Effective June 19, 2008, the Postal Operations Manual (POM) is updated to include new Part 227, Guidelines for the Purchase and Sale of Local Commemorative Envelopes. Part 227 provides postmasters and district managers guidelines on how to purchase and sell local commemorative envelopes to support local events. These guidelines include event criteria, postmaster and district responsibilities, administrative and financial procedures, and supplier responsibilities.
Postal Operations Manual (POM)
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2 Philately
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22 Retail Sales Policy
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[Add new 227 to read as follows:]
227 Guidelines for the Purchase and Sale of Local Commemorative Envelopes
This part provides guidelines for postmasters and district managers for the local purchase and sale of commemorative envelopes (covers/cachets). See Exhibit 227 for a Local Purchasing and Sale of Commemorative Envelopes Check-Off Sheet.
227.1 Event Criteria for Producing Commemorative Envelopes
Commemorative envelopes should only be considered for large-scale local events or historical events that have either a broad local appeal or importance. Use the guidelines presented in this part when creating commemorative envelopes in support of local events. Only requests to create commemorative envelopes in support of local events will be accepted.
227.2 Responsibilities for Producing Commemorative Envelopes
227.21 Postmaster Responsibilities
227.211 Request to Produce Commemorative Envelopes
At least 90 days prior to a local event or the required product sales date, postmasters must submit their request to produce commemorative envelopes to their district manager or designee. Postmasters should direct any exceptions to the 90-day advance notice policy to their district manager or designee.
227.212 Items to Include With Requests
Postmasters must justify to their district manager or designee through a cost benefit analysis the expected Return on Investment (ROI). With the exception of work hours, all associated expenses are charged as a negative to revenue; therefore, projected revenue must exceed expense. When submitting a request to the district manager, postmasters should include the following items:
a. A brief description of the local event including the dates, location, and expected number of attendees.
b. A cost benefit analysis with a breakdown of actual costs (including work hours) and revenue projections. The analysis should include costs associated with the event and product development including the following:
(1) Cost of the stamps: the face value of postage stamps included on the product.
(2) Stamp bursting and affixing costs.
(3) Design costs: costs associated with the design of the commemorative envelope.
(4) Licensing costs: costs associated with using design or images on a cachet.
(5) Envelope costs: costs of the actual envelope.
(6) Printing costs: costs associated with printing the cachet.
(7) Price breaks: savings associated with ordering specific quantities of cachets.
(8) Cancellation costs: costs associated with canceling the product, including work hours, postmark device, ink, or any other supplies.
(9) Packaging costs: supplier’s cost to package for shipping.
(10) Shipping costs: costs associated with shipping for cancellation and final destination.
(11) Distribution costs: costs associated with distributing product to the retail counter.
(12) Mail order costs: costs associated with filling mail orders including work hours, office space, supplies, etc.
(13) Special event costs: costs associated with setting up and staffing a temporary retail unit at the local event (including work hours).
(14) Accounting costs: costs associated with tracking the product quantities during development and sales.
(15) Promotional costs: costs associated with any advertising or promotional effort.
(16) Destruction costs: costs associated with product spoilage and excess product.
c. Net revenue projections including the following:
(1) Revenue projections: gross and net revenue projections based on expected unit sales.
(2) Breakeven point: minimum product sales to cover all costs associated with the event and product development.
(3) ROI.
Note: See Exhibit 227.212 for a sample Cost Benefit Analysis.
Exhibit 227
Local Purchasing and Sale of Commemorative Envelopes Check-Off Sheet
Postmaster Responsibilities
________ Submit requests to produce/purchase commemorative envelopes to the district manager and/or designee. Include cost benefit analysis and revenue projections.
________ Complete an eBuy and obtain all necessary funding approval. Expenses should be reported in Account Indentifier Code (AIC) 524. Purchases made under local purchase authority are subject to the policies and procedures in the Administrative Support Manual (ASM) and Handbook AS-709, Credit Card Policies and Procedures for Local Buying. Purchases valued at more than $10,000 must be submitted to Supply Management for handling, so allow time for solicitation and award of the contract; in addition, if the purchase is valued at more than $10,000 and a specific supplier will be used due to existing licensing agreements, a noncompetitive justification is required.
________ Purchase stamps for the commemorative envelopes (at face value) using an eBuy request, or have the supplier include the stamp (face value) cost in its product production cost.
________ Coordinate the design of the commemorative envelope with the supplier. A commemorative envelope designed and produced by the supplier must be an exclusive Postal Service product. The supplier cannot sell the same cachet or product design to others outside of the Postal Service.
