[Federal Register Volume 76, Number 220 (Tuesday, November 15, 2011)]
[Rules and Regulations]
[Pages 70653-70656]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-29391]


=======================================================================
-----------------------------------------------------------------------

POSTAL REGULATORY COMMISSION

39 CFR Part 3055

[Docket No. RM2011-14; Order No. 947]


Performance Measurement

AGENCY: Postal Regulatory Commission.

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: The Commission is adopting a rule addressing reporting 
requirements for the measurement of the level of service the Postal 
Service provides in connection with Stamp Fulfillment Services 
following consideration of comments filed in response to a proposed 
rule. No commenter opposed the proposed rule. The final rule is 
therefore adopted as proposed. Adoption of this rule will foster 
greater transparency and accountability.

DATES: Effective date: December 15, 2011.

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

SUPPLEMENTARY INFORMATION:
    Regulatory History: 76 FR 55619 (September 8, 2011).

Table of Contents

I. Introduction
II. Procedural History
III. Background of Postal Service Proposals
IV. Service Performance Measurement Reporting
V. Service Performance Measurement Reporting Rules
VI. Review of Comments
VII. Final Rule
VIII. Ordering Paragraphs

I. Introduction

    This rulemaking is part of the series of rulemakings initiated by 
the Postal Regulatory Commission (Commission) to fulfill its 
responsibilities under the Postal Accountability and Enhancement Act 
(PAEA), Public Law 109-435, 120 Stat. 3198 (2006). The final rules 
described herein, which establish reporting requirements for the 
measurements of level of service afforded by the Postal Service in

[[Page 70654]]

connection with Stamp Fulfillment Services (SFS), are adopted as 
proposed. The reporting of level of service is required by 39 U.S.C. 
3652(a)(2)(B)(i) as part of the Postal Service's annual report to the 
Commission and supporting documentation. This is a part of the 
Commission's implementation of a modern system of rate regulation for 
market dominant products to ensure service is not impaired as a result 
of the greater flexibility provided to the Postal Service under the 
PAEA in light of the price cap requirements. See 39 U.S.C. 3622 and 
3651.

II. Procedural History

    An SFS fee is charged for order processing and handling stamp and 
product orders received by mail, phone, fax, or Internet at the Postal 
Service's Stamp Fulfillment Services center in Kansas City, Missouri. 
Orders can include stamps, stamped cards, envelopes, stationery, and 
other philatelic items.
    On July 13, 2010, the Commission added SFS to the market dominant 
product list pursuant to a Postal Service request.\1\ On June 16, 2011, 
the Commission granted a Postal Service request for a temporary waiver 
from reporting service performance for SFS until the filing date for 
the 2011 Annual Compliance Report. The Commission further asked the 
Postal Service to either file a request for a semi-permanent exception 
from reporting or begin the consultation process for establishing 
service standards (and measurement systems) prior to August 1, 2011.\2\
---------------------------------------------------------------------------

    \1\ Docket No. MC2009-19, Order No. 487, Order Accepting Product 
Descriptions and Approving Addition of Stamp Fulfillment Services to 
the Mail Classification Schedule Product Lists, July 13, 2010.
    \2\ Docket Nos. RM2011-1, RM2011-4 and RM2011-7, Order No. 745, 
Order Concerning Temporary Waivers and Semi-Permanent Exceptions 
from Periodic Reporting of Service Performance Measurement, June 16, 
2011.
---------------------------------------------------------------------------

    By letter dated July 29, 2011, the Postal Service informed the 
Commission of its intent to institute an internal measurement system 
for SFS and asked for Commission comment.\3\ The Postal Service 
proposed service standards, measurement methodologies, and reporting 
requirements. The Postal Service indicated that it would formalize its 
proposed service standards through a Federal Register notice.
---------------------------------------------------------------------------

    \3\ Letter from Kevin A. Calamoneri, Managing Counsel Corporate 
& Postal Business Law, United States Postal Service to Shoshana M. 
Grove, Secretary, Postal Regulatory Commission, July 29, 2011.
---------------------------------------------------------------------------

    On August 25, 2011, the Commission responded to the Postal Service 
request for comment.\4\ The Commission concurred with the measurement 
approach that the Postal Service proposed and indicated that the 
Commission would initiate a rulemaking to make the Commission's 
reporting rules consistent with the Postal Service's reporting 
proposals.
---------------------------------------------------------------------------

    \4\ Letter from Shoshana M. Grove, Secretary, Postal Regulatory 
Commission to Kevin A. Calamoneri, Managing Counsel Corporate & 
Postal Business Law, United States Postal Service, August 25, 2011.
---------------------------------------------------------------------------

