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POSTAL SERVICE

39 CFR Part 111


System Certification Program (SCP)

AGENCY: Postal Service.

ACTION: Notice of proposed program.

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SUMMARY: The U.S. Postal Service (USPS) published a notice of the general 
requirements for Stage II of the System Certification Program (SCP) in the 
Federal Register on April 6, 1992 (57 FR 11593-11595). After further 
consideration, the Postal Service is withdrawing that proposal and is 
publishing for public notice and comment this proposal for a revised SCP. 
Although the new proposal retains the general purposes and much of the 
content of the original proposal, this new proposal includes three major 
changes: (1) Elimination of distinct stages of certification; (2) extension 
of the basic principles of the former Stage II program to a full-plant 
concept; and (3) establishment of a system of points and administrative 
sanctions to evaluate a certified mailing system and to promote maintenance 
of a high level of quality in certified systems. In addition, with this notice
the Postal Service is soliciting recommendations for prioritizing initial
applications to the SCP should more applications be received than can be 
reasonably processed.

    The SCP is a quality assurance program designed to evaluate the ability of 
mailers to prepare high-quality mailings consistently and to enhance the 
ability of the Postal Service to verify and accept these mailings efficiently. 
Participation is voluntary and is open to all mailers whose systems meet the 
established program requirements, regardless of the method(s) of postage 
payment used. The program is designed to evaluate the quality and accuracy 
of a mailer's overall mailing operation, including the design of mailpieces; 
the quality of address information; presort and mail makeup; control of
loading and dispatch of mailings; postage calculation; and postage payment.
Evaluation procedures include analysis of mailer hardware
and software systems that are used to presort mailings and to calculate
postage payment, as well as other systems mailers employ in the production and
release of mailings and related documentation (e.g.,addressing systems, 
mailpiece design techniques, and production and distribution schedules). 
An integral element of the proposed requirements for certification is the 
Presort Accuracy Validation and Evaluation (PAVE) program (published in the 
Federal Register on August 24, 1994 (59 FR 43600-43602).

    Once the Postal Service is assured that a mailer's overall mailing system 
is capable of producing properly prepared mailings, maintaining the integrity 
of individual mailings until deposited at the appropriate entry point, and 
accurately calculating postage, the Postal Service plans to certify the 
mailer's operation. This certification will entail a written agreement between 
the Postal Service and the mailer to ensure that the overall mailing system 
is properly maintained. The Postal Service then plans to provide simplified 
acceptance procedures for all mailings produced from the mailer's system, 
expediting the induction of mailings into Postal Service mail processing and
transportation systems.

    After finalizing this program, the Postal Service intends to publish 
step-by-step procedures for the SCP in a customer requirements publication 
(Publication 421-A, A Mailer's Guide to the System Certification Program), 
which will be made available to customers upon request. Those wanting to 
review a draft of this publication as part of their review of this proposal 
may obtain a copy of Publication 421-A by writing to the address listed below 
or by contacting the individuals listed for further information. 

DATES: Comments must be received on or before January 30, 1995.

ADDRESSES: Written comments should be mailed or delivered to the 
           
                  MANAGER BUSINESS MAIL ACCEPTANCE 
                  475 L'ENFANT PLZ SW RM 8430
                  WASHINGTON DC  20260-6808

Copies of all written comments will be available for inspection and 
photocopying between 9 a.m. and 4 p.m., Monday through Friday, at the above 
address.

FOR FURTHER INFORMATION CONTACT: George T. Hurst, (202) 268-5232, or
Robert H. Carlson, (612) 681-2206.

SUPPLEMENTARY INFORMATION: The proposed features of the SCP are discussed 
below. For those familiar with the original (1992) proposal, the differences 
between the current and original proposals are noted.

