WASHINGTON — The U.S. Postal Service is devoting more staff to develop more negotiated service agreements and do them on a larger scale, as preliminary results are exceeding expectations.
Mike Plunkett, USPS manager of pricing strategy, said at this week's Mailers Technical Advisory Committee quarterly meeting that the postal service is working on the Standard mail NSA with Bookspan, a direct marketer of general-interest and specialty book clubs, and the Bank One NSA.
NSAs are special service and rate arrangements negotiated between the USPS and a mailer or group of mailers. Proponents say NSAs encourage greater volume by rewarding the postal service's major customers with discounts and premium services. NSAs need recommendation by the Postal Rate Commission and approval by the Board of Governors. To date, the USPS has executed five NSAs. Earlier this year, the postal service said it received $12.4 million in net revenue and $9.3 million in savings from the first year of its NSA with Capital One Services Inc., McLean, VA.
“We are continuing to litigate the Bank One case, where we send the decision back to the Postal Rate Commission asking for some clarification,” Plunkett said. The case became more complicated because of Bank One's merger with J.P. Morgan Chase.
The Bookspan NSA, by covering Standard mail, is a departure for the PRC and to some extent the postal service, he said, “and we don't expect it to be an easy litigation by any means. But we think the precedents are important … and we are confident we will get what we asked for and be able to move forward.”
As for NSAs in general, Plunkett said the USPS has “several dedicated staff who are actively pursuing agreements with a number of customers, [but] we are not throwing dozens of people at this effort because we don't yet know if it is really going to be scalable to the level we hope.”
One mailer at MTAC asked whether mailing service providers would be acceptable for an NSA. Plunkett said that postal officials “always thought it would be an appropriate and acceptable avenue. The question is whether we can promote a structure that works and whether NSAs are the best vehicle for executing an agreement.”
A key factor involves ensuring that incentives aren't used to take away business from one service provider for another.
“If we are perceived as tilting the competitive balance among those users by the rate commission, those deals aren't going to work,” he said.
Another issue when the postal service presents an NSA, Plunkett said, is that opponents or the PRC usually ask, ” 'Why didn't you create a classification?' Often, issues that tend more toward cost savings just naturally evolve into classification changes whether they appear in an omnibus case or as a test or a niche classification.”
Plunkett said several things that began as NSA discussions mutated into classification changes. He also said the USPS has a project pending that could go in either direction.
Melissa Campanelli covers postal news, CRM and database marketing for DM News and DMNews.com. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters