b. Barcode Print Medium

Comment: One commenter mentioned that inkjet printing, which can print information at high speeds on mailing labels and produce POSTNET barcodes and related PLANET Codes and the 4state customer barcode, cannot print the required UCC/EAN 128 barcodes. This commenter believes that eVS should allow an alternative barcode that can be printed by inkjet printers at production speeds.

Response: The Postal Service and the parcel shipping industry worked together to evaluate and agree on the most widely used barcode technology in the late 1990s, specifically for Delivery Confirmation and parcel mail. Industry standards for this barcode are specified in the American National Standards Institute (ANSI) X3.1821990 Bar Code Print Quality Guideline. Following these standards ensures a consistently high read rate for successful barcode scanning at all stages in mail processing and delivery.

Processing equipment used by the parcel industry and the Postal Service support the technology behind the currently required parcel barcode. The Postal Service in cooperation with the parcel industry will continue to explore new barcode technologies and printing options as they become available to respond to a wide range of mailer operations.

c. Unique Period for Barcode Use

Comment: Two commenters believed that the current requirement that the barcode required for eVS (which contains the package identification code) may not be reused for 12 consecutive months will limit the flexibility of mailers and shippers to assign tracking numbers. These commenters stated that Postal Service noneVS manifesting rules require that the package identification code remain unique for no more than 90 days.

Response: The 90day period mentioned by the commenters refers to the retention of the actual manifest documents, not to the identification numbers. That document retention period applies to standard manifest systems as well as eVS.

Manifesting rules in Postal Service Publication 401, Guide to the Manifest Mailing System, require only a unique identification (ID) numbernot necessarily a package identification code as used in eVS within a given mailing represented by the manifest. For noneVS manifests, the ID number, whether a computergenerated number, product number, or any other number, may be reused for every mailing represented by a separate manifest. In the eVS environment, data for the package identification codes, which are required as specified in Postal Service Publication 205, is electronically stored for 12 months to support any mailer or shipper claims filed for extra services such as insurance or any research for postage reconciliations.

As information, the 22digit numeric package identification code (PIC) corresponding to the 22character barcode is composed of several required elements, including an 8digit number called the Sequential Package Identifier. The entire 22digit PIC currently must remain unique for 12 consecutive months from the date of first use. Because digits 0 through 9 may be used in each of the eight positions of the Sequential Package Identifier, a mailer or shipper actually has a total of 100,000,000 unique combinations available for one year just from that identifier. An eVS mailer or shipper can expand this number of unique combinations by increasing the number of ninedigit customer identification numbers used.

In view of the comments from parcel mailers and shippers and their need for greater flexibility to meet various business applications, the Postal Service has begun studying how to change the current requirements for unique PICs from 12 months to 6 months. The business rule on maintaining a unique PIC would still be set at the point when the Postal Service receives the electronic file.

Changes to the current 12month period will require systems development and testing to ensure that mailer and shipper business requirements and Postal Service operational needs are both met. The Postal Service believes that it could implement this change as early as June 1, 2007. As the Postal Service works on developing its system requirements for this change, it will continue working with the mailing industry to ensure that their various business needs are met. d. Rate Marking

Comment: Two commenters believed that the Postal Service should revise its policy in regard to actual postage payment and the corresponding rate marking in the permit imprint indicia for parcels mailed under eVS. These commenters proposed the development of a standard eVS marking for permit imprint indicia that could be used on all eVS parcels regardless of mail classification. Establishing such an indicia would eliminate postage adjustments for ``crossover'' parcels for which the correct postage rate is paid but the marking in the indicia is incorrect because it still reflects the original classification under which the parcel was rated.

For example, a mailer may rate and mark a parcel that weighs nearly 16 ounces as Standard Mail before handing off the parcel to a parcel shipper or consolidator. When the shipper or consolidator handling the parcel weighs the parcel, the actual weight is reported at more than 1 pound, making the parcel ineligible to be mailed at Standard Mail rates. The consolidator manifests the parcel at the appropriate Parcel Select rate to pay the correct postage but does not remark the parcel. If the parcel is sampled by the Postal Service, one commenter believed that it would result in a penalty in the calculation of the postage adjustment factor (as described in section B).

Both commenters believed that the emphasis in the eVS environment should be on the correct payment of postage. These commenters believed that a general eVS marking would solve this issue and provide parcel mailers and shippers the necessary flexibility to correct rate payments without the burden of remarking the parcels.

