U.S. Postal Service:

Intelligent Mail Benefits May Not Be Achieved if Key Risks Are Not Addressed

GAO-09-599: Published: May 6, 2009. Publicly Released: May 6, 2009.

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Over 80 percent of the approximately 200 billion mail pieces processed and delivered by the U.S. Postal Service (USPS) last year was sent by commercial mailers that barcode, sort, or transport mail to get lower postage rates. Starting in May 2009, USPS will encourage these mailers to use new barcodes that have increased capabilities as part of Intelligent Mail, a new program. According to USPS, Intelligent Mail is the most complex change it has ever undertaken. GAO was asked to describe (1) the Intelligent Mail program and the status of implementation efforts and (2) the key risks to implementing Intelligent Mail and how USPS is addressing these risks. GAO reviewed USPS and regulatory documents, public comments, and interviewed USPS officials, mailers, and mailer representatives involved in developing this program.

The Intelligent Mail program is a USPS effort to encourage commercial mailers to use standardized barcodes that will improve the ability to track mail. The program is centered on a new barcode that can uniquely identify a mail piece. While Intelligent Mail could provide benefits to both mailers and USPS, it will also require both to make significant changes to their processes and information systems. USPS expects to be prepared to begin implementation in May 2009. After that, USPS will phase in price incentives and other functions in November 2009 and will require mailers to use the new barcode by May 2011 to qualify for lower postage rates. Successful implementation of Intelligent Mail faces two key risks--(1) USPS's management approach and (2) mailers may not choose to participate in the program--which if not addressed, could limit achieving Intelligent Mail benefits. USPS has taken some steps to address these risks, such as a phased approach. However, USPS has not followed some key program management practices to reduce risks, raising questions about whether USPS and mailers will be able to meet schedule and program objectives. For example, USPS (1) lacks a comprehensive strategy, including all planned phases and the specific functions and systems to be implemented in each phase; goals and measures of success; and a risk mitigation plan to address the risks that could impact the Intelligent Mail program as a whole; and (2) lacks information on costs and savings attributable to the Intelligent Mail program, including a baseline and mechanism to track and measure actual savings, which are needed to measure program performance. The second risk is that program success is dependent on mailer participation, and it is uncertain whether pricing and other incentives will encourage mailers to participate to the extent anticipated. Some mailers have said they find the pricing incentives insufficient to recover their investment in the program. The Postal Regulatory Commission has also noted that uncertainty may lead mailers to delay adoption. Low mailer adoption could affect USPS's ability to report representative delivery service results, as required to comply with service performance reporting requirements, but USPS has not said how it would address this risk.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: USPS is implementing its Intelligent Mail program to provide much greater insight into the mail. However, GAO found that USPS faces two key risks to successful implementation of the program--(1) USPS's management approach and (2) mailers may not choose to participate in the program--which, if not addressed, could limit achieving Intelligent Mail. Although USPS was aware of these risks, it had no plan for dealing with them should these potential problems materialize. As a result, GAO recommended that the Postmaster General develop a comprehensive Intelligent Mail strategic plan that defines all planned phases and their associated functions and systems and includes program goals and measures of success. In November 2010, USPS released its Intelligent Mail Vision, which lays out seven strategies to guide its Intelligent Mail efforts. We assessed USPS's plan against the recommendation and determined that the plan addresses most of the elements in the recommendation. Overall, the plan better equips USPS to minimize risk and maximize the chances of successful implementation of a large and complex effort, such as the Intelligent Mail program.

    Recommendation: To help ensure that USPS addresses these risks to the successful implementation of Intelligent Mail, the Postmaster General should develop a comprehensive Intelligent Mail strategic plan that defines all planned phases and their associated functions and systems and includes program goals and measures of success.

    Agency Affected: United States Postal Service

  2. Status: Closed - Not Implemented

    Comments: USPS said it established both the baseline and cost reduction metrics for the savings associated with acceptance and verification activities. In addition, it said it has a tracking system in place and is tracking savings for these specific activities on a monthly basis. We requested additional information in September 2010; however, USPS has not provided documentation of these actions. In November 2010, USPS provided us documentation that provided work hours for 2009 and 2010 for the mail acceptance function. GAO is assessing the documentation to determine the extent that it satisfies our recommendation.

    Recommendation: To help ensure that USPS addresses these risks to the successful implementation of Intelligent Mail, the Postmaster General should develop cost and savings information for the activities that can be attributed to the Intelligent Mail program, including the baseline and metrics to be used to track cost savings achieved.

    Agency Affected: United States Postal Service

  3. Status: Closed - Implemented

    Comments: USPS is implementing its Intelligent Mail program to provide much greater insight into the mail. However, GAO found that USPS faces risk to successful implementation because it lacks a program-level risk mitigation plan that identifies and addresses potential weaknesses before they adversely affect the program. GAO recommended that the Postmaster General develop a plan that addresses how USPS will mitigate program-level risks. In August 2009, USPS released its Intelligent Mail Corporate Plan, which identified a single risk (mailer adoption). In an update to that plan in November 2010, USPS identified an additional six risks and discussed ways to mitigate them. GAO assessed USPS's plan against the recommendation and determined that the plan satisfies the recommendation. By producing this risk-mitigation plan, USPS has enhanced its ability to address these risks should they materialize and thereby maximize the chances of successful implementation of the Intelligent Mail program, which is the most complex program USPS has ever undertaken.

    Recommendation: To help ensure that USPS addresses these risks to the successful implementation of Intelligent Mail, the Postmaster General should develop a plan that addresses how USPS will mitigate program-level risks, including the implications of lower-than-anticipated customer adoption of the Full Service Intelligent Mail option, resource limitations, and schedule delays.

    Agency Affected: United States Postal Service

 

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