[Federal Register Volume 72, Number 31 (Thursday, February 15, 2007)]
[Notices]
[Pages 7483-7484]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E7-2624]


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POSTAL REGULATORY COMMISSION

[Docket No. MC2007-1; Order No. 3]


Negotiated Service Agreement

AGENCY: Postal Regulatory Commission.

ACTION: Notice and order on new baseline negotiated service agreement 
case.

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SUMMARY: This document establishes a docket for consideration of the 
Postal Service's request for approval of contract rates with Bank of 
America Corporation (Bank of America). It identifies key elements of 
the proposed agreement, which involves First-Class and Standard Mail 
letter rates, and addresses preliminary procedural matters.

DATES: Notices of intervention due March 5, 2007; prehearing 
conference: March 14, 2007 (10 a.m.).

ADDRESSES: Submit comments electronically via the Commission's Filing 
Online system at http://www.prc.gov.

FOR FURTHER INFORMATION CONTACT: Stephen L. Sharfman, General Counsel, 
202-789-6820 and [email protected].

Regulatory History

    Capital One Services, Inc. Negotiated Service Agreement, 67 FR 
61355 (September 30, 2002).
    Negotiated Service Agreement Final Rule, 69 FR 7574 (February 18, 
2004).

SUPPLEMENTARY INFORMATION: The Request of the United States Postal 
Service for a Recommended Decision on Classifications, Rates and Fees 
to Implement a Baseline Negotiated Service Agreement with Bank of 
America Corporation (Request) was filed with the Postal Regulatory 
Commission on February 7, 2007.\1\ The negotiated service agreement is 
proffered as a new baseline negotiated service agreement. The Request 
includes six attachments.\2\
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    \1\ The procedures of the former Postal Rate Commission apply to 
this Request under 39 U.S.C. 3622(f) as established by the Postal 
Accountability and Enhancement Act, Pub. L. 109-435, 120 Stat. 3198 
(2006). Section 3622(f) specifies, for the mail categories which are 
the subject of this Request, that: ``[p]roceedings initiated to 
consider a request for a recommended decision filed by the Postal 
Service during that 1-year [transition] period shall be completed in 
accordance with subchapter II of chapter 36 of this title and 
implementing regulations, as in effect before the date of enactment 
of this section.''
    \2\ Attachments A and B to the Request contain proposed changes 
to the Domestic Mail Classification Schedule and the associated rate 
schedules; Attachment C is a certification required by Commission 
rule 193(i) specifying that the cost statements and supporting data 
submitted by the Postal Service, which purport to reflect the books 
of the Postal Service, accurately set forth the results shown by 
such books; Attachment D is an index of Postal Service testimony; 
Attachment E is a compliance statement addressing satisfaction of 
various filing requirements; and Attachment F is a copy of the 
Negotiated Service Agreement.
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    The Postal Service has identified Bank of America Corporation (Bank 
of America), along with itself, as parties to the negotiated service 
agreement. This identification serves as notice of intervention by Bank 
of America. It also indicates that Bank of America shall be considered 
a co-proponent, procedurally and substantively, of the Postal Service's 
Request during the Commission's review of the negotiated service 
agreement. Rule 191(b) [39 CFR 3001.191b]. An appropriate Bank of 
America Corporation Notice of Appearance and Filing of Testimony as Co-
proponent, February 7, 2007, also has been filed.
    In support of the Request, the Postal Service has filed Direct 
Testimony of Ali Ayub on Behalf of United States Postal Service, 
February 7, 2007 (USPS-T-1). Bank of America has separately filed 
Direct Testimony of Richard D. Jones on Behalf of Bank of America 
Corporation, February 7, 2007 (BAC-T-1). The Postal Service states that 
it intends to rely upon the testimony submitted by Bank of America in 
presentation of its direct case in accordance with rule 192(b) [39 CFR 
3001.192b]. Request at 5. The Request has been assigned Docket No. 
MC2007-1.
    The Postal Service's Request, the accompanying testimonies of 
witnesses Ayub (USPS-T-1) and Jones (BAC-T-1), and other related 
material are available for inspection at the Commission's docket 
section during regular business hours. They also can be accessed 
electronically, via the Internet, on the Commission's Web site (http://www.prc.gov).

