Electronic Verification System (eVS) for Parcel Select Mailings, 38966-38978 [06-6021]

Agencies

• Postal Service

[Federal Register Volume 71, Number 131 (Monday, July 10, 2006)]
[Rules and Regulations]
[Pages 38966-38978]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 06-6021]



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Part II





Postal Service





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39 CFR Part 111



Electronic Verification System (eVS) for Parcel Select Mailings; Final 
Rule

Federal Register / Vol. 71, No. 131 / Monday, July 10, 2006 / Rules 
and Regulations

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POSTAL SERVICE

39 CFR Part 111


Electronic Verification System (eVS) for Parcel Select Mailings

AGENCY: United States Postal Service.

ACTION: Final rule.

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SUMMARY: This final rule sets forth the standards that will be adopted 
by the Postal ServiceTM to implement the electronic data and 
automated processes of the Electronic Verification System (eVS) for 
permit imprint Parcel Select[supreg] manifest mailings and eliminate 
current paper-driven and manual processes used for such mailings. This 
required change will also extend to Standard Mail[supreg] machinable 
parcels and parcels from other Package Services subclasses (Bound 
Printed Matter, Library Mail, or Media Mail[supreg]) that are 
authorized to be commingled with permit imprint Parcel Select parcels.

DATES: Effective Date: This final rule takes effect August 1, 2007.

FOR FURTHER INFORMATION CONTACT: John F. Gullo, Manager, Business 
Mailer Support, via e-mail at john.f.gullo@usps.gov or by telephone at 
(202) 268-8057; or Neil Berger, Program Manager, Business Mailer 
Support, via e-mail at neil.h.berger@usps.gov or by telephone at (202) 
268-7267.

SUPPLEMENTARY INFORMATION: On November 7, 2005, the Postal Service 
published a proposed rule in the Federal Register (70 FR 67399-67405), 
soliciting comments from mailers and parcel shippers on requiring the 
use of the Electronic Verification System (eVS) for all permit imprint 
Parcel Select mailings, including those containing authorized 
commingled Standard Mail machinable parcels and parcels from the other 
subclasses of Package Services (Bound Printed Matter, Media Mail, and 
Library Mail).
    The Postal Service received comments from two individual parcel 
shippers, one parcel trade association representing parcel mailers and 
shippers, and one organization representing the full range of mailers 
and shippers preparing letters, flats, or parcels. Responses to the 
comments from these shippers and organizations appear in section A, 
Public Comments and Postal Service Responses.
    Detailed information about eVS appears in section B, eVS Background 
and Overview. Implementing Domestic Mail Manual mailing standards 
appear after section B. In those standards, the term mailer also 
implies shipper or parcel consolidator who provides a variety of parcel 
mailing services.

Section A. Public Comments and Postal Service Responses

    The public comments received from the two parcel shippers and two 
mailing organizations can be grouped into the following five areas of 
concern:
    1. Label markings (barcodes and indicia).
    2. Postage adjustments and Postal Service sampling.
    3. Mailer and shipper quality control responsibilities.
    4. ``Start-the-clock'' confirmation at time of induction.
    5. Mandatory implementation and scope of eVS.