    On September 1, 2011, the Commission initiated the instant 
proceeding to consider rules for periodic reporting SFS service 
performance measurements.\5\ The Public Representative and David B. 
Popkin (Popkin) commented on the proposed rules.\6\ The Postal Service 
filed reply comments.\7\
---------------------------------------------------------------------------

    \5\ Notice of Proposed Rulemaking on Periodic Reporting of 
Service Performance Measurements for Stamp Fulfillment Services, 
September 1, 2011 (Order No. 837).
    \6\ Public Representative's Comments in Response to Order No. 
837 (PR Comments); Comments/Motion of David B. Popkin, September 22, 
2011 (Popkin Comments); Additional Comments of David B. Popkin, 
October 4, 2011 (Popkin Additional Comments). In response to the 
Popkin Comments, the Postal Service filed a Response of United 
States Postal Service to Comments/Motion of David B. Popkin, 
September 28, 2011. The Postal Service attached the Kevin A. 
Calamoneri and Shoshana M. Grove letters cited in footnotes 3 and 4, 
respectively, a description of the Postal Service's proposed service 
performance measurement plan, and a copy of its proposed Federal 
Register notice for SFS.
    \7\ Reply Comments of United States Postal Service, October 12, 
2011 (Postal Service Reply Comments).
---------------------------------------------------------------------------

III. Background of Postal Service Proposals

A. Proposed Measurement System

    The Postal Service proposed to measure the time from SFS order 
entry to the time a SFS order is placed on a mail truck manifest for 
entry into the mailstream. The transit time once an order is entered 
into the mailstream to delivery is not included as part of the SFS 
measurement.
    A measurement starts when an order is entered into the National 
Customer Management System (NCMS). NCMS manages SFS inventory, general 
ledger, order history, and customer accounts.
    A measurement ends when the order is logically closed out in the 
Automated Fulfillment Equipment System (AFES).\8\ The AFES system 
interacts with NCMS and is used to fulfill orders.
---------------------------------------------------------------------------

    \8\ A logical closure is an indication that an order has been 
fulfilled, packaged, labeled, and placed on a manifest for pickup by 
a Postal Service truck before entering the mailstream.
---------------------------------------------------------------------------

B. Proposed Service Standards

    The Postal Service's proposed service standards vary depending upon 
how a customer's order was received.\9\ The Postal Service proposes the 
following three service standards:
---------------------------------------------------------------------------

    \9\ As previously stated, the Postal Service's proposed service 
standards are not the subject of this rulemaking and can best be 
addressed by interested persons through a response to the Postal 
Service's Federal Register notice on this subject matter.
---------------------------------------------------------------------------

 Internet Orders: Non-Philatelic/Non-Custom
    Less than or equal to 2 business days
 Business Level Orders
    Less than or equal to 5 business days
 Philatelic/Custom and all Other Order Sources
    Less than or equal to 10 business days

C. Proposed Service Goals

    For each of the three proposed service standards, the Postal 
Service proposes a service goal or target of achieving each service 
standard at least 90 percent of the time.

IV. Service Performance Measurement Reporting

    The Postal Service proposed to report the percentage of time that 
SFS meets or exceeds the applicable proposed service standard. The 
Postal Service also proposed to report service variances. Service 
variances will report the total percentage of orders fulfilled within 
the applicable service standard, plus the percentage that are fulfilled 
1, 2, or 3 days late. Reporting is to be disaggregated by how a 
customer's order was received. Percentage on time and service variance 
reporting are to be provided to the Commission both on a quarterly and 
on an annual basis.

V. Service Performance Measurement Reporting Rules

    The Commission proposed to modify 39 CFR 3055.65 to include a 
special reporting requirement for SFS. Section 3055.65 specifies the 
requirements for the periodic reporting (quarterly) of service 
performance achievements for special services, which includes SFS.\10\
---------------------------------------------------------------------------

    \10\ Note that section 3055.31(e) currently requires quarterly 
data to be aggregated to an annual level and reported to the 
Commission.
---------------------------------------------------------------------------

    The special reporting requirement specifies that the Postal Service 
will report (1) SFS on-time service performance (as a percentage 
rounded to one decimal place); and (2) SFS service variance (as a 
percentage rounded to one decimal place) for orders fulfilled within +1 
day, +2 days, and +3 days of their applicable service standard.
    Both items shall be disaggregated by customer order entry method. 
The Postal Service currently proposed three customer order entry 
methods: (1) Internet Orders: Non-Philatelic/Non-Custom; (2) Business 
Level Orders; and

[[Page 70655]]

(3) Philatelic/Custom and all Other Order Sources. By generically 
referring to the three proposed methods as ``customer order entry 
method,'' the Postal Service is provided flexibility to propose other 
methods to the Commission for future implementation without requiring a 
rule change.

