**Minutes of the**

**Mailers\' Technical Advisory Committee**

**February 6-7, 2002**

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

**Ben Franklin Room**

**Washington, D.C.**

**Welcome**

**Joe Lubenow, Industry Chair**

Joe Lubenow, Industry Chair, called the meeting to order and welcomed
two new associations and several new members:

American Seed Trade Association, represented by Leslie Cahill and Dr.
Richard Payne and the National Association of County Recorders, Election
Officials and Clerks, represented by the Hon. Cathy Pearsall-Stipek and
the Hon. Charles Stern.

Other new member representatives included:

Laura Grafeld and Steve Johnsen (Alliance of Nonprofit Mailers)

David Shaefer and William Cunningham (American Business Media)

Phil Claiborne (DMA Nonprofit Federation)

Alfred Wilkowski (Envelope Manufacturers Association)

Dave Pitts (National Association of College and University Mail
Services)

Bob Shaney (Saturation Mailers Coalition)

Mr. Lubenow presented a framed letter of appreciation to Pat McGee,
immediate past Postal Vice Chair, and introduced the new Postal Vice
Chair, Ken Cowell.

**Overall Business Update**

**John Nolan, Deputy Postmaster General**

John Nolan discussed the current business situation, conceding that both
volume and revenues have declined as a result of the September/October
events and the state of the U.S. economy. He added that projections are
for continued weakness through the rest of fiscal 2002. The Postal
Service is aggressively addressing reduction of costs and the more
challenging task of increasing productivity in a period of declining
volume. There has been dramatic success in reducing labor costs in all
areas, including regular hours, overtime and the reduced need for
temporary help. Budget cuts of over \$1 billion, carefully calculated
for each region's activities and requirements, have been implemented.

Mr. Nolan stated that three high profile groups are working on future
projects and programs -- the Mailing Industry Task Force, the Mail
Security Task Force and the Product Redesign initiative. Senior
management is working to coordinate these activities to arrive at
products that are integrated and complementary to the overall mission of
the Postal Service and the needs of customers.

Noting personnel changes, he stated that John Ward has left the Postal
Service and Wayne Rogers had assumed his duties for the Mailing Industry
Task Force, and that a new Chief Inspector will be selected and take
over after Ken Weaver's retirement in March.

During discussion, Mr. Nolan emphasized senior management's support of
the transformation plan. He said the irradiation process is only being
used for mail destinating in the 202 to 205 ZIP Codes in Washington DC.
Service levels for First-Class Mail have returned to pre-9/11 levels
except in the affected areas of New Jersey, New York and Washington DC.
However, due to airline cutbacks, 3 day First-Class Mail service is
still being impacted. Asked about facility plans, he said the issue
would be addressed in the transformation plan. Finally, concerning
capital expenditures, he said that only projects which are
cost-reduction investments are being considered at this time.

**USPS Financial Review**

**Richard Strasser, Chief**

**Financial Officer & EVP**

Richard Strasser summarized the AP5 financial results, noting that
revenues were 5.1% below plan and 3.5% below SPLY. On the positive side,
expenses are 3.9% below (better than) plan and 1.7% below SPLY. He noted
that about 58% of expenses are variable (dependent on volume), but 42%
of all expenses are fixed (e.g., infrastructure, delivery network,
postmasters/post offices, loan payments, retirement and health benefits,
administrative salaries, etc.)

Mr. Strasser discussed the revenue effects of the timing of rate
changes, unique events such as increased election year mailings, and
unusual happenings such as the terrorist attacks. He noted that the
long-standing increase in overall volume during the last decade had been
interrupted by the current year-to-date decrease in total volume of
about 5%. Concerning expenses, versus a projected increase of about 3%,
actual expenses are slightly below last year's level. Work hours
continue to be reduced at a rate even faster than last year's.

Mr. Strasser stated that, in anticipation of the volume decline that
followed the September and October events, and the general state of the
economy, field budgets had been reduced by \$1 billion. There will also
be fuel savings and continued focus on productivity increases. Looking
forward, he said that the most optimistic view is for a slight
improvement in mail volume and revenues in the fall of 2002.

