[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 ServiceTM.
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.
0
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