    [Senate Hearing 115-450]
    [From the U.S. Government Publishing Office]

                                                            S. Hrg. 115-450

       NOMINATIONS OF HON. DAVID C. WILLIAMS, HON. ROBERT M. DUNCAN, AND
                       CALVIN R. TUCKER TO BE GOVERNORS,
                              U.S. POSTAL SERVICE

    =======================================================================

                                    HEARING

                                   BEFORE THE

                                  COMMITTEE ON
                   HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS
                              UNITED STATES SENATE

                         ONE HUNDRED FIFTEENTH CONGRESS

                                 SECOND SESSION

                                   __________

                NOMINATIONS OF THE HONORABLE DAVID C. WILLIAMS,
     THE HONORABLE ROBERT M. DUNCAN, AND CALVIN R. TUCKER TO BE GOVERNORS,
                              U.S. POSTAL SERVICE

                                   __________

                                 APRIL 18, 2018

           Available via the World Wide Web: http://www.Govinfo.gov/

                           Printed for the use of the
            Committee on Homeland Security and Governmental Affairs

     [GRAPHIC NOT AVAILABLE IN TIFF FORMAT]

                                   __________

                         U.S. GOVERNMENT PUBLISHING OFFICE
     32-453 PDF                  WASHINGTON : 2019

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            COMMITTEE ON HOMELAND SECURITY AND GOVERNMENTAL AFFAIRS

                        RON JOHNSON, Wisconsin, Chairman
    JOHN McCAIN, Arizona                 CLAIRE McCASKILL, Missouri
    ROB PORTMAN, Ohio                    THOMAS R. CARPER, Delaware
    RAND PAUL, Kentucky                  HEIDI HEITKAMP, North Dakota
    JAMES LANKFORD, Oklahoma             GARY C. PETERS, Michigan
    MICHAEL B. ENZI, Wyoming             MAGGIE HASSAN, New Hampshire
    JOHN HOEVEN, North Dakota            KAMALA D. HARRIS, California
    STEVE DAINES, Montana                DOUG JONES, Alabama

                      Christopher R. Hixon, Staff Director
                    Gabrielle D'Adamo Singer, Chief Counsel
                  Jennifer L. Selde, Professional Staff Member
                   Margaret E. Daum, Minority Staff Director
                   Donald K. Sherman, Minority Senior Advisor
                         Laura W. Kilbride, Chief Clerk
                       Bonni E. Dinerstein, Hearing Clerk

                                C O N T E N T S

                                     ------
    Opening statements:
                                                                       Page
        Senator Johnson..............................................     1
        Senator McCaskill............................................     2
        Senator Portman..............................................    16
        Senator Heitkamp.............................................    19
        Senator Peters...............................................    22
        Senator Carper...............................................    25
    Prepared statements:
        Senator Johnson..............................................    31
        Senator McCaskill............................................    32

                                   WITNESSES
                           Wednesday, April 18, 2018

    Hon. Mitch McConnell, a U.S. Senator from the State of Kentucky       4
    Hon. Rand Paul, a U.S. Senator from the State of Kentucky             5
    Hon. David C. William to be Governor, U.S. Postal Service
        Testimony....................................................     6
        Prepared statement...........................................    37
        Biographical and financial information.......................    40
        Letter from the Office of Government Ethics..................    60
        Responses to pre-hearing questions...........................    64
        Responses to post-hearing questions..........................    97
    Hon. Robert M. Duncan to be Governor, U.S. Postal Service
        Testimony....................................................     8
        Prepared statement...........................................   111
        Biographical and financial information.......................   113
        Letter from the Office of Government Ethics..................   133
        Responses to pre-hearing questions...........................   137
        Responses to post-hearing questions..........................   162
    Calvin R. Tucker to be Governor, U.S. Postal Service
        Testimony....................................................    10
        Prepared statement...........................................   171
        Biographical and financial information.......................   175
        Letter from the Office of Government Ethics..................   191
        Responses to pre-hearing questions...........................   195
        Responses to post-hearing questions..........................   217

                                    APPENDIX

    Income statement submitted by Senator Johnson....................   228

                        NOMINATIONS OF THE HONORABLE
                       DAVID C. WILLIAMS, THE HONORABLE
                      ROBERT M. DUNCAN, AND CALVIN R. TUCKER
                       TO BE GOVERNORS, U.S. POSTAL SERVICE

                                  ----------

                           WEDNESDAY, APRIL 18, 2018

                                         U.S. Senate,
                               Committee on Homeland Security
                                      and Governmental Affairs,
                                                        Washington, DC.
        The Committee met, pursuant to notice, at 10:04 a.m., in
    room 342, Dirksen Senate Office Building, Hon. Ron Johnson,
    Chairman of the Committee, presiding.
        Present: Senators Johnson, Portman, Paul, Lankford,
    McCaskill, Carper, Heitkamp, Peters, Hassan, Harris, and Jones.

                 OPENING STATEMENT OF CHAIRMAN JOHNSON

        Chairman Johnson. Good morning. This hearing is called to
    order. We are meeting to have a hearing on the nominations of
    three individuals to serve on the Postal Board of Governors
    (BOG), a position that I think is sorely needed.
        The history is interesting, in terms of how we came to
    this, what I consider a pretty sorry state of affairs where we
    have no Board members on the Board of Governors. The Board of
    Governors, their task is to, first of all, they are responsible
    for the hiring and firing of the Postmaster General and the
    Deputy Postmaster General. The Board of Governors approves the
    U.S. Postal Service's (USPS) business plan and strategy,
    including major changes to the USPS network, collective
    bargaining agreements, and rate increases.
        Now I think anybody who has taken a look at the numbers,
    and I will be the first to admit that the numbers are kind of
    hard to analyze. We are actually passing out an income
    statement that was kind of a late-night project of mine last
    night, trying to make a little bit more sense, to take a look
    at it from an accountant's standpoint versus kind of government
    accounting, just kind of laying out exactly what has happened
    with the Postal Service.
        It is pretty easy to diagnose. I mean, you have a fall-off
    in volume from 2001, where Postal Service delivered, about
    103.7 billion pieces of mail to now, last year it was 58.7. It
    is only 56.6 percent of that total volume.
        Now they tried to make it up with parcel post. I think part
    of the problem--and I do not have as accurate information as I
    would like before I release some information, but you take a
    look at the price increases over the last 11 years, since the
    last time Congress passed postal reform, which, by the way, did
    not fix the problem long term, the price increases of United
    Parcel Service (UPS) and Federal Express (FedEx) far exceed
    what the postal system has been able to run through. And I have
    had enough meetings with people who use the Postal Service that
    like it that way, but it certainly has not produced a long-
    term, viable Postal Service.
        In 2006s postal reform, they came up with this concept of
    pre-funding, which, listen, as a fiscal conservative I
    appreciate the fact that they actually wanted to fully fund
    your pension plans. The problem is the Postal Service has not
    had the funds. So over the last 11 years, in total, the Postal
    Service was supposed to pre-fund about $62.5 billion. In fact,
    they have actually made payments equal to about $20.8 billion,
    which means they have defaulted on that 2006 postal reform to
    the tune of about $41.7 billion.
        And if you look at their income statement that I did pass
    out,\1\ you can see that the total United States Postal Service
    report income was a loss of $63.9 billion, and 62.5 percent,
    virtually all of it, has to do with that pre-funding.
    ---------------------------------------------------------------------------
        \1\ The income statement referenced by Senator Johnson appears in
    the Appendix on page 228.
    ---------------------------------------------------------------------------
        So, again, if you take a look at it in terms of what I
    passed out here, I think this kind of lays out exactly what has
    happened over the last 11 years. We obviously need to take a
    look at the balance sheet. We need to understand what it is
    going to take to make the postal system a long-term,
    economically viable organization, which it is not today.
        Now we do not have any Governors. The purpose of this
    hearing is to have one. Right now the Postal Service is
    basically having to deal with the 535-member Board of Directors
    and we are not very effective at doing the job.
        So again, I appreciate the nominees' willingness to serve.
    I want to welcome you. I want to welcome your families. I am
    looking forward to your testimony. And with that I will turn it
    over to Senator McCaskill.

