**Minutes of the**

**Mailers\' Technical Advisory Committee**

**November 6, 2002**

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

**Benjamin Franklin Room**

**Washington, D.C.**

**First Day**

**Welcome**

**John Wargo, Chair, Postal**

**Joe Lubenow, Chair, Industry**

**Ken Cowell, Vice Chair, Postal**

Mr. Wargo called the meeting to order and welcomed the MTAC members and
guests. He recognized retiring Industry Chair Joe Lubenow's dedicated
service to MTAC, and expressed appreciation for the contributions he had
made over the years.

Mr. Cowell, Postal Vice Chair, welcomed new association representatives
Tonda Rush (National Newspaper Association) and Richard Barton (Mail
Order Association of America) and new MTAC representatives:

Terry Blanton Association of Priority Mail Users

WK Chan Florida Gift Fruit Shippers Association

Edward Conrad National Industrial Transportation League

Vance Dippold Newspaper Association of America

Mike Winn Printing Industries of America

Mr. Lubenow explained that the MTAC leadership process involves a
six-year commitment, two as vice-chair, two as chair, and two as
immediate past chair. He recognized with appreciation the completion of
that commitment by Joe Schick, and noted that the new leadership slate
would begin service on January 1 -- Bob O'Brien, Industry Chair, and
John DePiazza, Industry Vice Chair. Mr. Lubenow announced the Steering
Committee would also include new faces: Val Scansaroli and Dennis
MacHarg. He expressed thanks to Jack Widener and Laine Ropson, who would
be retiring.

**Work Group Reports**

Mr. Lubenow announced three new work groups were approved -- Design
Guidelines for Flat-Sized Mail (Joyce McGarvy and George Hurst as
Industry and Postal Work Group Leaders respectively), In-Home Delivery
Instructions for Standard Mail (Wanda Senne and Mike Spates as Industry
and Postal Work Group Leaders respectively), and Mail.dat & PostalOne!
Network/Operations Work Group (Dan Minnick and Jim Cunningham as
Industry and Postal Work Group Leaders respectively). The General
Session today and tomorrow features all currently active Work Groups
regarding desired outcome, current status, obstacles, and timeline.

He also announced the MTAC meeting schedule for calendar year 2003:
February 5-6, May 7-8, August 6-7 and November 5-6.

***ePub Watch***

***Joyce McGarvy and Paul Sullivan***

Mr. Sullivan described ePub Watch, which was begun six years ago with
the objective of replacing a relatively inactive paper-based system to
track delivery of publications. It was launched in September of 2002 and
is available at 7,500 sites, which have the necessary computer
capability. The system provides tracking for mailers, enhanced USPS
oversight of deliveries with an ability to confirm delivery unit
compliance. To date 189 publishers are on board, with 71 more in the
process of becoming involved. The Postal Service is tracking 886
publications (including daily, weekly and monthly pubs), and 196
additional pubs at other intervals (based on complaints).

There are some challenges to face, including insuring that appropriate
funding continues, and some information technology (IT) considerations
related to shared infrastructure and some capital investment issues
related to obsolete equipment. Future attention will be focused on
expanding to bi-weekly publications and an effort to insure sufficient
financial support for the system. Interested mailers may call (800) 238
3150 or go to [www.epubwatch.usps.gov](http://www.epubwatch.usps.gov/)
to become involved

[Click here to view the presentation](../mtac1102/epubwatch.ppt)

*Presort Optimization*

*Joe Lubenow and Marc McCrery*

Mr. McCrery, noting that the work group is involved in a continuing
process, discussed recent accomplishments including a 5-digit scheme for
parcels, initiatives to increase pallet use and decrease sack use,
co-packaging of automated and presort flats, reduction of letter trays,
and promotion of PAVE. More recently, the work group has developed a
5-digit scheme for flats and a list of 3-digit zip codes at locations
that can handle them without additional cost, allowed specifically
prepared mixed mail on BMC pallets, improved prep requirements for
"fletters", and formalized the prep requirements for flat-sized pieces
prepared in letter trays. In addition, the work group will remain a
forum to discuss product redesign issues and issues and proposals that
come out of the Mailing Industry Task Force.

