if a veteran does have post traumatic stress, the family suffers as well. so what we need to do is when we talk about education, we need to also educate the families. we need to make them aware of the signs, of the early signs of post traumatic stress so that we don't get into substance abuse, so that we don't get into domestic violence and the other issues that have become very, very much a part of the picture. >> also with us is wayne robinson. you are a post 9/11 veteran yourself retired command sergeant major, but more importantly for you right now director of student veterans of america. talk about your work and particularly educating those returning vets. the give bill is amazing. some of those benefits are amazing and people aren't

always taking advantage of that. >> thanks and thanks for the opportunity to speak about the amazing young people that, as the president and ceo of student veterans of america, that i get to represent. and so to start with a little bit of background on student veterans of america or sva, started six years ago on 20 campuses because when student vets were transitioning they saw that the college environment or higher ed was not prepared for student vets. we were older, we were much more mature. we had a different world view than just coming out of high school than say the traditional student. and so these vets met in chicago and we started on 20 campuses six years ago and today we are on more than is,000 campuses representing those 1,000 chapters with more than 400,000 student vets being

serviced by our policy, our advocacy and the work we do in delivering programs. i was very fortunate to be helped by general pace and katy who is here with wall street war fighters and i had a personal sitdown opportunity with leda but what i realized is that the majority of individuals will not have that. and we're about 25 years old and transitioning at least those that we represent and they don't have that transitional point. so there are gaps between where do i

and how do you transition that to the workplace. also joining us is john. head of merrill lynch. i know with you talked a earlier about the private sector but what challenge are you seeing and what are you doing in terms of veterans hiring veterans doing whatever you can that's working? >> sure. thank you. we heard what the challenges are. there's a lack of preparedness. we know about the stigma. there's an ongoing stigma.

we end up trying to make veterans fit our structure and we're trying to recognize that that doesn't work and bend our structure to the way they think and act. it requires, let's take hiring. it requires a different approach. now, one -- my example might be internships so if you're going to try to get an internship on a firm like marle lynch or bank of america is very competitive. the way that we go after the most talented folks the veterans is we created a different internship track that allow them the access and the exposure to see what life is like. so they get sort of a no-risk free look at what a career might look like. the onboarding process is different as we bring our veterans in to about how they're going to transition into the workforce and we

recognize some of those challenges. we don't have ault answer. this is sort of our attempt to do it. we have unique training for those folks as well. but i think most importantly the answers all lie within our people. we have 6,000 veterans that work for bank of america-merrill lynch and they've formed a military support advisor's group. the peer to peer interaction and learnings are probably the best approach that we have to continuing to evolve the process and how we can make sure that we have -- this be a successful transition. the one thing that wasn't talked about that i think is important is we're doing this because this is a business opportunity for us as well as doing the right thing. merrill lynch, for instance, has had a 45-year history of hiring veterans very successfully. they transition very well into our roles as advisers for clients with the maturity, the perspective, the leadership that they have. so i look at this as an enormous opportunity. i think the challenge and maybe

we talk about it at some point is how do we gather up all the resources to make it more seamless? i've met four people over the last 24 hours that are going to help me do this a lot more effectively and one is sitting here next to me. >> that is exactly the point i want to make. you've got all these people up here, all these great ideas. but connecting those dots and making it work, how do you do that? it seems to me just from the conversation and experience that this all starts while they're still in the military. they don't really get that transitional help or they get two days of transitional help and maybe nothing more that some people fall through the cracks. so each of you just talk about your ideas, if you will, about how you connect the dots to what you're all concerned about. do you want to start? >> sure. so i will say two things. one, while they're in the military we have this military support advisory group. we have full-time staff steams -- teams assigned to working

with the military, working with support organizations to identify that talent that's coming out of their service. and so we have a structure around that. that's one way to do it. the other way for us is to plug in to wayne's organization as we think about these campuses. and i happened to go to florida state university which has a robust veterans center and i'm proud of what we do. that's a great opportunity for us to identify talent. so the combination of the structure to attach directly to the military as well as our just ongoing recruiting efforts with the on-college campuses especially those that have established veterans centers give us a big advantage. >> let's go down the order. >> what i'll say is as i look at the issue and we talk about the greatest generation, right? and we know that the stats exist. e can talk about the 500,000

scientists and engineers that were -- that came out of that generation. 14 noble laur yet, three presidents. three supreme court justices. but if you peel that back they look just like our vets. they look -- they were guys from small town america. and so when i look at that picture and i look at the picture of vets, i see connection being the issue. and so we're actually redoing our it infrastructure. so what we want to be able to do is have employers that are interested in reaching out to vets -- and this is something that john and i talked about last night. interested in connecting with vets, be able to connect with them directly on campus. at the end of the day the recruiters need to be able to directly access those vets at florida state, purdue university, to be able to have that robust and dynamic conversation. so about four months we'll have

that infrastructure and -- in place and that way we're out of the conversation. they will be able to reach out directly. and then the vet will be able to put a face to the name of the organization. >> we've been hearing a lot about the veteran and the transition process into the private sector. imagine if the veteran is wounded. imagine what happens to that veteran that service man or woman's life. they still now have to overcome their wounds which they do with magnificent grace and dignity and i see it every day. but they have additional challenges. and so do their families. so in my mind, while they are doing their rehabbing, while they are still receiving treatment is to get to them at that point. mentor, let them know what's available. make them aware of what they need to do. because they do have additional challenges now. it's not just walking out of

the military and into the private sector. for these men and women, the additional challenges are many. so get to them. we used to say there is still this benefit gap as we're all aware. that during the transitional process from the d.o.d. to the v.a. that's the time i would like to see the mentoring process begin. let them know what's available, let them know what will be expected of them. give them an idea as to how they can brand themselves. how to put a resume together. use that time while they're improving themselves towards making them competitive, giving them an equal leveling the playing field, if you will, for that particular service man or woman. >> general, you have seen some very specific things of the transition not only to civilian life but just what ken fisher is talking about, the transition from d.o.d. to v.a. is not that simple. >> no, it's not.

and those are some of the things we need to -- we need to fix. and you don't know when you're in d.o.d. that the transition to v.a. is going to be difficult because you've never been in v.a. before. we have things like drug form lairies that aren't the same between d.o.d. and v.a. so a kid has post traumatic stress that's treated with an anti-depress nt that's 40 years old. finally gets on the right dosage and the v.a. has a dint drug form lairie and tells them that can't prescription you that drug. we don't have that drug in stock because our form larry is different. d.o.d. has a much more expansive than v.a.'s. and it's got nothing to do with the v.a. dock thinks one drug is better. it's those are the drugs that they have to provide. so we have disconnects like that. we have disconnects like the great place that arnold and ken fisher have built at walter

reed national medical center at bethesda i will be politically correct how i state that. nd they do an amazing job at the national intrepid center of excellence for the study of traumatic brain injury and post traumatic stress of putting together a treatment plan for a young man or woman. and they leave there after four weeks with a treatment plan much of it being experimental or really cutting-edge things, go back to a place like west point where they're relying on a try care network they go out and that network says we won't cover 50% of that which is on your treatment plan. now, think of that. we send them to a d.o.d. facility, they get a treatment plan, they move to the insurance provided by d.o.d. where doctors aren't available

to cover them and they're told i'm sorry 50% of what you are being prescribed we cannot provide you. so there are some huge bureaucratic issues here if we're really going to provide care where we need to do an end to end assessment, not in d.o.d., not in v.a., but a total end to end assessment from the time you enter the army until the time you are buried. to understand how to ensure that these two huge organizations are together and are totally focused on the service member. man or woman. throughout their career. >> imagine if you will when if they live in a rural area and they have this prescription and they go to their v.a. -- because the plan is to get them home as quickly as possible to aid in their recovery. but imagine if they go back to

