Mailers' Technical Advisory Committee
                              March 30, 1995

                                 MINUTES


Mr. Wargo welcomed MTAC members and introduced Mr. Larry Speakes, Senior Vice
President for Corporate Relations.

Remarks by Mr. Speakes:

Mr. Speakes, noting that he was relatively new to the Postal Service, said
that early on he had learned that "MTAC" stood for a "can do" organization
that effectively dealt with the $11.6 billion budget challenge. On behalf of
the Postmaster General and the Postal Service as a whole, he expressed
appreciation for the accomplishment.  He warned, however, that the threat
could reappear under a new guise and that continued vigilance should be part
of the MTAC-USPS program.

Mr. Speakes noted that the immense effort to defend against the threat had a
positive side effect -- a much increased awareness in Congress about the
needs and responsibilities of the Postal Service. Although it appears to be a
banner year with the highest service ratings ever, and increased revenues,
increased volumes, a profit of about $740 million projected, there remain
many challenges to deal with -- increased competition and resistance to USPS
innovations, and more and more demands from customers for lower rates and new
and improved service, much of which is difficult to provide under restraints
in the old Postal Reorganization Act.

Mr. Speakes said that following the November elections, the Postmaster General
had approached Congress in various ways to change the process and respond to
three needs: greater freedom internally to manage of Postal Service employees;
improved systems for pricing products, especially greater flexibility in
setting rates and introducing discounts in certain cases; and, greater
latitude to introduce new and innovative products and services, manage
investments, and negotiate agreements with employee groups.

One philosophical position that is virtually chiseled in stone, he said, is
the belief that universal service -- everyone, everywhere, every day -- is
the mission of the U. S. Postal Service.

In the days ahead, he said, MTAC members may be asked to contribute opinion
to Congress and the media, and he hoped that MTAC's intimate understanding of
postal issues and constraints would result in the most constructive responses
coming from MTAC members. Mr. Speakes expressed the opinion that the voice of
third parties, USPS customers, would be more powerful in effecting change
than any other source of information.

Asked about specifics for change, Mr. Speakes responded that the Postal
Service is working to avoid some of the errors made by others (such as the
Clinton health plan which was so huge it was unmanageable in debate, and the
recent rapid demise of the FAA privatization bill) by laying some groundwork
through briefings and conversations with folks on the Hill and elsewhere. The
purpose is to create a plan that is workable and that will not be vulnerable
to the "land mines" that special interests often plant to stop legislation.
Therefore, the details are not now available. The time line, he said, is also
uncertain, but it would begin with information hearings in Washington first
with the Postal Service, then with others, and perhaps some field hearings in
the summer. Legislative hearings will probably follow in the fall, he said.
These hearings would look at competition and what the Postal Service would
like to call the process of "commercialization".

Asked about a congressional staff comment about a "continuing subsidy", Mr.
Speakes said that it referred to retirement and health care payments covering
employees who worked most of their careers under the old Post Office
Department. He said the USPS has been assured that the "firewall" built by
Congress in the 1970's to separate the Post Office Department and the U.S.
Postal Service will hold and that the issue would not be an economic problem
in the future for postal customers.

Mr. Wargo introduced Mr. John Kelly, Vice President of Area Operations (New
York Metropolitan Area). 

Remarks by Mr. Kelly:

Mr. Kelly began by illustrating the exceptionally high density of the New
York City area, showing that it runs two to three times the density of most
other major cities, noting that delivery points are related to the high-rise
nature of the residential construction, mainly apartments. He said that three
conditions affect delivery. First, individuals don't use apartment numbers
for security reasons, for reasons of prestige, deserved or not, and in fear
of the legal ramifications of identifying one's apartment number when it is
either illegally sub-let (which is against rent control regs) or occupied by
more than one family. He said between 30% and 50% of addresses lack apartment
numbers.

Even when numbers are included, Mr. Kelly said, automated sorting fouls it up
by failing to recognize the commonly used alphanumeric designations -- 1B is
read 18, for example. Finally, when service measurements are being made, the
fact that the regular carrier is off more than 27% of the time makes proper
delivery more difficult.

Mr. Kelly described an approach to solve the problem which would basically
require names to be placed on the inside of each individual mailbox door
which, when the entire mailbox bank door is opened by the carrier, would
reveal all of the names of the addressees in that bank, even those who are
living two or more families to an apartment, and yet would still maintain the
full confidentiality of each addressee. Software would be developed to allow
the sorting system to accurately sort mail for each bank of mailboxes, using
the bank and box number rather than an apartment number. It requires, he
said, building a name file for every address which would be proprietary to
the Postal Service, available only for verification of a customer's list, but
not releasable as a mailing list to anyone.

Responding to a comment about subcontracting delivery to the building
superintendent, Mr. Kelly said that more than 900 buildings are handled that
way, but they tend to be the high rent buildings and tenants must sign
liability waivers. It would not, he said, be appropriate for most other
buildings. 

The program will be rolled out in May, Mr. Kelly said, and will take up to
six months to create. Concerning parcels, he said that the current method of
attempting delivery during regular delivery, which achieves perhaps 30%
delivery, 70% return for later customer pickup, is working poorly. Changing
delivery to a couple of evenings and weekends may improve that delivery rate. 
Of note was the fact that there was an expression of approval by the members
in the form of spontaneous applause after a number of the proposals.

Reclassification Update:

Mr. Hank Cleffi announced that the reclassification was filed on the previous
Friday, some 2,400 pages of description. There will be an implementation
advisory group to help roll out the Classification Reform Case, divided into
four sections -- letters, flats, periodicals and address quality issues. The
chairs of the four sub-groups were announced. Mr. Cleffi invited volunteers
to participate. He hoped that the groups would work for about nine months to
be able to contribute to the process well before the January 24th date on
which the Commission must act. Regular information reports of the groups
deliberations would be made available to MTAC members.

1995 Fall Mailing Season:

Mr. Bob Sheehan explained that the fall season plan would be based on the
successes of the year before, which were pretty much across the board,
including improved handling of the volume the Monday before Christmas. Now,
he said, there is a continuing "post-mortem" to look for even more
improvement -- transportation, delivery, processing in plants and in bulk
mail, work with customers, and on MTE efforts, work with AMC's and BMC's, and
with marketing.

