John (Jack) Potter, the Postmaster General, opened up last week’s Mailers’ Technical Advisory Committee meetings with a choice for the industry: improve address and barcode quality or lower expectations on service performance and measurement. A 30 percent tolerance for Intelligent Mail barcodes cannot support a 96% on-time delivery.

Jack also noted that for the third year in a row, the Business Mail Entry Units have been found non-compliant with Sarbanes Oxley (SOX), particularly in the area of postage statements and payments. In response, the USPS is tightening acceptance requirements, including use of the MERLIN devices.

On a brighter note, Jack reaffirmed that there will be no price increases for market dominant products in 2010. While the possibility had existed that rates might still be increased under an exigency case, Jack noted that it would be wrong to do so. Thus, the biggest issue facing USPS next year is not rates, but changing the law to correct the mistakes in over-funding the retiree health care benefits. The USPS is once again projecting a nearly $8 billion loss in 2010.

Intelligent Mail – The USPS will implement support for the Full-Service IM BC rates on November 29, 2009. Along with the price incentives ($0.001 and $0.003 per piece for Standard and First-Class Mail, respectively) comes a much tighter acceptance process.

The BMEU and DMUs now have hand-held scanning devices which can determine IM barcode quality, validate the Mailer ID, validate the Service Type Identifier, and ensure unique serial numbers for both the mailpiece barcode and the Intelligent Container Tag. A sampling of 10 pieces will be performed, taken from three bundles, out of five trays/sacks, on three containers. If two of the container tags fail, or if three pieces fail to pass the Full Service requirements, the entire mailing will lose its Full Service piece discounts as well as the Start The Clock information and the Full Service ACS information. As harsh as this sounds (and is), MTAC members were assured that the USPS will be willing to work with mailers through this process.

The readability tolerance for Intelligent Mail barcodes will increase to 80 percent on November 29, and rise again to a 90 percent threshhold on March 15, 2010. The USPS acknowledged that the industry still has concerns about MERLIN; thus, the USPS will post on information about the MERLIN devices, including whether the devices are up and running and that the software is current. The USPS will begin to treat the MERLIN devices just like any of their automation equipment and work to achieve a 96% “up time.” The goal is to have this regularly updated information live by the end of this month.

Move Update – January 4, 2010 is when penalties for non-compliance with Move Update requirements will go into effect. First-Class or Standard mailings that are less than 70 percent compliant will have a 7-cent-per-piece penalty assessed to a prorated portion of the mailing. The prorated amount will be calculated as the sampling error minus the 30 percent threshold. For example, a 100,000 piece mailing with a failure of 40 percent will have 10 percent of the entire mailing (40 minus 30) assessed an additional 7 cents.

Tom Day, USPS Senior Vice President of Intelligent Mail and Address Quality, responded to industry raised concerns about the Inspection Service using Intelligent Mail data to determine non-compliance with Move Update. Tom stated that there were absolutely no direct ties between Move Update and Intelligent Mail. The Inspection Service is looking for patterns of mailing behavior over a long period of time and not a single mailing basis.

If you are interested in MTAC, or better yet would like your industry association to consider joining MTAC as a contributing member, please check out the MTAC section on https://postalpro.usps.com. MTAC is a great way to actively direct the future of the mailing industry.