In the near future, the work group will look at merging non-AFSM
100-compatible flats for dispatch at delivery units, requiring the use
of Optional Endorsement Lines (OELs), combining letter mail trays from
multiple mailings on a single pallet, palletization of First-Class Mail,
as well as other flat preparation improvements in conjunction with the
product redesign initiatives. Mr. McCrery closed by emphasizing that the
process is ongoing with many issues to explore.

[Click here to view the presentation](../mtac1102/presortopt.ppt)

*PostalOne!*

*Dan Minnick and Larry Goodman*

Mr. Minnick likened PostalOne! to an electronic window through which a
diverse mailing population, including the Postal Service, can view many
different aspects of the mailing process. The objective of the work
group and the Postal Service is to achieve one hundred percent
participation through PostalOne! implementation across the country.
Although there are 60 billion pieces of mail.dat formatted mail in the
system, there is still a large volume of mail that has mail.dat
potential. For mail that is not appropriate for mail.dat, the work group
and the Postal Service is working on tools that will permit that mail to
be part of PostalOne! There will be efforts to continue to improve and
disseminate the Mailing Facilities User's Guide, to encourage software
providers, and to support USPS operations.

The challenges that must be addressed include the large scale of the
operation at one hundred percent -- the number of mailing facilities
involved, and the number of permits and payment processes. Mr. Minnick
concluded his remarks with the notion that the work group has much work
to do and will be an ongoing activity.

Mr. Goodman commented that the necessary infrastructure to deliver the
promise is being built, participation is increasing, and integration of
services is progressing. There are 33 mailers representing 109 sites
currently involved in PostalOne! They serve over 2,500 permit rate
payers that collect over \$83 million in revenues each week. The 300
million pieces per week involved represent about one-third of all mail
volume from the drop ship process, and about two-thirds of this is
involved at the SCF/DDU level.

Future issues include enhancements to postage payments, optimization of
mail induction, electronic verification of parcels, integrated mail
irregularity reporting, electronic postage payment receipt information,
and mail.dat. Mr. Goodman commented on other aspects of PostalOne!'s
evolution -- a seamless view of a mailer's operation once it gets into
the Postal Service, account management functionality that is customized
by the customer's needs, and a full understanding of the benefits by
mailers. Now the infrastructure is being developed and process
improvements are continuing.

Mr. Minnick announced the formation of a new "Mail.dat & PostalOne!
Network/ Operations Work Group" that will identify new opportunities for
disseminating available industry data to USPS network and operations
groups.

[Click here to view the presentation](../mtac1102/postalone.ppt)

**USPS Financial Review**

**Richard Strasser, Chief Financial Officer**

**and Executive Vice President**

Mr. Strasser briefly reviewed the successful performance in reducing
work hours, which had an objective to reduce work hours by 3.15% \-- the
actual reduction has been 4.83% in the first accounting period. Of the
32 million work hours targeted for the fiscal year, about 10 million
have already been eliminated in the first 8 weeks of the year. The
complement in fiscal year 2000, when the reduction program was begun,
was 797,000 career employees. That number is now less than 750,000. On
the demand side, during the same period, the delivery network has grown
by 5.6 million more deliveries, the equivalent of nearly 10,000 carrier
routes. Revenues are slightly under plan, offset by expenses which are
slightly under plan.

Mr. Strasser reviewed the recent developments with regard to the Civil
Service Retirement System (CSRS), which is a defined (fixed benefit)
retirement program with an annual CPI increase in January for retirees.
The employee contribution is 7% of salary, with an agency contribution
of 7%, while the actual cost of the program is 24.4% \-- resulting in a
shortfall of 10.4%. Therefore, the entire federal fund (covering all
agencies) developed an unfunded portion over the years. In 1983, to
shortstop the continuation of the problem, all newly hired federal
employees were enrolled in the Federal Employee Retirement System, that
redefined the annuity -- a smaller benefit, a Social Security component,
and a thrift savings component (like a 401K). The employees pay 7%, with
an additional 12% possible under the thrift savings option, and the
agency pays a minimum of 17.9% plus a matching contribution up to 4% of
the employee's thrift savings contribution.

In 1974, a law was passed to require the Postal Service to accept a
30-year "loan" each year at 5% to cover the unfunded portion resulting
from pay increases. The formula was based on the total amount of
unfunded debt in the entire CSRS. In the early nineties OBRA legislation
added another "loan", 15 years at 5%, to cover CPI payments for
retirees.