________ Coordinate the pictorial postmark design with the supplier. Refer to Handbook PO-230, Pictorial Postmarks, for guidelines on proper format and use of pictorial postmarks. Handbook PO-230 is available through the Material Distribution Center and online on the Postal Service PolicyNet Web site at http://blue.usps.gov/cpim.
________ Ensure that the supplier clears all rights associated with any design or image incorporated on the commemorative envelope and/or in the pictorial postmark design. The postmaster must request a letter from the supplier stating that all third-party rights have been approved. Postmasters must forward a copy of the supplier letter with the final commemorative cachet design to their district manager or designee.
________ Coordinate the printing, stamp affixing, and canceling of the commemorative envelope with the approved pictorial postmark. Suppliers may not cancel commemorative envelopes. For large cancellation orders, postmasters may contact the manager, Stamp Fulfillment Services, at 816- 545-1100 for assistance.
________ Coordinate and manage advertising and promotional efforts. Obtain funding and area advertising specialist approval for any advertising.
________ Coordinate and manage the temporary station (retail unit) associated with the event. (Temporary stations must have a pictorial postmark available for collectors’ requests. The pictorial postmark used on the commemorative envelope product must be the same postmark that is used and/or made available at the temporary station.)
________ Sales of commemorative covers must be tracked in AIC 083, Local Commemorative Envelopes Sales. Non point-of-sale (POS) offices should track sales manually. POS offices should scan barcodes to properly track sales. (See 227.4, Financial Procedures, for POS instructions.)
________ Every week, complete and maintain Commemorative Envelopes (Covers/Cachets) Unit Sales Activity Reports.
________ Following the sales period, destroy remaining quantities. Destruction must be witnessed, and both parties who verified the destruction must sign off on the quantities.
________ Maintain a summary of the Commemorative Envelopes (Covers/Cachets) Unit Sales Activity Reports as documentation of the destroyed quantities for a period of 4 years.
Supplier Responsibilities
________ Clear all rights associated with any design or image incorporated on the commemorative envelope cachet and in the pictorial postmark design. The supplier must provide the postmaster with a letter stating that all third-party rights have been approved. The supplier assumes all risk associated with rights; there must be no risk to the Postal Service.
________ Bid the cost associated with the face value of the stamps as well as stamp-affixing costs. Factor in shipping costs associated with transporting the product.
________ Do not cancel/postmark the commemorative envelope.
________ Ensure that all commemorative envelopes designed and produced by suppliers are exclusive Postal Service products. Suppliers cannot sell the same cachet or product design to others outside of the Postal Service.
227.213 Administrative Responsibilities
If the district manager approves the request to produce a commemorative envelope, postmasters are responsible for ensuring that the following steps are completed:
a. Step 1: Complete an eBuy and obtain all necessary funding approval.
b. Step 2: Submit all purchases of $10,000 or greater to Supply Management for handling. Allow time for solicitation and award of the contract. In addition, if the purchase is valued at more than $10,000 and a specific supplier will be used due to existing licensing agreements, a noncompetitive justification is required.
d. Step 3: Purchase stamps for the commemorative envelopes (at face value) using an eBuy request, or have the supplier include the stamp’s (face value) cost in its product production cost.
e. Step 4: Coordinate the design of the commemorative envelope with the supplier.
f. Step 5: Coordinate the pictorial postmark design with the supplier. Refer to the Handbook PO-230, Pictorial Postmarks, for guidelines on proper format and use of pictorial postmarks. The handbook is available through the Material Distribution Center and online on the Postal Service PolicyNet Web site at http://blue.usps.gov/cpim.
g. Step 6: Ensure that the supplier clears all rights associated with any design or image incorporated on the commemorative envelope and/or in the pictorial postmark design. The postmaster must request a letter from the supplier stating that all third-party rights have been approved. Postmasters must forward a copy of the supplier letter with the final commemorative cachet design to their district manager or designee.
h. Step 7: Coordinate the printing, the stamp affixing, and the canceling of the commemorative envelope with the approved pictorial postmark. Suppliers may not cancel commemorative envelopes. Postmasters should arrange for the canceling of commemorative envelopes through local Postal Service staff. For large cancellation orders, postmasters should contact the manager, Stamp Fulfillment Services, at 816–545-1100. Stamp Fulfillment Services may be able to cancel the commemorative envelopes depending on their current workload.
i. Step 8: Track all sales of commemorative covers in AIC 083, Local Commemorative Envelopes Sales. Integrated retail terminal (IRT) and manual offices should track sales manually. POS offices should scan barcodes to properly track sales (see 227.4, Financial Procedures, for POS instructions.)