                 OPENING STATEMENT OF SENATOR MCCASKILL

        Senator McCaskill. Thank you, Mr. Chairman. I appreciate
    you holding this hearing and I certainly underscore and
    emphasize the comments that you made about how important it is
    that we confirm some members to the Board of Governors.
        The Postal Service is the only delivery service reaching
    every address in America, and is growing by 1.1 million
    addressees per year. The Postal Service employs more than
    500,000 people, including over 100,000 veterans, to deliver 150
    billion pieces of mail and packages each year. It has
    operations in all 50 States, the District of Columbia, and all
    U.S. territories.
        Even as technological advances make the world feel smaller,
    mail delivery remains a critical part of the infrastructure
    that connects people and businesses across the country and
    world.
        The Board of Governors is comparable to a Board of
    Directors of a publicly held corporation and consists of nine
    Governors, appointed by the President and confirmed by the
    Senate. Can you imagine a publicly held corporation that would
    neglect to have a Board of Directors for 4 years, in terms of
    there even being a quorum?
        We have no Senate confirmed members of this Board, and I am
    not just pointing the blame at this Administration. I am
    pointing the blame at the past Administration also, that this
    was not made a priority in terms of filling this very important
    Board, especially at this critical juncture, in terms of the
    Postal Service and the financial constraints it is operating
    under. It is currently operating under the Temporary Emergency
    Committee, which includes the Postmaster General and the Deputy
    Postmaster General. This is untenable. We are in dire need of
    qualified Governors to help make critical decisions especially
    to address the financial challenges facing the agency.
        As the Chairman has indicated, the Postal Service has
    experienced 11 consecutive years of net losses, totaling $65
    billion. In 2012, it reached a statutory borrowing limit of $15
    billion, so it cannot borrow more money from the Treasury, and
    current law prevents the Postal Service from accessing private
    financial markets.
        These financial problems result from a combination of
    factors, including the decline of First-Class Mail and
    requirement to pre-fund 100 percent of its liability. Due to
    its universal service obligation (USO), the Postal Service is
    required to deliver to more addresses every year. Closing post
    offices and processing facilities can save the Postal Service
    money, but can adversely impact these communities, especially
    the rural communities, where the local post office is more than
    brick and mortar. It is very important to the survival of these
    communities that they continue to have first class postal
    service.
        The bipartisan Postal Reform Act of 2018, which Senator
    Carper introduced with Senator Heitkamp, Senator Moran, and
    myself, seeks to balance the Postal Service's competing
    interests while providing the Postal Service with short-term
    flexibility to make some necessary capital investments.
        I hope that we can move forward with nominees for the
    Board. We have a long history of pairing nominees from both
    parties. I am concerned that we are not doing so today. I hope
    the President will quickly nominate a fourth person to the
    Board so that we will have a quorum to take action, and short
    of that, Mr. Chairman, I hope you will work with me to quickly
    confirm a fifth member to the Postal Regulatory Commission
    (PRC). I understand there is a nominee under consideration for
    that position already. We should continue the long bipartisan
    tradition established by this Committee and ensure that balance
    is on the Board of Governors at this critical time.
        While I remain committed to working with the Board of
    Governors and Postal Service management to address management
    and financial hurdles, that will not work if the Postal Service
    refuses to cooperate with congressional requests. For example,
    I continue to be concerned that the Postal Service is not
    maximizing its best but most expensive asset, the last-mile
    delivery, in its negotiated service agreements with FedEx and
    UPS. Without the Postal Service, FedEx and UPS would be forced
    to find more expensive alternatives to deliver packages to the
    last mile.
        I have railed in this Committee for years, we should not be
    giving a deal to our competitors for the last mile of delivery.
    They should be paying a premium, not be getting a discount. In
    no other realm would we be giving a deal to our competitor. And
    package delivery is the future of the Postal Service. But
    despite my repeated requests for data and information about
    these contracts, I have been stymied time and time again. My
    request for Postal Service negotiated service agreements with
    UPS and FedEx has gone unfulfilled for years.
        I will not be able to support anyone's nomination unless
    they can commit that this important oversight committee gets a
    look, and we can negotiate as to how much of that would become
    public. But it is ridiculous that we have reached such a
    roadblock in getting this incredibly important information as
    we try to put the postal service on a more sound fiscal
    footing.
        I see that our leader is here. I apologize for going on
    once he entered the room, thank you, Mr. Chairman. I will put
    my entire statement in the record\1\ and I look forward to the
    testimony of the witnesses.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Senator McCaskill appears in the
    Appendix on page 32.
    ---------------------------------------------------------------------------
        Chairman Johnson. Thank you, Senator McCaskill, and in
    addition to welcoming our nominees we do have the distinct
    honor of welcoming the Majority Leader of the Senate, Senator
    McConnell, who would like to introduce Mr. Duncan.
        So, Majority Leader.

      STATEMENT OF THE HONORABLE MITCH MCCONNELL, A UNITED STATES
                   SENATOR FROM THE STATE OF KENTUCKY

        Senator McConnell. Thank you, Mr. Chairman, Senator
    McCaskill. I appreciate the opportunity to be here this morning
    to present my friend and fellow Kentuckian, Mike Duncan, to
    serve on the Board of Governors of the United States Postal
    Service.
        I have known Mike for a very long time. I am glad that
    President Trump has nominated such an intelligent, able, and
    experienced individual to once again serve our country. As a
    businessman, a public servant, and a dedicated mentor to young
    people, Mike is an outstanding choice to help oversee the
    world's largest postal organization. He has a wealth of
    business experience. He brings important skills to the Board to
    help manage the Postal Service with efficiency and
    effectiveness.
        After graduating from Cumberland College, which is in my
    State, and the University of Kentucky College of Law, Mike and
    his wife, Joanne, moved to Inez to lead the Inez Deposit Bank.
    This is a small community up near the West Virginia line. In a
    small coal community like Inez, community banks are a critical
    resource, and Mike's local focus has helped the area for a very
    long time.
        With proven leadership and dedication, Mike has gained a
    keen understanding of the needs of rural Americans. In addition
    to his financial work in Eastern Kentucky, Mike has served as
    President of the Kentucky Bankers Association and a Director of
    the Cincinnati branch of the Cleveland Federal Reserve Bank. As
    a result, he is adept in corporate governance and business
    management. He has shown responsibility, creativity, and
    integrity, and these qualities will continue to serve him and
    all who rely on the Postal Service well on the Board of
    Governors.
        When Mike and Joanne moved to Inez they committed to
    spending at least one day a week doing something to benefit
    their community. Borne from that commitment is Mike's lifetime
    civic service on a local, State, national, and even
    international scale. From directing the Christian Appalachian
    Project to representing our Nation by teaching the principles
    of democracy to former Communist leaders, Mike has clearly gone
    above and beyond his initial commitment of one day a week. In
    fact, in 2006, he took on the herculean task of serving on the
    Board of the Tennessee Valley Authority (TVA) at a time when
    the TVA was billions of dollars in debt and failing to
    adequately serve Kentuckians. The Senate confirmed Mike on a
    voice vote, and his public service helped to improve the TVA.
        Most recently, President Trump asked Mike to chair his
    commission on White House Fellowships. This position proves
    both the trust which the President has in him and exhibits
    Mike's lifetime commitment to mentorship, which all began back
    in Inez many years ago.
        As a dedicated mentor to dozens of young people in
    Appalachia, Mike helps them understand that they have the
    ability to flourish in their communities. He emphasizes the
    importance of hard work and community service and his program
    pushes these young people to reach their potential. Encouraged
    by Mike, they are succeeding in their own lives and bringing
    long-term benefits to their communities.
        So, Mr. Chairman, I am confident that Mike will bring all
    of these qualities--fierce intelligence, business acumen, and a
    commitment to public service to the U.S. Postal Service. During
    the course of this hearing, this Committee will come to
    understand how much the USPS and our Nation will benefit from
    his leadership and public service.
        So I appreciate very much the opportunity to come by and
    take a few minutes and talk about my good friend, Mike Duncan.
    Thank you, Mr. Chairman.
        Chairman Johnson. Thank you, Leader McConnell. I believe
    Senator Paul would also like to make a few words.

     STATEMENT OF THE HONORABLE RAND PAUL, A UNITED STATES SENATOR
                       FROM THE STATE OF KENTUCKY

        Senator Paul. Thanks, Chairman Johnson, and thanks, Senator
    McConnell, for taking the time to appear on behalf of our
    mutual friend, Mike Duncan.
        I believe Mike is a great pick to serve on the Postal
    Service Board of Governors. Mike and I have known each other
    not for as long as Senator McConnell and Mike have known each
    other but for several years, and I think he will be a great
    pick. He has worked with several hospitals, several colleges,
    and other nonprofits, Senator McConnell mentioned, in his
    resume. But in all the dealings I can tell you, with Mike, that
    I have found him to be honest, forthright, and fair, which I
    think are very important qualities for someone serving in
    government.
        Mike has provided successful and steady leadership for an
    impressive array of organizations, from large national
    nonprofits to regional quasi-government enterprises to small
    community enterprises, and throughout his distinguished career
    across a number of sectors he has always proven that he
    understands how to cultivate and manage personal relationships
    in order to effectively balance the needs of stockholders,
    industry, customers, rate payers, and, really, in the service
    of the public interest.
        The true hallmark of Mike's career, though, as Senator
    McConnell mentioned, has been his willingness to give
    generously of his time, including to students in and around his
    native Martin County and Eastern Kentucky. Though he has been
    to the big city, I do not think he has forgotten he is from the
    small city, and those Eastern Kentucky roots of loyalty to his
    home and loyalty to his State I think have guided him well in
    his career.
        In summary, I think Mike Duncan is a fine man and a
    dedicated public servant. I believe the U.S. Postal Service
    Board will benefit tremendously from his broad experience and
    skilled leadership, as well as, most especially, his good old
    fashioned Kentucky common sense, and I highly recommend him and
    hope the Committee will vote him through. Thank you.
        Chairman Johnson. Thank you, Senator Paul. I would ask
    consent that my written statement be entered into the
    record.\1\
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Chairman Johnson appears in the
    Appendix on page 31.
    ---------------------------------------------------------------------------
        It is the tradition of this Committee to swear in
    witnesses, so if you will all stand and raise your right hand.
        Do you swear the testimony you will give before this
    Committee will be the truth, the whole truth, and nothing but
    the truth, so help you, God?
        Mr. Williams. I do.
        Mr. Duncan. I do.
        Mr. Tucker. I do.
        Chairman Johnson. Please be seated.
        Our first nominee is the Honorable David Williams. Mr.
    Williams is currently the Director for the Center for
    Performance and Integrity at George Mason University. Mr.
    Williams is the former Inspector General (IG) for the United
    States Postal Service, having retired in 2016. He has also
    served as the watchdog for the Department of Housing and Urban
    Development (HUD) and Internal Revenue Service (IRS), among
    other agencies.
        Mr. Williams.