Response: Use of the correct rate and class markings on all mailpieces is the only way to ensure that the Postal Service can provide the appropriate service for mailpieces. Equally important, such markings also indicate
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content eligibility and provide information needed for statistical sampling done on all classes of mail to develop costing data used in the ratemaking process. In the case of the commenter's example about Standard Mail and Parcel Select, the Postal Service would like to point out that there are not only differences in rates, weight maximums, and available destination entry facilities for Standard Mail and Parcel Select as the commenter mentions, but there are also differences in how such mail is handled for service standards, for forwarding or return, and for eligibility for extra services.

The occasional need to change rate markings on mailpieces already prepared is not exclusive to parcel mail handled by consolidators. Mailers or mailing service providers preparing lettersize mail may wish to change the classification of advertising mail from Standard Mail to FirstClass Mail[supreg] to meet a tight deadline. In that case, the mailer or mailing service provider would need to obliterate and remark the pieces as FirstClass Mail or overlabel the indicia with an indicia marked FirstClass Mail. In another case, mailers or shippers handling order fulfillment may need to change the classification of a parcel from Parcel Select to Priority Mail[supreg] to expedite a late shipment to the consumer ordering the merchandise. The mailer or shipper would need to decide at the time the label is printed to avoid overlabeling. A parcel mailer or shipper needing to reclassify a Standard Mail parcel as a Parcel Select parcel would need to take the same action and remark the parcel or make the decision at the point the label is produced.

Preparing and marking the Standard Mail parcel weighing over the maximum permitted weight as Parcel Select resolves this problem. Postal Service classification allows Standard Mail to be reclassified easily as Parcel Post[supreg] because there are no minimum weight restrictions on Parcel Post and the content requirements are the same. As mentioned previously, there are service differences in handling and delivery between the two classes. What the commenter discusses is actually related more to weight than to classification and can be readily resolved by remarking the piece and converting it to Parcel Select. The Postal Service continues to require all mailpieces to bear the appropriate class and rate markings in order to provide the service requested by the mailer or shipper and expected by the consumer.

The commenter asked for confirmation on how the Postal Service would rate the Standard Mail parcel in his example. The Postal Service sampler would identify the piece as Standard Mail from the class marking in the permit imprint indicia and weigh the piece. The sampling software would then determine that the weight of the sample exceeds the maximum weight permitted for Standard Mail and prompt the sampler to confirm that the correct mail class had been selected. The sample data would then be uploaded to eVS with the parcel characteristics collected by the sampler. The sample data would be reconciled with the manifest data prepared by the mailer or shipper at the appropriate Parcel Select rate.
2. Postage Adjustments and Postal Service Sampling

a. Creation of Multiple Accounts

Comment: Two commenters requested clarification about the ability to create multiple eVS accounts per mailer or shipper.

Response: An eVS mailer or shipper may not use more than one permit number for having postage payment withdrawals made from a single financial account. If an eVS mailer or shipper wishes to use two or more permit numbers, the mailer or shipper must establish a separate financial account with the Postal Service for each permit number referenced in their permit indicia.

Currently, eVS participants have obtained multiple locationrelated identification numbers from the Postal Service, rather than setting up separate profiles with separate debit accounts and permit numbers. These eVS participants have linked these multiple identification numbers to the mailer ID and permit number in order to handle various client relationships and internal accounting arrangements. This approach has given these eVS mailers and shippers the flexibility to identify clients for billing as well as for handling internal business within the mailer's or shipper's operations such as distribution centers or regional plants.

b. Sampling Procedures and Postage Adjustments

Comment: One of the commenters presented several concerns about the proposed sampling methods and postage adjustment process. First, the commenter believed that postage adjustments collected under eVS for actual mailer or shipper errors should be costbased and specific rather than averaged and automatic. This commenter noted that although penalties against chronic offenders might be warranted, penalties should not be automatic for mailers and shippers who have a record of accurate postage payment when an issue temporarily occurs at a single destination facility or with a single mailing.

Second, the commenter expressed concern about the Postal Service proposal to take samples of individual mailings at each plant and delivery unit. This commenter believed that it appeared extreme to impose a penalty of a percentage of postage paid for an entire mailing period of one month if discrepancies between the Postal Service and mailer or shipper information could be isolated to a particular mailing, plant, or delivery unit.

Third, the commenter believed that, despite the two 10day review periods provided following the end of the mailing month in question to reconcile differences for postage adjustments, there appeared to be no satisfactory resolution to these adjustments because Postal Service claims of the character and weight of a particular sampled parcel or shipment cannot be verified by the mailer or shipper after sampling had been done and the data entered.