their v.a. in a rural area and they get the response towards the pharmaceutical treatment, what happens then? they kind of vanish. we kind of lose track of them. >> i didn't even know this existed when i was vice. i was in charge of army medicine in a weird kind of way. i had no idea that this problem existed. but most veterans when they're faced with that because of the pain they went through in getting the right ant depressant at the right dosage or the right pain medication or the right suite medication they have, walk out of the v.a., find a civilian provider, get them to write the script and pay for it out of pocket. that's what they do. because they don't want to go through that again. >> i want to touch on also what president bush was talking about in the pee ginning and -- beginning. it's media coverage and it is and i certainly have done this myself. we cover the homecomings and

the heroes but we also cover what you're talking about. we cover challenges or we cover things that make all of the people watching think these people are victims. they don't want to be victims. we don't want them to be victims. i'm going to remove myself because i think i do understand these issues quite a bit. but how do you convince the country, how do you draw that line that you want people to be aware of pts, you want people to be aware of the wounds, you want people to be aware of the challenges. yet you don't want to paint people as victims. but we want to raise awareness but don't want to paint them either as just heroes or victims? >> well, you start in forums like this, i hope, and you hope that the people who hear this in here will take it out and tell it to their constituent sis but i don't really have the best answer because it is really a difficult question. i really appreciated the first

panel because i think it takes somebody from the top to force veterans employment. but when you get to the middle manager, the h.r. person who is faced with two files and one person is deployed six times and another person who hasn't deployed, and if you don't have a push from the top, i can't help but think that that middle manager h.r. person is going to float on over to the person who hasn't deployed because they read a story about some veteran that had some problem with his or her brain and they're afraid. they're afraid and they move over. it really does in my opinion take pressure from the top to get down and say no we're going to do things differently. >> how do you talk to your employees about that? how does merrill lynch do this? and how do they do away with those stereo toops? >> it's education. we know that communicating with a lot of people is very hard. i could say happy holidays and not everybody will hear what i

say. so it's really on this relentless education. one of the things we've identified is a program called unconscious bias which we all carry with us which sounds like this really does fit in this category that we all walk around with news bits that we file away that all of a sudden inform. so you've got to be aware of it, one. so we are taking our leadership team through this. this would be in the category of it. but i think it's education. and what president bush did for me really helped me because he talked about diabetes. and i think about that. my aunt suffered from it. she went in a lot of comas in front of me. and my assistant had really severe childhood diabetes and one day she went into a coma and i recognized it and we were able to call. and i think about that as a work issue. no one talked about it. she has an incredible leadership career with our organization now. but why is it different? so i think the statistics that

you share about head injury and post traumatic stress isn't unique to combat. it's unique to life. and i think that education process will be one way we would go at it. >> when we talk about a bridge from military to civilian life, i know i end up talking to my military friends and i will often say do you have any civilian friends? so what responsibility -- and i'm going to ask you this way -- does the military have to sort of bridge that gap as well? to help you reintegrate, to help you say i am part of this, i had an incredible experience that none of you may be able to understand but i also need to take responsibility for that reintegration? >> i could actually speak on that for quite a while. when you look at the investment, when you say we're going to take america's best sons and daughters and we're going to put them through a process and we're going to make them the absolute best warriors

where they can deploy anywhere around the world, be self-sufficient, hit the ground, and if they're ten steps only be able to answer one of them and figure out the other nine once they hit the ground, that's pretty amazing seeing as how they came in at 18 or at 22 from, as an officer, and then so after that huge investment to turn them into this amazing warrior that that is able to support the country fight anywhere around the world and win, that's very important, and then we look at the investment when it's time for them to come out. so if you compare the two investments, then obviously there's a lot more that we can do. so how do we as ken spoke earlier, how do we rebrand that 22-year-old that we just told nothing was impossible to him or her that we can do all of

these things? if i could also address the previous question about conversation. what we want to be able to do is to change the conversation for the veteran in higher education. and we want to do that quantitatively. and we want businesses actually to be selfish when they approach us and ask what is the r.o.i. for hiring a vet? and so when we're working with -- >> return of investment. >> return on investment. >> i got it. >> what is the return on investment for hiring a vet. the n we look at organizations we partner with military family research institute and bept to prove quantitatively that if you hire a vet this is your return. so if we look at world war ii we know that for every $1 that was invested in a vet, $7 was

returned to the economy. so that's the conversation we want to bring to business to reshape how student vets or how vets are viewed. >> anecdotally i can tell you that we have a higher success rate with veterans than with nonveterans in our development program so we can talk about it later but we have some data. >> and that's what we want to be able to get out. >> there's also the data of unemployment is higher and general can you address that? >> the unemployment issue? i really -- i think d.o.d. is doing its best because it costs them money when people come out of the service and are unemployed for a period of time they have to pick up the unemployment benefits for one year. that was about an $800 million i had when i was vice. i think it's gone down a little bit now but they are working very hard on the transition assistance plan with v.a. to prepare better. i'm very, very pleased when i

hear things like that data base and data is being turned over to employees. that is -- that's huge. i sure couldn't make that happen or i couldn't find the right lawyer to make that happen when i was where i was. so those things are all great steps forward. but i think we need to go further than that. i had a discussion with a friend of mine in here before why don't we require everybody to do a linked in profile? and my good lawyer training said i can't do that because that is a privately owned rganization and if we were see ing favoring anybody we would be in trouble. but we need to make sure that we get them into the hand of the veteran and the hands of that h.r. person far earlier in the process than we do today. >> so if you all had to prioritize right now what you should do first to help make

this process work better of transition or employing or of reaching out to students to get to veterans who are students to get an education, what would you -- how do you prioritize? it's hard. right? >> to me it's -- we've hired 4,000 veterans over the last 3 years and plan on hiring another 10,000. my priority in achieving that outcome for our business and for those veterans is really to connect better with the organizations that can provide me that talent pool, that can associate us and can point out those skillsets. because it just saves a ton of time for everybody to do that. so my priority walking out of here is to do a very good job of connecting with some of the people i've heard here, put our team in place to put together a much more efficient approach. >> i want to eliminate the 20%. i'm focused on the minority.

i'm focused on those who are affected. so i'm kind of different in that way. i want to understand post traumatic stress. i want to be able to tell with certainty that someone has post traumatic stress not by asking them 20 questions. and i want -- demand -- that we treat today's veterans better than we treated other veterans who we know had post traumatic stress and traumatic brain injury from every war we fought in. and we're about 40 to 50 years behind in doing the research and connecting the dots that need to be connected to find answers too help that 20%. and if we did that and could really clear up this mystery and it really is a mystery. it's a mystery to everyone, even the professionals. and don't let them tell i-otherwise. if we could clear up this mystery we would go a long way in helping veterans unemployment by taking away this aura of uncertainty of

people having traumatic brain injury or post traumatic stress doing thing that is we don't want them to do. >> and how much improvement do both of you think there has been in terms of removing the stigma? because it's certainly still there. >> it's still there and i don't think -- i think you're going to have to stand this forever. but this is a society. society's problem. and we take your young men and women. you don't like talking about suicide. we concentrate on military suicide. i have 160, 170 active component soldiers commit suicide every year. 38,000 americans commit suicide every year but we were focused on that 160 to 170 in my case army soldiers. we ought to be focused on the large numbers. we ought to be focused on the 3.4 million people that are going to have head trauma every year, on the $78 billion in direct medical costs that traumatic head trauma costs

this country every single year and getting rid of it. and we've got to increase a research budget to researchers who are going to research the right way by sharing their data. we've got to increase that budget because i know with all the great ceo's in here that if you had a $78 billion problem and you were only spending $82 million a year to get at that problem you would not be a ceo for long. >> i think you want to say something about that. >> i think as the general just said, the stigma still exists. but there has to be a starting point everywhere. and we've made this -- we've made this issue, we brought it out to the forefront that there is a stigma. so now it's up to the veteran, it's up to the service man or woman to come forward and get the help that's there. i think that it's time that we started working and focusing on what works instead of what doesn't work. i'm so tired of hearing about everything that's wrong.

