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What Is the Annual Compliance Determination & Does It Matter?

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Annual Compliance Reviews (ACRs) begin in late December and result in Annual Compliance Determinations (ACDs) in 90 days. They are “assessments of [the previous year’s] … rates and service mandated by” the law and Postal Regulatory Commission rules. Later, the Commission issues a Financial Analysis and a report on the USPS’s Performance Report and Plan. The first of these two look like a Wall-Street ratio analysis, and are of little value, though they are a good resource. The ACD is the big one, 251 pages this year, accompanied by 61 public files (mostly Excel).

For FY ‘23, Appendix A is a 20-page compendium of 62 bullets (with 42 sub-bullets) of “Key Commission Findings and Directives.” Two pages are on worksharing and underwater matters, 5.6 are on competitive products, and 12.2 are on service (including things like customer satisfaction). During the review, the PRC Chairman issued 18 information requests, most with a number of questions, and most questions with sub-parts. Service received most of the attention by far in the findings and the questions.

ACMA filed comments in the ACR (along with six other parties, the Public Representative, and a letter from the Taxpayers Protection Alliance; unusually, the National Association of Presort Mailers did not file). Only the Postal Service and Amazon filed reply comments.

The underwater problem was elevated in the 2010 ACR, with the Commission relying on section 101(d) of the postal law. The Postal Service appealed the reach to 101(d), a broad introductory section. The Commission argued that the reach was appropriate for “extreme” cases of underwater. The court agreed on the reach but remanded on a question of whether the treatment of Standard Mail Flats (since rebranded Marketing Mail Flats) was consistent with the treatment of similarly-situated products and on whether Flats might “cease to be an extreme case at some slightly-less-than” 100% cost coverage. The Commission then explained the first question and answered the second question as “yes,” depending on USPS’s recent steps and explanation.

In ACR 2018, the Commission “recommended” an extra 2 percentage points for any product with a cost coverage below 100%, and in ACR 2019 (March 25, 2020) it became “mandatory.” The 10-year review (Docket No. RM2017-3) put this requirement into the Code of Federal Regulations (on December 30, 2020).

ACMA’s comments covered a range of territory, with the main focus on a proposal to waive the extra 2 percentage points for Carrier Route, particularly since the CR coverage was only slightly below 100%. ACMA presented an extensive empirical analysis to support a position that the cause of the below-100% is that nonprofit volume grew significantly while the commercial volume declined significantly. The Commission neglected this analysis.

ACMA also argued that there are fairness issues (e.g., why should High Density also have to pay an extra 2 percentage points or more, as it has a workshare relation to CR?, and why should nonprofit have to pay more when its growth caused the problem?) and that significant questions exist about the level of the costs (e.g., see the separate note on rural carrier costs). The Postal Service supported our request, adding that an ongoing costing case well might lower CR costs.

As for the fairness issues, the Commission said, essentially, that’s the way the cookie crumbles, and that if CR got a lower increase, someone else would get a higher increase, and that this would be unfair to these others.

As for the costs, it said the costs are the costs, and any changes in them need to be made in a separate case. It said ACMA could file such a case, although it knows that doing so would be complex and very expensive, and highly unlikely to succeed (such cases are almost impossible for a group outside the Postal Service). Further, it said that any motion for a waiver would have to be presented as a motion in a separate case. In other words, the die is cast, it is rigid, and you can’t change it.

All this does not mean the Commission is uninterested in costs. A number of questions were asked about costs. It is just that the answers were along the lines of, “well, this happened, that happened, and this was this big.”

The extreme attention to matters of service is obviously important, although many argue that the Postal Service’s self interest in service is all the push it needs. Most of the PRC-push is to get more detailed data on more aspects for smaller and smaller geographic areas for shorter periods of time for narrower components of volume. The image that comes to mind is of a patient with so many electrodes attached that s/he can’t walk. One hopes that all this information is useful to someone and that it leads somewhere.

Beyond more data, there are specific recommendations. The first two in Appendix A are:

  1. The Commission recommends that the Postal Service analyze trends in employee availability and focus its efforts to reduce seasonal variation in employee availability to improve service performance, and
  2. The Commission recommends that the Postal Service analyze the diverse impacts of employee turnover across functional areas to focus retention efforts where they are likely to yield the most benefit for service performance.

Again, one hopes that these recommendations are helpful.

 

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Restricted Status: Each Fund will be separately administered as restricted under the direction of the ACMA Board of Directors by the ACMA Treasurer and our association accountant. An elected Officer from the Executive Committee or the ACMA Board will authorize disbursements. Details on expenditures will be made available to any material contributor on request. Restricted funds may be released only upon authorization of the benefactor or in the event the contributing entity is defunct, by vote of the ACMA Board.

