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Pages x and 216

Recommendation:

More resources should be devoted to the analysis of variances in labor, rates and efficiency; materials, prices, and usage; and overhead, volume and rates rather than the current effort of recording all costs incurred and then calculating an all-inclusive rate.

Response:

The implication of this recommendation is that current costs are recorded and rates established without the benefit of analysis. This is not so. Considerable analysis is performed on costs before rates are established. The use of printing cost investigating techniques are used in our control over cost variances. Although the report says we should do more, in our opinion, additional effort would take us to the point of diminishing returns.

Pages x and 216

Recommendation:

Cost managers should become involved in the determination of standard rates and held strictly accountable for those costs under their control.

Response:

The recommendation implies that standard rates should be negotiated with managers for the purpose of controlling costs. Managers are involved in the development of rates. They are involved with determining workload requirements, staffing levels and work measurement criteria and data. However, standard rates would include other costs over which the managers would have no control. Furthermore, standard rates are a poor method of cost control. Analysis of cost variances by the printing cost investigating technique, budget analysis, and coordination with work measurement data, provides us with a superior cost control.

B. Pricing Formula

Pages xi and 217

Recommendation:

More effort should be devoted to tracking and estimating delivery costs, sales volumes, fixed costs, reprint and unsaleable charges; incentives should be established to encourage manipulation/control of both segments of "profit" formula, i.e., revenues (prices and volumes) as well as costs; and certain staffing levels/costs should be tied directly to sales volumes. Response:

The crux of this recommendatio is set ca. 15 cm et sit the est in on page 26, it indies that is are accurate izenatisk er et see, estisstes vaid so: hare to be made. This is a se. When eating rates that are to be ed is the se, es ist siis te ei. Furthermore, there is no assunce Sta: sunt::.:05 :: : stane sa will cause the estimates to de er mes at tte a material ese: s results.

The specific sai clatie of zices mal assis in ied it the recommendatira is unclear. 62 is aizited as te te eres dixerites :: 32 de established to eseserage miciatial genererer oss at trees. Staffing and work ses are consideret ia se degret 2008. titract various techniques are used to divide the dis was reticesies are available, we are either in a positie te generate izred srertising nor free to establish Tarices discovers ani dung:n techoes 12 canze tition with private h ers.

C. Billing Procedares

Pages vi and 2:

Recommendation:

The policy and procederes for tidlig castomers she te rerist te dese all bills on stasdard cost rates as festars. For as te de rocacet ir-boese, prepare a fin diding es inate que receiz ai costumer arder:

- Estimate to be based se protective iseteria: stadards and

sebetules of prices/ rates is all services in.ading trasssertatis.

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Pages x and 216

Recommendation:

More resources should be devoted to the analysis of variances in labor, rates and efficiency; materials, prices, and usage; and overhead, volume and rates rather than the current effort of recording all costs incurred and then calculating an all-inclusive rate.

Response:

The implication of this recommendation is that current costs are recorded and rates established without the benefit of analysis. This is not so. Considerable analysis is performed on costs before rates are established. The use of printing cost investigating techniques are used in our control over cost variances. Although the report says we should do more, in our opinion, additional effort would take us to the point of diminishing returns.

Pages x and 216

Recommendation:

Cost managers should become involved in the determination of standard rates and held strictly accountable for those costs under their control.

Response:

The recommendation implies that standard rates should be negotiated with managers for the purpose of controlling costs. Managers are involved in the development of rates. They are involved with determining workload requirements, staffing levels and work measurement criteria and data. However, standard rates would include other costs over which the managers would have no control. Furthermore, standard rates are a poor method of cost control. Analysis of cost variances by the printing cost investigating technique, budget analysis, and coordination with work measurement data, provides us with a superior cost control.

B. Pricing Formula

Pages xi and 217

Recommendation:

More effort should be devoted to tracking and estimating delivery costs, sales volumes, fixed costs, reprint and unsaleable charges; incentives should be established to encourage manipulation/control of both segments of "profit" formula, i.e., revenues (prices and volumes) as well as costs; and certain staffing levels/costs should be tied directly to sales volumes.

Response:

The crux of this recommendation is not clear. As coupled with the leadin on page 216, it implies that if more accurate information were provided, estimates would not have to be made. This is not so. When establishing rates that are to be used in the future, estimates must still be used. Furthermore, there is no assurance that conditions will not change that will cause the estimates to be erroneous and have a material affect on results.

The specific manipulation of prices and costs implied by the recommendation is unclear. GPO is limited as to the extent of incentives that can be established to encourage manipulation/control over costs and revenues. Staffing and workload are considered in our budget process. Although various techniques are used to advise the public what publications are available, we are neither in a position to generate unlimited advertising nor free to establish various discounting and dumping techniques in competition with private publishers.

C. Billing Procedures

Pages xi and 217

Recommendation:

The policy and procedures for billing customers should be revised to base all bills on standard cost rates and factors. For jobs to be produced in-house, prepare a firm billing estimate upon receipt of customer order:

- Estimate to be based on production and material standards and

schedules of prices/rates for all services including transportation.

Billing estimate to be furnished customer for use in fund administration and budgeting.

Billing estimate to be adjusted only for those changes made by customer after the job is placed in production, with advice of revised billing estimate to be furnished to customer.

Response :

Pirm estimates are provided for many jobs produced in-house. This is especially true where it involves repetitive type work. For example, we have product scales, which are firm prices, for passports, postal cards, letterheads, and patents. Also, firm estimates can be given on other jobs whenever the circumstances warrant the extra work involved. For example, jobs that are subject to wide variation in cost would have to be calculated by a printing specialist. This would result in a very labor intensive process prior to the start of a job. Thus, the added workload would only be justified in cases where there is a danger of

exceeding appropriation authority or some other extenuating circumstance because the current procedure for this type of work is a more practical and simplified system. Currently, charges are compiled by the computer system as the job progresses through production, charges are collected by job and a preliminary bill is computer generated for subsequent review or adjustment. The adoption of the ecommendation would by ss the present computer system on complicated jobs and lead to a more labor intensive process.

Pages xi and 218

Recommendation:

For jobs to be commercially procured, base firm billing estimate on the estimated or firm amount of the print order or other procurement document:

Estimate to be based on net amount of the procurement (estimated or firm amount less discount) plus applicable surcharges.

Billing estimate to be furnished to customer for use in fund administration and budgeting, and to be adjusted only for changes made by customer after order is placed.

Response:

The recommendation to firm estimate commercially procured jobs appears to be on the premise that commercially procured jobs are all placed against firm price single bid contracts. This is not so on much of the work. A large portion of our contracts are termed "program" contracts. For this type of work, contractors bid on elements of various classes of work and when an actual order is placed with them, the individual job has to be computed. In addition, certain work requires visits to the contractors' plants for press inspections, the cost of which must then be charged against the job. Contract provisions usually allow a contractor to ship and be paid for a percentage deviation from the ordered quantity. Also, some contracts provide for the use of Government supplied paper, negatives, Government Bills of Lading; etc.; and in some cases when contractors fail to meet certain contract provisions, liquidated damages are assessed; all of which affect the billing to the ordering agency.

The billing by the contractor to GPO has to be audited, calculated, and certified before payment. To adopt the recommendation would have the effect of doubling our work by being required to calculate the job both before ordering it and after receiving the billing from the contractor. Furthermore, multiple billings with the corresponding increase in workload could result for those adjustments that are passed on to the ordering agency.

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