Elimination of Stages

    Formerly, Stage I certification documented mailer ability to meet the 
standards for a special postage payment system. Stage II was envisioned as a 
means of evaluating and validating the quality of a mailer's overall mailing 
operation. Stage III was to be based on the use of automatic data processing 
(ADP) and electronic information exchange (EIE) systems. For the reasons 
discussed below, the Postal Service has decided to eliminate the distinct 
stages of certification.

    Under the current provisions of Domestic Mail Manual (DMM) P710, P720, 
and P730, special postage payment systems (Manifest Mailing System, Optional 
Procedure Mailing System, and Alternate Mailing Systems, respectively) approved 
after October 1, 1990, automatically certified the user at Stage I of the SCP. 
Systems approved before that date were later certified only if the Postal 
Service determined that they would qualify under the current standards.

    Since 1990, the Postal Service required mailers with previously approved 
special postage payment systems to meet the standards for Stage I in order to 
obtain renewal of their agreements. Because renewal of a postage payment system 
is required every 2 years, all participants in such systems are now expected to 
be in compliance with all Stage I standards. Accordingly, there is no longer a 
meaningful distinction between an approved special postage payment system and 
a Stage I certified system. In addition, the previously proposed program did 
not consider those mailers that did not have a postage payment system. The
current proposal makes the program available to all business mailers without
regard to a specific postage payment method.

    Also, by broadening the scope of the SCP to include the
mailer's full-plant operations, there is no longer a reason to distinguish a
separate Stage III for advanced ADP and EIE applications; these can be 
conveniently incorporated into the full-plant approach.

Full-Plant Certification

    As originally proposed, the SCP did not require all mailings produced by 
a Stage II certified mailer to meet every condition for a fully certified 
mailing. This incomplete arrangement could have required the Postal Service to 
adjust its verification procedures according to the production standards used 
for each mailing. Moreover, in these circumstances, the meaning of the 
designation Stage II certified mailer could have been unclear or misleading 
to clients of such firms providing mailing services.

    Accordingly, the Postal Service has decided to limit certification to only 
those mailers who can demonstrate that every mailing process used in their 
facilities will consistently produce mailings that meet or exceed all DMM and 
SCP standards.

    With few exceptions, the essential SCP requirements do not impose any 
higher mail preparation or postage payment standards on mailers than those 
contained in the DMM. Rather, the intent of the program is to certify that a 
mailer has implemented processes that, when operating properly, will 
consistently meet or exceed the DMM standards and that a mailer has developed 
quality assurance procedures to maintain the consistent and proper functioning 
of these processes. 

Required Certified System Elements

    The mailer's systems and quality assurance procedures will be evaluated to 
ensure that program standards are met throughout the mailer's plant in four 
core elements. These elements and the major requirements for each are set forth 
below.

Element 1: Mail Production Quality

    Under this element are the following requirements: 
    
    (a) All address lists owned and/or controlled by the
        mailer must be processed through Coding Accuracy 
        Support System (CASS)- certified address matching 
        software. In addition, all such lists must be
        processed through a Postal Service address correction 
        service. Both address matching and address correction 
        must be completed on such lists within 1 year from the 
        date of mailing, even if the lists are not used 
        to prepare mailings claimed at automation rates.

    (b) All equipment used to produce Postal Numeric
        Encoding Technique (POSTNET) barcodes must be Postal 
        Service certified. All DMM standards for barcode 
        readability must be met. All optical character readers used
        to apply barcodes must have a barcode verification mechanism 
        that is used during production. This verification mechanism 
        must validate barcode readability and validate the correction 
        digit applied to the barcode.

    (c) All mailpieces produced must bear complete and legible 
        addresses that meet or exceed the applicable DMM standards 
        for rate eligibility.

    (d) The mailer must have procedures that ensure all appropriate
        authorizations have been obtained and that all necessary 
        fees have been paid.

    (e) All mailings must conform to DMM standards for the class,
        processing category, and rates claimed. 
        
    (f) The mailer must have necessary equipment and personnel to
        ensure effective mail production.