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Lynn Noble

President & Executive Director

New Member Development & Acquisition; Postal Affairs

Lynn Noble is ACMA’s Vice President, Industry Relations, having joined the ACMA in May 2015, following an extensive direct marketing career in private industry as well as the US Postal Service. He is responsible for leading the membership development efforts for the ACMA through new member acquisitions and providing enhanced member value.

Throughout his career, Lynn has held key marketing & sales positions with several leading direct marketers, as well as several high-level management positions with the US Postal Service.

In 2009, at the request of the ACMA, the US Postal Service initiated a new position of Catalog Manager to lead the Service’s efforts to stabilize and grow the catalog industry. Lynn returned to the USPS to lead those efforts and was instrumental to developing a stronger industry partnership between the Postal Service and the catalog industry. Serving as the product manager for catalogs, Lynn helped to raise the awareness of catalog-specific business challenges within the executive ranks of the USPS. During his tenure, the ACMA and catalog companies enjoyed a collaborative and progressive environment that produced more stabilized rates and inclusion in key USPS promotional opportunities.

Just prior to joining the ACMA Lynn was the USPS’s Manager, Strategic Account Operations, leading a team of senior sales professionals who focused exclusively in the Catalog, Mail Order, and E-commerce arena. In addition to his Postal positions, Lynn previously held key positions with leading direct marketing companies, including Cox Target Media, Market Logic, Catalina Marketing, Freesamples.com, and Advantage Direct.

Paul Miller

Vice President & Deputy Director

Association Matters, Marketing / Communications, Membership Relations

Named Vice President & Deputy Director in January 2010, Miller came to the ACMA following a lengthy career of more than two decades following the catalog/multichannel/e-commerce/retail businesses. Reporting to ACMA president & executive director Hamilton Davison, Miller oversees marketing and communications, membership development, and organizes and oversees ACMA’s National Catalog Forum, while working with Davison on most of ACMA’s postal-related efforts.

Miller started his career as a reporter with Catalog Showroom Business, following a form of retailing that was led by the likes of the Service Merchandise and Best Products retail chains.

After several years of editor/reporter roles with business magazines that followed the toy and gift industries, Miller was named associate editor of Catalog Age magazine (now Multichannel Merchant) in 1986. He rose up the ranks at Catalog Age over the next 18 years to be the magazine’s senior news editor.

Beginning in the late ’80s, Miller became Catalog Age’s postal beat reporter, where he’d follow key postal events and pull out the key catalog mail-related issues for readers. During that time, he attended many Mailers Technical Advisory Committee (MTAC) meetings and National Postal forums.

After leaving Catalog Age in 2004, Miller consulted with several catalogers and multichannel suppliers for a time, he was named news/website editor at Commercial Property News. Less than a year later, he was asked to take the reigns at Catalog Success (now All About ROI) where he served as editor-in- chief from 2006 till the end of 2009.

 

Mike Plunkett

President & Executive Director

Washington, legislative, lobbying matters

ACMA appointed Michael K. Plunkett as its President and Executive Director in January 2024, succeeding founder Hamilton Davison. Mr. Davison moved on to own and run a company. Mr. Plunkett brings years of executive leadership experience having been the President and CEO of the Association for Postal Commerce (PostCom) since 2017.  In the newly-formed dual role, he will continue his current role with PostCom and the two organizations will operate separately.

During his tenure, PostCom has continued to lead the mailing and shipping industry on policy and regulatory matters and to work with Government agency partners to advance issues of importance to members. Mr. Plunkett is also President of the Delivery Technology Advocacy Council, a nonprofit launched in 2020 to concentrate on delivery and logistics technologies.

Prior to PostCom, Mr. Plunkett accumulated more than 25 years Postal experience with the United States Postal Service in numerous executive roles in operations, marketing, product development and pricing.  As a leader within the Postal Service’s management team, Mr. Plunkett developed a well-earned reputation for innovation by leading efforts to develop pricing agreements for domestic services and in the development of the forever stamp and the priority mail flat rate box.

Mr. Plunkett has testified on pricing and policy issues before the Postal Regulatory Commission and Congressional subcommittees.  He has authored and presented papers on postal policies, economics, and operations for National and International conferences.

Mr. Plunkett holds Masters Degrees in Business from the Wharton School at the University of Pennsylvania and the Massachusetts Institute of Technology, where he was a Sloan Fellow. He earned a Bachelor Degrees in Economics and Finance from the Pennsylvania State University.