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Chapter 2
postal operations

1. Negotiated Service Agreements

During 2004 the Postal Service continued to pursue NSAs, first approved by the PRC in 2003. Where appropriate, the Postal Service has explored agreements that are functionally equivalent to the Capital One precedent. The Postal Service is also pursuing new baseline agreements as part of a gradual, continuing expansion of NSAs. Since the implementation of the Capital One NSA, the PRC issued criteria on how both functionally equivalent and baseline NSAs will be handled in the future. NSAs provide customized pricing to customers in exchange for increased mail volume, increased revenue, or reduced Postal Service costs.

In June 2004 two additional NSAs were filed with the PRC for Bank One Corporation and Discover Financial Services. The Board of Governors approved the NSA with Discover Financial Services in October (see sections I.D.3 and I.D.4).

2. Domestic Mail Manual (DMM) Redesign Project

The Postal Service continued efforts to redesign the DMM. The Chinese-language version of the DMM 100, A Customer's Guide to Mailing, was released in 2004. In addition, both a large print version and an audio version of the English-language DMM 100 were developed. The DMM 200, A Guide to Mailing for Businesses and Organizations, received a 2004 APEX Award of Excellence from the Association for Publication Excellence.

Work began in 2004 on the third volume of the series, the DMM 300, Domestic Mail Standards of the United States Postal Service, which will structure the mailing standards around the ways larger business mailers use the mail. Information will be organized according to the type of mailing (retail or discount), the shape of the mailpiece (letter, flat, or parcel), and what mailing tasks must be accomplished (paying for postage or obtaining a permit). Besides reorganizing the information to better serve mailers, users will find new navigational aids, new charts and illustrations, and a new numbering system. The DMM 300 will be released in 2005.

3. Priority Mail Flat-Rate Box

In June 2004 the Postal Service filed a request with the PRC to implement a two-year experiment for flat-rate pricing of a new Priority Mail box. This box is available in two shapes, each with the same cubic capacity and will be rated at $7.70, regardless of actual weight or destination of the parcel. This allows customers to determine shipping costs in advance without the need for scales or zone-based rate charts. The Board of Governors approved this experiment in October, 2004 (see Chapter I.D.2) and implementation began on November 20.

4. Periodicals Pricing Test

In 2004 the Postal Service filed a request to expand an ongoing Periodicals pricing test, which provides an incentive for small publications to combine their mailings on pallets and drop them closer to the point of delivery. The expansion encourages mailers of high-editorial, heavy weight Periodicals pieces to participate in the test. It is expected that this kind of pricing will become more important with the predicted growth of smaller, more specialized publications (see section I.D.1).

5. Repositionable Notes

In July 2004 the Postal Service filed a request with the PRC to test prices for Repositionable Notes placed on the outside of mail. Repositionable Notes provide a complementary method for First-Class Mail, Periodicals, and Standard Mail users to deliver messages to their customers and generate higher response rates (see section I.D.10).

L. Technology

The Information Technology (IT) organization provides the Postal Service with an efficient, flexible, secure, and accessible information infrastructure. By standardizing, simplifying, and centralizing information hardware, software, and processes, IT supports both current and future business solutions that serve customers and employees and enable the Postal Service to remain competitive in the marketplace.

1. Advance Computing Environment/Upgrading the Infrastructure

IT has established a modernized Postal Service distributed computing infrastructure. The Advanced Computing Environment (ACE) initiative was completed in 2004, ahead of schedule and under budget. The ACE model supports the following features:

• A standard suite of hardware and software products for all users.

• Efficient and responsive remote help desk support.

• Rapid deployment of software enhancements, including security protections against virus intrusions and network disruptions.

• Rapid delivery of new products and services.

• Reduced development, maintenance, and support costs.