        TESTIMONY OF THE HONORABLE DAVID C. WILLIAMS\2\ TO BE A
                     GOVERNOR, U.S. POSTAL SERVICE

        Mr. Williams. Thank you, Mr. Chairman, and Senator
    McCaskill, and Members of the Committee. Thank you for
    considering my nomination. By way of background, my government
    experience began with military service in the Americal Infantry
    Division in Vietnam. I then joined the Secret Service. I served
    with the Department of Justice Organized Crime Strike Force in
    the Labor Department's Office of Inspector General and was part
    of President Reagan's Commission on Organized Crime.
    ---------------------------------------------------------------------------
        \2\ The prepared statement of Mr. Williams appears in the Appendix
    on page 37.
    ---------------------------------------------------------------------------
        I went on to head the Government Accountability Office
    (GAO's) of Special Investigations. I was then confirmed by the
    Senate to be the Inspector General at the Nuclear Regulatory
    Commission, the Social Security Administration (SSA), and the
    Treasury. I was also the first IRS Inspector General, and for a
    time was simultaneously acting as the Inspector General for
    HUD. Most recently, I served as the Inspector General for the
    Postal Service for 13 years, until 2016.
        As the Postal Service Inspector General, I conducted audits
    of program efficiency and effectiveness and worked closely with
    the outside auditor to review Postal Service financial
    statements. The office also conducted investigations to ensure
    the integrity of the organization's actions and its business
    dealings. I am currently a Distinguished Professor at George
    Mason University.
        I believe the Postal Service has long served an important
    role in America. As an economic engine for commerce and in
    supporting the daily, the communications, and logistic needs of
    Americans. I believe that the contribution of the Postal
    Service continues in this fast-moving and disruptive era. We
    are certainly fortunate to live in these times but they are
    continuously challenging and disorienting for citizens and
    commercial enterprises. The Postal Service and other American
    infrastructures are stabilizing constants, enabling opportunity
    while supporting citizens and businesses in this complex
    ecosphere.
        Each year the Postal Service continues to protect the
    privacy and security of its 150 billion mail and parcel pieces,
    vigorously investigating thefts and abuses. The business model
    since 1970 relies entirely on revenues from its product sales.
    The Postal Service provides the Nation with an unconflicted
    infrastructure serving the public good.
        The Postal Service recently navigated an immense storm that
    included digital messaging diversion, an historic economic
    downturn, and while serving as the sole participating in a
    major experiment to pre-funds its $400 billion benefit
    programs. And, as a result, there is rightfully a concern for
    the finances of the Postal Service, which are currently
    difficult for stakeholders to interpret and understand, and
    stakeholders, as a result, often accuse one another of
    understating or exaggerating the financial results.
        I believe it is essential for the financial condition to be
    more clearly presented, so that decisionmakers can make
    important judgments and chart the future. A first step is to
    decompose postal liabilities into component parts and to more
    clearly define the universal service obligation.
        I also believe that Congress could use the Postal Service
    to further support American citizens and to position business
    enterprises for opportunities and challenges of the digital
    global era. Today I suspect the Postal Service leaves much of
    its value to the Nation on the table.
        The country is also facing the promise and the specter of
    coming megacities, featuring smart systems and the Internet of
    Things (IOT). New systems must integrate our neighborhoods with
    our cities and surrounding regions and to the world. Binding
    our coming nation may actually be more challenging in the near
    future than in our past.
        The Postal Service's facilities and truck fleet could help
    collect and provide needed data for the Internet of Things and
    perhaps serve as platforms to increase internet broadband
    access.
        The digital age is still unfolding and the period ahead is
    likely to be challenging. The Postal Service's trusted presence
    in every American neighborhood could make it a candidate for
    new national mandates should Congress direct. The neighborhood
    operations of the Postal Service often provide the most visible
    presence in the daily lives of American citizens. This is
    particularly true in rural areas, where the Postal Service may
    be vital to enabling citizens of small towns and rural areas to
    enjoy the lives that we have intended for all Americans.
        If confirmed, I look forward to the challenges of this
    complex era and working with you to respond to the needs of our
    Nation. Thank you.
        Chairman Johnson. Thank you, Mr. Williams. Our next nominee
    is Robert Duncan. Mr. Duncan is currently the Chairman and
    Chief Executive Officer (CEO) of the Inez Deposit Bank and is
    the former Chairman of the Tennessee Valley Authority. He has
    over 40 years of experience in community banking and the
    financial services industry in rural Kentucky.
        Mr. Duncan.

        TESTIMONY OF THE HONORABLE ROBERT M. DUNCAN\1\ TO BE A
                     GOVERNOR, U.S. POSTAL SERVICE

        Mr. Duncan. Mr. Chairman, Ranking Member McCaskill, and
    Members of the Committee, thank you for holding this hearing to
    consider nominations to the U.S. Postal Service Board of
    Governors. I am, as you know, Robert M. Duncan of Kentucky, and
    I am pleased to be joined today by my colleagues, David
    Williams of Illinois and Calvin Tucker of Pennsylvania. I thank
    the President for having the confidence and trust to nominate
    me for this important job. I greatly appreciate the
    encouragement of my Kentucky Senators. Senator Paul, thank you
    for being here today and the words that you spoke, and Leader
    McConnell, I thank you very much for being here and speaking on
    my behalf.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Duncan appears in the Appendix on
    page 111.
    ---------------------------------------------------------------------------
        As you know from the material submitted, I have been
    involved in government, business, and politics at all levels
    over my career. I believe that my experiences in the public,
    private, and nonprofit sectors make me uniquely qualified to
    serve as a Governor of the U.S. Postal Service Board. I have
    studied management and leadership in different sectors and have
    an appreciation of the differences, similarities, and best
    practices in each.
        The Postal Service is an interesting blend of a public,
    private, and nonprofit organization. My service on the
    Tennessee Valley Authority Board helps me understand this
    unusual but important structure. I was selected a member of the
    President's Commission on Executive Exchange in 1989 and 1990,
    and I worked at the White House in the Office of Public Liaison
    while studying public and private organizations. I have served
    in many other governmental positions at the local and State
    levels and currently serve as Chairman of the President's
    Commission on White House Fellowships.
        My work with nonprofit organizations includes the Christian
    Appalachian Project, chairing a State University board, and
    serving for many years as Chairman of Alice Lloyd College. In
    addition I was Treasurer, General Counsel, and, finally,
    Chairman of the Republican National Committee.
        As a community banker in Appalachia, I have worked with
    many small businesses and have an appreciation for the
    challenges and potential of rural America. My work with the
    American Coalition for Clean Coal Electricity gave me
    experience of working with CEOs of the largest railroads,
    utilities, and energy companies in the country.
        In addition to my undergraduate and law degrees, I have
    attended numerous Executive Education programs including
    programs at the Kennedy School of Government at Harvard and the
    Harvard Business School. I believe I have both the practical
    and theoretical knowledge to be an effective member of the
    Postal Board of Governors.
        On a personal note, my grandfather, Walter Duncan, carried
    mail on horseback in eastern Tennessee and one year was on a
    train from Cincinnati to Chattanooga as a mail sorter. I have
    been interested in the post office all my life.
        I consider the Postal Service a public trust as every
    American citizen enjoys universal service. Referenced in the
    Constitution, the organization has served to bind America
    together for over 200 years. The Postal Service is in daily
    contact with virtually every business and citizen. The local
    postal employees are the primary contact of most Americans with
    their Federal Government.
        My approach to leadership and governance is simple. It is
    my goal to include all stakeholders through aggressive outreach
    and communications. The working relationship with the Postal
    Service, Congress, and the Postal Regulatory Commission is
    critical. More transparency in governing helps stakeholders
    plan for the future. An adequate staff is necessary for this
    Board to carry out its planning and oversight responsibilities.
    But I believe the reconstituted Board will be strong and
    independent.
        As a new Board member, I do not begin with an agenda of
    specific recommendations. I support a thorough and transparent
    planning process. The basic business model must be examined
    carefully. I will learn as much as possible, as soon as
    possible, to understand the financial conditions of the
    organization, Mr. Chairman.
        The work of the Board will be particularly challenging as
    we begin our tenure. There are many unresolved issues and
    pending legislation that will require flexibility in our
    approach.
        Issues that I expect to confront us are: (1) Governance
    structure. What are the relationships with Congress and the
    PRC? (2) Universal service. What is the intent of Congress? (3)
    Delivery frequency. What is the optimum number of days of
    service each week? (4) Delivery standards. What is reasonable
    and affordable? (5) Changes in rates. What are the constraints?
    (6) Rural service. What is fair to all Americans? And then (7),
    Mr. Chairman, opioids. What can be done to protect the mail,
    customers, and employees?
        If confirmed, I look forward to working with Congress, my
    colleagues, the leadership of the Postal Service, the Postal
    Regulatory Commission, and the stakeholders. The Board's role
    is to establish policy, monitor results, and evaluate
    management. As a board I believe that we can accomplish this
    mission.
        Thank you for considering my nomination, and I look forward
    to your questions, Mr. Chairman.
        Chairman Johnson. Thank you, Mr. Duncan.
        Our third nominee is Calvin Tucker. Mr. Tucker currently
    owns and is the Managing Partner for Eagles Capital Advisors
    LLC, a financial consulting business. His work is focused on
    turning around struggling businesses and starting small
    businesses in Philadelphia. Mr. Tucker has over 30 years of
    experience in the financial services industry.
        Mr. Tucker.