As a result of the rate case, forecasts suggest an increase in priority mail,
Mr. Sheehan said, and some changes in mailing patterns, especially in terms
of the BMC side. There will be annexes again at the BMC's, and there have
been improvements in the mechanical capabilities at a number of BMC's.

The final part of the process, Mr. Sheehan said, was a replay of the research
done last year, crunching numbers, supplying information to the larger
customers, welcoming feedback, adding the variables that had changed (like
paper price increases). Then the field units will make plans for various
levels of effort. He closed his remarks by requesting the same kind of
estimate support that were provided by larger users the year before.

Asked about the National Control Center, Mr. Sheehan said that it was staffed
year 'round and was consistently providing rapid feedback on conditions that
were being used by operational areas as well as marketing and labor. It
creates, he said, a high visibility for the operational state from day to
day.

Finally, Mr. Sheehan noted that there was a Priority Mail Redesign Group
looking at the priority mail product and that some definite policy would be
forthcoming in the future.

Palletization:

Mr. Jim Cunningham stated that proposed pallet changes had been in progress
for over 18 months, starting with a 500-pound minimum that would increase
cross-dockable pallets, move more mail into non-labor intensive operations
and on to delivery units as quickly as possible.  Concerning trayed mail,
feedback on original proposals was immense and extremely varied and
consensus, even within the Postal Service, was difficult to achieve.

Nonetheless, Mr. Cunningham said, a near term Federal Register will contain a
proposal that there may be optional pallet makeup at 250 pounds, required at
500 pounds; optional makeup for letter trays at three levels, required at six
levels. Maximum pallet stack will be 84 inches, up from our proposed 77
nches mainly because of persuasive customer arguments. 

Discussing courtesy pallets, Mr. Cunningham explained that to achieve the
goal of increasing cross-dockable palletization, the concept of courtesy
pallets could not be continued, and a six-month phase-out is planned after
publication of the final rule. He assured the members that the Postal Service
understood the impact of this change on its customers, but that it was deemed
inappropriate to continue courtesy pallets.

Mr. Cunningham explained that the inclusion of sortation matrices, which he
described in some detail, was an important addition to the current proposals,
the linking of the pallet configurations with the reclassification. The
specifications were provided at the meeting and would be available with the
minutes.

On the physical preparation side, good feedback was received after the summer
Federal Register announcement -- suggestions on top caps, and triple stacked
pallets (which included some extensive testing by the engineering department
looking at every variable including shrinkwrapping, banding, multiple stack
combinations, top caps and so on). The bottom line was that perhaps a rigid
process was unnecessary if customers would, on their own, provide well
prepared pallets. The follow-up to that, he said, was a certification process
that would allow customers to deliver pallets without having to follow a
specific set of specifications, the DMM guidelines, as long as the pallets
delivered stood up under normal usage. 

There was a short discussion about some of the technical aspects of the
proposal, after which Mr. Cunningham reiterated that the Postal service felt
that it was time to come to closure on the proposal.

Performance Indicators:

Mr. Wargo discussed EX2C and EX3C performance indicators stating that after
the analysis of criteria, USPS management concluded that the measurement
system did not reflect a statistically valid sample and it did not measure a
class or subclass of mail. It depended on a particular customer's mailing
that could vary from time period to time period.

Mr. Wargo said that there were so many opinions, so many variables and
inconsistencies, that the whole process needs to be interrupted and revised. 
Therefore, a new service performance measurement system is being developed
that will be cost-effective and provide useful results. Asked about the
current exercise, Mr. Wargo said that participants will continue to provide
information to Price Waterhouse and will individually continue to receive
feedback, but the general results will not be published. There is particular
concern about competitors using published information in a negative,
offensive and often inaccurate way to demean Postal Service efforts. Mr.
Wargo expressed the opinion that performance data should be released only to
those who participate and should then be used internally for management
purposes. 

Closing Remarks:

Ms. Riegle announced that the four reclassification groups would convene
shortly after the meeting and that issues that crossed group interests would
be carefully reviewed to insure that duplication of effort was minimized. She
suggested that format changes for future meetings were being considered. The
meeting was then adjourned.
                      

                      MTAC First-Class Mail Subcommittee
                               March 29, 1995
                              Meeting Minutes

1.  Impact of Privatization GAO Study - GAO has been charged with reviewing
the Private Express Statutes as it relates to both the Postal Service and it
customers.  As a result, mailers will be asked for input to this study by the
GAO staff.  The specific issues to be studied include the impact elimination
of the statutes would have on the Postal Service, its customers and what
would happen if there was limited enforcement of the Private Express Statutes.
The objective is to assist Congress by providing them information needed for
an informed debate.

The five areas to be studied in detail include:

     -  The pros and cons of the Private Express Statutes
     -  Private Express Statute enforcement
     -  Impact on the USPS if the statutes are relaxed
     -  What reforms are needed
     -  How have other Industrialized Nations handle this
        issue.

The GAO will then evaluate enforcement; evaluate the private service now
being provided; Examine the content of the mail stream; determine what types
of mail diversion exist which will impact USPS revenues, costs and its work
force; and finally provide Congress with a final assessment of privatization.

GAO will look at both what goes into the mailbox and also who actually
controls the mailbox.

Mailers interested in providing input to this study are asked to contact
Terry Angelo of the GAO at (202) 268-4972.

2.  Update on Service Performance -  Quarter I data (September to December
1994) were presented and indicated a notable improvement. The results 
indicated the following:

     Service Standard    % on-time         % one Day Late      Tail of Mail

     Over Night             84.1                 9.2               6.7
     Two Day                75.5                14.6               9.9
     Three Day              80.2                11.4               8.4

For Quarter I of FY 1994, the national on-time performance was 83.5%
overnight, 76.5% two-day, and 79.2% three-day.

Customer Satisfaction Index indicated that for 85% of the responses for PQ I
of FY 1995, the customers rated service Excellent, Very Good or Good. This
compares to an 88% rating in the first quarter of FY 1994.

The "fair to poor" service rating for PQ I of FY 1995 was 15%, as compared to
12% for PQ I of FY 1994.