The General Accounting Office, concerned that the obligations of the
Postal Service should be clearly defined, requested OPM to calculate
that obligation as it applies only to the Postal Service. That
calculation revealed that the USPS fund balance in 2002 current dollars
is \$152.1 billion with an anticipated need of \$172.6 billion to meet
the obligations based on current retiree life expectancy, a shortfall of
\$20.5 billion. Continuing with the annual "loans" under the current
law, the USPS would pay in \$243.6 billion, or about \$71 billion too
much. The very complicated calculation takes into account that the
obligation for each agency is based on the total federal unfunded CSRS
debt, and some agencies are in much worse condition than the USPS.

Legislation has been proposed by OPM, OMB and Treasury that would allow
the USPS to fully fund all current CSRS employees (rather than the 7%
contribution under current CSRS requirements), a provision that would
generate \$15 billion, leaving an underfunded amount of only \$5
billion. This would end the annual loan process.

If the legislation is passed before the end of the fiscal year, there
would be a positive effect on the bottom line. The current budget
projections include the regular 7% CSRS contribution (\$734 million),
and the principal and interest on the annual loans already on the books
(\$3.973 billion). The additional cost of fully funding current CSRS
employees would be \$1.8 billion (instead of \$734 million), but the net
savings would be \$2.9 billion. In the future, the loans would cease and
the principal and interest payment would be systematically amortized,
with the total obligation decreasing each year, until the last loan was
paid off.

During discussion, Mr. Strasser emphasized that this process was the
result of a rational analysis of the USPS portion of the CSRS, and that
neither the Postal Service nor OPM had made any error. The legislative
requirements have been appropriately followed in the past. Mr. Strasser
commented briefly on the uses of funds that may become available if the
legislation is passed, stating that most would go to debt reduction.

[Click here to view the presentation](../mtac1102/financial.ppt)

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

Mr. Potter expressed his appreciation, on behalf of the Postal Service,
for the contributions that MTAC makes to the process of improving the
products and services of the Postal Service.

Mr. Potter honored Leonard Bartels, Official Mail Manager of the
Department of Defense, who is retiring this year from MTAC where he has
been a representative for GSA (General Services Administration). He
presented a certificate of appreciation to Mr. Bartels for his role as a
valuable participant in MTAC over the years.

Mr. Potter also presented a certificate of appreciation to Russ Shores,
a member of MTAC for almost 20 years and an active contributor to many
MTAC committees and work groups. Mr. Potter recognized Russ Shores'
retirement from MTAC where he has been a representative for GCA (Graphic
Communications Association) now known as IDEAlliance. Mr. Shores
expressed appreciation for the honor.

Concerning the legislation outlined by Mr. Strasser, Mr. Potter stated
that the Postal Service would work hard to support passage of the
proposed legislation. Regardless of the outcome, the Postal Service is
dedicated to the course outlined in the Transformation Plan. Until the
legislation outcome is clear, the Postal Service will continue to
prepare the rate case for 2004 which could be deferred until 2006 with
passage of the bill.

During discussion, Mr. Potter underlined the fact that the pension fund
issue is a welcome benefit for the Postal Service and provides for a
deferment of the rate case, but it does not negate the long-term need to
continue improving the business model, the need to continue working
toward postal reform and the importance of supporting a Presidential
Commission. In conclusion, Mr. Potter noted that a number of events have
been gratifying since he began his term -- the response of the industry
to the anthrax situation, the appropriation from Congress to respond to
that situation, the support of the unions in the effort to reduce labor
costs, our exceptionally high service levels, and the potential benefit
of the pension debt issue.

**Work Group Updates (continued)**

***Maximizing Value of Planet Code***

***Martin Bernstein and Paul Bakshi***

Mr. Bernstein noted that a subgroup had been formed to examine the
mission of the Planet Code Work Group to help determine whether the work
group structure should be changed.

Mr. Bakshi explained that the mission of the work group is to help
maximize the utility of the Planet Code technology, especially by
improving and promoting Confirm Service, which provides tracking
information to customers and the Postal Service. The history of Confirm
began in 1997 with a single-mailer prototype, which grew to 100 mailers
in 2000 when a pilot project was established. The pilot system reached
maximum capacity in mid-2001,when about 600 mailers were on board. The
production system came on line in October 2001 and provided for a
"start-the-clock" code. The system began with an improved web site and
shared reports, and a customer support center in Memphis. The rate
classification became final with Board of Governor approval in September
2002 and 95 customers have signed on. The work group is looking for
feedback to assess future enhancements.