Response: The Postal Service developed eVS at the request of the parcel shipping industry to provide mailers and shippers greater operational flexibility by moving the verification process from an originbased system to a destinationbased system. eVS is based upon the mailer's or shipper's complete system of mailing processes, and mailer or shipper quality controls are expected to extend across all steps in these processes. This arrangement results in an accurate reflection of the mailer's or shipper's efficiencies throughout the mailing process. Postage samplingonly one element of quality verificationdoes not penalize; rather, the postage adjustment represents actual postage due versus what the mailer or shipper originally projected for the entire mailing volume.

eVS introduced three fundamental modifications to current acceptance and verification processes:

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In response to the commenter's first concern that postage adjustments should be costbased for specific mailings rather than averaged over an entire mailing month, the Postal Service wishes to point out that sampling to verify postage payment is a fundamental process used for permit imprint mailings, whether the sampling is done at origin or, in the case of eVS, at destination. When sampling is done at origin, an individual mailing is identifiable and samples can be taken from that particular mailing. If additional postage is needed, then only that mailing is involved. When sampling is done at destination facilities for eVS, parcels from different mailings are sampled each day at multiple sites. In this case, if additional postage is needed, it is not practical for the Postal Service to adjust payment for an individual mailing. Using data from parcels sampled over the entire month minimizes the effects of incorrectly rated parcels in a single mailing for the mailer or shipper. During this monthly period, mailers and shippers receive data that allows them to adjust their focus on specific facilities and processes that are falling below the established quality levels in their service agreements.

In response to the second concern about imposing a ``penalty'' of a percentage of postage paid for an entire mailing period of one month, the Postal Service wishes to state that it already allows a tolerance up to 1.5% in the underpayment of postage for any mailing. Furthermore, the Postal Service wishes to clarify that there is no penalty or added charge; what the commenter terms ``penalty'' is actual postage owed for pieces mailed.

For mailers and shippers with well executed quality control procedures and an established record of accurate postage payment, the postage adjustment factor (PAF) for their monthly mailings is 1.015 or below (representing underpayment of 1.5% or less). If the Postal Service moved to a purely costbased system of adjustments for eVS, then there would be no tolerance for any underpayment of postage and the systems requirements and data processing for eVS would need to become so sophisticated that most mailers and shippers, especially consolidators receiving electronic files from clients, would find both the technology requirements and the administrative costs burdensome and challenging.

In response to the third concern about reviews and appeals, the Postal Service believes providing 20 days gives both the mailer or shipper and the Postal Service sufficient time to reconcile any potential differences. If the results from the monthly sampling indicate total postage for the sampled parcels is understated by more than 1.5% (that is, the PAF is greater than 1.015), the Postal Service adjusts the total postage for the month at the end of the 20day reconciliation period.

Any eVS mailer or shipper may pursue the written appeals process as presented in Domestic Mail Manual 604.10.0 for postage refunds. The Postal Service will make a decision on the validity of a postage refund request or postage payment adjustment regarding the overpayment or underpayment, provided sufficient written documentation is included with the appeal.

c. MisShipped BMC Parcels

Comment: One commenter stated that it is impossible to eliminate all misshipped parcels from being included with DBMC rate mailings because scanning devices used by the commenter's own carriers misread a certain percentage of barcodes before the parcels are presented to the Postal Service. As a consequence, this commenter believed that mis shipped parcels received at bulk mail centers and sampled by the Postal Service should not be included in the postage adjustment factor (PAF). Instead, the commenter proposed that a misshipped DBMC parcel be charged the interBMC Parcel Post rate less the paid DBMC rate already paid.

Response: The Postal Service wishes to note that all destination rates require entry of the mail at the correct designated facility. Any destination rate parcel entered at the wrong facility is incorrectly rated. For sampled misshipped parcels originally rated by the eVS mailer or shipper as DBMC rate and destination sectional center facility (DSCF) rate, the Postal Service rates the parcels at the appropriate interBMC rate for misshipped DBMC parcels and intraBMC or interBMC rate for misshipped DSCF parcels.

Random sampling is the only technique currently available for identifying DBMC and DSCF parcels misshipped by the eVS mailer or shipper. In contrast, both random sampling and Postal Service carrier scanning (for all parcels bearing Confirmation Services) are techniques available for identifying destinating delivery unit (DDU) parcels mis shipped by the eVS mailer or shipper. As a result, nearly all mis shipped DDU parcels can be identified and are therefore not included as part of the PAF. Currently, eVS mailers and shippers must pick up mis shipped DDU parcels. In the future, the Postal Service will handle these parcels and charge the appropriate additional postage. d. Calculation of Postage for MisShipped DDU Standard Mail Parcels

Comment: One commenter requested clarification on how eVS calculates the additional postage required for misshipped Standard Mail DDU parcels. With the absence of a singlepiece rate for Standard Mail, the commenter believed such parcels should be charged either an appropriate FirstClass Mail singlepiece rate or Parcel Post single piece rate, based on the weight of the parcels.