    TESTIMONY OF CALVIN R. TUCKER\1\ TO BE A GOVERNOR, U.S. POSTAL
                                SERVICE

        Mr. Tucker. Thank you and good morning Chairman Johnson,
    Ranking Member McCaskill, and Members of the Committee. It is
    my pleasure to be here today. I want to thank the President for
    his decision to nominate me to become a member of the Postal
    Service's Board of Governors. I am honored and humbled by the
    confidence that President Trump has placed in me.
    ---------------------------------------------------------------------------
        \1\ The prepared statement of Mr. Tucker appears in the Appendix on
    page 171.
    ---------------------------------------------------------------------------
        I also want to thank my wife, Sharon, who is with us today,
    and my family, represented by my two sons, Aaron and Bradley.
    Those who could not join us include my daughter, Sheneen, and
    my granddaughter, Amaya, and my mother, Emma. I want to thank
    them all for their support in everything we have accomplished
    as a family.
        Over my 43 years, I have worked at many diverse
    organizations, and I have had the privilege to serve on
    numerous community and nonprofit boards. From this experience,
    I believe I can truly appreciate these communities. If
    confirmed, I will bring that perspective to help the Postal
    Service better focus on the needs of the small business and
    community groups.
        For example, in my consulting practice, many clients are
    single operators who struggle with their day-to-day
    responsibilities. They will ask questions like, who can help
    marketing, sales, or simply get product to the customers? So
    can the Postal Service simplify shipping options so there is
    one less thing for them to worry about? Are we doing enough to
    support nonprofits and their good work?
        If I am confirmed, these are the kinds of questions I will
    ask. I want to work with the small business community, postal
    management, and all stakeholders to ensure that everyone is
    well represented at the Postal Service. Today, it is essential
    that the Postal Service consider this small business
    perspective. Large companies can leave mail in favor of
    digital, but mom-and-pop businesses still need innovative
    solutions. For example, a neighborhood accountant may struggle
    with a digital advertising campaign, so a mail-based, local
    solution may be necessary. Are we doing everything we can to
    make it the easy and cost-efficient choice? A rural farmer may
    not have broadband, but she should always be able to count on
    mail delivery. How can we service these rural customers better?
    While my experience is in the small business community, I also
    appreciate that the Postal Service is a huge part of our
    Nation's economy. From the smallest to biggest business, from
    the cities to the countryside, from the richest to the poorest,
    the Postal Service is public service without playing favorites.
    Every day it delivers mail to more than 154 billion homes and
    businesses, made possible by more than 640,000 hardworking
    employees. If I am confirmed, I will work to ensure that the
    Postal Service continues to be a significant economic engine
    for all Americans. I am mindful, however, that the Postal
    Service faces significant challenges. These include large
    financial losses, growing debt, and a decline of its most
    profitable product, First-Class Mail. If I am confirmed, I will
    use all of my energy to help find solutions. These solutions, I
    believe, will be found in the Postal Service's strengths. Its
    31,000 post offices connect America. Its workforce is dedicated
    and knowledgeable. And it was, in fact, the very first social
    media network. If we leverage these strengths, I believe the
    Postal Service can flourish. While I do not have all the
    answers, if confirmed, I pledge to bring my perspective and
    experience, listen closely to all stakeholders, including
    Congress, and always remember the tremendous responsibility I
    have been given. Thank you, Chairman Johnson, Ranking Member
    McCaskill, and Members of the Committee. I look forward to any
    questions that you may have.
        Chairman Johnson. Thank you, Mr. Tucker. There are three
    questions the Committee asks of every nominee, for the record.
    I will ask the question then just, in order, starting with Mr.
    Williams, just answer yes or no.
        First of all, is there anything you are aware of in your
    background that might present a conflict of interest with the
    duties of the office to which you have been nominated?
        Mr. Williams.
        Mr. Williams. No, Sir.
        Chairman Johnson. Mr. Duncan.
        Mr. Duncan. No.
        Chairman Johnson. Mr. Tucker.
        Mr. Tucker. No.
        Chairman Johnson. Do you know of anything, personal or
    otherwise, that would in any way prevent you from fully and
    honorably discharging the responsibilities of the office to
    which you have been nominated?
        Mr. Williams.
        Mr. Williams. No, sir, I do not.
        Chairman Johnson. Mr. Duncan.
        Mr. Duncan. No, Senator.
        Chairman Johnson. Mr. Tucker.
        Mr. Tucker. No, sir.
        Chairman Johnson. Finally, do you agree, without
    reservation, to comply with any request or summons to appear
    and testify before any duly constituted committee of Congress
    if you are confirmed?
        Mr. Williams.
        Mr. Williams. I do.
        Chairman Johnson. Mr. Duncan.
        Mr. Duncan. I do, Mr. Chairman.
        Chairman Johnson. Mr. Tucker.
        Mr. Tucker. I do.
        Chairman Johnson. Well, my intention was to actually defer
    to our Ranking Member, so I can respect the other Committee
    Members' time. Are you ready to go for questions?
        Senator McCaskill. Sure.
        Chairman Johnson. OK. Senator McCaskill.
        Senator McCaskill. Let me first ask a brief yes-or-no
    question for all three of you. Do you agree to provide
    information and documents when requested by Members of
    Congress, regardless of party? Mr. Williams.
        Mr. Williams. I do, Senator.
        Senator McCaskill. Mr. Duncan.
        Mr. Duncan. Yes, Senator.
        Senator McCaskill. Mr. Tucker.
        Mr. Tucker. Yes.
        Senator McCaskill. Do you believe that the USPS management
    should comply with the requests for documents and information
    from Members of Congress, regardless of party? Not you,
    specifically, but the management. As the Board of Directors,
    would you require the management to respond to requests from
    Members of Congress, regardless of party? Mr. Williams.
        Mr. Williams. I would, Senator.
        Senator McCaskill. Mr. Duncan.
        Mr. Duncan. Yes, Senator.
        Senator McCaskill. And Mr. Tucker.
        Mr. Tucker. Yes, Senator.
        Senator McCaskill. Thank you.
        Mr. Duncan, before I get into some of the postal issues, I
    want to just ask you briefly, I know that you have run a bank
    and banks are typically closed on Federal holidays. Were there
    any Federal holidays where you required your employees to work?
        Mr. Duncan. There are no mandatory Federal holidays that
    our employees are required to work.
        Senator McCaskill. Let me put it this way. Are there
    Federal holidays where the bank is closed and you required your
    employees to work?
        Mr. Duncan. We have dates where we do training and the bank
    is closed on those days.
        Senator McCaskill. And what holidays would those be?
        Mr. Duncan. In the past it has been President's Day,
    occasionally it is Martin Luther King (MLK) Day.
        Senator McCaskill. So every year you require your employees
    to work on both MLK Day and President's Day?
        Mr. Duncan. Senator, I am not sure. I have been absent from
    the bank for a period of time. I would like to be able to
    respond to you----
        Senator McCaskill. Well, that would be important, because
    if MLK Day is the only day that you require your employees to
    work when the bank is closed, that would be something I think
    this Committee would want to know about.
        Mr. Duncan. I can tell you that they are required to work
    on President's Day. I am sure of that.
        Senator McCaskill. OK. Well, if you would get us the
    details of that, I think that is important.
        Mr. Duncan. Thank you.
        Senator McCaskill. Thank you.
        Let us talk about last-mile delivery and negotiated service
    agreements. I want you to know that when I began talking about
    this several years ago, I kept getting reassured that I would
    get this information. It was clear to me that there had not
    even been a thorough cost-benefit analysis done as to what they
    should be charging UPS and FedEx for last-mile delivery. So I
    kept drilling down and trying to get information, and
    eventually I came to the conclusion that I was not going to get
    anything from management other than ``trust us.''
        Now I need to let you know that, on top of that, I have
    been approached by people who lobby for both FedEx and UPS,
    saying, ``You are right.'' I had one of the companies go so far
    as to tell me that the Postal Service has no idea whether it is
    maximizing its profits on these agreements.
        You can imagine, in light of--I mean, it feels like, to me,
    that their--I am so concerned that their desire for volume has
    overwhelmed good business decisions, their desire to cut costs
    has overwhelmed good business decisions, particularly when you
    talk about the competitive edge we represent, in terms of the
    number of days we deliver and our access to the last-mile
    architecture.
        If confirmed, would you work with me to ensure that I get a
    copy of these contracts, Mr. Williams?
        Mr. Williams. Yes, Senator. I want to know more about what
    is going on. I was present a number of times when you made that
    representation.
        Senator McCaskill. You were in the room when I have been
    hollering about this as IG, right?
        Mr. Williams. I was, and I remember, I think the first time
    and the other times as well. So I know that it has been going
    on for a long time, and I know that you have a good concern,
    and it is a very interesting question. So we do need to get
    into it. We do need to work with your staff, who I have
    considered friends for many years, and get to the bottom of it,
    and I am sorry that that has not occurred as yet.
        Senator McCaskill. Yes. I understand that they do not want
    information out in the public domain, in terms of a competitive
    business situation. That is perfectly understandable. But keep
    in mind, we go into classified briefings and learn things all
    the time, that hopefully most of us never share. I am not
    anxious here to trot out private business information. I am
    anxious to figure out whether or not we are maximizing profits
    on the part of the system that is most expensive to us. To me,
    that seems like a simple oversight request, and I am frustrated
    that this has been so hard.
        Mr. Williams. And I know that----
        Senator McCaskill. Did you ever have a chance to look into
    this when you were IG, as to whether or not they were
    maximizing profits for these co-optition agreements? What do
    they call them? Not competition but----
        Mr. Williams. Co-optition.
        Senator McCaskill. Yes.
        Mr. Williams. We did look at the National Security Agency
    (NSA) process and I am not sure we looked at these particular
    agreements other than to assure that they met the floor. So
    they have a legal deal. Do they have the best deal----
        Senator McCaskill. Right. I want to know if they have the
    best deal.
        Mr. Williams [continuing]. Is another better question.
        Senator McCaskill. Mr. Duncan, would you work with me to
    ensure I get a copy of these contracts, in some form?
        Mr. Duncan. Absolutely, and I would work with the Board to
    make sure the Board has copies of the contracts and analysis of
    these contracts.
        Senator McCaskill. Yes. I think it would be really
    important that analysis be done, especially in light of the
    explosive growth of packages. I just think that is the future.
    I do not think we are going back, in terms of volume of
    packages in this country, and I am very concerned that we have
    enabled our competition to be more successful while we have
    hamstrung the Postal Service.
        Mr. Tucker, would you agree?
        Mr. Tucker. Yes, I will agree to work with you and the
    Committee to ensure that we all understand these service
    agreements.
        Senator McCaskill. Are all of you comfortable standing up
    to the President if you determine that the deals that have been
    cut with Amazon for delivery of packages are a good deal for
    the United States Postal Service? Mr. Williams?
        Mr. Williams. I would be entirely, and I am anxious to look
    into it. I would like to look at how NSAs are approved by the
    Postal Service. It appears as though a review has already
    occurred with regard to whether they have met that legal floor,
    but I think that space between the legal floor and the moment
    we drive Amazon away is the space we need to operate in and get
    an understanding of.
        Senator McCaskill. Yes. I am just concerned. Presidential
    task forces sometimes tell Presidents what they want to hear,
    and the people who go on the task force are people who want to
    get in and tell the President what they want to hear.
        Mr. Duncan, are both you and Mr. Tucker comfortable with a
    confrontation with the President over the agreements with
    Amazon if you determine they are in the best interest of the
    Postal Service?
        Mr. Duncan. Senator, we have to follow the facts and the
    facts will lead us toward the truth, and that will be what we
    advocate for.
        Senator McCaskill. Mr. Tucker?
        Mr. Tucker. Absolutely. I would not necessarily
    characterize it as confrontation but I certainly would be
    willing to challenge the assumptions if I determined that----
        Senator McCaskill. Well, there is no question he is on a
    mission here.
        Mr. Tucker. Yes.
        Senator McCaskill. He has a thing about the man who owns
    Amazon, and we all kind of follow the tweets and follow his
    personality as it relates to when he decides to pick on
    somebody. Those who confront him typically are shown the door
    in not too long a period of time. And I just want to make sure
    that you are not so afraid of being shown the door that you are
    not willing to do the right thing for the Postal Service.
        Mr. Tucker. Oh, absolutely, I am willing to do the right
    thing and I will challenge any assumptions.
        Senator McCaskill. Thank you.
        Chairman Johnson. Thank you, Senator McCaskill. I will say
    that I think one of your biggest tasks is going to be
    extracting the information you need to make good management
    decisions. I share Senator McCaskill's frustration. I have been
    at this for a number of years and we are starting to drill
    down. I am actually looking forward to the task force being
    able to extract that information as well. So best of luck to
    you.
        Chairman Johnson. Senator Paul.
        Senator Paul. The interesting thing is I think, Senator
    McCaskill and the President, you are on the same side, really,
    on this issue. He is concerned about how much Amazon is charged
    in that last-mile, and that is what we have been talking about,
    whether or not they are charged adequately or not.
        Senator McCaskill. Well, there is a difference, Senator
    Paul, in that Amazon is hiring someone to deliver their
    packages. UPS and FedEx are the competition to the Postal
    Service.
        Senator Paul. Right. But there still is----
        Senator McCaskill. Two different animals.
        Senator Paul [continuing]. There is the question, in that
    last mile, which is very expensive, are we charging Amazon
    adequately or are we charging anybody adequately. And, really,
    the biggest question we face with the post office is, is the
    post office losing a lot of money? I mean, billions and
    billions of dollars--how are we going to keep the post office--
    I mean, these are enormous questions.
        And so we have to look at rates. For First-Class Mail it is
    dwindling, so it is not like we can lower the rates and get
    more money through volume. We are just losing the volume in
    first class. What is an appropriate rate? We have to figure
    that out, and I think we have to have the openness to figure
    that out.
        And I guess it is not so much seeing the contracts is how
    you get to the contract, how you get to that price. when we
    deliver that last mile, which is very expensive, to go down
    that last mile to Inez or some small city, it is very
    expensive, and are we subsidizing companies by doing that? And
    we have to look at that, and it is easy to define the problem.
    It is hard to figure out what is the adequate rate?
        Right now Amazon does not have a post office to deliver the
    last mile, so it is not like they could do it on their own.
    There is probably some price at which they would do it on their
    own, actually. But I do not know if we have adequately found
    that price, and maybe there is room for improvement. And so we
    do have to explore all of that.
        One thing that has amazed me, when we have looked at this
    before and we have had a bunch of reforms come forward, none of
    them, I think, have adequately really examined the problem, and
    this is a problem but not maybe easy for people to actually get
    to the solution. Eighty percent of the post office's cost is
    labor. With UPS it is about 50 percent. With FedEx it is about
    38 percent. I am convinced the post office, because of lack of
    market forces and because their labor costs so much, I do not
    think they are ever going to be profitable unless something
    happened with the labor costs. But involves, sort of union
    contracts, and how we get to more affordable labor, I do not
    know.
        But I think, really, is that I hope you are all open-minded
    and that you will be open-minded into looking for answers. I do
    not have a specific question here, but I think what I would
    like to see is that maybe after you are approved that 6 months
    later we come back and say, ``What have you discovered and what
    are we going to do to try to fix the post office?''
        I think there are things that could be done even short of
    legislative changes. One, are we charging the adequate rates?
    Are we negotiating the best deal? And that is the only thing
    that I would advise, is that maybe we come back and look at
    this again. And I do not think it has to be--Amazon is a big
    supplier in our State. I like Amazon. I like all the employees
    that work in Northern Kentucky for Amazon.
        So I am not against Amazon, but I am for seeing what the
    price is. Are we charging an adequate price for the last mile?
    It is not easy. It is not like there is a philosophic answer to
    this so we can say, ``This is the price that is the appropriate
    price.'' Markets determine prices, and so it has to be based on
    supply and demand. But when you have only one supplier, That is
    why it is difficult to let the marketplace work. We have to
    figure out, is there a way we can try to figure out what the
    market price is for the last mile.
        And I do not say that because I dislike Amazon. I just
    dislike losing a billion dollars a quarter at the post office,
    and we have to figure out for all companies that use the last-
    mile, Amazon just happens to be a big player, but there are
    thousands of smaller players that use the post office in the
    same way, for the last mile. We have to figure out how we are
    getting the adequate price.
        But I commend you all, really, for wanting to do this
    service to the country, and I hope you will really think long
    and hard about being open to all solutions.
        Thanks, Mr. Chairman.
        Chairman Johnson. Senator Portman.