we know what's wrong. but let's start looking at what's right. let's see what works in this country. let's see what works as it relates to veterans best practices and bring that to light. and let's also remember that through this whole thing is the military family. and with sequestration and budget cuts it's this segment of military society that will get hit the hardest. this is where we as philanthropists, where we as foundations need to do a better job of hitting the issues, eliminating redundancies, honoring the donated dollar, fulfilling the mission that we have to fulfill. because i think in the end i think with everything that's going on with all the cuts, with all the issues, be it stigma, wounded, jobs, it's the private sector that's going to

make the difference, that's going to eliminate the gaps, that's going to lead the way forward. it's up to us to do a better job, to spend more money on our programs, and not on promotion, on salaries, so forth. we can do it. we just need to be more vigilant. > if i could tag along to what ken was just speaking on. what we are doing and the issue that we think is very prevalent in the student vet area or arena is that for -- if you were to ask anyone in this audience or outside of this audience what are the graduation rates of student vets at a particular university across the country, each year. so between 2009 and 2013, there was $34 billion invested into student vet education through the g.i. bill. so if you ask the graduation

rate no one could tell you what those graduation rates are. as a matter of fact, no one could tell you for the last 70 years what the graduation rates are. so very low data existed. so we at s.v.a. are determined to partner with the best, the brightest organizations that are committed to supporteding student vets and bringing them out of the shadows, bringing them out from just the portion of nontraditional students. so we partnered, we're funded by google is stepped forward, lume in a, a couple of foundations, and what we're doing is a project called the million records project. and we're actually competing -- computing the graduation rates from 2000 to 2010 of student vets. and we're going to release that. the first time in 70 years on march of this year. and then afterwards we're going to compute the persistance

rates and we're going to demystify student vets. we're going to show you how well student vets are doing. so those of us up here on the panel understand this but this is what we're going to get out to the american public so we can get away poor vet portion of the conversation and the handout and put us into the of investing in the country. with the research we are doing here. i want to open up to questions from the audience. we are going to wait for the microphone. right there. name and your affiliation. if you want to direct your question to a particular person. >> father john sheehan, i am a jesuit. that is latin for troublemaker. i run the xavier society for the

representingm the association for blind veterans. we have heard about post-traumatic stress and brain injury. ken talked about wounded warriors who carry their weapons woundsem -- carry their with them. employers tend to back off when shows up in a wheelchair or with one arm. a blind guy does not get to show up. blind people can do almost anything a sighted person can with proper equipment and training. i have ridden in a car driven by a blind guy. my challenge is -- what are we doing for blind vets? that is a small segment but in the last 20 years combat injuries that affect the eyes have skyrocketed.

unity has created a separate department to deal with this. companies have got to find ways to incorporate this. >> john, do you want to take this? >> i will take this as a challenge. i cannot address that as specifically as you would want. if that is a bias, we will just it. -- we will address it. >> i don't think you're going to get anyone who will disagree with you. you will do that, others in the room will do that. thank you for bringing that up. [indiscernible] >> thank you. behind you. will go to you. good afternoon. my name is kevin, director of interest initiatives -- director of veterans initiative for the walt disney company. very big numbers.

numbers in the thousands and hundreds of thousands. the veteran employment is one veteran at a time. with this this room brilliant crowd if each person towardsone veteran completing college. one veteran towards finding employment, we will move free hundred to 400 veterans to a better life. to the group, it is not a question, it is a statement. panel, thank you for your time. >> thank you, kevin. i think that is another one we agree. to that point, is getting to know veterans. is out there and who can offer their services. there are so many veterans who are so extraordinary who can do so many things. and just need a little push. right there. thank you.

my name is nakema, i am the chair of the veterans coalition of north central texas. we are a nonprofit comprised of 70 plus organizations that meet every month. from nonprofit organizations to the federal government. he talked about what are you doing, that is what we are doing on the ground. we come together every month to talk about the issues of our service and veteran organizations that support them. you mentioned a couple things i have a question. he talked about research and the economy. increasing the funding for research, the gap and prescriptions and after care. all that goes back to coverage for veterans. tri-care is one of the most -- i am sorry -- pathetic of around.s i have providers that call us and say we can no longer be in your network because you do not

pay anything. we can no longer see your pay lessbecause you than medicare pays. that is embarrassing. what are we doing -- before we talk about increasing funding for research or prescriptions. if we do not have doctors who will see them how can they get prescriptions? how can we talk about research? what are we doing to say we need to provide better medical care, better dental, better vision -- all around health care for our veterans. i am talking about -- >> let me take that question. sorry, general chiarelli, you are going to get this one. one of the issues with tri-care is the payment rate. we are trying to establish where that is having an impact. i am on a commission now looking at this whole thing. dod paid out $16 billion last

year in indirect medical costs on the tri-care network. they only did a billion dollars -- they only did $8 billion worth of care in our facilities. ontof our care is going the network. there are a bunch of things happening in health care today making it difficult. a $16 billion bill is something we are being asked to i promise you that. i do not see a movement afoot to raise tri-care payments. i really do not. there are things that could be done. one, they are normally five-year contract. the contract is set and services are set for five years. that is why you have problems with nico -- >> nico? >> national intrepid center of excellence. >> i am just reminding.

>> that is a problem i mentioned earlier. ,he plan is set for five years it is difficult to change. you have to wait until the next contracting phase five years later to include things like cognitive behavioral therapy for people with the strikes stress -- people with posttraumatic stress that it is covered across the board. i understand your issues. the committee i am looking -- the committee i am sitting on is looking at all those issues. >> sir? hello, my name is david, executive director of the greater dallas military foundation. i wanted to touch on mr. fisher's point about best practices and sharing what is working. the commission you are working on, general, defines best these problems. that is where we need to spend time. one organization i am involved with is helping children's

medical, a private organization, address a shortfall of $60 million in their budget. there are an enormous number of people around the country that would be very happy to dedicate their time and effort to operational do excellence, improvement projects, etc. for the v.a. if we could gain access to stop for tri-care. the ability for people in this , to to volunteer, to give give their time and their talents is a challenge. >> volunteering is not always easy. it is not always easy for companies to take volunteers. >> or for the government. >> i thinkfor all these people -- they would love to help if we could. if we could find access and we were given -- when i heard that the dod was giving up data on veterans, is pat

was stunned. we did a project with 3000 sailors to help them get a job. the biggest problem was how do we get to them and engage them? the issues around privacy was a big block. the issue of pay, we are from the private sector and here to help. >> let's let ken fisher talk about. about volunteering, first of all. about people wanting to help. i think volunteers are very relevant, especially when it comes to fisher house. the lifeblood of our program is those who want to serve in any way that they can. they do not always have treasure, they have services. it is these kinds of foundations. therenot really know if was a question -- forgive me if i am not answering or hitting

it. when it comes to volunteering at the relationship to tri-care i was not sure about the correlation. what i would like to say is that there are many ways we can make a difference. i know there is a lot of anger about tri-care and potentially raising fees and so forth. i know that there is a lot of anger about the quality. let me rephrase that, because i think the quality of care that has been administered to those who have been wounded with the 95% or 96% battlefield survival rate is pretty hard to argue with the quality of care they are getting. focusing on best practices and what is working. that is worth your time and your effort and volunteer. there are many of organizations that really need you. it is not just treasure, it is time, too. i do not know what your question was.