j. Step 9: Coordinate and manage the temporary station (retail unit) associated with the specific event. Temporary stations must have the pictorial postmark available for collectors’ requests. The pictorial postmark used on the commemorative envelope product must be the same postmark that is used and/or made available at the temporary station.
k. Step 10: Do not sell the envelope for the event sponsor if an sponsor creates a commemorative envelope for fund-raising purposes.
l. Step 11: Fund all costs associated with any advertising and promotion. Additionally, postmasters and/or district managers are responsible for obtaining approval from the area advertising specialist for any advertisements that are created.
m. Step 12: Include insert cards as an advertising/promotional piece with the commemorative envelope product, if desired. The supplier is responsible for the clearance of rights issues. The postmaster/district manager or a designee must forward the advertising/promotional piece to his or her area advertising specialist for approval.
n. Step 14: Make sure the commemorative envelope that is designed and produced by the supplier is an exclusive Postal Service product. The supplier cannot sell the same product or product design to others outside of the Postal Service.
Exhibit 227.212
Cost Benefit Analysis
Example
Description of Event: ________________________________________________________________________________________
Date(s): _____________________________________________________________________________________________________
Location: ___________________________________________________________________________________________________
Expected Attendance: ___________________
Costs Associated With Product Development:
Cost of Stamps (face value of postage stamps): __________________________
Stamp bursting and affixing costs: __________________________
Design Costs (design of the commemorative envelope): __________________________
Licensing Costs (use of design/images on a cachet): __________________________
Envelope Costs (purchase of envelope): __________________________
Printing Costs (printing the cachet): __________________________
Cancellation Costs (work hours, postmark device, ink, or other supplies): __________________________
Packaging Costs (vendor’s cost to package for shipping): __________________________
Shipping Costs (shipping for cancellation and final destination): __________________________
Distribution Costs (distributing product to the retail counter): __________________________
Mail Order Costs (work hours, office space, supplies, etc.): __________________________
Special Event Costs (setup and staffing of temporary retail unit): __________________________
Accounting Costs (tracking the product during development and sales): __________________________
Promotional Costs (advertising and/or promotion): __________________________
Destruction Costs (product spoilage and excess product): __________________________
Other Costs (specify):__________________________________________ __________________________
_____________________________________________________________ __________________________
_____________________________________________________________ __________________________
Total Costs: __________________________
Net Revenue Projection:
Revenue Potential (gross revenue based on expected unit sales): __________________________
Less Total Costs (minus) — __________________________
Net Revenue Projection (gross revenue minus costs): __________________________
Breakeven Sales Point
(Total number of individual units needed to be sold to cover all costs associated with event and product development)
Total Costs $___________ ÷ Unit Sales Price $ _________ = Number of Units _________
Example: $14,300 ÷ $5.95 = 2,403 units need to be sold to break even on costs
227.22 Supplier Responsibilities
The supplier’s responsibilities are as follows:
a. Clear all rights associated with any design or image incorporated on the commemorative envelope cachet and in the pictorial postmark design. The supplier must provide the postmaster with a letter stating that all third-party rights have been approved. The supplier assumes all risk associated with rights; there must be no risk to the Postal Service.
b. Bid the cost associated with the face value of the stamps as well as stamp-affixing costs. Shipping costs associated with transporting the product should also be factored in.
c. Do not cancel/postmark the commemorative envelope.
d. Ensure that all commemorative envelopes designed and produced by suppliers are exclusive Postal Service products. Suppliers cannot sell the same cachet or product design to others outside of the Postal Service.
Note: See Exhibit 227.22 for a sample Commemorative Envelopes Supplier Agreement.
227.23 District Responsibilities
The district’s responsibilities are as follows:
a. Approve or deny postmaster requests based on the justification provided.
b. Maintain a finalized copy of the commemorative envelope design, a copy of the supplier letter stating that all third-party rights have been approved, and a copy of the pictorial postmark. These files should be maintained for a period of 4 years from the date of the event.
Note: Refer to Handbook PO-230 for pictorial postmark guidelines and a copy of the pictorial postmark announcement report. Handbook PO-230 is available through the Material Distribution Center and online via the Postal Service PolicyNet Web site at http://blue.usps.gov/cpim.
227.24 Headquarters (Stamp Services) Responsibilities
Stamp Services’ responsibilities are as follows:
a. Review pictorial postmark designs and inform postmasters of any concerns associated with the image/design.
b. Place pictorial postmark information in the Postal Bulletin.