I. Bank of America Negotiated Service Agreement

    The Postal Service proposes to enter into a three-year negotiated 
service agreement with Bank of America. The

[[Page 7484]]

negotiated service agreement provides performance-based incentives to 
encourage Bank of America to undertake certain mailing activities to 
reduce Postal Service costs associated with processing Bank of 
America's letter-rated First-Class Mail and Standard Mail. The 
agreement also encompasses mail entered into the system by or on behalf 
of Bank of America subsidiaries or affiliates. The agreement is 
described as a pure cost-savings agreement based on pay for performance 
rather than compliance with specific process changes.
    The agreement requires multiple operational commitments from Bank 
of America: Implementing Four-State Barcode, OneCode ACS, CONFIRM, 
Seamless Acceptance, FAST and eDropship; barcoding of Courtesy and 
Business Reply Mail and Qualified Business Reply Mail; and waiver of 
physical return of certain First-Class Mail and Standard Mail in return 
for acceptance of electronic information.
    The Postal Service agrees to pay rate discounts from otherwise 
established rates for improvements in address quality and mail 
processing based on actual mail volumes and performance. First-Class 
Mail discounts will be available for improvements in mail processing, 
reductions in return rates, and reductions in forwarding rates. 
Standard Mail discounts will be available for improvements in mail 
processing, and reductions in undeliverable-as-addressed rates. The 
discounts, in the form of refunds, will be calculated quarterly and are 
based on a percentage of the resulting cost savings to the Postal 
Service. Specific per-piece discounts based on overall percentage 
incremental improvements are described in the Request, Attachment B.
    The Postal Service estimates it may benefit by $5.5 million, net of 
incentives, over the three-year life of the Negotiated Service 
Agreement. USPS-T-1 at 24. However, because the agreement is 
performance based, the actual value of the agreement can not be known 
with certainty until after the agreement has ended.

II. Commission Response

    Applicability of the rules for baseline negotiated service 
agreements. For administrative purposes, the Commission has docketed 
the instant filing as a request predicated on a baseline negotiated 
service agreement as described by rule 195 [39 CFR 3001.195].
    Representation of the general public. In conformance with former 
section 3624(a) of title 39, the Commission designates Shelley S. 
Dreifuss, director of the Commission's Office of the Consumer Advocate 
(OCA), to represent the interests of the general public in this 
proceeding. Pursuant to this designation, Ms. Dreifuss will direct the 
activities of Commission personnel assigned to assist her and, upon 
request, will supply their names for the record. Neither Ms. Dreifuss 
nor any of the assigned personnel will participate in or provide advice 
on any Commission decision in this proceeding.
    Intervention. Those wishing to be heard in this matter are directed 
to file a notice of intervention on or before March 5, 2007. The notice 
of intervention shall be filed using the Internet (Filing Online) at 
the Commission's Web site (http://www.prc.gov), unless a waiver is 
obtained for hardcopy filing. Rules 9(a) and 10(a) [39 CFR 3001.9a and 
10a]. Notices should indicate whether participation will be on a full 
or limited basis, see rules 20 and 20a [39 CFR 3001.20 and 20a], and 
shall indicate if a hearing on this Request is desired.
    Prehearing conference. A prehearing conference will be held March 
14, 2007, at 10 a.m. in the Commission's hearing room. Participants are 
encouraged to immediately begin discovery once a notice of intervention 
is filed to begin developing issues for consideration. Participants 
shall be prepared to address the scheduling of additional discovery and 
any issue(s) that justify scheduling a hearing at the prehearing 
conference. The Commission strongly urges participants to file 
supporting written argument in advance of the prehearing conference in 
regard to the identification of any issue(s) that would indicate the 
need to schedule a hearing, or any other scheduling request. The 
Commission intends to resolve such issues shortly after the prehearing 
conference.

Ordering Paragraphs

    It is ordered:
    1. The Commission establishes Docket No. MC2007-1 to consider the 
Postal Service Request referred to in the body of this order.
    2. The Commission will sit en banc in this proceeding.
    3. Shelley S. Dreifuss, director of the Commission's Office of the 
Consumer Advocate, is designated to represent the interests of the 
general public.
    4. The deadline for filing notices of intervention is March 5, 
2007.
    5. A prehearing conference will be held March 14, 2007, at 10 a.m. 
in the Commission's hearing room.
    6. The Secretary shall arrange for publication of this notice and 
order in the Federal Register.

    By the Commission.
Steven W. Williams,
Secretary.
[FR Doc. E7-2624 Filed 2-14-07; 8:45 am]
BILLING CODE 7710-FW-P