Response: Just to clarify, DDU rates are not currently available for Standard Mail parcels. However, to achieve improved delivery, mailers and shippers may be authorized to commingle Standard Mail parcels with Parcel Select parcels claimed at DDU rates and entered at DDUs. For misshipped Standard Mail parcels in this situation, the Postal Service does indeed charge the rates cited by the commenter. Under eVS, Standard Mail parcels will be charged either an appropriate FirstClass Mail singlepiece rate or Parcel Post singlepiece rate, based on the weight of the parcel and whichever rate is the lower rate. Because of the Standard Mail marking in the postage indicia, these pieces will still be handled like Standard Mail parcels in terms of delivery service and any forwarding or return service indicated by ancillary service endorsements.

e. Postage Adjustment Reviews

Comment: Three of the four commenters voiced the following concerns about changes in current sampling methodology that will occur for eVS mailings due to the replacement of origin sampling with destination sampling:

Response: The eVS requirements and processes presented in this final rule represent the outcome of more than three years of collaborative work between the parcel shipping industry and the Postal Service in the concept and design of this postage payment system. The use of destination sampling as a verification tool constitutes the foundation of eVS and provides parcel mailers and shippers with the greatest flexibility and freedom in managing their internal controls, modifying their operational processes, and improving their customer service. At the same time, eVS processes streamline nearly every step in the postage payment process and the reconciliation of mailings with that payment process. The Postal Service believes that these mailer and shipper benefits outweigh the limited option to rework mailings, an option that most mailers and shippers under tight fulfillment schedules and customer deadlines do not currently exercise.

In regard to the second point concerning discrepancies between manifested information for a particular parcel and information derived from the actual weighing and rating of the parcel as a sample, the Postal Service notes that most discrepancies found are due to incorrectly weighed pieces, incorrectly input rates, and incorrectly input destination ZIP Codes. All three of these discrepancies can result in postage differences. At the same time, they indicate that the mailer or shipper preparing the manifest files needs to improve quality control processes to eliminate such errors.

Postal Service employees responsible for sampling parcels are highly trained in all areas affecting sampling such as the correct procedures for classifying mail, proper handling of the sampling devices and scales, uploading sampling data, and prompt return of the sampled mailpieces to the mailstream. Postal Service employees responsible for sampling at DDUs report to the managers of Statistical Programs and handle a wide range of other programs requiring similar knowledge and skills, including the OriginDestination Information SystemDomestic Revenue, Pieces, and Weight System (ODISRPW) used to estimate revenue, volume flow, weight, and performance measurement for the Postal Service. This data is used to develop proposals for new rates, assist in budget preparation, conduct management studies, and support management decisions concerning mail flow and service performance in transportation and operations.

Postal Service employees responsible for sampling at DBMCs and DSCFs are included in the reporting structure of the manager of Business Mail Entry. These employees are trained to handle sampling and verification not only for eVS but for all other types and classes of mailings, including origin verification at mailers' and shippers' plants and at business mail entry offices. So while it is true, as the commenter notes, that mailers and shippers are not able to dispute the sample results due to the nature of the sampling process and the need to get the sampled mail back into the mailstream, the data will be collected by welltrained Postal Service employees and is expected to be accurate.

In regard to the third point about automatic withdrawals of postage adjustments, the adjustment process for current eVS customers is handled manually through email communications between the customers and the Postal Service. With a small number of customers, this approach presents few administrative burdens. With a large number of customers, however, this approach would become inefficient for the eVS customers and the Postal Service. Automating the adjustment process would provide an appropriate level of efficiency and customer service. With proper observance of quality control procedures and processes, mailers and shippers would have few reasons to be concerned about automated postage adjustments because of the number of review processes in place with eVS.

During the 10day reconciliation period following the month of mailing in question, the eVS mailer or shipper concerned about any specific adjustment or adjustment amount can submit a written appeal to the Postal Service under the standards in the Domestic Mail Manual. During the appeal process, the Postal Service will disable the automated adjustment feature as the eVS mailer or shipper and the Postal Service review and analyze the adjustment.

In regard to the fourth point, the Postal Service believes that the current PAF of 1.015 provides sufficient latitude for parcel mailers and shippers. As mentioned previously, Postal Service employees performing sampling are well trained and accurate. The Postal Service is working with these employees to increase the number of samples taken at BMCs, SCFs, and DDUs.