During discussion, he agreed that mail was lighter. There is less casing
time and increased automated letter volume. Work hours in all three
major labor categories has been reduced by about 5.4% \-- mail
processing, delivery services and customer service. Asked about the
early predictions that electronic commerce would dramatically affect
mail volume, especially First-Class Mail, he stated that customer
acceptance of electronic billing and payment has been slow and, while it
has affected single piece FCM volume slightly, we have not seen billions
of pieces diverted. Finally, he briefly discussed the challenge of
balancing the need to finance deficits when they occur with the need for
capital expenditures.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/strasf02.ppt>

**Rate Case Update**

**Ashley Lyons, Manager of Pricing**

Mr. Lyons reviewed the status of the current rate case. He introduced
Dan Foucheaux, the Postal Rate Commission (PRC)-designated settlement
representative. Mr. Lyons explained that the rate case time line began
on September 24 when it was filed, with implementation expected in about
12 months. The PRC requested a settlement effort, which has resulted in
near consensus of 56 interested parties, with one dissent. That opposing
party will present its argument in mid-February. The PRC should be able
to issue a recommendation by March 25^th^. In anticipation of a Board of
Governors approval by April 2^nd^, implementation would be scheduled for
June 30, about three months earlier than originally envisioned.

Mr. Lyons mentioned some of the rate changes arrived at during the
settlement process, focusing on First Class Mail, Periodicals, Parcels
and Standard Mail. The First Class 3- and 5-digit automated mail would
increase by two-tenths of a cent compared to the original Postal Service
proposal, and the QBRM postage discount would increase by half a cent..
The 3-digit sort, originally filed as optional, will continue to be
required. To support drop shipment of periodicals, the original Postal
Service proposal called for a drop ship discount for the editorial
portion of Periodical rates. The settlement calls for an enhanced pallet
drop ship discount and elimination of the proposed editorial drop ship
discount. Various periodical rates were adjusted up and down to bring
the entire rate structure into balance. Retail Parcel Post rates were
not amended, but there were minor changes in the DDU, DSCF and DBMC
rates. Finally the per pound rate for Standard Mail was amended slightly
in the settlement process to 61 cents (down from the current 63.8 cents,
but up from the proposed 59.8). In addition, a unique rate feature would
apply to the 3.3-ounce breakpoint for pound rates, such that automation
letters in ECR up to 3.5 ounces would be eligible for the automated
letter discount. Mr. Lyons noted that detailed rates were available in
the Federal Register and on the usps.com web site.

Mr. Lyons closed by noting that, with 56 signers and only one dissent
(with five others who had not signed but had indicated no opposition),
there is clear consensus on the settlement. He expressed optimism that
the PRC will hear the testimony of the dissenting party in a timely
manner and issue a Recommended Decision addressing the settlement.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/lyonsf02.ppt>

**Mail Sanitization Update**

#### Tom Day, VP, Engineering 

Tom Day discussed the irradiation services provided by two contractors
(in Bridgeport, New Jersey and Lima, Ohio). He briefly explained the
mechanical process of irradiation, noting that when the electronic beam
hits the target mail, energy is released that disrupts DNA structure,
thereby eliminating the biohazard. Irradiation has been used for many
decades. It's most familiar applications being in food processing and
medical sterilization. Mail is a new application and plants intended for
other purposes have been adapted to handle the mail sanitizing process.
After the first incident of anthrax in the mails, the e-beam technology
was rapidly but carefully evaluated with the help of several federal
agencies with specific expertise. There were safety and efficacy tests
that convinced the Postal Service to adopt irradiation as the primary
means for processing the affected mail (from Brentwood and the NY and NJ
facilities) and to continue sanitizing mail for delivery to the federal
offices in Washington DC. The process is continuously monitored.

Mr. Day stated that, as effective as irradiation is in neutralizing
biohazards, it is just as effective in damaging all substances with
biologic cell structures (e.g., blood and tissue samples, seeds, some
diagnostic test kits and pharmaceuticals). It can also adversely affect
some glass, film and plastic products. However, he reassured mailers
that only mail coming to the Washington DC 202 through 205 ZIP Codes
would be routinely irradiated (at the request of the federal agencies).
The vast majority of mail in the system is never exposed to irradiation.

Some of the side effects of irradiation include the creation of carbon
monoxide and ozone at levels that cause only minor irritation (headaches
and nausea in some). It was determined that these products came
primarily from the use of plastic bags used by the Postal Service (not
mailers' mail sacks) to hold letters during the irradiation process. The
Postal Service is working with the two irradiation vendors to eliminate
the use of bags as quickly as possible. The irradiation process also
creates volatile organic compounds (VOCs). Common examples of VOC's that
we are exposed to in our daily lives are gasoline, nail polish and even
inks used in printing. These VOCs are common in the environment and the
EPA has established standards for release of VOCs into the environment

.