227.3 Legal Issues and Concerns
227.31 Use of Third-Party Images and Artwork on Philatelic Item
In many cases, a stamp image contains elements that are co-owned by the U.S. Postal Service and by one or more other entities. The same third-party ownership may also exist in artwork reproduced on philatelic items that includes commemorative and/or first-day-of-issue covers/cachets. An example of a stamp series that contains images owned by other entities is The Art of Disney stamp series. Suppliers wishing to reproduce the actual stamp art or other Disney artwork on commemorative covers and/or philatelic products must obtain permission from Disney.
227.32 Refuse Purchase Orders Requiring the Postal Service to Obtain Rights
Postmasters cannot accept Purchase Orders that require them to obtain the rights in images, designs, and other intellectual property that are to appear on commemorative covers and other philatelic products. In some instances, suppliers selling philatelic products and commemorative covers to the U.S. Postal Service have not obtained permission from third-party owners for the use of the artwork, and have put a section in their purchase order and/or invoice requiring that the U.S. Postal Service obtain the rights to those drawings, pictures, text, or other elements displayed on the product. Postmasters must read all purchase orders and/or invoices carefully! It is critical that Postal Service staff ascertain whether invoices for commemorative and first-day-of-issue covers from suppliers contain such language. If an invoice for the purchase of commemorative or first-day-of-issue covers/cachets and similar items requires the Postal Service to obtain rights relating to the artwork displayed on them, the postmaster must refuse to sign/accept the purchase order and/or invoice and should decline the purchase.
Exhibit 227.22
Sample Commemorative Envelope Supplier Agreement
The supplier agrees to the following when developing and selling commemorative envelopes to the United States Postal Service:
- Obtain any necessary rights to use any images, designs, names, signatures, and any other intellectual property rights associated with any design or image incorporated on the commemorative envelope cachet, in the pictorial postmark design, and in any other work created under this agreement.
- Indemnify the Postal Service, its officers, agents, and employees acting for the Postal Service against any and all loss, cost, damage, liability, and expenses arising out of or from any claim whatsoever (1) for violation of proprietary rights, copyrights, trademarks, and any other intellectual property rights or rights of privacy or publicity arising out of the creation, delivery, or use of any commemorative envelopes, pictorial postmark designs, or any other works furnished under this agreement, or (2) based upon any libelous or other unlawful matter contained in such envelopes or works.
- Provide the postmaster with a letter stating that all third-party rights have been approved.
- Assume all risk associated with rights. There must be no risk to the Postal Service.
- Do not cancel/postmark the commemorative envelopes for Post Offices.
- Ensure that all commemorative envelopes designed and produced by suppliers are exclusive Postal Service products.
- Do not sell the same cachet or product design to others outside of the Postal Service.
- Bid the cost associated with the face value of the stamps as well as stamp-affixing costs. Shipping costs associated with transporting the product should also be factored in.
________________________________________
Signature of Supplier Representative
________________________________________
Print Full Name (Supplier Representative)
________________________________________
Company Name
________________________________________
Address
________________________________________
Address (continued)
________________________________________
Telephone Number
227.4 Financial Procedures
227.41 Postmaster’s Accounting Responsibilities
The postmaster’s responsibilities are as follows:
a. Coordinate the approval process with the district office.
b. Coordinate all commemorative envelope and pictorial postmark initiatives.
c. Verify that the total number of saleable and unusable (spoiled) items equals the number of stamps purchased. Both saleable and unusable items must be tracked on a Commemorative Envelopes (Covers/Cachets) Unit Sales Activity Report and be included in the final destruction.
d. Provide a Unit Sales Activity Report to each participating retail sales unit. The report lists the quantity, sales price, and total value of commemorative envelopes being shipped to the participating Post Office. The total of all Unit Sales Activity Reports must equal the number of stamps purchased. See Exhibit 227.41 for a sample Unit Sales Activity Report.
e. Maintain final Unit Sales Activity Reports and destruction records to determine the overall success of each product for a period of 4 years.
f. Assist unit managers in determining the final disposition for excess commemorative envelopes.
g. Process the purchase of postage stamps for affixing on commemorative envelopes through a retail associate. Retail associates will offset the stamp sale with an entry to AIC 524, Local Commemorative Envelopes Refunds/Expense. A copy of the approved eBuy is the support documentation for the entry into AIC 524.
h. Update the Unit Sales Activity Report for his or her unit on a weekly basis and resolve any differences.
i. Complete a consolidated Unit Sales Activity Report on a monthly basis after the beginning of the commemorative envelope promotion. The participating units will inventory the remaining quantity of envelopes and enter the value of this amount on the Unit Sales Activity Report as ending value. When the ending value is subtracted from the beginning value, the sales amount must match the AIC 083 total for the same time period. The unit must resolve any difference. A copy of the consolidated report must be sent to the district manager or designee.
j. Ensure that the district manager or a designee decides after 90 days about the disposition of the remaining envelopes based on the remaining quantity. The following are three acceptable dispositions:
(1) Continue availability for an additional 90 days at the unit. Verification must be performed weekly, and a Unit Sales Activity Report must be completed to ensure AIC 083 sales equal the value of envelope inventory reductions. The weekly record must be maintained at the unit for support documentation to the final destruction records.