VI. Review of Comments

    Three parties, the Public Representative, Popkin, and the Postal 
Service, provided comments in this docket. No party opposed adoption of 
the reporting rules as proposed. However, both the Public 
Representative and Popkin provided significant comments on the Postal 
Service's proposed measurement system and service standards.

A. Public Representative Comments

    The Public Representative questions whether the data reported will 
be meaningful based upon the Postal Service's selection of service 
standards. He submits that ``one purpose of service performance 
reporting is to make public service performance results that ultimately 
prompt further improvements in service by the Postal Service.'' PR 
Comments at 3. He contends that the Postal Service has selected service 
standards that are relatively easy to meet. Thus, he asserts there will 
be no impetus to improve the fulfillment of SFS orders.
    To develop meaningful service standards, the Public Representative 
suggests that the Postal Service be required to report, for the first 3 
years after implementation, the percentage of orders fulfilled for each 
business day of the 2-, 5-, and 10-day service standards. He argues 
that this would establish a service performance baseline for 
determining whether the reported results are meaningful. Id. at 3-4.
    The Public Representative further suggests that the Postal Service 
be required to define and describe the service standards for Internet 
Orders: (1) Non-Philatelic/Non-Custom; (2) Business Level Orders; and 
(3) Philatelic/Custom and all Other Order Sources so it is clear what 
is being measured. Id. at 4.

B. Popkin Comments

    Popkin, like the Public Representative, questions whether the data 
reported will be meaningful. Popkin Comments at 2. Based on his 
observations, Popkin contends that the 10 business day standard will be 
met virtually all the time, thus not providing any challenge to the 
Postal Service to improve service. Id.; Popkin Additional Comments at 
2-3. Popkin suggests that the Postal Service be required to provide 
data over the past few years to evaluate the 10-day standard. Popkin 
Comments at 2; Popkin Additional Comments at 2-3, 4-5.
    Popkin complains of the lack of opportunity to comment on the 
Postal Service's SFS service standards because the standards appear as 
a final rule in the Federal Register. He is also critical of the 
Commission for focusing on the reporting requirements instead of the 
Postal Service's service standards. Popkin Additional Comments at 1-2.
    During the comment period, Popkin submitted a Freedom of 
Information Act request directed to the Postal Service seeking 
information on SFS order fulfillments. Id. at 3. Popkin contends the 
information provided supports his allegation that orders are being 
processed in substantially less time than indicated by the service 
standards.
    Popkin notes that orders received during system downtime or 
catastrophic system failure, and pre-orders will be excluded from 
service standard reporting. He argues that these situations should not 
be excluded from reporting. Id. at 4-5.
    Popkin also argues that the reporting categories should be 
clarified and better defined. Id. at 5.

C. Postal Service Reply Comments

    The Postal Service's Reply Comments address the issues raised by 
the Public Representative and Popkin and conclude that no change is 
necessary to its proposed measurement system and service standards.
    The Postal Service states that it considered the questions raised 
by the Public Representative and Popkin while establishing a 
measurement system and service standards. Postal Service Reply Comments 
at 4. The Postal Service discusses the data it had available in making 
its decisions and the limitations of the data provided to Popkin. Id. 
at 4-5. It comments on its selection of reporting categories associated 
with its measurement system design. Id. at 5. It explains that customer 
expectations and volumes associated with the publication of a catalog 
and the holiday season play a role in establishing service standards. 
Id. at 5-6. Noting that Popkin's comments are based on his personal 
perception (one of 3 million orders received yearly), the Postal 
Service contends that it has to consider a variety of order scenarios 
when establishing service standards. Id. at 7-8.
    The Postal Service believes that pre-orders are properly excluded 
from measurement because the creation date for the order could be weeks 
before the product is allowed to ship. The Postal Service notes that an 
order containing a pre-ordered item is split into two orders, with the 
items that can be fulfilled processed immediately. Id. at 7.
    The Postal Service also contends that planned system downtimes and 
system failures are properly excluded from measurement. Id. The Postal 
Service describes system downtimes as audit periods or planned system 
upgrade periods. It states that during system downtimes customers are 
told to ``please expect longer timeframe for delivery.'' Id.
    The Postal Service does not believe it is necessary to report daily 
fulfillments as suggested by the Public Representative and Popkin for 
the purpose of evaluating the appropriateness of the selected service 
standards. Id. at 8-9. The Postal Service argues that this is asking 
the Commission to substitute its judgment for that of the Postal 
Service in an area that is within the realm of the Postal Service. The 
Postal Service acknowledges that the Commission has a range of 
regulatory tools at its disposal if there is reason to believe that the 
service standards are not meaningful.
    Finally, the Postal Service contends that it cannot provide further 
definitions regarding service standard categories because data is not 
fully available at this time. Id. at 9.