Customers commented on mail that does not fit the automation process.
The work group is now developing a container and bundle tracking
process, which will begin with a small pilot that will be designed from
information gathered from a small group of mailers. The system
requirements should be completed by November 2002, the pilot program in
March 2003, and the final product offering in July 2003 (with a rate
case filing the following September). The work group is also looking at
a Confirm for bulk First-Class Mail, including business reply and a
"Friend-to-Friend" option (a business mail card sent to a current
customer who may then forward the card to a friend as a referral).
Finally, the Postal Service is currently using Confirm data to evaluate
delivery performance and publish that performance data for internal USPS
use.

[Click here to view the presentation](../confirm.ppt)

***Mail Irregularity Feedback***

***Joyce McGarvy and Pat Killeen***

Ms. McGarvy stated that the work group objective is to develop an
electronic mail irregularity reporting process to replace the manual
Form 3749, a process that has not worked well in the past. The
electronic reporting process would rely on PostalOne! as a vehicle for
reporting and generating reports. The report package should identify the
mail preparer and owner, and describe the problem.

Mr. Killeen described a limited test at two sites that demonstrated
feasibility -- ability to identify the problem, notify the customer and
provide a basis for correcting recurring problems. The test also
revealed the need for improvements, most of which have been addressed:
improve the data collection procedure and data entry interface, creation
of issue status tracking, development of a smaller customer contact
interface with the business mail entry unit, and creation of a link
between the Business Service Network (BSN) and PostalOne! to eliminate
the need to duplicate entries.

Ms. McGarvy noted that the most important challenge is identifying all
the customers involved, with the ultimate objective to use a mailer ID
(when available) to notify both the mail preparer and mail owner
simultaneously. Until then, the permit holder will be notified.

Mr. Killeen described the time line for implementing the system,
beginning with the roll-out of the improved data collection/data entry
interface, which is nearly complete. A limited pilot test will begin in
November and expand to a full-scale pilot by January 2003. National
implementation is anticipated in June 2003.

[Click here to view the presentation](../mtac1102/irreg.ppt)

***Delivery Standards and Business Mail Measurement***

***Ken Metroff and Janet Tonner***

Mr. Metroff discussed the work group's interest in service standards and
the achievement of two objectives. First, the Postal Service has agreed
to post anticipated service standard changes on the web in sufficient
time for customer feedback. Second, the EXFC score (both past and most
current) will also be posted on the web. He said that the work group
will now focus on business mail measurement -- to measure service
standards for First-Class Mail business mailers and generate the results
at a reasonable cost. The work group has agreed that Confirm is the
appropriate mechanism for this process.

Ms. Tonner discussed obstacles related to Confirm, mainly issues related
to "start-the-clock" and "stop-the-clock" coding. A pilot test is
planned to assess the accuracy of ASN information in confirming home
delivery. The test will involve a few mailers who will agree to on-site
evaluations of mail induction ("start-the-clock"). The evaluation of
"stop-the-clock" will rely on EXFC data compared to mail that contains a
delivery Planet Code scan.

[Click here to view the presentation](../mtac1102/delstand.ppt)

***Service Assessment for DDU Drop Shipment***

***Mike Spates and Julie Rios***

Mr. Spates outlined the original objective of the workgroup represented
by parcel shippers, consolidators, and the Postal Service. The purpose
was to develop a service measurement system to assess performance
compared to a goal of 100% of all DDU dropshipped packages delivered
within one day. The workgroup gained a thorough understanding of mutual
operations to ensure the most effective interface at the DDU. They
investigated alternative methods for assessing the "age" or duration of
time the parcel has been in the postal system. The methodology should
maximize "passivity," thus minimizing possible attributable costs.

The new Parcel Select Service Performance System was implemented on June
8, 2002. Scanning the Form 8125 at the DDU [starts]{.underline} the
clock for performance measurement and the clock is [stopped]{.underline}
when the carrier scans at delivery or attempted delivery. The shared
service reports can be web-accessed by participating customers and
postal management. The data is in common format thus facilitating
discussions between mailers and the Postal Service.