    (g) Quality control procedures must be used to ensure that the
        system continuously meets each of the above requirements.

Element 2: Presort System Quality

    Under this element, applicable only to mailers who prepare presort 
mailings, are the following requirements:

    (a) All vendor-supplied presort software and hardware products 
        used for mailing categories for which PAVE certification is
        available must be PAVE-certified. 
        
    (b) All presort software used to prepare mailings must successfully
        process Postal Service presort test decks (in the categories
        available).

    (c) All mailings must be presorted and prepared to conform to all 
        applicable DMM standards. 
        
    (d) Presort documentation must be produced that meets all DMM 
        standards for rate eligibility. 
        
    (e) The mailer must have essential equipment and personnel to 
        maintain effective presort capability.

    (f) Quality control procedures must be used to maintain the
        accuracy of mail sortation.

Element 3: Postage Payment Quality

    Under this element are the following requirements:


    (a) The system must consistently and accurately calculate,
        document, and pay proper postage.

    (b) All requirements for any authorized special postage payment
        system(s) must be met, unless superseded by the provisions
        of the SCP agreement.

Element 4: Mail Presentation Quality

    Under this element, the system must provide acceptable controls on
staging, loading, and dispatching all mailings.

Optional Certified System Elements

    After successfully demonstrating compliance with the core program 
elements, mailers may seek additional recognition for excellence in either 
or both of the following two optional elements.

Element 5: Address Information Quality

    Under this element are the following requirements:

    (a) The system must significantly exceed all current addressing
        standards, including those incorporated into element 1, Mail
        Production Quality.

    (b) All address lists used (whether owned, controlled, or supplied)
        must be processed through CASS-certified address matching
        software, and the complete and standardized output from that 
        process must be used. In addition, all lists used must be 
        processed through a Postal Service address correction service. 
        Both address matching and address correction must be completed 
        on all lists used within 1 year from the date of mailing, even 
        if the lists are not used to prepare mailings claimed at 
        automation-based rates.

    (c) If a barcode applied to a mailpiece does not agree with the
        numeric ZIP Code in the address, the system must print the
        numeric representation of the correct barcode to the left 
        of the barcode.

Element 6: Mailpiece Quality Control (MPQC) Specialist Program

    Under this element, a mailer must institute quality control procedures 
for mailpiece design and subsequent in-production evaluation using MPQC 
specialists. To become an MPQC specialist, a required number of the mailer's 
employees must complete the Mailpiece Quality Control Training Program 
(Postal Service training program TD-34) and achieve a score of 90 percent or 
more on the final qualifying examination.

Points and Administrative Sanctions

    After a mailer is certified, the Postal Service intends to reduce its 
reliance on conventional mail verification procedures to determine that 
mailings by the certified mailer have been correctly prepared and that 
mailing statements are accurate. Instead of performing daily verifications of 
individual mailings, postal representatives will periodically perform 
scheduled and unannounced reviews of the certified mailer's production and 
quality control procedures, as well as completed mailings, to verify that 
system integrity is maintained. Under these circumstances, the Postal Service 
believes it is prudent to use a system of points and administrative sanctions 
to encourage certified mailers to maintain a high standard of quality in the 
absence of a daily on-site postal presence.

    During periodic reviews, postal specialists will
evaluate the system and will assess points for any system errors found. A
mailer who exceeds a specified number of points in a given period will be
decertified. In addition, if Postal Service reviews determine that postage 
or fees have not been fully paid, the deficient amount will be collected and 
financial administrative sanctions will be applied, as follows:

    (a) For underpayment of postage or nonpayment of a required fee,
        the mailer must pay an additional 10 percent of the amount
        underpaid or unpaid, in addition to that amount.

    (b) For nonpayment of postage (failure to submit a mailing
        statement) for an entire mailing or mailing segment, the
        mailer must pay an additional 25 percent of the total postage 
        due for the mailing or mailing segment, in addition to the 
        postage owed.