Although there has been a rash of complaints about physical symptoms
presumed to be related to irradiated mail, there is no scientific
evidence that irradiated mail causes any physical symptoms (e.g.,
headache, rash, etc.). There is also a major misconception by the public
that all mail is irradiated. Mr. Day assured mailers that almost all
mail avoids the process so that the items harmed by irradiation are
never at risk in the mail stream, again except for that mail destined
for the Washington DC ZIP Codes mentioned above.

During discussion, Mr. Day explained that the plan being developed for
Congress with regard to the \$500 million allocation for anti-terrorist
response includes a variety of technologies, of which irradiation is
just one. Irradiation remains the only proven technology that
effectively neutralizes biohazards in the mail. When the Postal Service
constructs its own facilities for irradiation, there will be greater
efficiency and less effect on the mail.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/tdaypres.ppt>

**Mail Security Task Force Update.**

**Jim Rowan, Deputy Chief Inspector for Security and Technology**

Mr. Rowan began his presentation with a brief overview of the role of
the Postal Inspection Service which focuses on the safety and security
of Postal Service personnel, facilities, customers and the mail. Since
the terrorist events of September and October there has been greater
focus on physical security of the mail and the work environment. Mr.
Rowan reviewed the chronology of the anthrax-contaminated mail, all
postmarked at the Trenton Processing & Distribution Center in Hamilton,
New Jersey.

The Postal Inspection Service has been working jointly with the FBI and
New Jersey State Police in the investigation of the anthrax mailings.
Because anthrax is classified as a "weapon of mass destruction," its use
in a terrorist act results in the FBI leading the investigation as per
Department of Justice guidelines. The reward for finding the perpetrator
of the anthrax mailings was recently increased to \$2.5 million, in
concert with the FBI, Postal Service and one of the Postal Service's
largest mailing partners, ADVO Inc. (a Windsor, Connecticut.-based
direct marketing firm). ADVO has pledged \$500,000 toward the reward.

Concerning the effect of these events on the Postal Service, Mr. Rowan
stated the Inspection Service has received over 16,000 reported anthrax
related hoaxes, threats and reports of suspicious items in the mail (not
counting the number that were handled by other federal, state and local
agencies). Approximately 569 Postal Service facilities have been
temporarily evacuated since October because of alleged anthrax hoaxes or
bomb threats. Inspection Service investigations of these incidents have
led to the arrest and prosecution of 72 individuals. There have been 11
convictions to date.

Mr. Rowan explained that the Postmaster General established the Mail
Security Task Force led by the Chief Postal Inspector, which began
meeting daily from mid-October through the end of the year. The Steering
Committee, made up of senior level postal executives, presidents of the
labor unions and management associations and the Inspection Service have
continued meeting on a regular basis. There are weekly meetings of the
Task Force's seven working groups:

Communicating and Messaging

Safety and Security in the Workplace

Mail Center Security

Contingency Planning

Mail Screening

Mail Preparation

Surface Transportation Security.

Mr. Rowan discussed some of the activities of the various working
groups, noting that sanitization or electronic beam technology is part
of the solution. While sanitization is a reliable, predictable, and
verifiable killer of bio-organisms, it also damages some types of mail.
The Postal Service is continuing to study emerging technologies in the
detection of biological, chemical and radiological substances as it
works towards finding a process that improves safety for postal
employees, is compatible to operations involving the processing of mail,
and is cost-effective without impacting service.

One working group has worked on an identified mailer initiative. This
initiative addresses approximately 90 percent of the business mail
volume that, if identified, could become eligible to avoid sanitization.
Mr. Rowan cited two primary advantages of this program; it leverages
already existing business relationships, and it adds a level of security
by providing a means for the mail to be tracked back to the sender.

Mr. Rowan said the working groups are continuing to evaluate the
security and maintenance of transportation equipment, and are evaluating
processes to identify mail that can bypass the security process. Several
of the working groups have developed "best practices" documents for use
by the Postal Service and customers. The Task Force is also educating
customers on the steps that can be taken to reduce the risk to their
employees and businesses. The Task Force's goal is to continue pursuing
any means possible to reduce the risks to postal employees and
customers.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/jrowanpres.ppt>

**Confirm Implementation Update**

**Paul Bakshi, Program Manager**

Mr. Bakshi reviewed the attributes of the Confirm system -- to provide
near real time mail tracking and accurately follow mail from acceptance
(start-the-clock) to delivery. He noted that a web site was available
for customer support and education. Mr. Bakshi explained that, to make
data complete enough to provide performance data and a comparison with
performance standards, mailers must provide a barcode that, when
scanned, recognizes that the mail has entered the mail stream
('start-the-clock' data). Then tracking data can be generated until
delivery that allows the mailer to track the mail and to contact an
appropriate operational unit when a problem arises.