                  OPENING STATEMENT OF SENATOR PORTMAN

        Senator Portman. Thank you, Mr. Chairman, and, yes, I want
    to echo Senator Paul. Thanks to you guys for stepping up. This
    is not an easy job. There are lots of challenges, and I think
    Senator Paul is correct about the last mile, and, Mr. Tucker,
    you talked about the importance of that too. So it is not only
    costly but, qualitatively, it is, in some respects, the most
    important thing the post office does, because no one else is
    going to do it. And that is a challenge, but there is a bigger
    challenge, really, in the financials, if you look at them, and
    that is this pre-funding of retiree health and how we deal with
    that, and pre-funding of pensions. And I know that that is
    something that some of you have some expertise on.
        Mr. Williams, in particular, has spent a lot of time
    looking at that, so you bring really important insider
    information that probably no one else on the Board of Governors
    ever has had, about what is actually going on. You know where
    the bodies are buried and you have probably buried some of them
    in your role as IG. And Mr. Duncan has the business experience,
    and he understands how government works too, which is helpful.
    And I appreciate you being willing to step up once again and
    serve your country. Mr. Tucker, you talked a lot about your
    small business background, and you have been a successful
    entrepreneur, and that is sort of the bread and butter,
    ultimately, of the Postal Service. And again, those are people
    who might get left behind if it is not done right.
        So appreciate it, and it is not going to be easy. I know
    this Committee is looking at the House legislation that came
    out of their committee, and I know Tom Carper has been at this
    a long time.
        And, by the way, one issue that I feel very strongly about,
    that some of you are knowledgeable about, I know, is this issue
    of security of the mail system, and particularly the
    unbelievable threat that we have right now with fentanyl. I
    would just tell you, the communities that I represent in Ohio
    are just getting killed by fentanyl. Columbus, Ohio, that
    county, Franklin County, just did their analysis of last year,
    2017. A 47 percent increase in overdose deaths. Two-thirds of
    those were from fentanyl.
        And guess how it is coming to that community? Through the
    mail system. I mean, it is coming through the U.S. mail system.
    And I can say that with some degree of certainty because we
    spent a year studying it, Senator Carper and I, on the
    Permanent Subcommittee on Investigation. I think, Senator
    McCaskill, you were there when we started that investigation.
        But it is clear where it is coming from. It is primarily
    coming from China, primarily coming through the Postal Service.
    When we went online undercover with some Federal investigators
    from Homeland Security, the websites that were selling this
    poison all said the same thing--use the Postal Service. They do
    not want to use UPS, FedEx, DHL, or anybody else because the
    Postal Service does not require them to provide the information
    that could help law enforcement to be able to interdict these
    packages.
        And so I have been on an tirade on this, and we have good
    legislation that most Members of this Committee, I believe,
    have already co-sponsored, called the Synthetics Trafficking
    and Overdose Prevention Act (STOP Act). We have had hearings in
    this Committee. Unfortunately, it is not in this Committee's
    jurisdiction, because I know the Chairman cares a lot about it
    and the Ranking Member. I think we would probably have
    something done by now, out of Committee, but it comes out of
    the Finance Committee, which we are working on, because it has
    to do with our Customs agreements.
        But, one, are you all aware of our study on this, and, by
    the way, it says that the post office is doing a little better.
    They are now providing advanced electronic data that law
    enforcement can use to identify these packages on about 36
    percent of the packages, as opposed to 100 percent with the
    private carriers. But even with that 36 percent we found that
    20 percent of the time the Postal Service was not presenting
    the package to law enforcement, and we also found out that some
    of the data was not legible, not usable by law enforcement.
        So, fewer a third of these hundreds of millions of packages
    are getting reviewed by law enforcement, and meanwhile, the
    poison keeps coming in and killing more and more Americans.
        So I would just ask you, are you familiar with the report,
    and I would ask all three of you that. And then, second, do you
    think the post office should be providing this advanced
    electronic data to U.S. Customs and Border Protection (CBP) and
    let the law enforcement, which they say is critical to their
    ability to try to interdict some of these drugs? Mr. Williams.
        Mr. Williams. I am familiar and deeply appreciate what you
    did with regard to this. This is a nearly unbelievable problem.
        There are some complications. I know that the packages
    received in China are received by China Post, not the United
    States Postal Service. There are some hopeful signs, as you
    said. There is a growing number of packages, any packets coming
    in from China, that do have the data on it, and that is
    increasing.
        I would like to know more, too, about what we are doing
    with the data that we receive, both with regard to Customs and
    the postal authorities. What kinds of data analytics are we
    engaged in? You have to really move fast when that data arrives
    or it really is not worth anything.
        I would like to know, is there any daylight between the
    efforts of the enforcement agencies? The role of the Customs
    broker, for the private express carriers, I would like to know
    more about. Is there a value-added there, and where are we
    exploiting that, as well as the advanced entry data.
        Senator Portman. Let me just say, briefly, the big data
    capability is impressive, and when law enforcement is provided
    with this data it is extraordinary what they can do with it,
    the analytics that they have in place. You are probably aware
    of that from some of your other experience. But they are much
    more sophisticated than they used to be, and so it works well
    in the context of these private carriers.
        And I have been to the sites and I have seen what happens,
    how they pull packages off and how they can get that data
    immediately. As you say, it has to be real-time. But the post
    office has to have that level of sophistication too, to be able
    to present the packages that they identify as suspicious, and
    that is not happening, and obviously they are not even
    requiring it from a lot of countries. So there is much more to
    be done.
        Mr. Williams. There have been some problems at the
    international centers that are related to that, and I think it
    would be a great area for us to focus on, for a number of
    reasons. But certainly opioids is the one that care most about.
        Senator Portman. So if you were confirmed for this job, you
    would want to focus on that and support providing that advanced
    electronic data to law enforcement?
        Mr. Williams. It would be something I would want to do the
    very first day.
        Senator Portman. Thank you. Mr. Duncan.
        Mr. Duncan. Thank you, Senator. Yes, I am familiar with
    your report. I am also familiar with the ravages that are going
    on in the part of the world where I live, in Appalachia,
    Huntington, West Virginia; Ashland, Kentucky; Pineville,
    Kentucky. That whole area is very personal.
        I do not know all the facts. I do not know as much about it
    as my colleague, Mr. Williams. But I am optimistic about
    technology. I have some data background, as you know, and I
    believe this can be a problem that can be solved. I cannot tell
    you when. I do not know what the finances are. I have a lot of
    questions about it. But it is a commitment. It is one of the
    seven issues that I mentioned today.
        Senator Portman. Yes. Thank you, Mr. Duncan. Yes, I think
    your background in terms of using data is very important. Mr.
    Tucker.
        Mr. Tucker. Yes, Senator. I am generally familiar with it.
    If confirmed, I will certainly look at it. And as I said in my
    questionnaire, anything we can do to provide to law enforcement
    to protect our workers and the American citizens I am in favor
    of as well.
        Senator Portman. Thank you to all three of you. Thank you,
    Mr. Chairman.
        Chairman Johnson. Senator Heitkamp.