    (c) Refunds for overpayment of postage or fees will be reduced by
        10 percent of the amount of the refund. 

Prioritizing Initial Applications

    As noted previously, the Postal Service is soliciting recommendations for 
the fairest and most impartial method of prioritizing applications to the SCP 
should a large number of mailers choose to participate. Because the SCP is a 
unique, voluntary program, the number of initial applicants is unpredictable. 
If the Postal Service receives more applications than it can reasonably 
process, the Postal Service will need to prioritize the processing of those 
applications by some predetermined factors. Rather than using a first-come, 
first-served  approach, the Postal Service hopes to publish less arbitrary 
criteria as a  result of comments received.

    Although exempt from the notice and comment provisions of the 
Administrative Procedures Act (5 U.S.C. 553 (b) and (c)), regarding proposed 
rulemaking by 39 U.S.C. 410(a), the Postal Service invites public comments on 
the following proposed amendments to the Domestic Mail Manual (DMM), which is 
incorporated by reference in the Code of Federal Regulations. See 39 CFR part 
111.1.

List of Subjects in 39 CFR Part 111

    Postal Service.

PART 111--[AMENDED]

    1. The authority citation for 39 CFR part 111 continues to read as
       follows:

       Authority: 5 U.S.C. 552(a); 39 U.S.C. 101, 401, 403, 404, 3001-3011, 
       3201-3219, 3403-3406, 3621, 3626, 5001.

    2. Revise the Domestic Mail Manual as noted below:

       P700 Special Postage Payment Systems
       P710 Manifest Mailing System (MMS)

* * * * *

4.0 Authorization

    [Delete 4.4; renumber 4.5 through 4.10 as 4.4 through 4.9, respectively.]
* * * * *

P720 Optional Procedure (OP) Mailing System

* * * * *

2.0 Authorization

    [Delete 2.5; renumber 2.6 through 2.9 as 2.5 through 2.8, respectively.]
* * * * *

730 Alternate Mailing Systems (AMS)

* * * * *

2.0 Authorization

    [Delete 2.3; renumber 2.4 through 2.9 as 2.3 through 2.8, respectively.]
* * * * *
    [Add new P740 as follows:]

P740 System Certification Program

1.0 Description

    The System Certification Program (SCP) evaluates an overall mailing 
operation, instead of individual mailings, to measure its accuracy and 
reliability to produce high-quality mailings consistently. The SCP evaluates 
a mail production facility's operating procedures, including hardware and 
software systems, emphasizing quality control in the production of high-
quality mailings. The SCP is an alternative acceptance procedure that relies
on the mailer's internal quality controls instead of conventional USPS 
sampling, weight, and presort verification procedures.

2.0 System Elements

    The SCP is segmented into four core elements required to achieve
certification (2.0a through 2.0d) and two optional elements that establish 
higher levels of quality control (2.0e and 2.0f) as follows:

    a. Mail Production Quality. The mailer's ability to
       document and demonstrate that it has appropriate mail 
       production processes, quality control procedures, mail 
       production improvement plans, and address accuracy and barcode 
       quality procedures as verified by a thorough on-site review of 
       the mail production facility by USPS systems analysts.

    b. Presort System Quality. The accuracy of the hardware and software 
       systems used to presort mailings and of the computer-generated 
       documentation supporting rate qualification. 
       
    c. Postage Payment Quality. The mailer's demonstration that the process 
       used for calculating, documenting, and paying postage meets all 
       DMM standards, is consistently accurate, and is easily verifiable.

    d. Mail Presentation Quality. The validation of mailer procedures for 
       staging, loading, and containerization (tray, sack, pallet preparation).

    e. Address Information Quality. Processing of address information used on 
       all mailings generated from a facility through either a CASS- or 
       MASS-certified process; use of a USPS address correction service; and 
       compliance with additional barcode quality criteria.

    f. Mailpiece Quality Control Training Program. The mailer's establishment 
       of quality control procedures for mailpiece design and subsequent 
       in-production evaluation by designating a required number of employees 
       within the mailer's facility to take and pass the Mailpiece Quality 
       Control Training Program. 