when i hear the word volunteer, and theit to what we do amazing volunteers that we have. >> [indiscernible] leaders -- >> do you have a quick question? >> how do we get connected? privatee considered a organization, that is something that frustrates us all. throughout my time as the vice for four years, i am sure general paes had similar experiences. private organizations would come with one intent and that was to help wounded warriors. it was very hard because of regulations for us to be seen as favoring one private organization, even though it was solely directed at helping individuals, over another private organization. >> you cannot fund raise. tell you how

difficult it was to get the process in place. the hardest thing in the world is to get the government anything. >> that was my point. it is hard to volunteer than you think. you said it better. less itore we do, the falls on the government. what we do, we have to do well. >> i just want you to each wrap up, if you can. some final thoughts on how we take what was announced today and the initiative and the research being carried out. and what they want to happen and how do you make that happen. i learned a lot today. there is research and it is accurate. it came from the people trying to serve. that has tons of credibility with me. i learned a long time ago that none of us are as smart as all of us. i challenge us to take the

challenges we have today and then do something about it. it can be one person one at a time. i am walking away saying i have much more information. and we have better data and more facts to fix the problem and we will do that as an organization. >> i will just say if we look at what can we do with those sitting in the room, help us to fund research. number two, to be able to reach chapters in your local community. asked to serve as mentors. it might be tough initially are busy,udent vets with families -- they are older. once you break down that barrier the first thing you will realize is that they do not know the question to ask you. and justith resources saying i am here to help, to

support, what do you need? on a local level that will help the student vet be in power. >> ken? >> 1% of this nation raised their right hand and took an oath to defend this nation. we as americans also need to raise our right hand and take enough to take care of the military family. take care of those who have given so much to this nation, whether it is a mental or physical injury. remember the military family. do what you can to help employee our wounded. do what you can to employ the blind. do what you can to employ those in wheelchairs and so forth. remember what sacrifices have been made on behalf of this nation. >> i would like to build on president bush's lost lede. >> he buried the lede, yeah.

>> that we end the stigma associated with these issues. depression, post about it stress or brain -- depression, posttraumatic stress or brain injury. creating the environment in your own space. be that a large corporation or a small group of people. that tells people it is all right to go get treatment for these problems. that is absolutely critical. that, we will go a long way in helping the great group of people that are out there that really need to get some help. i am sometimes criticized for winning to drop the d. people say i have talked to all kinds of people and they say they had no problem with the d at all, they called the

disorder. that is the wrong group of people to talk to. talk to soldiers who say at 19 years old i do not want to be told i have a disorder because i had to pick up my friend in pieces on the side of the road and put him in a body bag so i could bring him home. i do not want to be told i have a disorder because of that. ending the stigma and getting that we to get the help can give them and over time improving that help is what i hope we can all do. only improving that helped but also educating the country to know that there is and they can that be great contributors to society and the workplace. we thank you very much for those thoughts. we leave it up to you to connect those dots and help others as well. [applause] [captioning performed by national captioning institute] [captions copyright national cable satellite corp. 2014] up next on c-span, a hearing

on the u.s. postal service. then, some topics on "washington the secondncluding amendment, the conservative movement, and foreign policy in the middle east. "washington journal" is live every morning at 7:00 a.m. eastern. >> nearly 40% of european union gas imports come from russia, much of which goes through ukraine. a panel looks at the implications of russia's growing influence in european and asian energy market. live coverage from brookings starts at 10:00 eastern on c-span. donald trump will address the national press club. beginning at 1:00 eastern on c-span. >> up next, a panel looking at the future of the u.s. postal service and new innovations and

delivery. with postal officials and business executives. this house oversight subcommittee hearing is one hour 40 minutes. >> good morning. i would like to read our mission statement. americans have a right to know the money washington takes from them as well spent. americans deserve an efficient, effective government that works for them. our duty is to protect these rights. our responsibility is to hold the government accountable to taxpayers because taxpayers have a right to know what they get from their government. we will work tirelessly and partnership with citizens reform. groups to bring this is the mission of the oversight and government reform committee. i would like to recognize myself

for an opening statement. which is in a different book. i edited it. the staff suggests one is not always 100% right. we will examine recent efforts by a number of private sector companies and startups to develop innovative postal products. while the internet has been a boon for the national and global economy, it has been a mixed blessing for the postal service. first-class mail volume is down more than 33% from its peak in two thousand one and continues to drop. package volume is growing rapidly thanks to e-commerce. americans are changing how they communicate with one another and the postal service has struggled to adapt. that does not mean we are living in a post-postal service world. the postal service still has a vital role in our economy and our nation, affording and connecting even -- affordably connecting even the most remote parts of the country.

that is why innovation is so important. we need infrastructure for moving matter, not just bits of data. the postal service and private sector companies have begun efforts to create new, innovative products to preserve existing mail volume or create new demand for mail and possibly streamline the way of mail is handled. these efforts target every aspect of the postal service's current operation and includes innovations into new mail design, online postage purchasing, e-commerce, return logistics, and greater consumer targeting for advertising. i am looking forward to hearing from private sector companies and discussing efforts to develop new products and services. statistically -- specifically, what problems have encountered working with the postal service to develop and implement these products. now is the time for the postal service to embrace innovations by the private sector. companies are more than willing to spend millions of dollars to

test and then, new products that could bring future revenue to the postal service. in the tech community they use the word "disruptive." it is not necessarily a bad thing, it is a change. my wife and her junior league days use to refer to the way we have always done it. we have got to be wary of falling into the trap of the way we have always done that will stop if companies keep being steamrolled by bureaucratic red tape, animators will look elsewhere to present ideas. i hope to hear success stories from private sector companies that work with the postal service and how future entrepreneurs and innovators can create a more marketable and open environment in the postal service. there is need for innovation. whether it is cluster boxes for package delivery or access to databases like changes of address, there are many areas

nation. my fear is that a government , americans taxpayer are going to be left footing the bill for a taxpayer bailout of the postal service. that is the last thing we need. i look forward to hearing from our panel and i believe there are smart ways to lower costs and improve service. i hope we can bring them to light today and find a way to move the postal service closer to internet speed. before i recognize mr. lindh for his opening statement, i ask unanimous consent that our colleague from texas be allowed to participate in the hearing. without objection it is so ordered. your opening statement. >> thank you. i want to think you for holding this hearing. to examine the development of innovative postal products and services by the usps. i would like to thank our

witnesses, some very innovative individuals, for helping the subcommittee. in november 2013, the postal service entered into a strategic partnership with online retailer amazon.com to test sunday package delivery in select markets otherwise known as "seven-day delivery." the program has proven wildly successful and is the primary reason why the postal service has recently demonstrated the ability to grow revenue in the face of the most difficult financial conditions. in its quarterly financial report released may 9 of this year, the agency reported a revenue increase of $379 million of the same reporting period last year, its third straight quarter of growth. due in large part to an 8% increase in shipping and package revenue. sunday package service is expanding to other cities across the country and the agency is working to establish partnerships with other companies. illustrate that

the agency can experience positive financial results when it capitalizes and builds upon what it already does best -- utilizing an unparalleled and universal mail network that is driven by a hard-working, dedicated workforce to deliver the mail to american people seven days a week. it is an example of innovation rather than degradation of existing products and services. we would be well served to take a similar approach as we take the task of reforming the postal service. as evidenced by yesterday's markup and powerful committee, chairman issa continues to put forward misguided proposals that presume that we can enhance the postal service by degrading the services that had come to define the agency in the eyes of the american people. i do not agree that we can reform the postal service for the better by eliminating the current six-day mail delivery by mandating a wholesale conversion of toy delivery addresses to curbside + luck delivery.