Letter scan rates in the Confirm system are exceptionally high, better
that 90%. However, because of sorting equipment settings, the scan rate
for flats is presently about 40%. Steps are being taken to expeditiously
improve that rate within the next few months.

During discussion, Mr. Bakshi noted that the Planet Code had been
expanded to 14 digits, increasing the number of digits available for
mailer use from 4 to 6. He added that an internal training program had
been initiated to bring Postal Service personnel up to date with Confirm
capabilities and procedures.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/bakshf02.ppt>

**First Class Mail/Expedited Work Groups Update**

**Laine Ropson**

Ms. Ropson announced that the Business Reply Mail Service, Acceptance,
and Accounting work group (Issue \# 51) has been "sunsetted". The work
group's final report is on the MTAC Issues Tracking System (MITS) which
can be found on the MTAC web site. The work group on First-Class Mail
Delivery Issues (Issue \# 57) has also ended its work and final
information for this initiative is also on MITS.

Janet Tonner, Postal Service Work Group co-chair, reported that the Work
Group 60, Service Standards and Business Mail Measurement, met on
February 6th. The Postal Service agreed to announce any changes in
service standards 30 days in advance on the MTAC web site. However, it
was noted that First Class Mail service standards have not changed since
May 2001. At this time, Chuck Gannon will still be the first point of
contact regarding service standards. EXFC results are also available on
the MTAC web site (the link is near the bottom of the home page).

It was reported that the Work Group is designing a business mail
measurement system, similar to EXFC, for business mailers\' presentment
mail. This program would extend the information provided by Confirm to
include \"stop-the-clock\" information using data collected by a
reporter panel. However, the Postal Service cannot fund the project so
costs would need to be shared by participating mailers.
PricewaterhouseCoopers has prepared a mailer survey to better understand
the scope of the work and to develop a cost estimate for each mailer.
Interested mailers are encouraged to contact the Work Group for a copy
of the system proposal and the mailer survey.

**Parcels Work Groups Report**

## Clarence Banks

Mr. Banks introduced Tom Davis, who reported on the DDU Drop Ship
Assessment work group. He stated that the work group is looking at a
package tracking system, using the entry document (Form 8125) to start
the clock. It may roll out as early as April. Several major mailers
involved in the work group are prepared to participate which would mean
that a large percentage of packages in the system would be included in
the pilot. There is an issue that the documents must actually match the
package loads as they move through the system. The report will be
similar to the Confirm report.

Joyce Bagby reported that the Priority Mail Service Improvement work
group had been focusing on return delays, but had found that most of the
issues were able to be solved by dealing with them on a local basis. The
work group is also looking at parameters for delivery standards that
would be based either on delivery in so many days for a set fee or
deliveries based on a fee schedule related to the number of days
required for delivery. The work group hopes to submit a final report in
April.

Mr. Banks reported that the Bound Printed Matter work group had asked
mailers about costs related to repackaged bound printed matter into firm
packages. A Federal Register notice will be published soon on this
issue. There was a comment that a more accurate descriptive term than
"firm package" would be helpful.

Elliot Siegel reported on the Future Flats Strategy work group, noting
that the group is ready to sunset . This work group has been exploring
ways to lower flats processing costs for the Postal Service and
customers. With the addition of the AFSM100 (which currently processes
about two-thirds of the flats worked in Plants), the Postal Service has
achieved significant (over 200 pieces per hour) bottom line flats
productivity improvement. Work will continue on issues regarding the use
of applying ID tags to flats as well as mail preparation alternatives. A
guideline for improving the readability of flats has been completed.
Confirmation testing will be performed prior to dissemination to the
mailing community. Finally, the mail characteristics study was
conducted, however, the report is not yet ready for issuance . Some
additional data regarding "piece weight" is needed. Samples for testing,
scheduled to begin at the end of February, were requested from mailers.
Afterwards a draft of the guideline will be available for review.

