USPS will spend $14 billion to keep IT edge

USPS needs to spend more money on IT to ensure private-sector competitors such as DHL,
Federal Express and United Parcel Service will not siphon off USPS' business, Postmaster
General Marvin Runyon recently told the service's Board of Governors at a September
meeting in Boston.

"There are those who do not want a strong Postal Service," Runyon said.
"It is clear: 1995, 1996 and 1997 will go down as the best three years so far in
postal history."

Chief financial officer Michael Riley said at a Board of Governors meeting last month
that USPS' new five-year plan emphasizes improving customer service by making mail
delivery speedier and more efficient.

The plan acknowledged that the Postal Service fell behind its projected IT goals for
this year. But, Riley said, "if the investments are technologically feasible and they
are affordable, we should and will accelerate those investments."

IT investments will achieve further labor reduction, he said.

The Postal Service will go ahead with its long-term goal of fully automating its mail
processing, Riley said. To ensure more accurate and efficient mail processing, he said,
USPS will spend $6.7 billion over the next five years on automation and mechanization
projects. The figure accounts for 40 percent of the Postal Service's total five-year
budget of $17 billion, Riley said.

At least $5.9 billion of the $6.7 billion will be spent on IT projects, but other
automation and mechanization work might also include IT aspects, USPS spokesman Roy Betts

For instance, the Postal Service last year spent more than $800 million on automation
and mechanization projects such as remote bar coding, multiline optical character readers
and integrated mail handling system equipment.

Letter automation, flat mail distribution, parcel mail operations and material handling
could require additional investments of up to $6.5 billion over the next five years, Riley

The Postal Service plans to spend $1.1 billion on retail equipment by 2002, more than
three-quarters of which will be spent on the Point of Service One contract to upgrade the
systems customer service clerks use [GCN, Oct. 13, Page 10].

The Postal Service annually revises its five-year plan.

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