                 OPENING STATEMENT OF SENATOR HEITKAMP

        Senator Heitkamp. Thank you, Mr. Chairman. This is
    definitely a very important hearing for us. The post office has
    been rudderless. We, as a major Board of Directors here on this
    Committee, but certainly the Board of Directors for the post
    office has not been functioning for a long period of time, and
    you see the result of that in the numbers that somebody has put
    together for us here. And I know, Mr. Williams, as the former--
    --
        Senator McCaskill. The Chairman put this together late last
    night.
        Senator Heitkamp. Thank you.
        Chairman Johnson. The accountant.
        Senator Heitkamp. Yes. The accountant. Well, I appreciate
    this because I think it is the best we can do right now to
    really illustrate the enormous challenges that are ahead of us.
        Now it is no mistake. I have been very aggressive on this
    issue. And to give you a sense of how important this is in
    North Dakota, I opened up a portal on my Web page--now, North
    Dakota is a very small State, population-wise--and it was
    called Fix My Mail. And in a month we had over 500 discrete
    contacts from people who have seen deterioration in service.
    And just yesterday I was with someone from rural North Dakota
    who thanked me for the work on the post office.
        So understand this. Where frequently the problems that we
    talk about here may not have reached America in the same way,
    America knows that the post office is not delivering the way
    they used to deliver. And I think that has been a
    responsibility not of the men and women who walk and deliver
    mail. I think it is the responsibility of management. Whether
    it is us and you guys as the future Board of Directors or
    whether it is the upper management of the post office, we have
    to fix these problems.
        And so I am going to ask just some quick yes-or-no
    questions for all of you. If confirmed as a Governor for the
    United States Postal Service, will you make sure that the Board
    focuses on strong service performance so mail delivery in rural
    America is protected and then improved?
        Mr. Williams. Yes, Senator.
        Mr. Duncan. Yes. It is one of the issues I outlined today.
        Mr. Tucker. Yes, Senator.
        Senator Heitkamp. On the record. How would getting postal
    reform legislation help you in accomplishing your job? And I
    would add to that, have you read Senator Carper, Moran,
    Heitkamp--I think Claire is on this bill too--McCaskill's
    postal reform bill, the latest iteration here that we
    introduced a couple of weeks ago. Mr. Williams?
        Mr. Williams. In my mind, you are the reason there is a
    Postal Service. We have, in this room, some of the express
    companies. They are the best in the world. You need us not in
    those big cities but we are needed where you are.
        The reform bill that is coming through, and has been
    presented, is aimed at reestablishing the financial stability
    of the organization, and that is really the only thing in my
    mind that ought to be a challenge at all. Our dedication to you
    is absolute. You are the reason we have.
        Senator Heitkamp. We are going to hold you to that, Mr.
    Williams, because frequently what we find out is that when push
    comes to shove and we end up financial, we start hearing about
    reducing service, we start hearing about reducing delivery. And
    the other problem that we have--and I will just take a moment--
    is getting appropriate data. Never mind financial data. Getting
    service-related data that we can rely on. We come into the post
    office and say, ``Look, it took 10 days to get a letter.'' They
    go, ``No, that does not happen.'' Well, yes, it does happen. I
    mean, do not call the people who are talking to me fibbers.
    This happens.
        And so, Mr. Duncan, can you illuminate us at all on what
    your expectations would be of this Congress, in this giving you
    the tools you need to reestablish stability, financial
    stability, at the Postal Service?
        Mr. Duncan. Thank you, Senator. I have not read the report,
    the new legislation, but I have read press reports of it, and I
    think it goes to the heart of what we are about. We have to
    develop a business model that requires the cooperation, first,
    of Congress. It has to be of our regulator, the Postal
    Regulatory Commission. It has to be of this Board and our
    stakeholders. And I believe bringing that group together is how
    you do it.
        I am very aware of the level of service difference today as
    compared to 20 years ago, as someone who uses the mail both
    professionally and in my business.
        Senator Heitkamp. And, Mr. Tucker, we will give you a
    chance too. My baseline question is, can you actually do what
    you hope to accomplish for the Postal Service without a postal
    reform bill?
        Mr. Duncan. No.
        Mr. Tucker. No.
        Senator Heitkamp. So we are sending you on a mission that
    is doomed for failure unless we do our job here. Mr. Tucker, is
    that a fair statement?
        Mr. Tucker. I would say that 90 percent of what we need to
    do is directed to Congress. I think we need a reform bill. I
    think we need to move a 20th Century business model to the 21st
    Century, and I think the reform bill, as I understand it, goes
    a long way to move us in that direction.
        Senator Heitkamp. So our choices are pretty limited. Your
    choices are going to be pretty limited if we do not do postal
    reform. You are going to sit in a room and you are going to
    move money from this pile to that pile, and hope you can make
    it happen. But there is not any certainty of success in
    stabilizing the financial outcome or the financial situation
    for the post office. There is no likelihood of success if we do
    not do postal reform. Would you agree, Mr. Williams?
        Mr. Williams. Both limited and extremely controversial. The
    decisions ahead of this, without postal reform get very bad,
    very fast.
        Senator Heitkamp. Mr. Duncan?
        Mr. Duncan. The business model must be changed. I am an
    optimistic person and I think there are things that can be done
    at the margin, but this comes down to the basic model.
        Senator Heitkamp. Mr. Tucker.
        Mr. Tucker. Yes, I agree. As I indicated in my opening
    remarks, we can do some business development and bring new
    clients to the marketplace, particularly small business and
    community groups and nonprofit organizations. But at the end of
    the day, we need reform.
        Senator Heitkamp. Yes. I mean, I would just say this. It is
    like a business that has not modernized, a business that has
    not taken the appropriate steps for a long period of time, in
    part because they have been squeezed by requirements of
    Congress, requirements of this Board of Directors, at this
    table. And so now, to suggest that we can do this without some
    kind of opportunity to stabilize in the short term, your job is
    going to be extraordinarily difficult.
        And so I am committed, as I have been since I got here,
    that we ought to do our job, and that you cannot do your job
    unless we do our job, and get you the right set of
    circumstances.
        So I want to thank every one of you, and your families, for
    you guys taking on this job. I think it is one of the hardest
    jobs right now in America. And I appreciate the extent of the
    service and the diversity of the opinion here, and I look
    forward to working with you after you are approved, and get the
    Board of Directors up and running so that we have a partner
    that we can work with as we move postal reform.
        Thank you, Mr. Chairman.
        Chairman Johnson. Thank you, Senator Heitkamp, and I
    appreciate you noticing my little income statement. Let me take
    just a minute here to talk about the numbers, because it is
    actually pretty stark and pretty easy.
        Setting the income statement sheet aside, if you just look
    at the balance sheet, as of September 30, 2017, when you
    combine the current retired health care benefit liability with
    the Civil Service Retirement System (CSRS) liability, the
    Federal Employees Retirement System (FERS) liability, and the
    long-term retiree health care benefits, that totals $440
    billion. The fund has a balance of $336 billion. That is
    leaving an unfunded balance of $104 billion. That is the
    problem.
        On the income statement you can see, over the last 11
    years, of the $63.9 billion loss that the Postal Service
    reported, $62.5 billion of that is the pre-funding of that
    liability.
        So if you are not really willing to take a look at how do
    you fund that obligation to retirees--I mean, you can talk
    about postal reform but you have to really understand exactly
    what we are talking about. And we can also throw in pretty
    words like ``Medicare integration,'' but it has been pulling
    teeth trying to figure out what does that actually cost, what
    has been contributed, what has been used by postal--I cannot
    get it. I have been trying to get it for years.
        This little income statement here is the result of
    extracting information kind of bit by bit from the Postal
    Service to try and lay out exactly what has happened over the
    11 years so we can understand what is happening moving forward.
    But again, I mean, the basics are in terms of pre-funding, the
    pre-funding to the tune of about $20 billion, and they have
    defaulted on about $41.7 billion. And that just tells you it is
    kind of hard to follow verbally, but is all in the long-term
    pension and health benefit liability. That is the problem.
    Senator Peters.

