[Federal Register Volume 59, Number 228 (Tuesday, November 29, 1994)]
[Unknown Section]
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From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-29361]


[[Page Unknown]]

[Federal Register: November 29, 1994]


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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 Plaza SW, room 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]
BILLING CODE 7710-11-P