Performance data is available in various levels of detail (by area,
cluster, and 5-digit) for weekly, accounting period and quarterly time
periods, and by percentage delivered on day 0, day 1, etc., both
individually and cumulative.

Mr. Spates commented that the current challenges are: (1) to increase
the number of test participants (only three customers are currently on
board); (2) to ensure a match of number of actual parcels with the Form
8125; and, (3) to break out a consolidator's individual customers. All
these issues are being addressed.

Ms. Rios demonstrated the reports currently available on the web, which
is designed to represent data in a logical sequence using drop-down
window lists for select information. She briefly discussed enhancements
that are under way as follows: (1) revision of software to reveal at the
outset any discrepancy between the Form 8125 and the number of packages
entered into the system; (2) providing more sophisticated analysis of a
customers' mail (for consolidators and parcel shippers with multiple
customers); and, (3) developing an ability to track percent of pieces
delivered on first attempt and the time between first delivery attempt
and actual delivery.

In summary, the Postal Service and the participants are using the
information to isolate possible trouble spots, eliminate the problems,
and raise the service level to the ultimate goal of 100%.

[Click here to view the presentation](../mtac1102/dropship.ppt)

***Undeliverable-as-Addressed Military Mail***

***Leonard Bartels and Susan Hawes***

Mr. Bartels commented that this work group represents the first time
that there has been a joint effort between the Postal Service and DoD to
solve the undeliverable-as-addressed issue in the DoD system. It has
been determined that, to proceed, the DoD must develop a standard
forwarding service system (like CFS) that can be used with on-site PCs
for military mail. Due to the current focus on the military response to
terrorists' threats (including the situation developing in Iraq)
attention has been diverted from this problem and the work group will be
temporarily suspended. It will be reactivated when a CFS type system is
developed for military mail. Another issue being considered is
standardized addresses for barracks housing on domestic bases.

***Mailer Barcode Quality (Merlin) Industry Best Practices***

***Wanda Senne and Scott Hamel***

Ms. Senne reviewed the work group objectives --to identify industry best
practices to improve barcode quality (including reports on diagnostics),
development of a Merlin users guide, and a plan to widely disseminate
that information to users. Two subgroups were formed, one to address the
best practices issues and one to work with software developers. Because
of these efforts a number of enhancements to Merlin can be reviewed on
the Merlin web site. The first version of the users guide (Mailer's
Guide to Merlin) has been written and it includes useful information for
prospective Merlin users.

Mr. Hamel commented that, although the work group experienced a few
obstacles at the outset (mainly refining logistics and meeting
procedures), it established a format to maintain focus and insure
consensus as the various milestones were completed and submitted to the
full work group for review.

[Click here to view the presentation](../mtac1102/merlin.ppt)

***Summary and Adjourn***

***Joe Lubenow***

Mr. Lubenow closed the first day's meeting, commenting on his two-year
tenure as Industry Chair. He reviewed accomplishments, which included
the exceptional success of Postal One!; development of the Planet Code
(which flew in the face of conventional wisdom that ordinary mail could
not be tracked); the focus on revenue assurance through Merlin,
line-of-travel and MOVE update; the establishment of the continuing
presort optimization effort; and the international address standards
specifications (which are on the verge of testing by 12 countries).
Finally, he noted the emergence of the Mailing Industry Task Force as a
signal event because it was built on the commitment of industry CEOs.

**Minutes of the**

**Mailers\' Technical Advisory Committee**

**November 7, 2002**

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

**Benjamin Franklin Room**

**Washington, D.C.**

**Second Day**

**Call to Order**

**Bob O'Brien, Vice-Chair, Industry**

Mr. O'Brien called the meeting to order and announced the promotion of
Ralph Moden to Senior Vice President, Government Relations.

**Work Group Updates (continued)**

***Flats Container Development***

***Joe Schick and John Brown***

Mr. Schick reported that the work group is seeking to reduce the cost of
mail preparation on the AFS 100, a faster and more productive machine
than the ASF 1000. The goal is to reduce Postal Service labor input and
reduce the cost of preparation for the mailers. A collapsible tray has
been designed that, using a flats feed assist device, allows rapid
placement of flats on the sorter. A challenge for the equipment
manufacturers is to extend the receiving tray on the equipment to handle
a larger amount of mail, which would reduce operator idle time.

