[Federal Register Volume 76, Number 62 (Thursday, March 31, 2011)]
[Rules and Regulations]
[Pages 17787-17788]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-7403]


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POSTAL SERVICE

39 CFR Part 111


Market Dominant Negotiated Service Agreement (NSA) for First-
Class Mail and Standard Mail

AGENCY: Postal Service<SUP>TM</SUP>.

ACTION: Final rule.

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SUMMARY: The Postal Service will revise the Mailing Standards of the 
United States Postal Service, Domestic Mail Manual (DMM[supreg]) 709.1, 
to establish a new Negotiated Service Agreement (NSA) Market Dominant 
product for First-Class Mail[supreg] and Standard Mail[supreg] combined 
letter revenues.

DATES: Effective June 6, 2011.

FOR FURTHER INFORMATION CONTACT: Gregory Dawson at 202-268-7446, Steve 
Monteith at 202-268-6983, or Yvonne Gifford at 202-268-8082.

SUPPLEMENTARY INFORMATION: This new NSA for First-Class Mail and 
Standard Mail is based on the combined total revenue of First-Class 
Mail automation letters, Standard Mail automation letters, and Standard 
Mail carrier route barcoded automation-compatible letters.

Background

    The 3-year agreement is designed to maintain and grow the total 
contribution the Postal Service receives from First-Class Mail and 
Standard Mail and to provide an incentive for net contribution growth 
beyond that. The agreement has five main components: A revenue 
threshold using a participant-specific baseline, a revenue threshold 
adjustment, a postage commitment, a rebate on First-Class Mail, and a 
rebate on Standard Mail.

Revenue Threshold

    The revenue threshold is based on the amount of total postage paid 
for First-Class Mail automation letters, Standard Mail automation 
letters, and Standard Mail carrier route barcoded automation-compatible 
letters. The baseline for the revenue threshold is the total postage 
for these categories over the previous one-year period. The threshold 
is calculated at a negotiated percentage above the baseline for each 
year during the duration of the agreement.

Revenue Threshold Adjustment

    The revenue threshold will be adjusted upward by a negotiated 
amount for every dollar decline in First-Class Mail postage. To qualify 
for rebates under this adjustment, a determined revenue amount of 
Standard Mail must be mailed to offset each dollar decline in postage 
from First-Class Mail.

Postage Commitment

    The agreement contains a postage commitment, equal to the adjusted 
revenue threshold or any subsequent yearly adjusted threshold. If the 
amount of total postage from eligible mail in the first year of the 
contract is less than the adjusted threshold, a penalty is assessed for 
the difference between the adjusted revenue threshold and the actual 
total postage paid for contract year one. Subsequent year penalties for 
failing to meet the adjusted revenue threshold are negotiated by the 
parties prior to the end of the current contract year.

Rebates

    If the mailer holding the agreement meets or exceeds the adjusted 
postage thresholds in any given year of the contract, the mailer will 
earn a rebate on the qualifying First-Class Mail and Standard Mail 
postage. For First-Class Mail, the rebate will be equal to a negotiated 
percent of the increase in postage as a result of a subsequent 
cumulative price increase (relative to First-Class Mail prices in 
existence at the initiation of the agreement) for all qualifying 
pieces. For Standard Mail, the rebate will be equal to a negotiated 
percent of the increase in postage as a result of a subsequent 
cumulative price increase (relative to Standard Mail prices in 
existence at the initiation of the agreement) for all qualifying 
pieces.
    The NSA expires three years from the effective date. Either party 
can terminate the agreement, without penalty, for convenience, in the 
first nine months of any contract year provided the terminating party 
gives 90 days written notice prior to the planned termination date to 
the other party.
    In accordance with the Postal Accountability and Enhancement Act, 
on January 14, 2011, the Postal Service filed a Notice with the Postal 
Regulatory Commission (PRC) regarding the Market Dominant Negotiated 
Service Agreement (NSA) for First-Class Mail and Standard Mail and it 
was approved on March 15, 2011.
    The Postal Service adopts the following changes to Mailing 
Standards of the United States Postal Service, Domestic Mail Manual 
(DMM), incorporated by reference in the Code of Federal Regulations. 
See 39 CFR 111.1.

List of Subjects in 39 CFR Part 111

    Administrative practice and procedure, Postal Service.

    Accordingly, 39 CFR Part 111 is amended as follows:

PART 111--[AMENDED]

0
1. The authority citation for 39 CFR Part 111 continues to read as 
follows:

    Authority: 5 U.S.C. 552(a); 13 U.S.C. 301-307; 18 U.S.C. 1692-
1737; 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001-3011, 3201-3219, 
3403-3406, 3621, 3622, 3626, 3632, 3633, and 5001.