3.  Status of Accelerated Reply Mail (ARM) - Currently the Postal Service has
put together a task force for the ARM program which includes Operations,
Marketing and Sales. The objective is to bring the ARM service back to an
acceptable level. The work currently underway includes the review and updating
of current 5637's (Service agreements); and to determine if there will be any
changes in delivery commitments. The involvement of the National Account 
Managers and Account Representatives are to play a major role in the action
with the customers involved in the program. The goal of the USPS is to
monitor on time performance; improve communications at the field level; and 
to establish an area Remittance Mail coordinator who will oversee the ARM
program as part of the job assignment.

Additionally, USPS Operations is studying methods to improve trap rates and
plans to include the development of an SOP for every plant handling this
program.

The service is used by a limited number of mailers as of this date and most
of these are Remittance mailers. The service is based on Custom Designed
Express Mail service which the Task Force would like to see operating at the
95% service level at a minimum.

The USPS is going to look into the updating of the ARM service diskette which
was available to customers in the late 1980's.

4.  Remittance Mail Update - The USPS Field Intervention Team has begun work
on the review of actual service provided to Remittance Mail in general. It
was noted that ARM service represents only a small part of the total
Remittance Mail handled by the Postal Service.

The customer need have become the focal point of the program. An area contact
is now being developed for Remittance Mail and all items which effect service
for this mail are now under study. Central contacts for the program are now
being determined and should be finalized early in the week of April 3.

5.  Remittance Work Group Report and Discussion - Work on Remittance Mail
began in earnest in November of 1994. A small working group of Remittance
Mailers and representatives of the Postal Service began work on developing
the expectations and recommended Action Items which needed specific attention
to improve the service. The attached briefing provides the details of the
initial work done by the group. Each of the three major categories, 
Communications, Measurements and USPS Processing have become the focal points
for all future work.

During the discussion of the Measurements category, it was noted that ODIS
may be modified to provide some of the Diagnostic Measurements currently
missing from the Postal Service's measurements program. Currently ODIS does
not trap FIM mail separately. Also, mailers were encouraged to provide the
USPS with their own measurement information on service so that the Postal
Service could use it help solve problems.

In the category of USPS Processing, it was noted that caller service was
primarily a consistency issue. 

Finally it was noted that mailers should begin to spend more time in making
sure that the mailing pieces they develop meet the needs of the Postal
Service when it re-enters the mail stream as Remittance Mail. It was noted
that in most companies, the billing operation and the remittance operation
are under two different departments and these departments often do not
communicate as well as they should. If this could be improved internally,
some of the problems now facing the Postal Service in handling Remittance
Mail could be minimized.

Mury Salls
Chairman

                                   MTAC
                        SECOND-CLASS SUBCOMMITTEE
                             MARCH 29, 1995



Charles Pace, Chairman
John Dorsey, USPS Coordinator

Introduction

Charles Pace opened the meeting by welcoming all guests. He asked that agenda
items for the next MTAC second-class subcommittee meeting  June 14 and 15, be
submitted by April 28. It was also mentioned that Tony Dobush, postal 
transportation specialist who had served publishers well over the years and
who had retired last year, had reconsidered his options and is now back with
the Postal Service at the Great Lakes Area Office.

Second-Class Service Standards

Jim Cunningham, USPS Headquarters Operations Support, reviewed Charlie's
request of last Fall  that publishers submit service data for diagnostic
purposes.  Jim indicated that Jack Widener and Bill Anderson of Newsweek had
submitted their data and that it was also reviewed by the ten 2C service 
improvement coordinators (see attachment for names and telephone numbers).
Jim said that this exchange of information is encouraged to ensure that
expectations of publishers are, in fact, being met operationally by the 
Postal Service in view of the fact that First-Class Mail service standards
were adjusted a few years ago and second-class scheduling adjustments might
be appropriate in certain circumstances. Jim introduced Bruce Marshall, Rick
Fallica, and Chuck Gannon (first two from USPS Headquarters Operations
Support and the latter from USPS Headquarters Workforce Planning and Service
Management) who reviewed key factors which can contribute to service
improvement. Bruce reviewed examples (two facilities in Atlanta going to 
Birmingham) of sample operating plans  to establish realistic transportation 
windows and Rick covered the factors of clearance time, critical entry time
and transportation window (See attached  for samples given). Chuck offered
publishers a graphical Windows PC program to help in this process and said it
is available free of charge for now by calling the USPS National Customer
Service Center in Memphis at 1-800-331-5746 (ask for Susan Leibovich).

Dennis Farley of Fairchild Publications asked about EX2C in regard to its
usefulness. John Dorsey replied that it is useful to the participant but that
it does not go far enough in showing a publisher  and the Postal Service
where specifically to take corrective action. In reply to the question of
whether or not Red Tag survey information is useful both Jim and Chuck
indicated it definitely is of value and is to be encouraged. Jim Schemmel
raised the humorous yet serious fact that EX2C constraints are quite severe
in regard to the extent that participants can use results for meaningful
change and action.

Charlie Pace reported that thirteen individuals had signed up so far for 
plant visits which will provide excellent insight into what we are dealing
with and he encouraged others to  see him about going. He will be 
coordinating these visits through Pat McGee, Manager, National Accounts. He
requested that mailers hold onto the Service Standards chart (see attached)
published in the 1994 ZIP CODE Directory (Pub 65), since it was deleted from
the 1995 issue. Charles also wanted to know why information that is so widely
used by  customers was removed from the USPS publication.


Reclassification

John Dorsey provided a handout "Overview of Classification Reform" (copy
attached) which offers an excellent synopsis of the 3/24/95 filing. He
stressed that we are not dealing with non-profit, in-county, etc. in this
filing. Non-Profit will come later. Classification reform is revenue neutral.
In second-class a new highly efficient Publications Service subclass is
proposed which will enjoy a 14 percent decrease in rates. The "Regular 
Periodicals" subclass (note name change from "second-class")  will  have a
rate increase of about 17%.

Peter Moore of Peter Moore Associates then reviewed a model (see attached for
complete package) which helps publishers ascertain the potential impact of
reclassification depending upon their publications' unique characteristics
and their ability to make adjustments to optimize cost savings. He noted that
from the time the press release was provided on 3/13/95 to the actual filing
on 3/24/95 there was a slight change in two numbers and the attachments will
need to be revised to reflect them. Specifically the 14.6 cents proposed for
the A rate category for the Publications Service should be 14.7 cents and the
8.2 cents proposed for the C rate category for the Publications Service
should be 8.3 cents.