3.0 Authorization

3.1 Application

    The mailer must contact the local manager of the business mail entry unit 
and/or the local rates and classification service center (RCSC) serving the 
mailer's plant (see G042) for information about application procedures. The 
application and all supporting documentation, found in Publication 421-A, A 
Mailer's Guide to the System Certification Program, must be submitted to the
manager of business mail entry. If problems are identified during the
manager's review that preclude certification, the mailer is notified in
writing and, within 15 days, must respond or lose eligibility for further 
consideration in the program for 1 year. The response must detail a 
satisfactory explanation for the identified problems, a satisfactory plan for 
corrective action, or notification that corrective measures have been 
implemented.

3.2 On-Site Review Team

    A team of USPS personnel conducts an on-site review at the mailer's 
facility. If problems are identified that preclude certification, the mailer 
is notified in writing and within 15 days must respond to the findings. The 
response must detail a satisfactory solution and an implementation schedule 
as outlined in Publication 421-A. If either of these conditions is not met,
the application is denied and the mailer may not reapply for the SCP for
1 year after the date of the denial.

3.3 Ruling on Application

    After all reviews and on-site evaluations are performed, the RCSC manager 
serving the mailer's plant location rules on an application for the SCP. If 
the application is approved, the mailer and the RCSC manager sign an agreement 
containing the conditions and responsibilities of each party under the program. 
SCP details in Publication 421-A are incorporated into that agreement by 
reference. If the application is denied, the mailer is notified in writing of
the specific reasons for denial. The mailer may not reapply for the SCP for 1 
year after the date of denial.

3.4 Renewal

    The initial SCP agreement is valid for 1 year and may be renewed for up 
to 2 years, subject to USPS review and approval. 

3.5 Revocation

    The RCSC manager may revoke a mailer's SCP authorization if the mailer:

    a. Does not maintain the system as specified in the application.
    b. Does not properly perform reported quality control procedures.
    c. No longer meets the SCP criteria established by this standard
       and in the individual certification agreement.
    d. Exhibits critical and noncritical errors during USPS audits
       in excess of allowable deficiencies (see Publication 421-A).


4.0 Reviews, Administrative Sanctions, Decertification

4.1 Reviews

    Once certified, the mailer's operation is subject to a series of system 
and mail preparation reviews instead of conventional mail verification and 
acceptance procedures. 

4.2 Errors--Administrative Sanctions

    If mail makeup or preparation errors, detected during an SCP review, 
exceed the allowable tolerance (e.g., 5% for presort, 3% for value-added, 
1.5% for manifest) and cause postage deficiencies, the deficiency as well as 
10% of the deficiency is collected on that mailing. If the USPS finds that no 
payment of postage was made for a mailing, the full postage as well as 25% of 
the total postage is collected on that mailing. If the USPS finds that a 
required fee was not paid, the mailer must pay the fee plus an amount equal
to 10% of the fee. Mailers are required to correct the system deficiency
responsible for the error and notify the domiciled field specialist and the 
manager of business mail entry of the corrective action.

4.3 Errors--Decertification

    Errors found during SCP reviews are either critical errors (directly 
affecting accurate postage or fee payment) or noncritical errors 
(see Publication 421-A). Excessive errors can result in decertification. A 
mailer is notified of decertification in writing by the RCSC manager. 
Mailers may appeal notices of decertification under G020. A decertified 
mailer may not reapply for system certification before 1 year after the date 
of decertification.

* * * * *
    An appropriate amendment to 39 CFR 111.3 will be published if the proposal 
is adopted.

Stanley F. Mires,
Chief Counsel, Legislative.
[FR Doc. 94-29361 Filed 11-28-94; 8:45 am]