**USPS Transformation Plan Concepts**

**Ralph Moden, Acting VP, Strategic Planning**

**Julie Moore, Executive Director, Postal Transformation Plan Concepts**

Ms. Moore explained that Congress had requested a transformation plan
for the Postal Service that would reflect long-term change. The team
that is developing the plan is composed of a broad range of Postal
Service managers from every major operational and administrative area,
supported by a steering committee made of up senior management. In
addition, outside expertise is tapped as part of the planning process.

Ms. Moore stated that the outline for discussion, a broad and general
description of the concepts for postal transformation, was published for
public comment in September. About 130 comments were received by January
and a number of focus groups had been convened across the country. The
Board of Governors became involved by holding two panels composed of
major mailers (six) and labor union representatives respectively.
Finally, there has been an effort to discuss the plan with individual
major mailers.

Recurring themes in the public comments and from other feedback
mechanisms include cost containment (overhead reduction, shared costs,
labor and workforce levels, productivity improvement), the preservation
of a possibly modified universal service, stable and predictable rates
and a smooth rate case process, negotiated service agreements, network
optimization and postal reform. The plan will be based on three parallel
tracks -- incremental operational and administrative changes, moderate
legislative reform and structural transformation. The plan will focus on
human capital, finance, and operations. There will be a much higher
level of detail included in the published first phase of the plan than
was available in the original outline for discussion. Incremental
improvement will include rates and products, labor, operational and
financial flexibility, and the plan will take into account stakeholder
concerns reflected in the various comments received. There will be
specific recommendations for moderate reforms needed in the short term.
Structural transformation requires identifying a range of possible
endpoints, pathways and trigger points than can result in a smooth and
orderly transition. The Discussion Outline provided a framework for
debate as the final plan evolves.

Next steps include digesting the information needed to develop the
Transformation Plan, submission to Congress and dissemination to the
public. Postmaster General Potter will address a session at the Postal
Forum about the transformation plan.

During discussion, Ms. Moore explained that the mandatory five-year
strategic plan, actually a short-term document compared to the
transformation plan differs from the transformation plan in that the
strategic plan assumes no significant changes to the current
legislation.. Asked about the role of volume and revenue projections,
she stated that the plan would address those issues, but would not make
specific assumptions regarding the volume effect of electronic mail.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/mooref02.ppt>

**Work Group on Policy Related to Quality for Mail Preparation and
Acceptance**

**Ken Cowell and Michele Denny**

Mr. Cowell reported the MTAC Executive Committee agreed to establish a
high level workgroup that would focus on improving the quality of mail.
He announced that the work group would be headed by Michele Denny and
Bob O'Brien. Ms. Denny discussed the working group, which will initially
focus on quality of mail preparation and acceptance to include training,
communications, policy, feedback and technology. Members from the Postal
Service are from marketing and sales, and operations:

John Sadler Business Mail Acceptance

Ken Ceglowski Customer Relationship Management

Rick Arvonio Product Development

Cheryl Pawlowski Sales

Robin Ware BSN Integration

Pat McGee Marketing

(TBD) Operations

Bob O'Brien, MTAC Industry Vice Chair, will accept indications of
interest from MTAC members who would like to participate on the work
group.

One of the first issues to be addressed will be the quality issues
related to flat mail, and any assessments related to bar code quality
will be deferred until the work group develops initial recommendations
on handling the issue. She added that no assessments had been made to
date as a result of Merlin. All other aspects of Merlin operations will
continue as planned. The recommendations concerning the barcode issue
should be available within 30 days.

**New Operational Initiatives**

**John Rapp, Senior Vice President, Operations**

Mr. Rapp began his presentation with a brief comment about the fall
mailing season, which ran very smoothly. There were fewer customer
complaints, volume was down and the mail moved very well, except for the
disruptions caused by the terrorist attacks.

He described in detail the network integration and alignment initiative
that will develop a flexible and effective logistics network, reduce
total costs, increase efficiency and service quality. There are three
operational levels in the plan -- a strategic level that defines the
future logistical infrastructure of the Postal Service, a tactical plan
that focuses on the how and where of operations, and an operation plan
that specifies the day-to-day functions of the final network.

The initiative will examine and analyze the physical infrastructure, the
challenge of increasing transportation costs, and the fact that
operational procedures vary from region to region and location to
location. There are inconsistent mail preparation and handling
procedures and differing service standards through the Postal Service
system. All of these inconsistencies must be addressed.