Second--Class Flats Automation Update

John Dorsey reviewed that the Postal Service is looking afresh at flats
automation. He reported that flats number 27 billion in total, that 2 billion
were barcoded in 1994 and that this represents a 240% increase over prior
year. He said that recently there appears to be a flattening trend and that
the Postal Service will be working to ensure buy-in with field operations
based on additional publisher input. He said the USPS will continue to rely
on customer barcoding of non-carrier route flats, that they will deploy FSM
1000s to increase mechanization for non machinable flats,  that they will set
barcode flat volume targets, and that they will continue working with MTAC to
generate optimum mutual benefit for both publishers and the Postal Service.



Policy, Requirements and Methods (PRM) Update

John Dorsey reported on the success this group has achieved in the
Second-Class Co-Palletization Documentation (simplification)  Postal
Bulletin DMM Revisions which appeared in the March 16, 1995 Postal Bulletin
(copy attached) and which will do much to help publishers. He (and Charles
Pace) gave special thanks to the Industry Chair of this group, Bill Strong
of Crain Communications, and to Ernie Collins, Mailing Standards who
spearheaded much of this effort with the PRM Group.




2-C Transfer Hubs

Russ Shores led a brief discussion on 2-C transfer hubs. He indicated that
there is tremendous benefit for certain publishers who cannot go to state
distribution centers (SDCs). However, the list of SDCs which shows which ones
are served by specific transfer hubs has not been updated and he requested
that this be provided by the Postal Service. He indicated that the Transfer
Hubs Directory had last been updated during 1985 when the Postal Service's 
Harry Stanley was still active in USPS Operations. 


Update on the USPS Development of Service Performance Indicators

John Wargo, USPS Vice President, Sales reported on the morning meeting which
covered the EX2C and EX3C programs. He said Norm Lorentz, Vice President,
Quality, has overall responsibility for quality and has been providing MTAC
with updates on the performance indicator study group. John Wargo said that
he, John Dorsey and others are on this group with responsibility to develop
quality processes to help achieve service performance objectives. It has been
decided that EX2C and EX3C do not provide the needed indicators to enable us
to take corrective action to improve service. The issue is that historical
information is "nice" to know but does not achieve what is needed to truly
serve the customer. John said the USPS must  ensure publishers are receiving
the quality service which was paid for and to be able to pinpoint where
problems arise and then be able to provide resolution. John Wargo agreed with
Time-Warner's Ted Russell that we are redefining "measuring service 
performance" using a corporate wide quality improvement approach. He also
agreed with McGraw-Hill's Tom Tully that the second-class focus groups can
play a key role in identifying service performance issues. John Wargo 
confirmed that the EXFC will be maintained. Conde Nast's Howard Schwartz
stated that he felt the EX2C gave important information to subscribers. 
Howard then asked if John Wargo was saying that the EX2C gave incorrect
information to which John stressed that that was not what he was saying. He
stated EX2C provides publishers information on a particular mailing but the
information was not statistically projectable for any class of mail.


Other Updates (Short Bytes)

Ernie Collins reported on the current effort to implement special bulk third-
class rates and to define what are the content requirements for periodic
publications as requested by Congress. He indicated the proposed rule was
published March 7 and includes title, issue number, formed of printed sheets,
and a minimum of 25% nonadvertising in each issue. The comment period ends
April 6. An outstanding issue is whether advertising content needs to be
substantially pertinent to the non-profit organization.

John Dorsey reported that the Publication Watch had completed its 60 day
test, that the Postal Service is encouraged by results analyzed to date, and
that next steps will be forthcoming.

Charles Pace stated the new supplement rules went into effect March 27. The
process started in mid-1993 with three meetings to develop proposed changes
to simplify rules that had caused mailers and acceptance personnel confusion. 
The easing of the standards should end most disputes over what constitutes an
"independent publication" or prohibited matter.

The Postal Service has shown increasing flexibility and a sensitivity to our
business needs with programs which allow us to keep our mail volume within
the Postal Service. Charles wanted the record to express our particular 
appreciation and thanks to Anita Bizzotto and her staff people, Alixe
Johnson, Jerry Lease and Scott Hamel for their efforts in this direction.



                     MTAC THIRD-CLASS SUBCOMMITTEE MEETING
                              March 29, 1995
                                 Summary
                              
Industry Chair: Dan Minnick
USPS Coordinator:  Jean Li Rogers

R94 created an anamoly that produced unforseen critical side effects on
mailers with continuity products. Walter Pfeifer of Newfield Publications
summarized the situation. Direct marketers of continuity products such as
books, cosmetics and collectables on a regular interval (i.e., 3,4,5, or 6 
weeks) not uncommonly receive 20-30 percent returns on their merchandise.
They have experienced substantial cost increases for returns of their
products weighing less than 16 ounces and which do not otherwise qualify by
content for fourth-class Bound Printed Matter or Special Fourth rates. The
increase has led to an anamoly where the 3C single Piece Rate equals the
First-Class Single Piece Rate for pieces weighing over 11 ounces without
getting the First-Class Rate services of expedited handling, free forwarding
and return. The charts in the attached handout"Third-Class Return Rates for
Heavyweight Pieces" shows the exponential cost increases per ounce for 3C
return parcels weighing 5 ounces or more. The increases are double-digit,
resulting in dramatic loss of business and revenue for mailers and the Postal
Service. 

Pfeifer proposes a"Business Merchandise Return Rate" concept to be
established for commercial merchandise shipments sent 3C and returned 3C
because they do not qualify for a special fourth-class subclass. This concept
could hopefully be implemented without going through a rate case process.

Anita Bizzotto responded for the USPS. Although MTAC does not discuss rates,
she is open to working with a task group on exploring options other than a
rate case solution. Dan Minnick will coordinate an industry task group
comprised of Walter Pfeifer, Gene Del Polito, Dick Funck, Jon Mulford, Bill
Hoyt, Ed Hendricks. and Brendan Sheehan. Other interested individuals should
contact Dan Minnick.

New rates and reclassification point to incrasing SCF entered volumes,
according to Joel Rosen of the USPS. Updating the SCF Drop-ship reservations
system, Rosen stated that there are more mailers applying for logons and more
use of the reservation system since the last MTAC meeting. Enhancements are
underway, including testing of a software program to accelerate response time
for mailers on the system and expansion of the security lockout time from 10
to 60 minutes. The new system also allows mailers to look at close-out date
information.