or by asking -- curbside and sidewalk delivery. or by asking customers to pay a legacy feature retained door delivery service. this would place the postal service at a greater disadvantage and damage long-term viability. stead, we can encourage the postal service to build upon its existing products and services to set itself apart in the mailing industry. i command ranking member cummings for his leadership in this area and i am proud to sponsor -- cosponsor -- his regislation, hr 2690, the innovate -- the innovate delivery act. this would lead the development of innovative products and services in line with emerging information technologies and changing market trends. it would require the chief innovation officer to ensure these products maximize revenue. postal innovation will be a key

component to reform. i understand there are a variety of perspectives on how best to facilitate that innovation in a manner that will place the on a morervice solid footing. i look forward to discussing issues with our witnesses. i yield back the balance of my time. >> thank you. members will have seven days to submit opening statements for the record. recognize our panel. mr. james cochrane, chief information officer and executive vice president for the united states postal service. mr. david williams as inspector general of the united states postal service. mr. will davis is chief executive officer of outbox inc. is chief legalrg

officer of stamps.com. mr. patrick eidemiller is director of technology at amtech systems. mr. todd everett is chief operating officers of new logistics incorporated. the witnesses will be sworn in before they testify. please rise and raise your right hand. you solemnly swear or affirm that the testimony you are about to give will be the truth, the whole truth, nothing but the truth -? all witnesses answer in the affirmative. be seated.nd you may a housekeeping matter -- it is my understanding that the house will have votes around 10:40. that'll be a long series of votes. so i want to get everything covered by 10:40 so you do not have to sit around for over an hour while we go vote. an i might be able to make earlier flight back to texas. it would be a win-win if you abided by the timer here that

gives you five minutes for your testimony. we will then ask questions. your entire written testimony is a part of the record and is available for this committee and others to review. so we will start with mr. cochrane, you are recognized for five minutes. >> good morning, chairman farenthold. thank you for calling this hearing. i name is james cochrane, serve as chief information officer and executive vice president of the u.s. postal service. i oversee the integration of technology innovation in our business. during my 39 years with the postal service, i have developed a perspective on the business, how we serve the market, and our customers. this business acumen is essential. technology plays a foundational role in every postal product and service. emerging technology often challenges us with potentially disruptive effects. effectively traversing this

emerging disruptive continuum is my responsibility and a matter of survival for the postal service. postal service operates one of the largest technology infrastructures in the world. it is supported and codeveloped by something most respected technology companies and many small businesses. our goals our simple. every day we focus on how we can innovate with technology and partnerships to generate revenue, reduce expenses, deliver reliable service and a world-class customer experience. though our goals our simple, our business model is complex and diverse. programs have shared the responsibility for efficiency and innovation with business partners. this model is guided by the premise that our profits and brand are enhanced when our partners are profitable and our joint customers received an increase fight proposition. printers, software vendors, mail service providers, transportation companies, and parcel integrators play a role. together we have built an

industry around market needs. disruption in the competitive package market is an excellent example of how customers demand and evolve and we adapt. driven by e-commerce and free shipping, there has been a shift to ground based solutions. parcel select is an innovative product develops to answer that demand. it is a program that leverages the processing and transportation network of csnsolidators such as newgisti with our delivery network, providing a customer solution. parcel select enables the cooperation, ups and fedex provide logistics and the postal service provides last mile service, creating a win-win for shippers and consumers. the new normal is same-day delivery, sunday delivery, delivery customization, and constant real-time tracking. consumers are demanding these new services without increasing

costs and requiring that we adapt or face irrelevance. the postal service is helping businesses make mail more valuable coming and gauging, and interactive. through intelligent or codes and financial incentives, from mobile optimize mail, we are creating a digital reflection -- and a digital response. we are leveraging our brand of property, security, and trust. fromlcome ideas entrepreneurs. our program provides a public venue to submit new ideas to advance the mailing industry. in order to be a doctor, these ideas must align with the postal service -- in order to be adopted, these ideas must postal and generateues profit. the postal service receives idea from a variety of sources. some of these are not new concepts, some are being pursued

internally, and some cannot be adopted because of restrictive laws. the role of the postal service is changing at a rapid pace. citizens are using a wide range of technologies to communicate, transact business, and shop. ever-changing technology presents the postal service with opportunities but our success is dependent on how we can evolve. we remain guided by our charter to bind the nation together and our commitment to provide value and service upon which american businesses and consumers depend. the postal service continues to make strides in adapting to the countries changing mailing and shipping needs. our efforts are limited by an outdated, legally restricted business model. we have the responsibility to provide and find universal service for our nation but we do not have sufficient authority or flexibility to carry out that mandate. we absolutely need comprehensive postal reform legislation to return us to financial viability. such legislation should provide us with clear authority to offer

new products and services that allow us to take full advantage of our current infrastructure and competencies. to make theress not postal service's task more difficult by placing further restrictions on our ability to innovate and compete. the postal service competes vigorously but we also compete fairly. instant with our legal obligations. forward ton, we look working with you and the rest of the subcommittees to accomplish postal reform legislation and to continue to deliver innovation to the american public. i am pleased to answer any questions you might have. >> thank you. mr. williams customer >> mr. chairman, members of the subcommittee -- >> bring the microphone closer to your mouth. there. they do not pick up as well -- has a postal industry long history of working with the private sector to spur innovation. historically, mail transport sealed the railroad and airline industries.

as applications stimulated advances in handwriting recognition technologies. they acted as a platform for the private sector innovators and postage,ronic pre-sorting, and mail order industries. imposedpostal service the overlay of the zip code across the country to the benefit of businesses and researchers. innovation is more important in today's age of digital globalism. the ungovernable internet has changed the world. great opportunities and enhanced capabilities exist alongside awkwardness systems and unfamiliar risks. the forces of creative destruction have ravaged traditional communications and logistics systems. in this environment, the job of and into structure like the postal service is to support citizens and businesses as they try to compete and position themselves. it also takes care to ensure that market forces prevail and are not undermined. to continue in this role,

understanding the changing world and rapid adaptations, our increasingly critical endeavors. the postal service faces the challenge of modernizing traditional products as it provides services for emerging technologies. success will depend on its ability to innovate and embrace innovations of others. as a result, continual strengthening of the postal processes for innovation will be needed. that includes seeking to understand the frustrations and supporting emerging needs of people and commerce. developing a comprehensive innovation strategy. clarifying the entry point for innovators. providing staff to join innovators in navigating the postal structure. to remain with them until the proposal is resolved. strengthening these skills and assessing the financial viability of proposals. developing the ability to engage in rapid prototyping of new products and operational innovations. and protecting intellectual

property and respecting that of others. when pursuing innovation, partnerships with the private sector and the government are important. bringing in new ideas and specialist competencies, sharing risks, and leveraging the costs of research and development investment. there are several areas where innovation opportunities seem particularly rich. support for e-commerce and e-health and government transactions at the front end for providing a portal for identity verification for individuals and e-businesses and providing digital currency exchange instruments. on the back end, assisting with shipment of parcels. using e platform services to help small businesses with logistics and shipping solutions. providing digital access to postal service networks for the public and commerce by linking together its website and post

offices and digitally enabled carriers. in conducting digital analysis of the vast data now generated throughout the network through operational efficiencies, revenue ideas, and business intelligence. these opportunities can tighten the integration of data streams and their supporting matter streams. the internet, smart devices, search engines, and cloud storage have laid the foundations for a changing world. an aspect of what will come next top this foundation will likely be an ecosphere that continues to be ungovernable and chaotic with endless changes, learning curves, and substantial creative destruction. the ability of society to propel inher than retard progress this area will depend in part on the competency of the postal infrastructure to support american commerce and citizens through the coming era that will combine and employ a major new technologies that include additive manufacturing.

also known as 3-d printing. the internet of things linking ubiquitous sensor nets. augmented realities and smart devices. big data analytics. advanced robotics and nanotechnology. to world post were slow adapt their role in the early phases of the digital age. and were partially constrained from doing so legally. the next phases of the age of technology will be more disruptive than we have seen today. the postal service must be highly agile and develop an intuitive sense of the changing role and the new challenges facing american businesses and citizens. a key aspect of the postal service's ability to transform must include stronger competencies for embracing and implementing innovations. thank you, mr. chairman. we will move to some of our private sector folks, mr. davis from outbox. -- it is in the

title of today's hearing. we have heard it spoken about at least a dozen times. offel the need to go script. a movie is the only thing that comes to mind, one of my favorite and one of my daughters favorite -- "the princess bride." whereis a scene in their up neil montoya is caught with a band of criminals and the criminal mastermind keys using the word inconceivable when all his plans to not go as planned. saysya looks at him and "you keep using that word, i do not think it means what you think it means." that is how i feel about the word "innovation," i do not think it means what you think it means. the reason for this is because innovation at its heart is disruptive.