Currently there are a number of individual tests by mailers who are
trying out modified trays. A meeting is scheduled in December to discuss
the results of the test, after which (probably in early 2003) a
full-scale test will be launched. Mailers have expressed concern that
the trays can only be used for flats and not carrier route mail. The
process to fix that is complicated, involving a new presort scheme, a
rate/pricing evaluation and study of costs by mailers who would have to
re-fit some bindery equipment.

[Click here to view the presentation](../mtac1102/flatsdev.ppt)

***Parcel Processing Field Study***

***Brad Briskey***

Mr. Briskey stated that the study would examine characteristics of small
parcels, especially bagged mail. The work group has not been fully
constituted and he and Tom Allshouse will soon provide an initial
agenda, and invite additional MTAC members to join the effort.
Preliminarily, two site visits were conducted to observe small parcels
on automated equipment. Although there were few problems noted, there
was an issue identified as "selvage" (mail packaged in bags with excess
bagging material that can cause jams and other throughput problems).

***MOVE Update***

***Joel Thomas and Angelo Wider***

Mr. Wider described the primary objective is to improve mail quality
related to undeliverable as addressed mail through proper use of the
MOVE update requirements established by the Postal Service. MOVE Update
includes all forms of address change available. About 17% of all
Americans move each year resulting in about 44 million change of address
orders, a formidable challenge. Although it is less than 3% of total
mail volume, the cost is \$1.5 billion.

Recommendations included implementation of national revenue assurance
initiatives for MOVE Update compliance, establish an awareness campaign
for all involved, establish a Postal Service cross-functional team to
address policy and operational issues, and work with MTAC to address
industry and mailer concerns. The initiative included three areas and
the Postal Service is analyzing the results.

Mr. Thomas discussed the work group's focus, which has been on the
original MOVE Update compliance issues. The group has not considered the
expansion and modification that was the subject of a May Federal
Register notice. The work group has agreed that there should be an
improved effort to communicate the requirements and benefits of MOVE
Update. He noted that the work group has good industry representation,
has identified a number of key issues, and invites any additional
suggestions from MTAC members. Issues already identified include the
importance of communications, the certification document, a point of
contact/compliance survey, and retroactivity and responsibility with
regard to assessments.

Mr. Wider noted that logistics was a challenge because of the large
number of work group participants. In addition, the work group must sort
out the issues related to the established policies and the proposed rule
changes. He stated that the work should be completed by the end of the
year with a final report and implementation of the procedures --
training, communications and reviews.

[Click here to view the presentation](../mtac1102/moveupd.ppt)

**USPS Flats Strategic Plan**

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

Mr. Rapp discussed the Corporate Flats Strategy in detail, noting that
overall flats productivity has increased almost 78% between the end of
FY 2000 and today. Successful implementation of the strategy should
dramatically improve that performance. He also noted that Periodicals
Mail is considered one of the "mailbox anchors" and that Standard Mail
ranked second to First Class Mail in total revenue. These two classes
make up the majority of the flats mailstream. He also stated that the
Postal Service's ultimate goal is to have flats and letters automated
using one sorting pass to produce a single package of mail for each
delivery point.

The official Flats Strategy document was published in July 2001. It
outlined the general concept and plan, which aimed at increased
operational throughput and efficiency. To date, progress has included
development and deployment of the AFSM 100s, modification to the FSM
1000s, and the development of a number of alternative processes and
tools to improve overall operations.

In the near term, action items include continued efforts to move mail up
the automation process (to the AFSM 100s), elimination of the FSM 881s,
and a substitution of capital equipment for manual labor. Products of
this effort include an automated tray handling system, a flats feeder
assist device, modification of the FSM 1000s (higher speed feeder, OCR
capability and ID code sort), and a pallet mover. There will be
continued efforts to increase customer applied bar coded volumes.
Finally, flat mail has been moved from smaller, mainly manual operations
to larger automated facilities.