MTAC members suggested that multiple drop load mailers need more consistent
appointment windows at different SCFs. The USPS noted that local offices set
their own schedules, but HQ will examine the possibility of providing general
guidelines for all SCFs to improve consistency.

GAO is initiating a review of the Private Express Statutes. Terry Angelo of
the GAO announced that GAO was tasked by Congress to examine the effect of
postal reform and privatization on the futurre of the Postal Service and
mailers. The GAO is seeking informed debate on such issues as the pros and
cons of the postal monopoly, the enforceability of the Private Express
Statutes, the impact of the relaxation or repeal of the Statutes, alternate
delivery, comparison with other postal administrations and the effect of
electronics. Angelo also noted that the GAO defines their investigation as
not limited to"privatization," but broader opporutnities for "postal reform."
The target date for the final report is in October-November 1995. The GAO
will be contacting identified mailers and seek others who have opinions on
the issues. Interested parties should contact Terry Angelo at 202-268-4972.


Some mailers want to create a delivery unit pallet for multi-zip, but not the
entire 3-digit, delivery, Charley Howard of Harte-Hanks noted. Postal
managers in the Mid-Atlantic Area have told mailers who dropship that they
could improve penetration with a"one office, multi-zip pallet." The software
that enables this option could be based on the DMM. Howard suggests a change
in the pallet regulations.

MTAC members noted that such a proposal for palletization is not in the
reclassification effort.Dan Minnick requested the on-going pallet review
group to incorporate this suggestion.

How to authorize carrier-route mail in trays without local Office approval 
has been an item on the MTAC agenda. The issue is resolved. The USPS Postal
Bulletin  recently announced the requested changes.

Updates on ADVANCE, the management system designed to monitor, and, therefore
lead to improved delivery of 3C with requested in-home delivery dates, now
includes some relaxation of requirement and the formation of a planning board. 
Glen Cournoyer of the USPS  said the infrastructure is in place (i.e.
equipment, training, software) to send images of the mail piece
electronically to delivery units, Area Control Centers and the National
Customer Support Center (NCSC) in Memphis. Currently there are 4 mailers 
actively partcipating and the USPS is seeking more. Mailers with less than 1
million 3C flats or non-automation compatible letters are now eligible. 
Saturation mailings will be included as pilot testing. Cournoyer also
announced that the USPS is forming an ADVANCE Planning board to
systematically obtain customer input, feedback and evaluation and to provide
customer requirements for the USPS Systems Improvement Committee. Interested
mailers should contact the NCSC at 800-458-3181 or Glen Cournoyer at
202-268-3636.

Carrier Route minimum for desitnation entry mailings is an issue in-progress. 
Dan Minnick and the task group met with Legal Counsel of the USPS, Anita
Bizzotto and Cheryl Beller. There is optimism that the issue will be resolved
shortly.

This is also the case for seeking alternatives for USPS mailing facility
liability in the event lettershop customers default in postage payment. Lee
Epstein will report postal Legal Counsel response at the next MTAC meeting.

Lee Epstein also announced that surveys are being conducted by the AMMA and
MASA to determine mailers' needs for a new configuration of self-adhesive
stamps in rolls. MTAC members are encouraged to respond to the surveys to
provide the USPS with an accurate gauge of this innovation's potential
benefit.

Grayson Poats, the USPS Legal Counsel on Classification Law, announced that
rate intervenors may obtain the limited rate case package, as filed last
week, in the HQ lobby.



                                MTAC MINUTES
                           FOURTH-CLASS SUBCOMMITTEE
                               March 29, 1994
                              
                              
                              
Ed Meszaros, Industry Chair
Tom Higgins, USPS Coordinator

Ed Meszaros opened the meeting at 11:28 a.m.

Ed began the meeting by announcing the recent promotion of Sid Shulins to
Marketing Integration Manager and Pete Zeranski being named to the position
of Manager, Parcels. Ed then introduced Pete Zeranski.

Mr. Zeranski expressed his pleasure at being involved with parcels and gave a
strategic overview of his plans for parcels. Loren Smith, Senior Vice
President and Chief Marketing Officer, is driving a process involving priority
objectives:

            1.Core Offering - Must be provided to all customers.The
              Postal Service must ensure they remain available and
              profitable. The USPS must zero in on target niches to
              grow overall business.

            2.Information Technology - Explore products from Technology
              Applications to see if they can add value to parcel post.

            3.Strategic Alliances - Consolidators have been and need to
              be our partners. We must work together with these and
              other stakeholders.

            4.Improve quality

            5.Sales and Marketing - Must simplify rules through
              reclassification to achieve a more user friendly rate
              structure, revenue growth and advertise to specific
              niches.

A discussion then began which addressed how these objectives would be 
applied to the existing parcel services. Mr. Zeranski assured the group
that Reclassification was a top priority for him but he was not able to
enter into a detailed discussion at this time. He went on to say that his
responsibilities included first class and third class parcels as well as
fourth and that he was supportive of the FASTNET concept.


Ed then introduced Tom Higgins

Tom began his presentation by discussing the recent trends in volume and
revenue for fourth class. Both have declined, this is believed to be a
reaction to the January rate increase and is thought to be temporary. Tom
went on to update on the Shipper Paid Forwarding effort and asked for 
customers to apply to participate, to date no customer has applied. Next was
a discussion on expanding the use of a 1-800 number from perishable shippers
to all shippers. An alternative, including the recipients phone number in the
address block, was also addressed. The subcommittee endorsed researching the
potential of using the phone number in the address block. The final item
discussed by Tom was an update on the EX4C test just completed. The customers
who participated will be contacted in the next week or so and provided their
data and the aggregate data for the test. Tom also announced that John Wargo,
Vice President of Sales, would be addressing measurement systems at Thursday's
General Session.

Mr. Meszaros then introduced John Mulkay, BMC Operations.

John had three subjects to discuss, mechanized sortation of Non-Machinable
parcels, status of the BMC Annexes, and the BMC Capacity Study.

The Memphis BMC is testing a large parcel sorter. It can handle packages up
to 6 feet in length, packages which are by definition non-machinable. The
tests have shown promise so far. Only 7 of the 18 annexes are still being 
used but long term leases are still being held on the remainder and the can
be put to use within a few days should the need arise. The BMC Capacity Study
is not finished, currently being rewritten and "what if" analyzes are being
performed. This is to project what the optimum solution would be if a BMC
reached capacity.