(2) Immediately destroy remaining quantities.
(3) Transfer the existing quantity of envelopes to a philatelic unit within the district. The philatelic unit may continue sales of the envelope. The philatelic unit must maintain a sales record to be included with the final destruction records.
Note: A summary of the Unit Sales Activity Reports is the support documentation for the destruction quantities. Destruction of commemorative envelopes must be witnessed, with both parties verifying and signing off on the quantity destroyed, and at least one person must be an Executive and Administrative Schedule (EAS) employee.
Unit Sales Activity Reports and all other related invoices and/or retail unit forms should be retained for a period of 4 years, filed together with the unit’s PS Form 1412, Daily Financial Report.
Exhibit 227.41
Sample Unit Sales Activity Report
227.42 Post Office Accounting Responsibility
All nonworkhour expenses related to commemorative envelopes authorized by the district manager or designee through an eBuy should be charged to the unit’s finance number using General Ledger Account 44041.524 as a local purchase.
Locally paid items associated with commemorative envelopes should be charged to AIC 524, and supporting documentation must be maintained.
227.5 POS Instructions for Local Commemorative Envelopes
227.51 Renaming AIC 083
The following steps should be taken for renaming AIC 083, using item numbers 9445 through 9475 and setting the price at the unit level in the back office:
a. Step 1: Log in to the POS system with the role of stock custodian or supervisor.
Note: Both of these roles allow the user to edit non-accountable items, but only the stock custodian can receive the items into the unit.
b. Step 2: Select <Non-Retail Roles>.
c. Step 3: Select <Back Office>.
d. Step 4: Select <Inventory Options>.
e. Step 5: Select <Edit Item Parameters>.
f. Step 6: Enter or scan the desired item number (9445 through 9475).
g. Step 7: Select <Description and Status>.
h. Step 8: Key in the new item description and then press [Enter].
i. Step 9: Toggle “Yes/No” for returns allowed and for exchange allowed.
j. Step 10: Select <Accept and Go To Pricing and Tender>.
k. Step 11: Key in the new selling price and then press [Enter].
l. Step 12: Key in the new regular price and then press [Enter].
m. Step 13: Select <Accept and Return to Options>.
n. Step 14: Select <Return to Inventory Options>.
227.52 Receipt of Item Into the Unit
After the steps described in 227.51 are completed, the stock custodian can receive the items into the unit with the description and value they entered in the <Edit Item Parameters> workflow. It is important to edit the item number prior to receiving it into the unit. Otherwise, the retail unit will be receiving the designated product as “Local Product” for $0.00.
Use the <Receive Stock> workflow as usual, and the items will be entered into the retail product inventory category.
227.53 Retail Product Inventory Report
When viewing the Retail Product Inventory Report, the item is still listed as “local product” and not the name the user gave the item before bringing it into the unit; but, the item number and the value are correct. The report is returning the description directly from the proditem file. When the retail associate tries to sell the item, either by scanning the item or using the <Sell by Item Number> function, the item shows up with the new description and price. If the item description and value have not been edited as described in 227.52, when the retail associate tries to sell the item, either by scanning the item or using the <Sell by Item Number> function, the item still shows up as “local product” with a price of $0.00. At the time of the sale, retail associates can access <Edit Mode> using the up arrow; and because the item is non-accountable, the retail associates can change the price to the new selling price.
227.54 Default List of Items that Can Be Edited for Local Use
The following list is the default list of items that can be edited for local use:
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We will incorporate these revisions into the next printed version of the POM and also into the online update, available on the Postal Service PolicyNet Web site:
(The direct URL for the Postal Service PolicyNet Web site is http://blue.usps.gov/cpim.)
It is also available on the Postal Service Internet:
- Go to www.usps.com.
- Click About USPS & News, then Forms & Publications, then Postal Periodicals and Publications, and then Manuals.
— Stamp Services,
Government Relations, 6-19-08