In regard to the fifth point, eVS manifest mailing system replaces all postage payment systems for permit imprint Parcel Select mailings, including optional procedures and alternate mailing systems (AMS). Mailers and shippers would be permitted to continue using such postage payment systems for parcel mailings except for permit imprint Parcel Select mailings or permit imprint Parcel Select mailings combined with other parcels. The Postal Service believes that once mailers and shippers begin using eVS, they will want to use this system for all parcels.

3. Mailer and Shipper Quality Control Responsibilities

Comment: Two commenters voiced concerns about mailer and shipper costs associated with the internal quality control requirements outlined in chapter 5 of Postal Service Publication 205, Electronic Verification System Technical Guide:

Initially, the mailer must perform postage accuracy verifications on 0.5% of the parcels for each destination entry level (DBMC, DSCF, DDU) from each mailer facility * * *.

The mailer must perform postage accuracy verifications on 0.5% of the parcels from each mailer facility for the first 30 days. After that, when mailings remain within the 1.5% accuracy level, the percentage of parcels verified for each destination entry level can be reduced to 0.25%. If errors for any destination entry level exceed the 1.5% difference, 0.5% of the parcels to that entry level must be sampled until the < plus minus>1.5% accuracy level is maintained for 30 days.

One commenter proposed amending the 0.25% to 0.1% of all parcels with
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the view that the goal of eVS should be to reduce cost in mail verification for mailers and shippers as well as the Postal Service. This commenter stated that the initial costs incurred in establishing proper quality control procedures in order to comply with these requirements and the associated labor costs for these internal verifications performed by the mailer or shipper could be brought in line to meet the purpose of quality control by permitting this lower percentage.

The commenter stated that the Postal Service should work closely with interested parcel mailers and shippers to develop alternative procedures that still ensure proper postage payment at a lower cost to the mailers and shippers. In addition, the commenter suggested that the Postal Service may want to consider reducing the number of parcels that must be verified, especially for companies that consistently meet quality thresholds specified by the Postal Service.

Response: The Postal Service recognizes that there are many costs associated with implementing and maintaining a successful quality control program at any mailer's or shipper's production site. Unlike lettersize mail and flatsize mailboth of which tend to be
predictable in production, scheduling, and qualityparcel mail generally does not have those characteristics of predictability. Parcel mail represents a form of mail driven by customer orders and fulfillment not by catalysts such as monthly invoicing, subscription services, or sales cycles for advertising campaigns. As a result, parcel mailings can vary greatly from day to day, whether for a parcel mailer or a parcel shipper consolidating parcels from several clients. In addition, because eVS relies solely on the accuracy of the manifest files submitted and the subsequent sampling done by the Postal Service at destination, the importance of quality control assumes an extremely critical role for the success of this electronic system.

The required sampling percentages are minimal to ensure that the parcel mailer or shipper using eVS prepares and reports accurate data for the Parcel Select mailings. Taken in perspective, the Postal Service notes that 0.5% represents only 5 parcels out of 1,000 parcels. If the mailer or shipper plans to deposit mail at several sites from several mailer or shipper plants, the number of parcels sampled still remains relatively small. At 0.25%, the mailer or shipper reduces the number of parcels sampled by onehalf.

The Postal Service encourages the use of more quality control rather than less to validate processes and systems. However, the Postal Service also believes that mailers or shippers who demonstrate superior quality control procedures as benchmarked by the postage adjustment factor (PAF) should be rewarded for that performance. In response to these two commenters, the Postal Service will modify the business rules in Publication 205 for postage accuracy verifications for eVS mailers and shippers as follows:

The mailer must perform postage accuracy verifications on 0.5% of the parcels from each mailer facility for the first 30 days. After that, when mailings remain within the 1.5% accuracy level, the percentage of parcels verified from each destination entry level can be reduced to 0.25% for the next 60 days. After that 60day period, the percentage of parcels verified from each destination entry level can be reduced to 0.10%. If any destination entry level exceeds the 1.5% difference, 0.5% of the parcels to that entry level must be sampled until the 1.5% accuracy level is maintained for 30 days, followed by 60 days at 0.25% and finally at 0.10%.