Next Ed introduced Win Zimmerman who presented a proposal for carriers to
apply a security label to packages being left in an effort to prevent theft
or rifling. After some discussion Joe Ball of the FGFSA indicated he had
already begun a dialogue with USPS Delivery regarding an analysis of data
from the past holiday mailing season to determine if a delivery problem
existed.

Ed closed the meeting at 12:35 p.m.




                 Mailers' Technical Advisory Committee (MTAC)
         Engineering & Technology/Transportation Subcommittee Minutes
                          Wednesday, March 29, 1995

Joe Lubenow, Industry Chair
Bob Cundiff, USPS Coordinator

ABC Flats Focus Group Update - Dick Funck/Sherl Johnson

Dick Funck reported on results from polywrap testing conducted in February
with USPS and industry participants. There were some successes and some
failures, and some situations were encountered which called for modifications
to the flat sorter. Particularly, pieces tended to fly-over 4" high diverter
gates which open up to allow pieces to slide down into the appropriate bin.
This even occurs with pieces that are not polywrapped. Field offices and 
Engineering are working on modifications to the FSM 881 flat sorter which
will raise the gate height and hopefully eliminate the problem. Dick 
considers this a key issue as the USPS will experience an increased volume of
light weight flats, primarily 8 1/2" by 11" catalogs weighing up to 4 ounces,
due to increased paper costs.

Sherl Johnson provided a detailed report on the testing. Tests were conducted
over a 3-week period in February in Seattle, Denver, and Fort Lauderdale. For
the first time, there was a successful candidate, which unlike the others,
used a polypropylene wrap. About ten different size pieces were tested
ranging in weights from 1.8 oz to 13.6 oz., including slim jim, direct mail,
digest, and bound catalogs. Size, weight, thickness, type of polywrap and how
the wrap was applied were evaluated. How the wrap was applied seemed to have
a major effect. Prior to and after each run, temperature, static readings,
and external and internal humidity readings were documented, as polywrap
consistency varied with the location, affecting the machinability of the
mailpiece. The number of fly-overs, fall-outs, jams, double feeds, and
readability of the mailpieces were also documented. Most runs were
unsuccessful and had to be stopped immediately after starting. Sherl
reemphasized the adjustments that Dick discussed on the machine gates and
said that there may be other modifications needed to the equipment or the
mailpiece. Dick noted that the failures on the digest and regular size 
pieces were for different reasons. Digest size pieces may need a different
type of polywrap.

There will be a Federal Register notice, sometime in April, to announce the
next round of testing. That same notice will provide information on the type
of polypropylene that was successful in the tests at all three sites, with a
98% readability or higher. Procedures are being developed for future annual
test cycles and for certifying the manufacturer and use of the approved
polywrap. Prior to participating in the tests, manufacturers were required to
provide make-up information on the type of poly used to ensure that approved
poly would not have any particular production secrets and would meet internal
and external environmental concerns. The approved polywrap will be able to be
produced by all manufacturers as the ingredients are documented with industry
part numbers.

Dick concluded his report with feedback that the USPS had been presented with
a list of open issues concerning automation in January, which were discussed
in the ABC Core Group meeting, with Art Porwick as the USPS group leader. It
was felt that progress was being made. Updates will be provided in future
meetings.

ABC Parcel Focus Group Update - Ed Meszaros

Ed Meszaros, on behalf of Phil Parizino, discussed progress on the Swiss
Colony project to develop a polywrap reader, which will read the label under
the poly and apply an additional label on the parcel outer wrap, with a
verification process for matching the labels. This is being developed since
the USPS is currently unable to consistently read the label under the poly.

The USPS provided a barcode reader to 3M research centers to assist and
search for optical friendly materials. Five materials were identified as
likely candidates for barcode reading applications. Four were manufactured by
3M and one by Kodak. Materials were supplied to Accu-Sort for extensive
testing in a BMC like setup. Three of the materials, including one type of
polywrap, provided a better than 98% first read rate.  Bob Overholt, USPS,
has identified three mailers who will participate in testing at two BMCs
starting about July 1 and is looking for additional participants. Bob can be
reached on 703/280-7067. Mailers will need to include the destination ZIP
Code, package identification code, and the poly material type on each label. 
USPS will provide the poly to the mailer during the test. The cost of the
material is 6-10% higher than the poly used today.

Ed reported that modifications to conveyors at 16 BMCs have been completed
which permits dropship barcoded parcels to go directly to the secondary
conveyor. This improvement will be extended to the other BMCs as funding is
available. Each conveyor conversion costs approximately $800,000.

Ed also reported on Verbex Voice Systems which provides voice recognition
technology for circumventing keying in ZIP codes and other data. In testing
of both numeric and alphanumeric coding, keying proved to be faster than
voice recognition for alphanumeric data, since the user has to say Alpha
instead of A, etc. The benefit for voice recognition is in assisting USPS new
hires or part timers in casing operations or other separations.

ABC Containers Focus Group Update - Bob Lindsay

The primary concern was the upcoming Federal Register Notice on revised
pallet regulations. Regulations were first submitted for response in the
August, 1994 Federal Register and have been modified by USPS responses to
industry concerns. The container group felt that if the purpose of the new
regulations is to increase the use of pallets, decrease sacks, increase
cross-dock opportunities and pave the road to reclassification, the USPS had
not achieved its objective. Questions arose about banding similar multiple
three-digit pallets to a single destination. Will it be required for mailers
to band two or three pallets together, or is it an issue which could be
approached in other ways? It will apparently be proposed that pallets will be
sorted to ADCs, which could reduce drop shipping depending on how the ADCs
overlay the SCFs, and could cause additional residual mail. The regulations
also call for creating BMC pallets for 2C mail, but BMC pallets currently
require shrinkwrapped packages. If BMC pallets are required, does the USPS
and industry fully understand the implications of having to add equipment to
binding lines? Regulations will require mailers who use courtesy or
convenience pallets to stop within six months and switch to proper DMM
defined pallet makeup. Will top caps be required and who will supply them? A
recommendation to the ABC Core Group was to convene a group of postal/
industry representatives to resolve issues and decide whether to recommend
implementation of the "win-win" portions of the pallet regulations, ahead of
reclassification, and resolve the more difficult issues in that context.