it destroys things. it kills jobs. that is too bold of a statement? 1926der this fact -- in the s&p index was formed. the average tenure of companies on the index was 60 years. today, the less than 15 years. since its inception, there's only one company that remains on the s&p index, that is general electric. one single company. all those other companies are gone. they are destroyed. for all of its destructive capabilities, there is almost another effect of pursuing innovation. it is the narrow road -- the narrow path of putting off old business models and secure cash flows and grasping for something that is uncertain.

the promise of innovation comes in the form of new jobs, new job,tplaces for every every company, every market that is destroyed for embracing innovation, two more pop up in its place. ideas, newand concepts and work forces that could not have been fathomed. what happens in the destructive process is incumbents usually die off and go the way of the other companies on the s&p 500. talking about innovation and the postal service, we have to understand that embracing it means a fundamentally different postal service. it means that in 10 years, it looks almost unrecognizable from the postal service today. that does not mean it is worse off.

in fact, it does not mean that jobs have to be destroyed within the postal service. it means new ones can be created. make no mistake, innovation will -- disruption will come. in that regard, it is a bit like junk mail. it is coming whether you like it or not. and so as we talked about innovation and embracing it, we need to understand that it means hard, fundamental, core changes to the business model. embracing it means destruction. it also means a new market, new jobs, new opportunities. thank you. >> thank you. mr. weisberg? >> thank you, mr. chairman. i am from stamps.com, the leading pc postage company. pc postage is internet-based software that allows companies to print their own postage using

their existing computer and printer. stamps.com serves over 500,000 registered customers, primarily small businesses. in 1999, we became the first company to offer a software only pc postage solution. enabling customers for the first time ever to print real postage from any internet connected pc and standard printer. just seven years ago, pc postage 5 billion inr $.2 annual postage sales. last year and accounted for over 3.25 billion in postage sold. stamps.com's growth alone was more than 30 5% year-over-year. that is consistent, double-digit roads every year. even through the heart of the recession. virtually all of the priority and express growth surged in recent years is generated through the pc postage industry.

a study showed that revenue through the industry pc postage dollar ofst $.2 per revenue compared to $.47 through a usps owned retail outlet. pc postage produces secure, sender identifiable mail, which is important for security against biological or other attacks. pc postage provides customers with cutting edge technology without the postal service having to pay for research, development, support, or maintenance. anmps.com has launched enterprise service targeted to organizations with multiple geographic locations. it features enhanced reporting that allows a central location such as a corporate headquarters greater visibility and control over postage expenditures across their entire network of locations. an e-commerce merchant with multiple stores can use

stamps.com to consolidate all their orders so they can ship them out with these. with one click, they can directly import all their order data from the most popular online marketplaces and shopping cart software and then automatically print the shipping labels. although shipping data, including usps tracking, automatically posts back to their web stores. stamps.com also automatically keeps the buyer informed. orders the carrier pickup, sends an electronic manifest to the generates ace and scam forum. all the carrier does is in the form once and all the packages are in the postal service's computer systems. is based on a public-private partnership with the postal service regulating participants. our products must complete extensive testing and evaluation in the areas of operational reliability, financial

integrity, and security. the postal service also partners with the industry to achieve ofual, win-win goals improving the customer experience, increasing revenue, and minimizing costs. io sitting on this panel, and so many of the dedicated postal veterans who have ably worked with us for many years deserve much credit for the success story that is the partnership between the postal service and the pc postage industry. we believe public-private partnerships are the best path forward as technology innovation becomes increasingly important for the future. having the postal service create its own technology is not the best approach. instead, it should provide incentives for industry innovation. this allows customers to pick the best technology solutions for their needs. provides jobs, both

in industry and the postal service. every package produced is ultimately delivered by a city or rural letter carrier. growth in pc postage means more packages to deliver, more letters to the lover, more volume to surface. thank you for the invitation to testify today. >> thank you, mr. weisberg. mr. eidemiller, am i pronouncing that correctly? >> that is correct. >> my radio days come back. >> good morning. my name is patrick eidemiller, i am director of engineering and technology for m-pack systems. we're are a small, startup m-pack,that produces the future of prescription packing. apack was created by 71-year-old navy veteran from a small town with a population of 85 people. this is m-pack, a flat pharmacy

file. this is a traditional round file. m-pack has many advantages. the most important are this vial is temperate resident, this is not. iss bottle of water temperate evident, this is not. for an entire supply chain, we have more security in this than in this. hard to believe. we also have more label space so it is easier to read. lastly, much more space efficient and compact. m-pack is made in the united states in erie, pennsylvania. we are adamant about u.s. production and producing onshore. advantage, ther reason i am here. the usps provides a favorable rate for what is called a machine will flat. thisis a machinable flat, is a parcel.

the rate for this is $2.22, the 29% saving to the taxpayer. realizing what we had with a flat vial and considering the u.s. government is one of the largest users of prescription by mail. we want to save money and provide a better, safer vial through the post office. working in new york, we developed this envelope, which meets all the mechanical machinables of a flat. in fort worth and received our approval june 17, 2011. of the next 18 months, we continue to improve our product. and refine and refine it.

we came back to a product that looks like this. smaller, lighter, cheaper. more weight is more cost. we took two ounces out of this envelope. we put a package together that 50 per second, this one was 15 per minute. 18 months of work to go from this to this. we resubmitted our package, this package plus some of the internal improvements that appeared. we wanted to retest and us. our packages or rejected. not only this new package, but the existing form factor as well. we were shocked. this had been approved once. for a different reason. it was not a fact that it does not meet mechanical requirements of a machinable flat, bend like this, the dimensions. it was that a box in an envelope is not a machinable flat. that is why we were rejected.

we were surprised, shocked -- it already been approved. we solicited, a sent a letter to the father of the flat rate box. we thought we had a synthetic ear. we were referred to mail standards and got a curt response that basically said " thank you, especially for your persistence. unfortunately the piece, with its current contents, qualifies as a partial. if you change the contents, please contact us again." if we change the contents from gustavus. best,tire point is not the point is this. this is a better, safer vial because of its shape it can ship through the mail 29% cheaper. that is the point. frustratedng very

with our experience. we went to the post office for a reason. the post office provides value. the post office is the only agency that him lately put prescription drugs through a mail slot in a mailbox and not leave it on your door stop. factor in important safety. we want to work with the post office. we baked, we will change our package and test at our expense. use the postal service. it fell on deaf ears. we went to the private sector, ups and we will take it. no questions asked. because we know how many of these we can put on an airplane. get secondary service at a dollar apiece -- get second day service at a dollar apiece. that is what i am here. thank you, members of the committee. >> thank you very much.

today i will describe for this subcommittee how the u.s. postal service has partnered with and helped make it possible s, toy company, newgistic .evelop innovative products thank you, mr. chairman and members of the subcommittee for allowing me to speak on behalf newgistics. held companyately based in austin, texas and we have over 400 people on our payroll. we were formed in 1999 to develop a better way for consumers to return merchandise to retailers. our success is due in no small part to the postal service and its willingness to listen and work with private entities like solutions.to develop we also offer a national integrated parcel delivery and

return service for our customers. we are able to provide cost-effective, reliable, and convenient shipping solutions by working with the postal service to provide last mile delivery and first mile pickup. when newgistics we view ourselves as a technology company that would provide information to retailers regarding return packages. soon we involved into a return logistics company, handling returns for retailers making use of innovative technologies. we concluded that customers wanted to be able to return packages easily and retailers wanted to make returns more efficient and cost effective. we developed a proprietary intelligent return solution making use of barcodes embedded smart label.tics those barcodes provide us and customers with information that enables customers to manage their transportation and returns processing resources. as we evolve, we discussed with the postal service the