The Postal Service will continue to work with parcel mailers and parcel shippers on improving quality control procedures. An attachment to the service agreement references the following quality control processes that can be tailored to specific business and operational needs:

4. ``StarttheClock'' Confirmation at Time of Induction

Comment: Two commenters expressed concern about the elimination of the PS Form 8125, PlantVerified Drop Shipment (PVDS) Verification and Clearance, that mailers or shippers currently use when they enter PVDS mailings at a destination facility. For the Postal Service, the form confirms that the mailing has already been verified by the Postal Service and may be accepted. For the mailer or shipper and the Postal Service, the form serves as the ``starttheclock'' event for Parcel Select performance. The commenter proposed replacing the process of scanning the Form 8125 by requiring Postal Service destination facilities to scan five parcels from the shipment when received. The commenter requested that the Postal Service specify what will replace the PS Form 8125 barcode scan as proof of entry and ``startthe clock.'' The commenter concluded that the Postal Service should commit to prompt verification and acceptance at destination facilities.

Response: The Postal Service and the parcel shipping industry worked together for the past three years to develop a postage payment system that eliminated reliance on paperwork, including PS Form 8125. With the proper reconciliation of data in the manifest files created and submitted by an eVS mailer or shipper, the Postal
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Service does not require clearance documentation.

In response to the critical need, however, for eVS mailers and shippers to have confirmation that a shipment has been received, the Postal Service is in the process of considering new acceptance procedures for eVS mailings. These procedures would incorporate scanning a yettobe determined percentage of pieces in each Parcel Select destination entry mailing with the ``DC/eVS Arrive'' scan event. Further, the Postal Service is examining the appropriate system logic that would be used for this additional data collected on Parcel Select mailings to support service performance measurement, also a critical element for eVS mailers and shippers and for the Postal Service.

It is expected that the new procedures would provide a more efficient and effective means of entering Parcel Select mailings. Because this change would affect many mailers and shippers and Postal Service operations, considerable work with the mailing industry will be needed before final procedures are programmed and adopted.

5. Mandatory Implementation and Scope of eVS

Comment: One commenter stated that mailers or shippers with multiple facilities may need more than one year to test and implement eVS.

Response: The Postal Service believes that most mailers and shippers, even those with multiple facilities, will have little difficulty testing and implementing eVS within one year. Generally, parcel mailers and parcel shippers already manifesting parcel mailings have the electronic infrastructure and quality control processes needed for the implementation of eVS. Depending on the circumstances and proposed timelines of such multiplesite parcel mailers or parcel shippers, the Postal Service will consider possible extensions for full implementation of eVS at all sites.

Comment: One commenter stated that many mailers and shippers currently use their manifest systems to pay postage for all classes and subclasses of mail. This commenter noted that the proposed rule published on November 7, 2005, in the Federal Register applied only to Parcel Select mailings and to Parcel Select mailings authorized to contain machinable Standard Mail parcels and parcels from other Package Services subclasses (Bound Printed Matter, Media Mail, and Library Mail). This commenter recommended that eVS be made available for all classes of parcels.

Response: The Postal Service agrees with this commenter's recommendation and will extend the availability of eVS, but not its required use, to all classes of domestic mail, whether or not the parcels are included in a Parcel Select mailing. Currently, eVS may be used for Bound Printed Matter, Media Mail, and Regular Standard Mail. In addition, the Postal Service plans to extend eVS to permit imprint Priority Mail and FirstClass Mail after it has developed origin verification processes by working with the parcel industry and Postal Service management responsible for acceptance procedures.

Comment: One commenter noted that the implementation of eVS requires considerable upfront costs. This commenter believed that such costs would reduce the value of eVS and possibly decrease the competitive position of the Postal Service as a parcel carrier. The commenter recommended that eVS should be made optional and that workshare discounts should be provided to eVS parcel mailers and shippers.

Response: The Postal Service believes that most parcel mailers and parcel shippers will experience limited costs in modifying their current production and information technology systems to accommodate eVS. In fact, many Parcel Select mailers and shippers already use manifesting systems and transmit Delivery Confirmation files. eVS uses the same information already created by these systems. This similarity helps minimize transition costs to eVS.

From a competitive standpoint, eVS offers significant benefits to parcel mailers and shippers. Mailers and shippers no longer have to wait for Postal Service verification, the parcel barcoding requirement provides greater specificity in accounting and postage, and the electronic manifests eliminate the need for most paper documentation. At the same time, eVS increases operational flexibility for participants, and streamlines most administrative processes for participants and the Postal Service.

The Postal Service and the parcel industry have worked many years to evolve a system that would modernize the handling and payment for parcel mail. The Postal Service believes that the eVS features and benefits will make parcel mail an attractive alternative for many customers.