                  OPENING STATEMENT OF SENATOR PETERS

        Senator Peters. Thank you, Mr. Chairman. And I will just
    echo the comments made by my colleagues here, and Senator
    Heitkamp, in particular. You have a very tough job ahead of
    you, if confirmed. We appreciate your willingness to take on
    this challenge. But it is a challenge that has to be met,
    particularly in our rural areas. Michigan is an urban State but
    it is also an incredible rural State, particularly in Northern
    Michigan and Michigan's Upper Peninsula, which is a very rural
    area.
        And whether it is a retiree waiting for a Social Security
    check or life-saving prescriptions, this is a very real and a
    very big deal for folks, which is why I concur with the
    sentiments that I have heard about the need for postal reform.
    It is up to us to push this forward, and I certainly appreciate
    Senators Carper, Moran, Heitkamp, and McCaskill--thank you for
    your leadership on this issue. Senator Johnson, I know this is
    something you want us to focus on as well. We need to make this
    a priority and move something going forward, and I hope we do
    that very well.
        But Senator Heitkamp alluded to something, the kind of
    complaints that I have been hearing fairly regularly too, which
    is how do you balance the very challenging fiscal situation
    that the Postal Service is in with service? As you cut service
    to meet the demands of the fiscal needs, then people become
    disenchanted with the Postal Service and try to look for other
    options. And then you get, basically, on a slippery slope. You
    cut more services, you lose more business, and your revenue
    goes down so you have to do more cuts.
        And so I want to focus on a couple of areas that I have
    been hearing a great deal about, and one of those areas is the
    consolidation of mail processing centers. As a result of
    unrealistic budget requirements, we are concerned that two more
    centers in Michigan will be placed on the chopping block--
    basically, one in the Upper Peninsula near Iron Mountain and
    another in Lansing that service a great deal of Northern
    Michigan. We had a facility near Kalamazoo in West Michigan
    close recently. The pattern of shutting down these processing
    centers, it seems clear, means that it takes a lot longer for
    mail to get to places because it is not being processed as
    quickly with a number of facilities.
        So I would like to have each of you tell me, will you weigh
    in on decisions related to consolidation of mail processing
    centers, and how are you going to weigh cost savings with
    customer service, given the current situation that you are in?
        We will start with you, Mr. Williams, and if we could go
    down and kind of get a sense. How do you grapple with this
    challenge? Give us a sense of your decisionmaking process.
        Mr. Williams. The Postal Accountability and Enhancement Act
    (PAEA) legislation did a lot of good, particularly in the early
    years, but it did go on a long time. And as those budget cuts
    became more extreme in order to meet our obligations, the
    downsizing became less measured, the targets of opportunity
    were all wiped out, and there were a number of targets of
    opportunity. And we are now down to what needs to be a very
    scientific process. And I think we can only do it through
    modeling. We need to understand the universal service and we
    need to create a modeled network that will deliver that.
        I know, from my work as the Inspector General before, some
    of the early analyses efforts for the impact of closure were
    wrong and mistakes were made. And some of the mistakes became
    more frequent as the financial crisis became more serious.
        So I am a huge believer in modeling. I do not believe we
    can close things through professional judgment any longer.
    Those are all gone. And we need to show you how we are going to
    do it, and give everyone a chance to arrive at the same
    conclusion that we did, that we now have the model for a
    network that will deliver on our promises.
        Senator Peters. Thank you. Mr. Duncan?
        Mr. Duncan. I agree with what my colleague is saying today.
    I guess I am an optimistic person and I start on the revenue
    side first. I think that is where I look before I start doing
    the cuts, because, as a business person I know that there is a
    tipping point, that if you cut into the muscle then you lose
    many other things in an organization. So my predilection would
    be to start looking on the revenue side to make sure that we
    are properly charging for our services.
        I think defining what universal service means, what
    Congress means by that, will help us along the way. I have felt
    the cutbacks, personally, in the processing centers. I have
    seen the change in the standard. We need to know what the
    American people want, what Congress wants, what our
    stakeholders want.
        Senator Peters. Thank you. Mr. Tucker.
        Mr. Tucker. Yes. I agree that modeling is an area that we
    need to look at. We need to define that universal service
    obligation, what it means today, and how do we maintain our
    service standards in communities across this country. I would
    look at both revenue and expenses in making decisions. But I
    think we need to see all of the analytics around how it is
    going to affect those communities before decisions are made
    with respect to consolidation or doing some other things.
        Senator Peters. The strength of any organization is
    dependent on the people within that organization. So morale, as
    all three of you know, is incredibly important to having an
    efficient, well functioning organization. People have to come
    to work motivated to do a good job and take pride in their
    work. And what I have heard, on a regular basis, is that morale
    is a challenge at the Postal Service. Workers feel that they
    have too much mandatory overtime, their opinions are not
    listened to, and they are not communicated to in terms of some
    of the decisions that have to be made, sometimes difficult
    decisions.
        So in the remaining time, if you briefly could give us a
    sense of your vision of how are we going to strengthen the
    postal workforce and the morale in that workforce, which will
    be critical to making sure that this organization runs
    properly?
        We will start with you, Mr. Tucker, and then work the other
    way.
        Mr. Tucker. No, morale is key to a strong and committed
    workforce. I think some of the internal tools that the Postal
    Service should use, it is internal communications, to
    communicate some of the issues that we face, some of the
    opportunities, and bring people in on an incentive basis to
    help them create the opportunities they want, the income that
    they are trying to achieve. And I think just information is
    important to driving morale in any organization.
        Senator Peters. So where does that rank in your priorities,
    in this new position?
        Mr. Tucker. That ranks pretty high because we do not--as I
    noted in my opening remarks, we have 640,000 people and that is
    the No. 1 asset of the Postal Service is our workforce. And to
    keep an interested and committed workforce is the No. 1, I
    think, priority that we should strive to do. Because without
    the workforce, we can do all of these reforms and other issues
    and still not achieve what we need because it is the people
    that is going to make things happen.
        Senator Peters. Right. Mr. Duncan?
        Mr. Duncan. Well, I think the postal employees have a lot
    to be proud of. Consistently, they have delivered the mail, day
    in, day out. They are consistently ranked as the best
    government agency, and I think they have a lot to be proud of.
        On the other hand, they have to have constant
    communication, and that communication is in the form of
    education. They have to understand it is up to us. The tone is
    set at the top by the management of the postal board. That is
    how they work with the union representatives but also the rank
    and file everyday member of the organization. And it is
    communication. It is constant and consistent communication.
        Senator Peters. So that will be one of your priorities?
        Mr. Duncan. It has to be one of the priorities of the
    organization.
        Senator Peters. All right. Thank you. Mr. Williams?
        Mr. Williams. The last couple of years have been really
    rough on the Postal Service employees. In response to that,
    they have risen to the occasion. They were the first ones back
    after September 11, 2001, after Hurricane Katrina. And their
    morale has taken a beating but it is extremely high. It is a
    very dedicated group. And as Senator McCaskill said, there are
    113,000 veterans there, and they bring with it the discipline
    that they learned to this new job.
        We downsized very fast. It reached a reckless pace. The
    wheels were coming off the wagon. And also we focused so much
    on our problems that we only focused on our problems, and there
    were some extraordinary accomplishments that we forgot to thank
    people for. They are our assets. They are 80 percent of our
    operation, and we need to take care of them and thank them for
    what they have done. We need to focus on the successes as well
    as the problems ahead, and the successes have been enormous.
        We also kind of inherited a legacy before any of us were on
    the scene in this. There were labor management problems that
    went back to the 1950s and the 1960s, that still sort of cast a
    pall over things. I am glad that you mentioned this. It is a
    big deal and we never talk about it, and its time has come. We
    need to address this and make sure that morale remains high and
    we do not just, intuitively, rely on it.
        Senator Peters. Well, I appreciate that. I appreciate all
    three of your comments. It is a strong workforce. They care
    deeply about their job. But it is important to celebrate them
    and it is important to make sure that they are a part of the
    decisionmaking process, because they do bring a great deal of
    expertise to the job each and every day. So thank you for your
    comments.
        Chairman Johnson. Thanks, Senator Peters. Mr. Williams,
    real quick while we are on the subject of employee morale,
    having been the Inspector General, do you happen to, off the
    top of your head, know the top pay scale, on a per-hour basis,
    for postal workers?
        Mr. Williams. I think I understand. There is a pay scale
    for all of the various professional series.
        Chairman Johnson. Just for a letter carrier. Do you know
    what the top pay scale is?
        Mr. Williams. I have it in my head that it is around
    $50,000.
        Chairman Johnson. Do you know how soon they can retire on
    full benefits, how many years?
        Mr. Williams. I think it is a combination of experience and
    age, and I think it is about 30 years of experience.
        Chairman Johnson. OK. Again, we will explore all of this as
    we work together with the task force.
        Mr. Williams. And if I am wrong, I will send a confirmed
    note.
        Chairman Johnson. No. Again, unfair question at this point
    in time, but because of your past experience I thought you
    might be able to answer it.
        Mr. Williams. I think that is right.
        Chairman Johnson. OK. Senator Carper.

