NOTE: COMMENTS REGARDING ANY FEDERAL REGISTER NOTICE MUST BE SENT TO THE ADDRESS INDICATED IN THE DOCUMENT. ANY COMMENTS ON THE RAPID INFORMATION BULLETIN BOARD SYSTEM (RIBBS) ABOUT ANY FEDERAL REGISTER NOTICES WILL NOT BE USED OR CONSIDERED IN THE COURSE OF ANY RULE MAKING. ======================================================================= ----------------------------------------------------------------------- POSTAL SERVICE 39 CFR Part 111 System Certification Program (SCP) AGENCY: Postal Service. ACTION: Notice of proposed program. ----------------------------------------------------------------------- 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 PLZ SW RM 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]