The Postal Service wants to point out that postage worksharing activities generally require mailers and shippers to prepare, sort, or transport mail to qualify for reduced postage rates (``worksharing rates''). These reduced rates are based on the avoided costs estimated by the Postal Service as a result of worksharing activities done by the mailer or shipper. The key activities include (1) barcoding and preparing mail for Postal Service automated equipment; (2) presorting mail by ZIP Code or specific delivery location; and (3) entering mail at a Postal Service facility closer to the final destination of the mail.

The Postal Service notes that eVS is simply a more advanced manifest mailing system for permit imprint mail that reduces certain tasks for mailers and shippers. Under eVS, mailers and shippers are not assuming the performance of tasks generally done by the Postal Service, including verification of mail and monitoring mailer and shipper quality. Even though these tasks are simplified and greatly automated under eVS, they are still tasks that the Postal Service must perform to ensure that mailers and shippers can benefit from this program while protecting Postal Service revenue. So the traditional basis for worksharing is not present in eVS.

The net benefits of eVS would inevitably be passed on to the mailers and shippers by helping to mitigate increases in institutional costs for the Postal Service and costs directly associated with specific classes and subclasses of mail. At the same time, eVS would, in the longterm, reduce overall operational and administrative costs for mailers and shippers.

Comment: One commenter stated that mandating eVS might prevent mailers or shippers who cannot meet the requirements for this new system from using Parcel Select. This commenter also expressed concern about the intentions of the Postal Service to extend the use of eVS to all parcel mailings in the future, raising additional issues with the mailing industry.

Response: The Postal Service plans to make eVS available for all parcelshaped mail, but it does not intend to mandate the use of eVS outside Parcel Select mailings without further experience and discussions with the parcel industry.

Section B. Background and Overview

The Postal Service has worked closely with the parcel shipping industry over the past 3 years to develop verification and acceptance procedures designed for customer convenience and flexibility in mail induction and postage payment. Current procedures for the acceptance and verification of parcel mailings are paperdriven and can be challenging in a dynamic shipping industry. This industry includes mailers and mail
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owners (such as catalog companies, orderfulfillment houses, and e commerce firms) as well as shippers (such as regional and national carriers and parcel consolidators and transporters handling parcels from mailers, mail owners, and other shippers).

Current Operational and Document Flow

Current operational cycles of parcel mailers and shippers tend to be tied to the schedule of Postal Service clerks who visit their plants and distribution centers to verify and accept parcel mail before it can be entered into the mailstream or transported to Postal Service destination entry facilities for induction. For destination entry parcel mailers or shippers, scheduling poses a greater challenge because they must prepare paper documentation for each scheduled induction event at the time of acceptance and verification at their plants.

The critical documents used for parcel mail are the numerous postage statements representing payment for the many and varied destination entry points. These postage statements are generated with corresponding manifests to support the mail volume and destination delivery points. A challenge for the mailer or shipper is the high level of coordination needed to ensure that the mail, the Postal Service personnel charged with verification, and the mailer's or shipper's transportation all arrive around the same time. The additional key documentation for destination entry mail is PS Form 8125, PlantVerified Drop Shipment (PVDS) Verification and Clearance, which serves as proof of payment for each specific destination entry shipment when presented to the Postal Service at the entry facility.

After Postal Service clerks verify the parcel mail at a mailer's or shipper's plant, the mail often flows through consolidators and transporters who must keep track of the various PS Forms 8125 that the Postal Service certified at the time the mail was verified.

When consolidators and transporters commingle parcels from multiple mailings, it becomes even more difficult to keep the physical mailings and corresponding documents intact. It is also difficult for Postal Service clerks at destination entry facilities to reconcile the paper documentation against the physical parcels received.

Mailers and shippers need a more convenient and flexible way to provide and update documentation and present mail. Likewise, the Postal Service needs a more consistent and accurate way to verify parcel mailings at destination entry facilities.

Benefits of eVS

The Postal Service and the parcel shipping industry have worked together to develop eVS as a new manifesting model that simplifies acceptance, verification, and induction of parcel mailings. Under this model, mailers or shippers barcode and manifest all parcels before transmitting an electronic manifest to the Postal Service.

The eVS manifest lists all barcoded parcels in a mailing and includes pertinent information for each parcel to support postage and fee payment. Under eVS, parcel mailings are no longer verified by the Postal Service at a mailer's or shipper's plant, and the mailer or shipper is no longer required to create paper documentation for induction activities. Mailers or shippers manifest the parcels, transmit the electronic files to the Postal Service, schedule appointments through the Facility Access and Shipment Tracking (FAST) system, and present the parcels at the desired destination entry facilities according to the appointments.