PIEX Update - Clarence Banks

Clarence Banks reported that Rick Graff followed up with Gail Sonnenberg on
the issue of USPS sponsorship for PIEX. Rosemary Hamel was asked to review
PIEX and attempt to move the program forward. Concern was expressed that
there are a number of proposals in reclassification which will make mailers
choose the automation subclass to take advantage of the automated processing,
but the group felt that the USPS is not fully prepared for the transition
into automated and electronic mail and there is only a 10-month window while
the reclassification case is before the Postal Rate Commission. There appears
to no longer be a commitment to Transaction 2000, which was to bring several
systems under one umbrella. Industry is still committed to the concept and
will work with USPS to develop these automated processes.

Reclassification Issues/Automation - Joe Lubenow

Based on the March 13 USPS statement on reclassification statement and the
March 24 filing, Joe Lubenow said that the main automation issue arising from
reclassification is the expected transition of six billion pieces to
prebarcoded first-class, due to the increase in automation discounts and a
reduction in retail presort discounts, and the projected shift of 6.3 billion
pieces to prebarcoded Third-Class, since automation rates are lower than any
carrier route rates for letters. Letters can be mailed in the enhanced
carrier-route subclass, but will get rates based on flats, which are less
competitive. The carrier route barcoded offering in reclassification leaves
some open issues, such as which ZIP Codes will be eligible, which will be
discussed by joint USPS/industry task forces being established. Some options
for getting to 100% barcoded preparation will be available, including the
USPS Address Element Correction (AEC) program, which may be made available
through licensees. There will be also proprietary address element correction
systems, and mailers may send lists to local post offices. Gene Del Polito of
AMMA has called for consumers to be informed of the Delivery Point ZIP Code.

In preparing the USPS for the increase in automated mail, Bill Dowling has
ordered 102 FSM 1000 flat sorters, 700 image lift units for Advanced Facer
Cancellers, 42 Advanced Facer Cancellers, 38 MLOCR units, 145 Remote Computer
Readers, and will be ordering additional bar code sorters for letters.

Plastic Sack Update - Paul Seehaver/Joe Schick

Joe Schick addressed industry concerns which were: 

     1) a heavy slip factor making it difficult to stack sacks on a skid; 
     2) the draw string closure, which was recently modified; and 
     3) tag holders with a zip lock closure causing problems. These issues
        were creating a demand for increased labor. Plastic sacks will no
        longer be disposable, and instead are intended to be reusable. The
        USPS has made modifications and the new sacks are more acceptable to
        customers.

Paul Seehaver gave an overview of the plastic sack evolution starting about
five years ago. The first version cost about 53 cents due to production
process details including the label holder. In attempting to prevent a
projected sack shortage during the 1994 holiday mailing season, USPS
introduced a one-time use disposable sack at approximately 29 cents each. 
After experiencing problems with the draw strings and label holders,
modifications were made to make the bags easier to close and label holders
more secure. The current problem is that the label holders must be ordered
separately, but the holders are being stocked at the Indianapolis Hub and can
be shipped overnight if needed. Another modification was designed to reduce
the slippage problem. Cloth bags cost about $12 each with high reuse costs,
while the latest version of the plastic sack costs about 33 cents with reduced
reuse costs. The USPS plan is to reduce the need for sacks over time, which
increases the advantages of using low cost reusable plastic sacks.

FSM 1000 Flat Sorter - Ed Kuebert

The FSM 1000 appears to be able to process a wide range of flats based on six
months of testing in Albany. Ed Kuebert talked about the differences between
the FSM 1000 and the older FSM 881, which are documented on the attached
handout. The machine capacity in terms of flats per hour is essentially the
same, however, with a change in design of the induction belts, the throughput
is increased by one third with the FSM 1000. The difference in machinability
criteria is also shown on the enclosed handout. The FSM 1000 will be able to
handle tabloids, digest size, flimsy flats, polywrapped flats, and heavier
flats. The needed degree of flexibility of the mailpieces is still being
tested and results will be forthcoming. An initial procurement of 102
machines has been contracted from UNISYS with deployment between February
1996 and January 1997. There are approximately 120 sort destinations per
machine. Under current plans, the machines use manual keying and induction,
and will not be deployed with barcode readers, as the objective is to
eliminate the manual sorting. Barcode readers from the FSM 881 are being
tested on the FSM 1000 with limited success, as the barcode reader cannot
keep up with the faster pace of the FSM 1000. More high speed readers are
being tested and evaluated in the next three months. Additionally, with the
bend of the mailpiece in the FSM 1000 channels, barcodes are more difficult
to read.

Reply Card Scanning - Stuart Willoughby

Stuart Willoughby gave an overview of the Reply Card Scanning product concept
which will be the subject of an upcoming market research effort. This product
will tie in to the remote barcoding equipment being deployed in 145
originating remote barcoding facilities. After scanning at the originating
facility, reply card graphic images or ASCII data will be sent to an
Electronic Post Office (EPO), which was not available during the test phase. 
A mailer would then access the information from the nearest EPO. Testing was
done with Neodata, Fingerhut, and Rodale Press, and it was determined that a
12-digit form identification was needed to properly identify the mailer and
location. The images in the testing produced high quality output. Internal
tests for the EPO are planned to begin in mid-April. Customer testing will
begin in May and June with the original participants. Price Waterhouse will
be conducting market research with larger potential USPS customers within
the next couple of weeks to evaluate product features. Input on card
specification is needed in addition to input on price. Research should be
concluded by the end of June. If there is a go-ahead, after equipment is
purchased, the projected date for national implementation is mid-1996. The
plan is to only read the information on the back of the cards, but the USPS
is also looking at product applications for reading information on the
outside of envelopes. Existing technology does not yet allow the ability to
scan information on the inside of an envelope. That may be a future
enhancement to consider. 

A handout was made available on Remote Computer Readers, which will be more
fully discussed in the next meeting. The USPS has ordered 145 of these units,
which will reduce labor in the remote bar coding process. 



                     Addressing and ZIP+4 Subcommittee
                               March 1995

Peter Moore began the meeting by commenting that the majority of the agenda
items were influenced by the reclassification filing of earlier this month. 
He urged the members to become more familiar with the proposals, in particular
those with implications on address list processing, and to ensure that the
membership of their associations also received the information.           