1. Label Markings (Barcodes and Indicia)

a. Barcode Size
    Comment: Two commenters cited potential problems with the size of 
the UCC/EAN 128 format barcode required for eVS--either the 30-
character concatenated barcode (which contains the destination ZIP Code 
, also called the postal routing code) or the 22-character barcode 
(which does not contain the destination ZIP Code)--positioned on the 
mailing label as described in Publication 205, Electronic Verification 
System Technical Guide.
    The commenters noted that the surface area of the address side 
found on some parcels, especially lightweight machinable Standard Mail 
or Media Mail parcels, is too small to accommodate both the required 
barcode and all other necessary addressing information, postage 
indicia, and any internal inventory barcodes or processing codes. The 
size of standard window envelopes also presents similar problems. Some 
parcel mailers and shippers affix window envelopes in place of mailing 
labels to outgoing parcels. These envelopes frequently contain packing 
slips, statements of account, or invoices. The delivery address may be 
printed on a shipping slip, statement of account, or invoice in the 
envelope. Many of the window envelopes used for these purposes cannot 
completely display the barcode types required for eVS along with the 
required delivery address information.
    These same commenters pointed out that the smaller size parcels 
that could be commingled with Parcel Select mailings if authorized are 
frequently machinable Standard Mail or Media Mail parcels. As one of 
these commenters mentioned, if these smaller parcels cannot be included 
with eVS Parcel Select mailings, the mailer or shipper and the Postal 
Service incur additional handling costs for separate mailings with 
separate manifests.
    Response: The Postal Service recognizes that most parcel mailers 
and shippers use standard-size labels in their automated production 
processes. One of the most commonly used sizes throughout the shipping 
industry measures 4 inches wide by 6\1/4\ inches high, a size with 
sufficient space to contain the barcode required for eVS, addressing 
information, and postage information in the permit imprint indicia. For 
small parcels that cannot accommodate this size mailing label on the 
address side of the parcel, mailers and shippers can decrease the size 
of the label as long as all required postal information is included. 
Mailers can use smaller barcode formats for internal information or 
place internal barcodes on a different side of the parcel.
    For mailers and shippers wanting to use window envelopes on the 
outside of parcels, large clear pouches are available that can be 
affixed for holding various types of packing slips that serve as the 
mailing label with the delivery address information and required 
barcodes. These pouches, which come in several standard sizes, are an 
effective substitute for window envelopes. The most common pouches have 
clear plastic fronts and adhesive backing on either opaque or clear 
plastic backs.
    In today's automated processing environment, the current size of 
the barcode required for eVS, which is based on the Delivery 
ConfirmationTM barcode specifications, remains critical to 
ensure accurate scanning across many processing platforms and in 
multiple delivery situations. Current testing and certification used by 
the Postal Service evolved from engineering studies of barcode 
configurations and industry standards. It should be noted that barcodes 
used by other parcel carriers tend to be the same size or longer and 
taller than the concatenated barcode.
    The longer concatenated barcode is the preferred barcode because it 
contains the delivery address ZIP Code, serves as the basis for 
Confirmation Services scanning information, and promotes mail 
processing efficiencies with automation equipment. Use of this longer 
barcode with the ZIP Code also allows the mailer or shipper to benefit 
from the parcel barcode discount without needing to print an additional 
ZIP Code barcode (postal routing barcode) elsewhere on the label. 
Moreover, this barcode allows the use of Delivery Confirmation for 
Parcel Select and Priority Mail at no additional fee for electronically 
manifested information.
    The mailing industry and the Postal Service determined together 
that the UCC/EAN 128 barcode format was

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optimal for parcels and added this barcode symbology as an option for 
parcels as published on July 14, 1998, in the Federal Register (63 FR 
37947), with an original mandatory use in 2004. This barcode symbology 
was selected for three major advantages:
     First, this format is one of the most complete, 
alphanumeric, one-dimensional symbologies currently available. The use 
of three different characters (A, B, and C) facilitates the encoding of 
the full 128 ASCII character set.
     Second, code 128 is one of the most compact linear barcode 
symbologies currently available. For example, the Code 128 symbology 
length is much shorter than Code 39. Character set C enables numeric 
data to be represented in a double density mode. Here, two digits are 
presented by only one symbol character saving valuable space. This 
format allows concatenation to combine multiple application identifiers 
(AIs).
     Third, code 128 symbols use two independent self-checking 
features that improve printing and scanning reliability.
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 4-state 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) X3.182-1990 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 non-eVS manifesting rules require 
that the package identification code remain unique for no more than 90 
days.
    Response: The 90-day 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) 
number--not necessarily a package identification code as used in eVS--
within a given mailing represented by the manifest. For non-eVS 
manifests, the ID number, whether a computer-generated 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 22-digit numeric package identification code 
(PIC) corresponding to the 22-character barcode is composed of several 
required elements, including an 8-digit number called the Sequential 
Package Identifier. The entire 22-digit 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 nine-digit 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 12-month 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 ``cross-over'' 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 letter-size mail may 
wish to change the classification of advertising mail from Standard 
Mail to First-Class 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 First-Class Mail or overlabel the indicia with 
an indicia marked First-Class 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 location-related 
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 cost-based 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 10-day 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 
origin-based system to a destination-based 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 sampling--only one element of quality 
verification--does 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:
     How postage is to be paid. Postage is paid by the 
transmission of an electronic manifest and the automatic generation of 
postage statements and automatic withdrawals from the eVS mailer's or 
shipper's PostalOne! payment account.
     Where and how verifications are to take place. Sampling 
mail at destination is the cornerstone for eVS verification of correct 
postage payment.
     Use of a Postal Service accounting period (a calendar 
month), rather than individual mailings, as the basis for calculating 
any postage adjustments.