The Postal Service draws random statistical samples of the mailings at the appropriate plants and delivery units, and electronically compares the sampling data against the transmitted electronic manifest to verify the accuracy of the mailing. Electronic reports provide information on the discrepancies noted. These reports are available via the eVS Web site and can facilitate an automated reconciliation process.

Both mailers and shippers can benefit from the use of eVS for their parcel mailings as follows:

Requirements

eVS has two fundamental technical requirements that provide the necessary data and configuration for successful processing:

Because Delivery Confirmation service does not require any additional fees for Parcel Select items, mailers and shippers are encouraged to apply a Delivery Confirmation service barcode to all Parcel Select pieces. Delivery Confirmation service is available on other Package Services and Standard Mail parcels for $0.14, when using the electronic option. Mailers and shippers may choose to apply an alternate barcode as described in Publication 205 to avoid paying this fee. However, no delivery information will be available when using this barcode.

eVS Manifest Mailing Operations

The principal eVS manifest mailing operations for the eVS participant and the Postal Service are as follows:

1. Transmitting electronic manifest files. On or before the actual date of deposit (also called the date of mailing), the mailer or shipper transmits electronic manifests to the Postal Service detailing all eVS parcels to be deposited into the mail stream.

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2. Generating postage statements. eVS generates postage statements using the information contained in the mailer's or shipper's transmitted manifest files and submits these postage statements directly to PostalOne!

3. Paying postage and fees. From the information on the generated postage statements, postage and any fees for special services are withdrawn from the mailer's or shipper's PostalOne! payment account. Account information, including current balances and transactions, is updated on the eVS Web site. The eVS mailer or shipper can access the passwordprotected Web pages to view postage statements and associated funds debited from the account.

4. Transporting and depositing parcels. The eVS mailer or shipper makes appointments through the Postal Service's FAST system and then the mailer or shipper transports and deposits the parcels at the appropriate Postal Service destination entry facility, based on the entry rate claimed:

a. Destination bulk mail center.

b. Destination sectional center facility.

c. Destination delivery unit.

5. Sampling deposited parcels. As parcels are deposited at the destination entry facilities, the Postal Service randomly samples the parcels using scanning devices and electronic scales and uploads the collected sampling data to the eVS application. The uploaded data is matched to the data manifested by the mailer or shipper and then compared to verify whether the manifested postage claimed by the mailer or shipper for the sampled parcels has been calculated correctly based on specific rate determinants and physical characteristics of the parcels. The results of the comparison are recorded in the eVS database and used to calculate the postage adjustment factor (PAF) described in the next section. Sampling data collected by the Postal Service includes the following:

a. Barcode information and rate markings on the mailing label.

b. Entry ZIP Code of the sampling site and destination ZIP Code on the mailing label.

c. Zone, if applicable to the class or subclass of mail.

d. Size of the parcel.
e. Weight of the parcel.

f. Machinability of the parcel.

6. Determining misshipped and unmanifested parcels. When barcodes on the mailing labels are scanned during the normal processing and delivery operations (for example, delivery scans collected for parcels prepared with Delivery Confirmation), the barcode data is transmitted to the eVS database to determine whether the parcels are misshipped or unmanifested. Misshipped parcels are parcels deposited at the incorrect destination entry facility. Unmanifested parcels are parcels scanned but not included on the mailer's or shipper's manifest.

7. Assessing additional postage. As described in the next section, the mailer or shipper is assessed postage for discrepancies found in the electronic manifests for any of the following:

a. Incorrectly rated parcels.

b. Misshipped parcels.

c. Unmanifested parcels.

Postage Adjustments

The eVS program will collect postage daily based on the electronic manifests received that day from mailers or shippers. For calculating postage adjustments in eVS, a mailing period is defined as a calendar month. A reconciliation period is defined as the 20 days immediately following the mailing period. In addition to the daily collection of postage based on the manifests, postage will be calculated and assessed for the following types of errors when detected:

The Postal Service will work with mailers and shippers required to pay postage adjustments for incorrectly rated parcels, misshipped parcels, and unmanifested parcels to determine the causes leading to these adjustments and review quality control procedures. It is important that the mailer or shipper maintain quality control procedures to ensure accountability of parcels entered under the eVS manifest program.

Postage Payment Schedule

Under eVS, the collection of postage and any postage adjustment occurs as follows:

FOR FURTHER INFORMATION CONTACT John F. Gullo, Manager, Business Mailer Support, via email at john.f.gullo@usps.gov or by telephone at (202) 2688057; or Neil Berger, Program Manager, Business Mailer Support, via email at neil.h.berger@usps.gov or by telephone at (202) 2687267.