A 13-step process has been developed that will first establish a
baseline of data. Then a modeling phase will seek an optimization of
Postal Service structure and operation, which will then be transformed
into an implementation plan. There will be ample opportunity along the
way for customers and the other interested parties to contribute to the
process.

The modeling effort is gargantuan, reportedly the most ambitious ever
undertaken by a major organization. Heretofore, such efforts have been
frustrated by inadequate software and limited computing capabilities.
The software must accommodate millions of scenario combinations. The
current contractor has assured the Postal Service that its software will
be able to do the job. The scenarios that can be manipulated in the
model include differentiation (facilities that process a single type of
product/service shape or numerous types),
centralization/decentralization (how many facilities and how they are
used), outsourcing (from total outsourcing to total in-house control of
products and services), and business requirements (the product mix).
Hopefully the modeling will indicate both a qualitative and quantitative
optimization.

During discussion, Mr. Rapp noted that baseline data had already been
developed, including specific equipment and mail preparation
requirements. Outside response to the plan will be collected throughout
the process, probably by developing a series of briefings for industry
and appropriate other parties. There was a discussion at the end of the
presentation on the process of modeling, during which Mr. Rapp described
a number of the variables that would be part of the process

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/rappf02.ppt>

**Congressional Update**

**Deborah Willhite, Senior Vice President, Government Relations and
Policy**

Ms. Willhite reported that the Postal Service would be heavily involved
with appropriations hearings, including supporting the report that was
being prepared by Engineering with regard to the \$500 million
anti-bioterrorism allocation. There will also be numerous oversight
hearing in both the House and Senate. Senate hearings on mail security
and the transformation plan will be held in the April-May time frame.

In February, a report to the Congress on the national service agreements
(NSAs) is due that may provide an opportunity to move forward with
negotiations with the PRC to develop either some regulations that would
enable negotiation of NSAs, or proposed legislation. Either would act to
encourage mailers to consider applying for an NSA. Another issue of
importance is aviation security, which is currently a very sensitive
issue that has a serious cost aspect. There is also an issue with the
U.S. Customs Service. Customs has become more aggressive, supported by
the current anti-terrorist atmosphere, in pursuing the right to open
mail without a probable cause warrant, an act that the Postal Service
views as a violation of the Fourth Amendment. Customs success in this
would attack the foundations of mailer confidence and trust.

Concerning postal reform, there is no reliable information about what is
transpiring on the Hill. Congressman Waxman is working on a bill that
would give the PRC predominant authority. The Postal Service anticipates
some support for developing incremental, discreet legislation in support
of NSAs and some aspects of the transformation plan.

**Don O'Hara, Executive Director, Product Redesign**

**Joe Lubenow, MTAC Industry Chair**

Mr. O'Hara updated the members on the progress of the product redesign
effort. Still in the first phase, the work groups have worked hard to
develop and refine proposals. The steering committee had provided
guidelines (goals) for the workgroups and shortly after the November
MTAC meeting added a fifth goal to recognize explicitly the importance
of increasing volume and contribution.

There have been some changes in the work group leadership; the current
co-chairs are:

# First-Class Mail: Mury Salls and Susan (Turner) Campbell

Periodicals: Val Scansaroli and Rick Arvonio

Standard: Anita Pursley and Cheryl Beller

Parcels -- BPM: Charley Howard and Sharon Daniel

Parcels -- Other: Steve Zwieg and Jim Cochrane

Addressing/Quality: Joe Lubenow and Wayne Orbke

Mr. O'Hara presented some PERMIT system data to demonstrate the wide
spectrum of business customers so that the work groups would be aware of
their varied needs. He noted that, of the 200,000 permits outstanding
for commercial Standard Mail, 120,000 are held by mailers who mail fewer
than 10,000 pieces per year. In this group, the average customer mail
averages about 3,100 pieces per year (divided among four mailings) and
spends about \$700 per year on postage. At the other end of the
spectrum, there are customers that mail over 100 million pieces per year
and spend an average of \$24 million on postage. Mr. O'Hara provided a
detailed breakdown of the number of permits, total mail and total
revenues for the various groups of mailers.