possibility of creating a new process for handling returns of large shipments of merchandise that made use of the newgistics smart label. based upon our collaboration with the postal service, usps developed one of its most innovative products, the parcel return service, also known as prs. prs is a postal service program under which providers like newgistics are allowed to retrieve return parcels from facilities. this allows us to provide advanced data and customized return services to retailers wil. we found that the postal service was very receptive. in late november 2001 we began having meetings with the postal service. in may 2003, the postal service sought permission from the postal rate commission to test prs, testing began in october 2000 three. after two years of successful testing, in october 2005, the postal service sought permission for prs to become a permanent

class of mail. in 2006.proved from that point we were able to implement our return solution, including newgistics smart label introduction -- in conjunction with prs. the return process by offering prepaid returns via postal service pickup at home, workplace, or drop-off edi at any mailbox. yet our solution, -- our solution gives consumers returning products complement their return will be handled expeditiously. our solution has enabled newgistics to expand offerings to include parcel delivery, fulfillment, and e-commerce solutions to our customers. been andl service has continues to be a willing an important partner in our efforts to develop innovative solutions

that bring value to our customers and their consumers. likewise, prs has been successful we believe from the postal service's perspective. based on recent data, prs continues to grow. in fiscal 2013, the handled more and 50 million prs packages generated more than $120 million in postal revenue. thank you for the opportunity to testify. >> we are going to break with tradition and little bit. normally i would ask the first round of questions. mr. lynch has a vote in another committee so i am going to allow him to go ahead and ask his questions. you, mr. chairman. thank you for your indulgence. i think the members of the panel for them help. it has been a very interesting discourse thus far.

ofn i think about the future the next iteration of the united tend toostal service, i think about what they have going on in switzerland. of our local one companies, has a system over there they have rolled out. it is called a digital mail scam. i can pull up my e-mail as it mailes at the regional facility. i can go on my secure website and see my mail before it is delivered. if i do not like what is there, i can click on it and say do not deliver. junkavis, when you say mail is coming, not necessarily. it is not as inevitable as you would think. you can click on it and tell them not to deliver it. that is sort of a new iteration of the postal service that is out there. i think that is going to be

coming to the u.s. at some point. really disruptive. it would be a great thing for the environment because of the huge drop in mail volume. because people will not be getting mail that they do not want in their mailbox. down here in d.c., at my apartment that is 90% of what i get. circulars and stuff like that. if my wife and the girls did not the sale information that they get every single day i would be saving a ton of money. the volume will drop because stop. will be able to that'll be a good thing for the environment and a terrible thing for the u.s. postal service's national letter carriers. that is really disruptive change. that is what we're are going to have to deal with at some point. what the chairman of the full committee has in mind is putting

out about 1.5 million of these still boxes -- of these steel boxes. he wants to change 15 million door delivery addresses to cluster boxes so that even if there is 100 addresses in a box, it comes to one point 5 million. if you make them bigger, you can drop that. 700 33,000. that is a huge expense. huge expense. even where it is feasible. one point 5 million steel boxes all over america, how much flexibility do we have. putting things in a neighborhood

and telling senior citizens you can walk a quarter of a mile to get your mail, it is disrupted in a way, but that is not innovation. townis going backwards in -- time. that is not created. that is extremely costly and inefficient and reduces flexibility. >> with the gentleman yield? >> i will have to leave. you can talk about me when i am gone. >> with pleasure. so when i think about the idea of going to five-day delivery, which is another bad idea, the president supports it, chairman supports it, i uphold it, most of the it nation tries

to tie in with what society is doing, tries to answer a need out there. where i live, which is common in america today, we operate on a seven-day schedule. be the stores that used to open, they have gone to seven-day. office will close for two days every week. i just think that is the wrong direction. example ofa fabulous citizens in switzerland being able to unsubscribe from junk mail. that technology existed in the united states for two years. we brought that technology to the united states without box. we unsubscribed over one million

pieces of junk mail for our users. we were able to do it through the digital delivery and resentment of postal mail. what we found is even though they unsubscribed from volume, we can measure intent. intent is the holy grail for advertising. intent, we can know what they prefer, and tend to prefer. it is sohy unfortunate. toall i am saying is i want empower the customer. the taxpayer is not involved. the postal customers picking up the tag. survive on the money we get from the state. i want to empower the customer. they do not have to go to any company. they can see the mail when they arrived at the postal center and click off if they do not want it

delivered. -- is disruptive change, innovative change. that would lower the cost. i am going to yield. i have gone beyond my time. thank you. have boats as well coming right up? -- votes coming up? >> the gentleman from missouri is always welcome to speak in the committee. general11 the inspector for the postal service released a two-part report on postal service role in the digital age in part a human report that the idea that the postal service was expanding to hybrid and diverse mail service. mr. williams, can you reflate

explained what the brief -- can you briefly explain what it is and why it may be beneficial to expand these areas? ability tove the print a letter at the point of a lot of thed keep system. of saving on transport and fuel and crowding through the network of sorting would be a very good idea. allowing variation among the regions so you could print different letters for different zip codes. as the postal service per cart before the horse by closing and distribution centers?

plan tohey have a real go forward to lessen the volume of mail. >> i do. i think there is excess capacity. inside the sorting centers. i do not believe it should spring up in advance of what the impact of this would be. picking the timing for innovation is the officially ethical. -- is difficult. if we pick something that is not immediately embraced and have closed off the possibility of using the other network, it would be a very serious thing. the hybrid and perverse hybrid mail system sounds similar to the business model today.

mr. davis, your company outbox was a fee-based service that customers had as a choice to bypass physical mail, correct? >> yes. and if i am correct to our business model is dependent on this for sure. infrastructure and customer participation, correct? this year outbox announced it would terminate digital mail operation. about theed customers outbox setting them as service. mentioned the initial test show positive signs of success and operational simplicity but the deal did not work out. is that correct? >> absolutely. additionally you decide your visit with the senior leadership as mr. smith goes to washington

moment where senior leadership made it clear they would never participate in any project that would limit junk mail, and were immediately shutting down the partnership, correct? >> correct. in developing your business plan, were you aware advertising mail fraud presented a significant portion of the postal service volume? >> yes. as a self-sustaining industry that has to generate revenue. were you aware the postal service has a right to choose who it works with based on the bottom line? >> absolutely. >> mr. cochran, the postal service has been quiet on this issue. is there is any -- is there anything you would like to add? >> the concept of football collect ink mail and digitizing has been out there for 10 years. the approach is one where people go to a receding

agency. it happens in buildings all the time. very common in new york and washington. the challenge was the outbox approached it a little bit differently. they did not want a receding agency. that required us to go to the mailbox and pick it up. there are business models out there and providing a digital image to their client on a day-to-day basis. >> thank you for that. >> although i commend mr. davis and company for innovative solution, i think it is unfair to use the hearing to criticize the postal service for not being innovative and at the same time and operate with the business mindset, which is what it was doing in this case. in addition, i asked where he unanimous consent to article the may 8 2014 letter from

arid edge foundation entitled why the purse -- postal service was right to find with geoff davis over outbox. >> would the gentleman yield? with youd like to side in this case surprisingly that although it is a shame to see a for-profit entity close because they are not making a profit am i do agree with you that's when this is an innovation that should be on the list of innovations of the postal service the cousin falls squarely within the basic requirement, just as stamps.com is an innovation that the post to their peril. one of the thing -- strange things we agree on is at a minimum the post office should do the core job of revenue -- revenue and revenue savings first.

i think we have two witnesses hear from one for-profit. they are both core functions of the post office. i share with you in the comprehensive postal reform bill, we increased innovation fund specifically because we hope the post office will innovate within the core. cryyour opinion, doesn't out for a public-private partnership? >> i believe there are core businesses. >> they may use private enterprises as their contracts but i will say on the record here today that the job that if embraced as, a core function could far exceed the benefit.

and including we apparently electronics industry. that is a first for my calling. the fact is, that when he talks about digital delivery in switzerland being inevitable, he talks about a version of mr. davis business plan that switzerland has gotten ahead of. he is right that this will happen within the postal system or the postal system will be fighting for the core right to decide not to participate. i could not agree with you more that your point was right on. >> i agree that we may have an outer body experience.

