PRC Report Backs USPS Service Agreements

The U.S. Postal Service can legally enter into negotiated service agreements with mailers if they follow certain rules, the Postal Rate Commission said in a report to Congress.

The report was filed with the House and Senate Appropriations Committees, the Senate Government Affairs Committee and the House Government Reform Committee. The committees had asked the PRC and the postal service to report on areas of USPS authority as part of their review of appropriations for fiscal year 2002.

NSAs are special service and rate arrangements negotiated between the USPS and a mailer or group of mailers. Some mailers and consumer watchdog groups oppose negotiated agreements, alleging that they give preferential treatment to mass mailers over regular mail users. Proponents have suggested, for example, that NSAs would provide variable pricing that would encourage greater volume and reward the postal service's best customers with discounts and premium services.

The PRC said NSAs are permissible provided the proposal is reviewed publicly; the agreed-upon rate and service changes benefit mail users and the postal system, and the negotiated rate-and-service package is made available on the same terms to other potential users.

The USPS developed guidelines in 2000 for evaluating NSAs and has reviewed several customers' preliminary proposals. But the postal service tabled efforts to promote NSAs due to its financial difficulties, the report said.

However, “with settlement a strong possibility in the current rate case, we are examining NSAs again and have begun reevaluating the earlier process, reviewing potential NSA candidates and determining the resources necessary to pursue customized ratemaking,” the report said.

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