Mr. Lubenow discussed the review of the recommendations that would occur
in the next few weeks. He added that some concepts to consider are
continued improvement of work sharing, de-averaging so that there are
incentives to properly create mail submissions, efficient component
pricing, and flexible cost-based presort. The work groups are organized
on a mail class basis mainly because the rate structure is mail
class-based, but there must also be an effort to integrate the results
for a given shape across mail classes.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/oharaf02.ppt>

**Remarks by Postmaster General John E. Potter**

Postmaster General Jack Potter expressed appreciation for the faithful
support of MTAC and all of the hard work individual members have
contributed to help the Postal Service continue to address the
challenges of the present and future. He noted that difficult times had
clearly arrived and the Postal Service was steadfastly maintaining
service and moving programs forward as expeditiously as possible. He
added that the aviation situation continues to be a service challenge,
with the FedEx arrangement offering some relief until new regulations
can be finalized.

Mr. Potter particularly expressed appreciation that the labor
settlements had been successfully concluded. He notes that, even though
both city and rural carriers had gained wage increases, the negotiations
had included significant productivity improvements that virtually offset
those increases in terms of net cost to the Postal Service.

Mr. Potter briefly discussed the productivity decline that resulted from
the terrorist attacks and the anthrax incidents, noting that
productivity was now positive once again. As part of the effort to
improve productivity, an analysis of the rural letter carrier structures
is underway and that significant changes will result. Since those
changes will be made sequentially during the next several months,
mailers are encouraged to regularly update their databases.

Mr. Potter concluded his comments by discussing the transformation plan.
He noted that he expects the plan to contain much more information than
the original discussion outline that was circulated last fall. The
transformation plan is set to go to The Congress on March 31.

**Addressing and ZIP+4 Work Groups Update**

**Peter Moore**

Mr. Moore announced that a new work group had been formed to review the
military address change procedures, which currently do not result in a
change in the computerized mail forwarding database. Volunteers for the
work group are needed.

Mr. Moore announced that Jan Caldwell has assumed the duties of Manager,
Address Management, in Memphis, replacing Mike Murphy.

Mr. O'Brien announced that the Address Management customer interface
would be moved from Memphis to Washington, under Product Development.
The actual information technology services will remain in Memphis.

**Periodicals Work Groups Update**

**Jack Widener/Joyce McGarvy**

In the absence of Jack Widener, Joyce McGarvy reported on the E Pub
Watch work group, noting that area coordinators would attend a training
session that would help them return to their areas and offer local
training. The system should be online and working by April, after which
the work group would be "sunsetted".

Pat Killeen reported that the Mail Irregularity Feedback work group
received a briefing about changes in PostalOne! and the revised data
collection form. A test will be conducted in Mach at the original
Portland pilot site. A briefing was provided to the Business Service
Network (BSN) to determine if there could an integrative link to the BSN
and the Postal Service agreed to review the process, including whether
it could also be linked to the Business Mail Acceptance (BMA) system as
well. Assurances have been provided that the Mail Irregularity Feedback
data would not be used in such a way that it would viewed as a
"negative" by customers in regard to revenue assurance.

**Merlin**

**Michele Denny, Manager, Marketing Technology and Channel Management**

Ms. Denny explained the 30-day suspension of any planned assessment
related to flats barcodes. The issues related to flats barcodes will be
reviewed with an eye to resolving the problems that may exist. Other
aspects of the Merlin program will continue without interruption. Ms.
Denny stated that a number of handouts were available (distributed at
the meeting) as follows:

> \* Phase One sites including ramp-up dates
>
> To view the document, click here:
> <http://ribbs.usps.gov/files/mtac/merlinp1.xls>
>
> \* Phase Two deployment schedule
>
> *Was handed out at the meeting, but is now being revised. When
> available, it will be posted under "Latest on Mail Quality" section of
> the MTAC Homepage*
>
> \* Guidelines for utilizing the Chicago pre-testing facility
>
> To view the document, click here:
> <http://ribbs.usps.gov/files/mtac/merling.pdf>
>
> \* Standard Operating procedures provided to the BMEUs
>
> To view the document, click here:
> <http://ribbs.usps.gov/files/mtac/bmeusop.doc>
>
> \* Merlin diagnostic reports for current users
>
> To view the document, click here:
> <http://ribbs.usps.gov/files/mtac/merrpts.doc>
>
> \* USPS Operator/Supervisor Manual (on CD-ROM)
>
> *Was handed out at meeting in CD-ROM and is not shown here.*
>
> \* MERLIN Barcode Error Reference Guide
>
> To view the document, click here:
> <http://ribbs.usps.gov/files/mtac/merlinbc.doc>

In response to a question, Ms. Denny explained that current barcode
problems were mainly related to specifications such as placement, skew,
lines (too short, fat, tall, thin, smeared, poor print quality, etc.).