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    In response to the commenter's first concern that postage 
adjustments should be cost-based 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 cost-based 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 20-day 
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. Mis-Shipped BMC Parcels
    Comment: One commenter stated that it is impossible to eliminate 
all mis-shipped 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 mis-shipped DBMC parcel be 
charged the inter-BMC 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 mis-shipped 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 inter-BMC rate for mis-shipped DBMC parcels and intra-BMC 
or inter-BMC rate for mis-shipped DSCF parcels.
    Random sampling is the only technique currently available for 
identifying DBMC and DSCF parcels mis-shipped 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 Mis-Shipped DDU Standard Mail Parcels
    Comment: One commenter requested clarification on how eVS 
calculates the additional postage required for mis-shipped Standard 
Mail DDU parcels. With the absence of a single-piece rate for Standard 
Mail, the commenter believed such parcels should be charged either an 
appropriate First-Class Mail single-piece 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 mis-shipped 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 
First-Class Mail single-piece rate or Parcel Post single-piece 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:
     Rework option. eVS mailers and shippers lack the option to 
rework mail as currently permitted for mail subject to origin sampling 
and verification.
     Sample parcel discrepancy resolution. eVS mailers and 
shippers lack any real ability to dispute destination sampling results 
because the physical pieces will have been delivered, leaving only data 
to resolve discrepancies.
     Automated postage adjustment withdrawals. eVS mailers and 
shippers lack a way to stop automatic postage adjustments calculated 
through sampling and withdrawn from their debit account established 
with the Postal Service before the mailer or

[[Page 38970]]

shipper even agrees with the adjustment. Two of these commenters 
recommended that, in view of these methodology changes, the Postal 
Service develop system functionalities for each eVS customer profile 
that would allow an eVS mailer or shipper to set a threshold--either a 
dollar amount or a percentage of total postage for the month--above 
which the Postal Service would be required to obtain authorization from 
the mailer or shipper.
     Reduction in PAF. Additionally, one commenter recommended 
that the Postal Service should implement a program to monitor its 
sampling accuracy and include a provision that would numerically 
increase the postage adjustment factor (PAF) threshold from 1.015 if 
the Postal Service sampling accuracy or sampling size fell below a 
specified level.
     Optional procedures. eVS mailers and shippers lack any 
alternative to eVS such as using optional procedure mailing systems. At 
a minimum, this commenter believed that the Postal Service should still 
honor and renew existing optional procedure mailing systems with 
individual parcel mailers or shippers.
    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 Origin-Destination Information 
System--Domestic Revenue, Pieces, and Weight System (ODIS-RPW) 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 well-trained 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 e-mail 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 10-day 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 1.5% accuracy level is maintained for 30 days.

    One commenter proposed amending the 0.25% to 0.1% of all parcels 
with

[[Page 38971]]

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 
letter-size mail and flat-size mail--both of which tend to be 
predictable in production, scheduling, and quality--parcel 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 one-half.
    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 60-day 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:
     Quality control documentation. Maintain and document 
quality control over all aspects of mail production and system 
processing environments. Documentation could be represented by a 
quality control manual or other work instructions and checklists that 
the Postal Service could audit if necessary.
     Customer number maintenance process. Ensure that all the 
shipper's clients are incorporated into the eVS data structure for 
proper identification and impact on postage payment.
     Barcode read rate. Document which quality control 
processes are used and which reports are generated to ensure accurate 
readability of barcode information on all parcels.
     Insured parcels. Have a process to validate that all 
insured parcels or collect-on-delivery parcels, whether claimed by the 
mailer or shipper or by clients of the mailer or shipper, are verified 
as being present within the mailing before including the mailer's or 
shipper's data or the clients' data within the electronic eVS manifest 
mailing. This data must be protected using detail record 2 format 
criteria as specified in Publication 205.
     Sampling process. Document the frequency of errors by 
using PS Form 8159 or a facsimile and provide an explanation of those 
errors and the corrective action taken for files accepted from clients. 
Have client-based quality control to ensure the proper rating of all 
material being entered by the client.
     File upload process. Ensure the proper upload of all 
electronic eVS manifest mailing data.
     File return process. Ensure that file error report data--
such as the Product Tracking System Error/Warning report--returned from 
the Postal Service receives scrutiny, prompt correction, retransmission 
or other electronically documented reconciliation.
     Monthly quality improvement effort. Provide a corrective 
action report regarding action taken to improve quality if Postal 
Service sampling results indicate more than 1.5% error.
     Delivery appointment quality measurement. Arrive within 
one half hour of appointment schedules and provide, upon request by the 
Postal Service, electronic validation of monthly performance in meeting 
these appointment schedule times, as applicable to each destination 
delivery unit post office where mail is being deposited.