VII. Final Rule

    The Commission adopts the SFS service performance reporting 
requirements as proposed. The rules will be incorporated into the 
Commission's rules of practice and procedure by modifying the periodic 
reporting of service performance achievements for special services 
found in 39 CFR 3055.65.
    Both the Public Representative and Popkin believe the Postal 
Service's proposed service standards will be exceptionally easy to meet 
and provide little incentive for improvement in service. Both suggest 
temporarily reporting time to fulfillment on a daily basis to judge the 
appropriateness of the proposed standards.
    The Commission concurs that a purpose of service performance 
measurement is to drive improvement in service. However, costs that 
drive some improvement must be balanced with the value of results. To 
justify improvements in service, other factors also must be considered, 
such as customer needs and expectations, and the capabilities of the 
system to provide that service. The Postal Service indicates that it 
has considered these factors in formulating its initial

[[Page 70656]]

proposals. The Commission will not require reporting of time to 
fulfillment on a daily basis at this point. The Commission first would 
like to review the ability of the Postal Service to meet its service 
standards as proposed before suggesting any changes. A Commission 
review of this service could be initiated if future demonstration that 
customer needs or expectations are not being met. As noted by the 
Postal Service, if in the future the Commission does not believe SFS 
service performance reporting is providing meaningful data, the 
Commission has the authority to direct changes in measurement systems 
and standards.
    Popkin contends that orders received during system downtime or 
catastrophic system failure, and pre-orders should not be excluded from 
service standard reporting. The Commission currently is willing to 
accept excluding planned downtimes so long as customers are notified of 
these occurrences as indicated by the Postal Service. However, the 
Commission believes that system failures (unscheduled events) should be 
included in the reporting of service performance. Infrequent events can 
be explained within the data reports. Frequent events might indicate a 
systemic problem that requires immediate attention. The Commission 
recommends that the Postal Service revisit the decision to exclude 
system failures.
    The Postal Service states that pre-orders may be received well in 
advance of fulfillment. This creates a problem for determining when to 
start-the-clock on measurement. The Commission agrees that pre-orders 
create a start-the-clock issue and that it need not be addressed at 
this time.
    The Public Representative and Popkin contend that the reporting 
categories should be clarified and better defined. The Commission 
reminds the Postal Service that it must provide a description of what 
is being measured with each annual report to the Commission. See 39 CFR 
3055.2(e)(1). The Postal Service is directed to ensure that accurate 
descriptions of the reporting categories are provided at that time.

VIII. Ordering Paragraphs

    It is ordered:
    1. The Commission amends its rules of practice and procedure by 
modifying the periodic reporting of service performance achievements 
for special services found in 39 CFR 3055.65. The changes to 39 CFR 
3055.65 appear following the signature of this order.
    2. The Secretary shall arrange for publication of this order in the 
Federal Register.

List of Subjects in 39 CFR Part 3055

    Administrative practice and procedure; Postal service; Reporting 
and recordkeeping requirements.

    By the Commission.
Shoshana M. Grove,
Secretary.

    For the reasons discussed in the preamble, the Postal Regulatory 
Commission amends chapter III of title 39 of the Code of Federal 
Regulations as follows:

PART 3055--SERVICE PERFORMANCE AND CUSTOMER SATISFACTION REPORTING

0
1. The authority citation for part 3055 continues to read as follows:

    Authority: 39 U.S.C. 503, 3622(a), 3652(d) and (e), 3657(c).


0
2. In Sec.  3055.65, add paragraph (d) to read as follows:


Sec.  3055.65  Special Services.

* * * * *
    (d) Additional reporting for Stamp Fulfillment Service. For Stamp 
Fulfillment Service, report:
    (1) The on-time service performance (as a percentage rounded to one 
decimal place), disaggregated by customer order entry method; and
    (2) The service variance (as a percentage rounded to one decimal 
place) for orders fulfilled within +1 day, +2 days, and +3 days of 
their applicable service standard, disaggregated by customer order 
entry method.

[FR Doc. 2011-29391 Filed 11-14-11; 8:45 am]
BILLING CODE P