**"Trust in the Mail" -- Recent Developments**

**Janet Tonner, Manager, Customer Satisfaction Measurement**

**Dr. Greg Gaertner, The Gallup Organization**

Ms. Tonner introduced Dr. Greg Gaertner, who presented some results of
recent public opinion polls and some USPS-specific polls. He stated that
the events of 9/11 and the anthrax attacks have captured public
attention in a historically unprecedented manner. That impact is
demonstrated by comparing how closely the public has followed the news
coverage of particular events. Over 75% of the public followed the
terrorist attacks very closely. No other event in recent history has
been so closely followed. For example, the next most followed event was
the death of Princess Diana, with only 55% of the public stating they
closely followed the coverage.

When asked what is the most important concern facing the country today,
the primary response before September 11^th^ was economic problems.
However, concern over terrorism and the war supplanted economic concerns
following the attacks. Since then, the trend is slowly reversing.

A second effect of the attacks is on approval ratings for various
individuals and institutions. After the attacks, approval of the
President soared from about 60% to almost 90% where it has remained. The
same kind of increase occurred for Congress, although approval ratings
for Congress are beginning to decline to their earlier levels. A
November poll indicated that approval ratings for the Postal Service
were similar to ratings for Congress and Attorney General John Ashcroft
and above ratings for Dick Cheney, the C.D.C. and Homeland Security
Director Tom Ridge.

Other Gallup polls found that, after the attacks, less than a third of
postal patrons began handling mail differently. The approval ratings for
specific Postal Service activities including overall performance
improved after the attacks and have remained relatively high since.

In summary, Dr. Gaertner stated that the events of 9/11 have created a
climate of intense public concern. There has been an extended rally in
approval and confidence ratings that is only now slowly declining.

Ms. Tonner presented results of internal Postal Service surveys related
to brand equity. The survey was made prior to the terrorist attacks
(August) and a follow-up survey (December) was made after the attacks.
About half of the 1000 surveyed were identical. In the December
post-9/11 survey, ratings of specific trust components (quality/service,
brand recognition, and price/value all increased. As one would expect,
survey respondents indicated that immediately following the
bio-terrorist attacks their sense of the safety of the mail dropped.
However, 96% of respondents feel the mail is currently safe. About 70%
of the respondents indicated no change in the way they are handling mail
versus before the attacks, and a very small percentage indicated a
substantial change (gloves, hand-washing, etc.).

Almost all those surveyed rated the overall handling of the
bio-terrorist situation by the Postal Service favorably. Overall, the
survey indicated that about 95% of Postal customers feel the Postal
Service is doing everything within reason to maintain their trust and
protect against future bio-terrorism.

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/gallop.ppt>

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/trust1.ppt>

To view the PowerPoint presentation, click here:
<http://ribbs.usps.gov/files/mtac/trust2.ppt>

**Standard Mail Work Groups Report**

**Anita Pursley**

Ms. Pursley reported that the number of active work groups had been
substantially reduced. The work group looking at aligning payment and
USPS ownership has been "sunset". She noted that a new work group may be
developed to look at placement of in home data on advertising mail and
disposition of mail for retail versus in home purposes. Concerning
product redesign, she noted that the steering group had reviewed about
70 suggestions, honed it down to 40 which will be forwarded to the
Postal Service for consideration.

Dan Minnick reported on PostalOne!, noting that the Postal Service had
provided an in depth briefing on the impressive array of services and
features included in the PostalOne! umbrella. However, he added that
many of the services are not yet available because of current
restrictions, especially the lack of capital investment.

PostalOne! is interested in mail owners who would be willing to
participate in a user group, since most feedback to date has come from
mailing service firms and industry vendors.

**Engineering and Technology Work Groups Update**

**Robert Lindsay**

Mr. Lindsay invited Joe Lubenow to report on Presort Optimization. Mr.
Lubenow reported that the work group announced new procedures for
automation and presort flats, which will be available in April, that
will improve discounts and service efficiency. Vendors involved in
presort optimization (and PAVE testing) were asked to take a proactive
role in participating, especially in resetting software default settings
to take advantage of various options. The work group has agreed that a
5-digit scheme for flats should be considered, as should a 3-digit
pallet location report. He discussed several specific technical issues
related to presort optimization.

## Adjournment 

## 

## The meeting was adjourned at 4:30 p.m.