1). Although both USPS and mailers could benefit from the program,  implementing the program will require both parties to make considerable  changes to their systems and processes. 2). Service performance measurement capability. Implementation of Intelligent Mail Involves Many Changes for Mailers and USPS

According to USPS, Intelligent Mail is the most complex project it has  undertaken. First,  USPS’s approach to developing and managing the program has not  followed certain key program management practices to reduce risks and  mailers have raised questions about whether USPS and mailers will be  able to meet schedule and program objectives. Second, USPS has said that  Intelligent Mail success is dependent on mailer participation in the Full  Service option, but it is uncertain whether pricing and other incentives will  encourage mailers to participate to the extent anticipated. If these risks  are not addressed, they could limit USPS’s ability to fully achieve the  program’s benefits. USPS also lacks program cost information associated with Intelligent Mail,  including a baseline and mechanism to track and measure actual savings. USPS has developed a process to identify and address  technical risks related to, for example, integrating the Intelligent Mail  system with existing USPS systems, but it has not developed a more  strategic-level risk mitigation plan that discusses how it will address the  key risk areas that could impact the program as a whole, such as lower- than-anticipated mailer participation, resource limitations or schedule  delays. Financial Incentives May Not Be Sufficient to Encourage Mailers to Participate in Full Service

Another risk to the success of the Intelligent Mail program is that mailers  may not choose to participate in Intelligent Mail. Recommendations for Executive Action

To help ensure that USPS addresses these risks to the successful  implementation of Intelligent Mail, we recommend that the Postmaster  General take the following three actions: (1) 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; (2) 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; and (3)  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. However, USPS also acknowledges that the risk associated  with low mailer adoption is a valid program-level concern. Appendix I: Scope and Methodology

This report addresses (1) what the Intelligent Mail program is and the  status of the U.S. Postal Service’s (USPS) implementation efforts and (2)  the key risks to implementing Intelligent Mail and how USPS has  addressed them. Appendix II: Significant Dates in the Intelligent Mail Program, 2001 to 2011

	A report issued by the Mailing Industry Task Force, led by chief executives from 11 industry-leading

companies and the Deputy Postmaster General of USPS, recommended Intelligent Mail as a way to respond  to customer’s needs    USPS established Intelligent Mail and Address Quality organization to identify and shepherd efforts to develop    USPS published Intelligent Mail Corporate Plan, which established the vision of the program  USPS finalized the format for the Intelligent Mail barcode    USPS permitted mailers to begin using the Intelligent Mail barcode on letter mail    Postal Accountability and Enhancement Act signed into law, requiring USPS to report on its service    USPS announced that Intelligent Mail program will be fully operational for all commercial mailers by 2009    USPS published new specifications for the Intelligent Mail barcode  In Federal Register Advance Notice of Proposed Rulemaking, USPS proposed to require mailers that get  automation prices to use Intelligent Mail starting January 2009  In Federal Register Proposed Rule, USPS revised standards and proposed that mailers will be eligible to use  Intelligent Mail and receive incentives for using Full Service starting May 2009  The USPS Board of Governors approved funding to create an infrastructure that will facilitate Intelligent Mail  implementation  In Federal Register Final Rule, USPS announced that it will allow POSTNET barcodes until May 2011 and  that it will start offering Intelligent Mail Basic and Full Service in May 2009    USPS announced price incentives for Intelligent Mail Full Service     USPS will make Intelligent Mail available for mailers to start implementing and testing their systems    Price incentives for Full Service mailers will go into effect and USPS plans to add other program functions    All mailers who get price incentives for using barcodes will be required to use Intelligent Mail barcodes  Pub.
Why GAO Did This Study

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.

What GAO Found

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.