agreeing with you so much. i see why time is up. i yield back. >> thank you very much. he will get back to the regular order here. i will go ahead and start with some of my questions. knownk most of us up here the story of outbox. you took your time to give a very passionate speech about innovation, which i have enjoyed listening to, but can you roughly tell us about what inbox did and what happened the elevator speech version. we allow users to view it from anywhere, whether it is iphone or i've had and could tell us exactly what they wanted and did not want physically. so a hybrid approach in that regard. thisssa is correct in that is a fabulous idea that should

be adopted by the postal service. we started in austin, texas, with the idea that we would ask for this before we ask for permission because the rules and regulations are so onerous. in that meeting we had a fundamental misunderstanding of who the customer is of the postal service. he said your customer is not my customer. i said mr. general, what do you mean? my customer is a sender of mail that allows me to place mail on the kitchen table of every american every day. while true, that is not where the inherent value of the postal service lies. the value lies with the connection of every single american. that large belief

organizations and governments of which the postal service is in part both is not -- does not naturally tend to adopting innovation. so it was my hope and business but we were not allowed to. the only way we can do this is if we have a safe harbor. something within the postal service that allows me to be disrupted on a small-scale and localities around the country of testing new ideas, and issa mentioned to give customer service -- choice lead to higher value, lead to increased understanding of who the real customer is, the american people and let the value opportunities that were beneficial for the end user and beneficial for our company and ultimately the postal service. >> thank you very much.

should you were unable to get your project classified and would take a parcel. >> unclassified and magically became a parcel. >> that is more a competitive service for the post office. i think you mentioned the amount your flat would take. >> yes. this is a parcel rate for poor -- for prescription vials, two dollars 18 two cents. this is the over counter rate. >> your new readers is you want to ups. they made an offer to put it on the table at roughly a dollar. the challenge we have when i brought them up is we are a young startup. we are investing when we have opportunities to generate revenue.

so we have a lot of interest in bringing this to market. a have had discussions and couple of potential customers. ups will not officially put it on the table until they have volume and unit and cost. they say including the package, we know we can do it for about one dollar. the post office can put this envelope into every pillbox in the united states. ups can do that. the volume is there, the businesses there. this is a regular standard business. this is $.90 over-the-counter.

drugs by mail for $.90. two dollars $.22. hundreds of millions of dollars on the table. the only plausible reason that we want it classified as this verse is best is top line revenue. the top line revenue of a parcel is higher than flat. year's plan 2013 i got this online. what this says is the post office makes three times more money on a flat in a parcel. 3-1. the post office actually makes more money. doing this at lower cost. three times more revenue. very simple. it is easy to automate.

we have proven we can automate this. their only case is a square box is a a machine. requirement.y we have volunteered to work with the post office. it. appreciate i will not draw you into the debate whether or not secure delivery location ford parcels would be of benefit to your company. took to on your side of the aisle first. if you do not mind, we will recognize chairman issa and come back to you. mr. chairman. >> thank you. this is an interesting turn of says there mr. lynch is inevitability we will do what switzerland has done. i was madder than hell at your proposal. are trying idea you

to be chief innovation officer and promoting thinking within the ig's office is it worth had -- it are hence a bowl. i was shocked but it you would go from waste, fraud and abuse promoting aency to specific agenda. notwithstanding that, the post office has every right for innovative activities, including postal money orders and other items some of which are historic and postal systems here and around the world. however, i would hope in the future that you would be much more of an advocate, including people like mr. lynch. allows the post office to breakeven and be more customers, which as stated earlier, are the shippers. mr. lynch is not here and i've probably said i would talk about him after he left. he will never be my partner and

anything that reforms the post office and makes it more efficient because that will reduce labor. he is a lost cause on that. mr. clay is not. the fact is it avoids another story -- three cents per letter costincrease in similar across the board, doesn't it? .> i understand the principle >> looking at $2 billion what the rate increase did. >> i think that is america opposition.

need to find out what happens in reality, but i certainly follow the train of thought. >> that is why the president has proposed that. plan on having this be a lynch issa, but it looks like it will be. he has spent a lot of time bashing steel containers. isn't it true 91 million homes do not receive in the door delivery while 37.8 plus or minus million do? allthat is the curb/cluster over america, rural livery and so on, 91 million plus or minus to not get into their door while only 37.8 do. lex yes, i agree that is the .atio >> it is amazing for that ratio of more than two out of every three, who are already part of not having to

walk all the way through the door, less labor, and has been proven and calculated by the post office in cbo, the labor savings for less than one third of america is billions of dollars and ultimately a question for you. those billions of dollars per year scored at the modest 15 million, less than half of those converted, escorted over $20 billion in savings in cost to the post office. let's just go through the numbers. your customer is a shipper am a whether you like it or not. the shipper gets a value in secure storage and in avoiding cost. >> correct.

i can have at no cost delivered to my door today cap gertrude? >> it is true. we did a study as well on this topic. we saw the amount of savings was , depending on whether you pick an extreme model or one that was very moderate, there was a huge amount of savings. your proposal, as i understand it, is on the moderate side. >> we toned it down a lot so we can save more than half of americans can't get to the door. we believe communities will over time brush to have secure storage, not necessarily cluster boxes, often two or four in the cluster, just practically at your front door.

in fact the ones we showed yesterday during the hearing, we one that are ase little larger because we want to be fair in neighborhoods where it is hard to place a box, you tend to have larger boxes. >> both were places where the difficult tol is fit people with special needs. we saw there was a waiver and model considerations for waiver and think that is important to do. we think it could be a real game changer. we think it will save an enormous amount of money. also want to note those 37 million you pointed out are not designed for people with special needs or special requirements or that are special to

deliver. it is a historic accident. we like the fact that this imposes a comprehensive plan for the placement of those in the facilitation of people with special needs and neighborhoods where the model cannot work with classic. >> can i have your indulgence for two more minutes? thank you. a couple of quick things. ishink your end, the fact the post office, in my opinion is uniquely positioned to provide a postal digital delivery system. for a feenal feature to the shipper.

that it is opinion completely doable. the risk side of that is what we discussed earlier, catalog mailers that are paying to get into the mailbox. if you are disrupting that, it does threaten a very extensive revenue stream for us. >> for example come and these are hypotheticals, you looked at

a lot of the efficiencies. if the shipper says i am going to give you x amount of these things and if a person declines, i will pay half as much. it could be a win-win. i could deliver you two thirds as many pieces of material. visible and usable by someone digitally. let's just say i want the coupon or whatever. to your customer shipping, you are expanding his option. you could also have a no delete option and must be delivered and have to pay full price. those options are not available today. i am in the district. but i would love to know digitally everything proposed to be sent to me so i know to expect it and if it does not, and in the invoice of something, i would be prepared to say i mail. lot use of

huge advantage to that. i happen to be to the door delivery here in the district and i often get my next or neighbors mail. so i take the mail and put it in my neighbor shoot. my neighbor does not know she is missing her mail until it shows up and i am gone for weeks at a time because i do not actually live here. so they lose three or four weeks sometimes of mail. if they had a digital picture, they would know the intent. all of these and more is what the chairman is a -- what the hearing is about. i want you to continue pushing for the innovation. our broad proposal has innovation dollars. i would like to close with one thing, i was in business for more than two decades exclusively and then in business very modestly for the past 14

years. the one thing i know about business is the topline and bottom-line are not easily different. you can increase topline but if it does not flow to the bottom line, it is of no value and you could make cuts and never get to profit. it is a combination of the two. the post office has the current volume comment millions of dollars of excess innovation -- inefficiency we all know we can cut. innovation in your case and others, depends on efficient delivery. the more efficient, the more promising for innovative brownts. it amazes me trucks go to any suburban areas. i think they go there to kiss they cannot quite get a good a deal as they will be to get them the post office if these innovations happen. so i appreciate the extra time. there is