Mr. Rapp described the current operational structure, which includes
four mail streams -- automated, mechanized, FSM 1000 and manual. The
near-term objective is to eliminate the mechanized streams, and
ultimately end up with a single mail stream through delivery point
processing (DPP), as described below. It is anticipated that MTAC
involvement will be needed in a number of areas -- barcode quality and
readability; address block location; alternative flats packaging to make
the AFSM 100s even more productive; bundle integrity improvement, the
increased use of pallets and the eventual elimination of sacks.

Mr. Rapp discussed the long-term plan to sequence letters and flats into
one package for each delivery point -- DPP. This major change in process
will require substantial concept development and evaluation, the
invention of new sorting equipment, an estimate of equipment and space
requirements, and a detailed analysis of customer impacts. Because the
development of the DPP equipment is crucial to success, the Postal
Service is proceeding with two options. The first, DPP, would be a
one-pass system that would dramatically reduce in office and carrier
requirements since all mail would be sorted into a single delivery point
package. In case equipment (or other considerations) prevent the
implementation of DPP, a second option, flats sequencing system (FSS)
will be developed simultaneously -- a two-pass process, sequencing flats
separately and then having the carrier combine the residual letters and
flats. Customer impacts will be minimized as much as possible, but some
changes can be expected -- 11-digit barcodes, possibly ID tags, and some
changes in makeup, presentation and entry points.

Mr. Rapp concluded that the savings generated by DPP would be
substantial, especially at the carrier level. The savings for FSS would
be less since there would still be carrier casing for the remaining
letters and flats.

[Click here to view the presentation](../mtac1102/flatsstrat.ppt)

**Vote-by-Mail Research Plan**

**Cathy Pearsall-Stipek and George McHale**

Ms. Pearsall-Stipek explained that the study was initiated in the spring
of 2002. The work group intended to develop an implementation plan to
support the use of mail voting. Elements of the plan include work teams
in each state that already have vote-by-mail options and development of
a plan by the Postal Service for standardizing operations for election
mail. She would like to see evaluation of alternative rate structures
specifically for election mail as well as development of a plan to
encourage liberalization of laws to allow citizens to choose
vote-by-mail with the least impediment.

Analyzing the potential for revenues related to universal vote-by-mail,
the estimate totals over \$120 million per election. Ms. Pearsall-Stipek
provided a state-by-state analysis of the potential revenue and the
current practice and legislation related to vote-by-mail. She emphasized
that the decisions concerning how individuals vote rest with the local
jurisdictions (usually the county). The analysis included the total
number of registered voters, number of absentee voters, type of mail
used by jurisdiction (First-Class Mail, Standard Mail, Non-Profit,
etc.).

**Address Management Overview**

**Jan Caldwell and Rick Arvonio**

Ms. Caldwell stated that the core function of Address Management
("Memphis") is to provide value-added products and services that allow
the mailer to better manage the quality of the mailings while allowing
the Postal Service to optimize field operations. Although intended to be
an invisible distinction, the recent reorganization set up Product
Management (focusing on addressing policy, regulations and pricing) and
Address Management (focusing on the operational aspects of the Address
Management System -- AMS - to include enforcement and customer support).

Ms. Caldwell noted that there is a continuing exchange of information
between the two groups and that customers may approach either group for
support. Address Management is concerned with address quality, change of
address and MOVE Update support, certifications and audits, the Call
Center, and Center support functions (i.e. annex operations, computer
operations, budgeting, administration, information technology -- IT -
services, and accounting).

Mr. Arvonio described his responsibilities -- policy aspects related to
product management for addresses, letters and flats, and special
services, which include value-added products and services across all
classes of mail.

[Click here to view the presentation](../mtac1102/addrmgmt.ppt)

**Postal Automated Redirection System (PARS)**

**Jan Caldwell**

Ms. Caldwell discussed PARS as it relates to Address Management, a
system to identify undeliverable as addressed letter mail at the first
machine handling (scan) to immediately redirect the mail to the
appropriate address. The current system allows the mail to reach the
undeliverable address delivery unit, where it is sent to CFS for a
correct destination and is then re-entered in the system for delivery.
The customer's change-of-address process will continue to apply.

Another aspect of the process is the capture of the manual
change-of-address form wherever the customer drops it into the mail
system. That card will then go to the nearest CFS unit for entry into
the system (versus the original process of sending all COA forms to New
York). Ms. Caldwell encouraged customers to use the Internet. There was
a brief discussion about the requirement to verify the change of address
validity using a credit card, which results in a charge of one dollar
(necessary because the credit card company charges for the verification
service). The Postal Service is looking at alternatives to eliminate the
charge, as well as alternatives to the current change of address
process.