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2. Revise the following sections of Mailing Standards of the United 
States Postal Service, Domestic Mail Manual (DMM) as follows:

Mailing Standards of the United States Postal Service, Domestic Mail 
Manual (DMM)

* * * * *

700 Special Standards

* * * * *
    [Rename the title of section 709 as follows:]

709 Negotiated Service Agreements and Experimental and Temporary 
Classifications

* * * * *
    [Add new 1.4 as follows:]

1.4 Market Dominant First-Class Mail and Standard Mail Letters NSAs

1.4.1 Definition and Purpose

    The First-Class Mail and Standard Mail NSA is based on the combined 
total revenue of First-Class Mail automation letters, Standard Mail 
automation letters, and Standard Mail carrier route automation letters, 
and provides an incentive to encourage the growth of First-Class Mail. 
A baseline is determined from the revenue generated from First-Class 
Mail automation letters, Standard Mail automation letters, and Standard 
Mail carrier route barcoded automation-compatible letters that are 
mailed as and eligible for full-service Intelligent Mail prices 
(705.23) during a prior specified 12-month period of time. It includes 
a postage threshold that is

[[Page 17788]]

adjusted from the baseline to qualify for a rebate. If the adjusted 
revenue threshold is met, a rebate is generated on a percentage of the 
difference of an increase in postage as a result of a subsequent 
cumulative First-Class Mail and Standard Mail price increase related to 
the prices in existence at the time of the agreement. If the adjusted 
revenue threshold is not met, the NSA holder will pay a penalty.

1.4.2 Candidate Factors and Requirements

    Potential participants must be IMb full-service customers with 
substantial, but declining First-Class Mail volumes and significant 
volumes of Standard Mail. Candidates must also meet the standards in 
1.1 through 1.3 to qualify. The basic agreement comprises five 
components:
    a. Revenue threshold: Is based on the amount of total combined 
postage paid for First-Class Mail automation letters, Standard Mail 
automation letters, and Standard Mail carrier route barcoded 
automation-compatible letters. The baseline for the revenue threshold 
is the total postage for these categories over the previous one-year 
period. The threshold is calculated at a negotiated percentage above 
the baseline for each year during the duration of the agreement.
    b. Revenue threshold adjustment: Will be adjusted upward by a 
negotiated amount for every dollar decline in First-Class Mail postage. 
To qualify for rebates under this adjustment, a pre-determined revenue 
amount of Standard Mail must be mailed to offset each dollar decline in 
postage from First-Class Mail.
    c. Postage commitment with penalty: The postage commitment is an 
amount equal to the adjusted revenue threshold. If the amount of total 
postage from eligible mail in the first year of the contract is less 
than the adjusted revenue threshold, a negotiated percentage penalty in 
the amount of the difference between the adjusted revenue threshold and 
the actual total postage paid for contract year one must be paid. 
Subsequent year penalties for failing to meet the adjusted revenue 
threshold are negotiated by the parties prior to the end of the current 
contract year.
    d. Rebate on First-Class Mail: If the mailer holding the agreement 
exceeds the adjusted revenue thresholds in any given year of the 
contract, it will earn rebates on its qualifying First-Class Mail 
postage. The rebate will be equal to a negotiated percent of the 
increase in postage as a result of a subsequent cumulative price 
increase (relative to First-Class Mail prices in existence at the 
initiation of the agreement) for all qualifying pieces.
    e. Rebate on Standard Mail: If the mailer holding the agreement 
exceeds the adjusted revenue thresholds in any given year of the 
contract, it will earn rebates on its qualifying Standard Mail postage. 
The rebate will be equal to a negotiated percent of the increase in 
postage as a result of a subsequent cumulative price increase (relative 
to Standard Mail prices in existence at the initiation of the 
agreement) for all qualifying pieces.

1.4.3 General Requirements

    Any proposed First-Class Mail and Standard Mail NSA under this 
classification must also contain, at a minimum, the following general 
candidate requirements and conditions:
    a. The NSA expires three years from the effective date. Either 
party can terminate the agreement, without penalty, for convenience, in 
the first nine months of any contract year provided the terminating 
party gives 90 days written notice prior to the planned termination 
date to the other party.
    b. The NSA will contain a merger and acquisition clause, which 
adjusts the threshold to account for increased mailing activity (or 
decreased, in the case of a sale or closure).

1.4.4 Initial Proposal

    The proposal must explain how the candidate meets the requirements 
in 1.4.2 and also must meet the following conditions:
    a. The candidate must submit a written proposal that includes 
appropriate supporting documentation to the USPS Manager of 
Correspondence & Transactions (see 608.8.0 for address).
    b. The proposal must be initiated by the mailer and include a 
summary of the information responding to the applicable candidate 
features and general requirements described in 1.4.3.
    c. A nondisclosure agreement must be signed before any substantive 
discussion of the proposal begins.
* * * * *
    We will publish an appropriate amendment to 39 CFR Part 111 to 
reflect these changes.

Neva R. Watson,
Attorney, Legislative.
[FR Doc. 2011-7403 Filed 3-30-11; 8:45 am]
BILLING CODE 7710-12-P