4. ``Start-the-Clock'' Confirmation at Time of Induction

    Comment: Two commenters expressed concern about the elimination of 
the PS Form 8125, Plant-Verified 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 ``start-the-clock'' 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 ``start-the-
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

[[Page 38972]]

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 yet-to-be 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 multiple-site 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 First-Class 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 long-term, 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 
parcel-shaped 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 paper-driven and can be 
challenging in a dynamic shipping industry. This industry includes 
mailers and mail

[[Page 38973]]

owners (such as catalog companies, order-fulfillment 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, Plant-Verified 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:
     Managing internal workflows is no longer limited by Postal 
Service verification schedules.
     Barcoding each parcel ensures greater precision in 
accounting and postage payment processes.
     Preparing and transmitting electronic manifests eliminate 
the need for paper documentation, significantly improving the 
efficiency of operations and reporting, and providing greater 
flexibility for updating information.
     Having access to a wealth of online reports provides up-
to-date mailing and transaction information. This information, 
accessible 24 hours a day, 7 days a week, facilitates convenient 
information sharing between the Postal Service and the eVS mailers and 
shippers.

Requirements

    eVS has two fundamental technical requirements that provide the 
necessary data and configuration for successful processing:
     Electronic manifests. The creation and successful 
transmission of electronic manifests to the Postal Service for postage 
payment will be required. The electronic file format and data elements 
to be used for these manifests are detailed in Postal Service 
Publication 205. The eVS electronic manifests will replace today's 
hardcopy manifest, as well as the associated hard-copy postage 
statement and PS Form 8125.
     Parcel barcoding. The application of a unique barcode to 
each parcel will be required. There are two standardized eVS barcode 
formats: the Confirmation Services barcode (that is, the current 
barcode used for Delivery Confirmation\TM\ and Signature 
Confirmation\TM\) and the Package Services routing barcode for parcels 
not containing Confirmation Services. Technical requirements for each 
barcode type are also detailed in Publication 205.
    [cir] The barcode must be an authorized UCC/EAN 128 barcode meeting 
the technical requirements in Publication 205.
    [cir] The mailer or shipper ID used in the barcode must be unique 
to the parcel shipper or the parcel shipper's client.
    [cir] Each barcode must be unique for 12 consecutive months. (The 
Postal Service is currently developing requirements to shorten this 
period to 6 consecutive months for implementation by mid-2007.)

    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.

[[Page 38974]]

    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 
password-protected 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 mis-shipped and un-manifested 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 mis-shipped or 
un-manifested. Mis-shipped parcels are parcels deposited at the 
incorrect destination entry facility. Un-manifested 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. Mis-shipped parcels.
    c. Un-manifested 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:
     Incorrectly rated parcels. If total postage paid for the 
parcels on the manifests received for a mailing period is understated 
by more than 1.5% based on sampling and finding underpaid parcels, a 
postage adjustment factor (PAF) will be calculated by dividing the 
total postage for the sampled parcels by the postage claimed for the 
sampled parcels on the mailer's or shipper's manifests. If the PAF 
exceeds 1.015 (that is, the percentage of underpayment is greater than 
1.5%), then the manifested postage amount for the entire mailing period 
will be multiplied by the PAF minus 1 (1.015 - 1) to determine the 
additional postage due.
     Mis-shipped parcels. For DDU parcels dropped at an 
incorrect entry location, the mailer or shipper will be charged the 
difference between the manifested postage and the single-piece rate for 
the parcel. In the case of Standard Mail parcels, the mailer or shipper 
will be charged the difference between the manifested postage and 
(whichever is less) the appropriate single-piece First-Class Mail rate 
or single-piece intra-BMC or inter-BMC Parcel Post rate. DDU rates are 
currently not available for Standard Mail parcels. To allow for 
improved delivery, mailers and shippers can be authorized to commingle 
Standard Mail parcels with Parcel Select parcels entered at DDUs. For 
DBMC and DSCF parcels dropped