[Click here to view the presentation](../mtac1102/janpars.ppt)

**Mailing Industry Task Force Update**

**Wayne Rogers**

Mr. Rogers commented that sixty-five companies are now involved in the
Task Force efforts. It began in the spring of 2001, issued an initial
report with eight major recommendations the following fall, and issued
updates at the National Postal Forums in San Diego and Boston. He
included a video presentation in which a number of CEOs commented on the
importance and impact of the Task Force.

There are eight major groups currently underway. The CEO Council has
become independent of the Task Force. This allows them to be involved in
certain activities not available to the Postal Service by law. The
remaining groups focus on implementation of specific areas identified as
major opportunities for the Postal Service and the industry. He noted
that the Task Force had observed the importance of deferred pension
expenses, interest expenses and government transfer costs as a negative
factor in operating the Postal Service.

**Product Redesign Update**

**Don O'Hara and Joe Lubenow**

Mr. O'Hara provided an update on Product Redesign. A joint meeting of
the Redesign work groups for information sharing is planned for early
2003. Also, for packages, internal information gathering is underway,
and when that is complete the Package and BPM work groups will be
reactivated.

Proposals have been categorized into four areas -- ideas that do not
require Postal Rate Commission (PRC) approval, small cases and
experiments, ideas that could fit into the omnibus rate case, and ideas
that require a full contribution-neutral classification case.

In the first category is the September 5 change in 5-digit
bundle-minimums for AFSM 100-compatible Standard Mail; 5-digit bundles
are now optional for 10-16 pieces and required only at 17 pieces. If
mailers have comparative preparation data from processing a given file
using both 10-piece and 17-piece minimums, they are asked to provide it
to Cheryl Beller (<cbeller@email.usps.com>). Also, Anita Pursley will
coordinate information gathering on the extent to which the option is
being utilized across the industry. Where possible, this effort will
also gather information on the extent to which customers place limits on
bundle size other than a 20-pound weight maximum (e.g. maximum height of
3").

Standard Mail parcels are the target of a second non-PRC proposal. In
response to customer suggestions, the Postal Service is considering a
Customer Support Ruling that would allow DDU entry of Standard parcels
at DBMC or DSCF rates (creating a DDU rate would require PRC action).
For the DBMC rate, there will be no minimum volume requirement. To
qualify for the DSCF rate, mailers must document via a manifest that the
Standard parcels for that DDU (5-digit/scheme) meet the required
10-pound minimum. By allowing Parcel Select and Standard parcels to be
merged for DDU entry, this option should improve service consistency for
customers who use Standard for parcels under a pound and Parcel Select
for heavier parcels. It should also generate some savings for the Postal
Service.

There are two small PRC cases related to Product Redesign. Already well
along is the proposal to provide additional incentives for the
co-palletization of Periodicals that would otherwise be prepared in
sacks and entered at origin; settlement discussions on this case have
been going quite well. In the final stages of preparation is a Parcel
Select Return Service case; this service would be open not only to
parcels originally delivered via Parcel Select but to parcels delivered
via other classes of mail or by competitors.

Several proposals are candidates for inclusion in the omnibus case, such
as a simplified preparation option for Standard Mail (aimed at
current/new customers with small targeted mailings (basic and 3/5 under
current rules); an adjustment in bundle minimums (e.g., increasing the
minimum at which 5-digit bundles are permitted from the current 10
pieces); shape-based First-Class Mail rates (providing incentives for
light-weight flats to convert to letters); and incentives for additional
work-sharing for Standard parcels.

If the Civil Service Retirement System (CSRS) legislation passes, there
would be opportunities to pursue Redesign ideas outside the constraints
of an omnibus case. However, until that legislation is passed, work on
the omnibus case will continue. Mr. Lubenow added that, if the
legislation fails, Move Update and other Mailing Industry Task Force
address quality recommendations would be candidates for inclusion in the
omnibus rate case.

[Click here to view the
presentation](../../../../../../../../mtac1102/proddesign.ppt)

## Adjournment 

## 

## The meeting was adjourned at 11:50 a.m.