Address Change Service

Rocky Matthews began by reviewing the impact on ACS participation and option
selection since the change in the cost of hard copy notifications. While he
reported no significant changes in either category, the results are 
summarized below.
                              
      Address Change Service (ACS) Participants Update:


            12/31/94   3/18/95  Increase   %Change
                                                  
First Class      166       188       +22      +13%
Second-Class   1,363     1,399       +36       +3%
Third-Class      903       979       +76       +8%
Fourth-Class      19        19        +0       +0%
                                                  
Total          2,451     2,585      +134       +6%



       Second Class ACS Notification Options Selected:


               Option                              Active    %

1: Electronic-ACS with Manual Follow-Up after 60      208   15%
   days

2: No ACS under 60 days with Electronic ACS            92    7%      
   after 60 days and No Follow-Up

3: Electronic-ACS with Manual Follow-Up after         479   34%
   120 days

4: Electronic-ACS with No Follow-Up                   508   36%

5: Electronic-ACS with Electronic Follow-Up            28    2%
   after 60 days

6: Electronic-ACS with Electronic Follow-Up            84    6%
   after 120 days
                                                            
Total:  Second-Class ACS Participants               1,399  100%
                                                   
                                                            
                                                            
One member questioned the capacity of the CFS/ACS technology. This referenced
the new "Shipper Paid Forwarding" process which charges back to the mailer
the postage associated with forwarding a parcel. ACS is the vehicle by which
the forwarding charges are captured. If the paid forwarding capability is
expanded to other classes, will the system be able to accommodate the
additional demands?

Jim Schemmel commented that in the last quarter, he had converted 125-130
titles to ACS. He did mention that he had experienced some response problems
when the Optional Endorsement line and the ACS keyline were separated by the
address block barcode. It was his experience that this particular format,
though perfectly acceptable and within the specifications of the program,did
not receive the proper treatment at CFS sites because operators miss seeing
the key line under the barcode.  Jim suggested that using a different format
may improve response rates and he wished to make the members aware of his
experience.


ABC Lettermail

Bob O Brien reported on the meeting of the ABC Lettermail committee. The
Address Element Correction (AEC) process is averaging about 1 million
records a month and the average match rate is nearly 60%. The "History File"
of accumulated matched records currently contains almost 6 million addresses.
Progress is being made towards releasing the application to the DSF licensees. 
These licensees are eligible because the DSF file is required for using the
AEC software. Licensee pricing of providing AEC processing will be market
driven.

Bob also talked about the address quality requirements of the new
reclassification filing. These requirements will effect all discounted rates
in some way. Verification of ZIP Code accuracy is necessary as studies have
revealed that an avenge 8% of ZIP Codes are incorrect. Carrier route codes
will need to be updated in a more timely manner. For barcoded rates, mailers
will need to reprocess their lists every 6 months. First class mailers will
need to systematically update their records when their customers relocate.

Bob also reported that the Line of Travel (LOT) product would be available in mid 1995.  This product is used to
place mail in roughly the carrier s walk sequence. It will be a separate
product from the ZIP+4 file but may ultimately be integrated into it. Use of
LOT can be combined with ZIP+4 processing so that coding and sequencing could
be accomplished in a single pass. A new method for evaluating mailer barcodes
is being tested, the Automated Barcode Evaluator (ABE) will be test to see if
the barcode on letter mail meets physical specifications and will do a
reverse address lookup. Members expressed interest in having the machine
available commercially so they could use it first. Members also questioned if
there would any "grace period" for mailers whose barcodes do not meet the
specifications when tested.

Optional Endorsement Right-Justification

Russ Shores brought up the March 2 Postal Bulletin notice concerning the
optional endorsement line. This notice limited the prohibition on any printing
to the right of the endorsement to that line and the 2 lines below it. Russ
asked for feedback from members on whether it is still a problem. He also
asked for clarification if this was restricted to alpha and numeric characters
and other symbols would be exempt. Members felt it was unclear what problem
the Postal Service was trying to solve. Peter agreed to get a representative
from the sponsoring department to address the issue in the next meeting. 

National Distribution Network Changes

The responsibility for managing the changes to the National Distribution
Network has moved to another office in the Postal Service. As a result, there
has been no significant progress on the issue. A report is expected at the
next meeting.

RIBBS

Susan Hawes reported on the status of the Rapid Information Bulletin Board
System (RIBBS). Since January, when subscriber fees were instituted there has
been a little reduction in the average calls per day from about 275 to about
230. The number of questions being posed has not diminished significantly and
the number of files being downloaded for off line use has remained constant. 
The number of registered user continues to grow, as does the number of paid
subscribers. Peter urged members to use this tool and asked them to actively
participate instead of "lurking" in the background.

Use of Commercial Services to Augment AEC

Susan also reported that the Postal Service is exploring the use of
proprietary information through the use of commercial name and address
matching services to enhance the performance of AEC. The testing has just
begun and analysis of the results is incomplete. She also announced that the
608 ZIP Code range will be activated in the Chicago service area on July 1,
1995.

Improvements in Z4Change

Doug Schmidt reported on changes to the Z4 Change product. The old product
was in a binary form and is now available in an ASCII format. The product
continues to be released monthly. The old style will be retained through the
July monthly product release and then will be discontinued. Doug indicated
that processing using Z4 Change is 3 to 5 times faster than regular
processing. 

Centralized Trust Accounting System

Rosemary Hamel described the Centralized Trust Accounting System (CTAS).
Under CTAS, mailers deposit mailing funds in a single trust account which can
be accessed by multiple mailing sites. When mail is presented, the local
office can draw upon the central account for payment of the postage for the
specific mailing. The existing local accounts are closed. Any mailer may have
multiple accounts to accommodate multiple permits, etc. Mailers can check
their centralized account balance using a PC, modem and simple communication
software. Mailers may also receive a report recording account activity by
site and permit number. Rosemary and her staff received lots of compliments
from the members on the execution of this program. One member questioned how
long it took to become active. Rosemary replied that is was usually dependent
on the mailers schedule, due to the widespread nature of the existing postal
networks. She urged that mailers who are interested provide a list of sites
they wish to mail from early in the process. The Postal Service can use that
information to be sure the site is on or will be attached to the national 
network.

Peter closed the meeting by urging the members to discuss with the members of
their associations the list processing implications of the reclassification
case.