                  OPENING STATEMENT OF SENATOR CARPER

        Senator Carper. A couple of guys on--probably some gals as
    well, on our committee, are baseball fans. Senator Peters and I
    both turned out to be Detroit Tigers fans, for reasons I will
    explain later. Ben Cardin is our big Orioles fan. And I watched
    the end of the Tigers-Orioles game last night, where the Tigers
    actually won a game, 4-2. And one of the things that you are
    always worried about as a pitcher, is that you are not
    telegraphing your pitches. You want to telegraph your pitches
    to the hitters.
        I am going to telegraph my pitch, and my first pitch deals
    with revenues, which I think, Mr. Duncan, you mentioned. And I
    think I have met you before. I am happy to meet you today and
    to welcome you, and thank you for your willingness to serve. We
    have known David Williams for a long time and just thank him
    for all of his service.
        Mr. Williams. Thanks, Senator.
        Senator Carper. We need Governors. I am an old Governor. We
    need Governors, desperately. To have the idea we have maybe the
    second-largest business in the country and we do not have a
    Board of Directors, we do not have a Board of Governors? I
    mean, that is awful. And hopefully we can do something about
    that real soon, and we can also move a kind of bipartisan
    legislation, Senator Moran and I, and others, have worked on
    with folks in the House. But I am delighted that we are here
    today. This is an important step.
        All right. Before we talked about--and the pitch I am going
    to telegraph is to ask you what the Postal Service should be
    doing to innovate, to bring in revenues, the kinds of revenues
    it needs to be able to invest in capital, whether it is capital
    in processing plants, post offices, technology, technology on
    new vehicles that actually do not break down, that are not 30
    years old, and they are actually a better size for the kind of
    work the Postal Service is doing these days with packages and
    parcels. So To start thinking about that.
        And I will just say, as a backdrop, the Postal Service has
    gone through a lot of cutting, as I am sure Mr. Williams knows.
    They have half as many processing centers as they used to have,
    one-half. They have about a third as many full-time employees
    as they had before. And about a third of all the post offices
    across the country no longer are open 6 days a week, say from 8
    or something in the morning to 5 in the afternoon. We are
    basically on a much tighter--slower schedule--smaller schedule.
    And there is a menu of options that smaller communities and
    towns can take in terms of how do they want to provide service
    to Postal Service, to their residents and their customers.
        But one of the things that I focused on as Governor for 8
    years is balancing budgets, and we were fortunate to be able to
    balance budgets 8 years in a row. We actually reduced taxes 7
    out of 8 years. A lot of jobs were created. I am told more jobs
    in those 8 years than any 8-year period in history in the State
    of Delaware.
        The reason why I mention that is we paid off debt. We got
    AAA credit ratings for the first time in State history, and I
    was so proud of that. So proud of little Delaware getting AAA
    credit ratings, across the board. And I remember after we got
    the AAA credit ratings, meeting with the rating agencies the
    next year, and they said, you have done--and not just me, but
    previous Governors and legislators--Pete du Pont, Mike Castle
    and others--did really yeoman's service in terms of their
    fiscal responsibilities and leadership.
        But each of the rating agencies said to us, me and my
    cabinet, they said, ``You have done, over the years, really
    responsible stuff, good stuff in managing your State's
    finances. You still have one obligation, one liability, you now
    have to address.'' We literally were amortizing 10 years the
    unfunded liability for pensions. We had no money in the pension
    fund, 10 years later. We were amortizing over 40 years, and
    within 10 years we got there. And we just had a lot of extra
    money and we just threw it in the pension fund and did it in 10
    years.
        But fast forward. We have AAA credit ratings in Delaware in
    1999, and the agency said, ``You still have a major liability
    that you have not addressed.'' And we said, ``What is that?''
    And they said, ``You have all these pensioners, fully funded
    pension fund, but they have a health care liability that you
    have not put aside any money to address, and you need to do
    that.'' And so we started doing that.
        As it turns out, we were not the only one. I did not know.
    Almost no State had even acknowledged that was a liability,
    health care liability through the pensions. And they said,
    ``You need to get to work on that.''
        Well, as it turns out, that was like 19 years ago, and if
    you look across the country, you look at most States, most
    States still have not really acknowledged that that is a
    liability, and they are not setting aside money. But they
    certainly have not funded it to 100 percent of the liability,
    on 90 or even 80 percent, or 70 percent, or 60 or 50 percent.
        And if you look at big businesses, I had my States look at
    Fortune 100 companies, Fortune 500 companies, Fortune 1000
    companies and see what they are doing to fund their health care
    liability for the pensioners. Almost nobody that I know of has
    actually funded to 100 percent of the liability, and very few
    are even close to 50 percent.
        And part of the Postal Service's problem, as you know, is
    that they have been required to meet a liability--how do you
    meet this liability, a real liability, and how do you do it
    over a reasonable period of time? How do you do it over 10
    years? Well you cannot, and that is what we said. You have to
    not only realize and recognize this liability but you have to
    pay it off in 10 years.
        And sort of, I think, the genius behind what Senator Moran
    and I and others are trying to do is to say, this is a
    liability. We want you to address it. We want you to fund it,
    but over a reasonable period of time. And that is 40 years.
    That is part of what we are trying to do. And so I just want to
    mention that up front.
        All right. Let us talk about--what would you all need--and
    let us start with David, if we could--some ways that you might
    suggest that we would allow the Postal Service to innovate and
    to be more creative and bring the revenues it needs to invest,
    realizing that all that growth in packages and parcels is
    coming out of technology, it is out of the internet. And there
    is just a lot of running room there, to make money. But go
    ahead, please. I talked too long.
        Mr. Williams. Thanks, Senator. There are a lot of levers
    that can be pulled that will result in revenue for the Postal
    Service that we have not fully exploited in the past, and we
    need to look at the implications of exploiting those. There are
    down sides too. But in my mind I think of things like returns
    management. A huge issue for e-commerce is the number of
    packages being returned. Those can best be managed at the point
    that they are returned, and the Postal Service could easily
    manage that. It is a perfectly situated adjacent space to the
    services we have.
        A lot of foreign shoppers would love to buy here but they
    cannot, because they do not have an address. We could provide
    virtual post office boxes for them and it would help commerce
    and it would help the Postal Service. There are a lot of
    services we could do in connection with last-mile. We could
    provide presence services for the elderly and deliver nutrition
    to the elderly. There is a growing army of freelance workers
    that now have no office. They work at home. And that is only
    going to grow in the future. Better supporting them in this
    last-mile effort. Smart cities are going to bring with them
    smart systems, and the collection of data from the Internet of
    Things. There is something that these 227,000 vehicles and the
    30,000 post offices could do to collect and do initial analysis
    for.
        We could do 3-D shippings, where we are not shipping
    anything. We are just shipping the software, and we actually
    produce it at the point that it is delivered. So there are an
    ocean of things that could be done, and this exactly how world
    posts have gone from losing money to profitability.
        Senator Carper. Thank you so much. Those are great. Mr.
    Duncan?
        Mr. Duncan. I think it starts with technology. I am very
    optimistic about technology. I like the technology that we are
    using at the Postal Service today to allow you to see what your
    mail is going to be. I think that there are things that will
    build off of that platform. My colleague has mentioned some
    other things, the returns. I think this goes to partnerships,
    and it goes to the ability of us being able to flexibly act on
    an agile basis. One of the things that you can help us with is
    to make sure that we have the ability to act on these
    opportunities that come forward.
        Also look at our physical plant. I have been in many of the
    post office buildings, for example, the Farley Building in New
    York. I have been in one in Indianapolis. And I look at how
    little of the space is being used in some of those buildings.
    We have partnership opportunities there.
        Senator Carper. All right. Thank you. Mr. Tucker?
        Mr. Tucker. Yes. I know my colleague talked about informed
    delivery, the innovation side of what the Postal Service has
    been doing. When I first learned about informed delivery I
    mentioned it to my son, who is a millennial, and he was
    excited. He thought it was great that you could see 12 pieces
    of mail that is being delivered to your home, regardless of
    where you are. So I think if we could tell that story, get that
    out to the marketplace, that is going to be a driver of some
    revenues.
        But in my opening statement I talked about three things:
    small business, community organizations, Consumer Directed
    Community Support (CDCs), as well as nonprofits. Those are
    areas that I think we need to cultivate and farm, and possibly
    raise some significant revenue from those communities, and
    heretofore I am not sure if the Postal Service has been working
    with those revenue generators.
        Senator Carper. All right. Thanks. Grateful that you are
    here. Mr. Chairman, thank you so much for holding this hearing
    for these nominees, and we look forward to working with you, to
    move forward. Thank you.
        Chairman Johnson. Thank you, Senator Carper.
        As is usually the case, my colleagues have done a good job
    answering the questions that you are really in a position to
    answer. My questions really have to deal with the detailed
    financial information that you are going to have to gain access
    to, so we can actually go through a problem-solving process,
    develop the information, gather it, do a root cause analysis,
    define achievable goals. I mean, do that first. Then we will
    start working on exactly what the solution is. I think past
    attempts have just really not had adequate information.
        So, again, I appreciate your willingness to serve, and,
    again, I want to say thank you to your families for working
    with you on this.
        I do have a couple of magic words to read. The nominees
    have made financial disclosures and provided responses to
    biographical and pre-hearing questions submitted by the
    Committee. Without objection, this information will be made
    part of the hearing record,\1\ with the exception of financial
    data,\2\ which are on file and available for public inspection
    in the Committee offices.\3\
    ---------------------------------------------------------------------------
        \1\ The information submitted by Mr. Williams appears in the
    Appendix on page 40.
        \2\ The information submitted by Mr. Duncan appears in the Appendix
    on page 113.
        \3\ The information submitted by Mr. Tucker appears in the Appendix
    on page 175.
    ---------------------------------------------------------------------------
        The hearing record will remain open until noon tomorrow,
    April 19, for the submission of statements and questions for
    the record.
        This hearing is adjourned.
        [Whereupon, at 11:29 a.m., the Committee was adjourned.]

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