This supplemental appropriation contains the requirements for additional expenses in the supply distribution, procurement, quality control, and administrative operations activities. All expenses are directly related to the increased volume of stores stock sales and nonstores direct delivery purchases for the Department of Defense in connection with the increased military aid to Vietnam and the general buildup of U.S. military forces. Based on U.S. Army estimates of additional requirements for GSA-managed items contained on their support lists and buildup lists, and preliminary estimates of Navy and Air Force requirements, there will be an unanticipated increase of $26 million in stores stock sales. In addition the general administrative items furnished to DOD by GSA such as group 81-packaging and packing supplies -not included in the lists amount to an additional $15.4 million based on Army and GSA estimates. Based on the same sources, estimates of additional requirements for nonstores items will total $10.8 million. These increases, which will raise the stores stock sales for fiscal year 1966 to $416.4 million and the total volume of stores and nonstores buying to $787.3 million, are considered the minimum effect of the increased military requirements on the volumes which can be handled within 1966 funds currently available. The estimate of Army volume which constitutes the major portion of the increase is as firm as possible at this planning stage, based on actual requirements anticipated for initial issue and replacement factors for specified troop strengths. The Navy and Air Force requirements together are included in this estimate, based on approximately 50 percent of the Army requirements, and include the supply support to Navy needed in the demothballing of ships and the initial supply of those vessels. GSA support to the military forces includes combat essential items as well as general administrative support items. Many items of individual and organizational equipment are supplied by GSA such as soldiers' entrenching tools and machetes, and the organizations' supply of axes, picks, and shovels. The tool kits and sets managed by GSA, many of which consist of hundreds of individual components are basic to the military effort in Vietnam. These kits and sets are used for the installation and maintenance of radar and radio equipment. field maintenance of mobile equipment such as cranes, tractors, graders, earthmoving equipment, "pioneer kits" issued to combat engineer battalions for site preparation and clearance, kits for repairing sniperscopes, kits for the maintenance of teletype equipment, and missile assembly kits. In addition to supplying the shortages of troops on duty, initial issue must be made to additional troop strength and the pipeline needs to be filled to maintain a constant flow of items to keep kits in full operating condition. In connection with the demothballing program, items such as ship-bottom and other ship paint for immediate use, and the supply of paint and other materials for operation of the ships are a basic part of the expected increase in issues to the Navy. The revised volume of $416.4 million stores stock sales represents an increase of 11 percent above the volume which can be supported with the funds available for 1966 and an increase of 21 percent above actual 1965 sales. July incoming stores business in San Francisco, the region which supplies southeast Asia. totaled $12.3 million, an increase of 58 percent above last July. Stores shipped sales in July 1965 totaled $32.5 million, the highest month's sales in the history of the FSS stores program. For the procurement activity, the increased requirement is reflected in the number of increased inventory management actions required to process the increased stores business and the increased expenses necessary to purchase the additional stock for maintenance of inventory at the appropriate levels, and for purchasing the additional nonstores direct delivery volume. The increased expense required for inspection is reflected in the costs connected with the necessary origin and destination inspection by quality control representatives and the laboratory testing required by the increased stores and nonstores volume. An increase of $350,000 is required for increased administrative operations and is almost entirely related to the increase in line items shipped from 9.1 million to 10.1 million. This increase will generate additional workload volumes for financial support services such as invoice payments, billings, and processing miscellaneous accounting documents, as reflected in the following table: Administrative support which includes financial, administrative, and legal services, when expressed in unit cost per hundred dollars of stores stock sales reflects a significant decrease from the actual 1965 and current 1966 programs. These decreases in unit cost will be achieved through increased efficiency and increased individual employee productivity. Mr. EVINS. This is a request of $3,510,000. This is not for the procurement of additional supplies. You base your justification, as I understand it, upon the request of the Department of Defense because of the Vietnam situation. Why is $3.5 million necessary at this time? Mr. GRIFFIN. Mr. Chairman, we are now funded in 1966 for sales of $375 million in stores, and nonstores volume of $283 million. As a result of the increased activity in Vietnam we are now faced with additional military requirements, which are now firm and made known to GSA, of $41 million stores; and $10,800,000 nonstores, which the military will be procuring through and from GSA. These are completely above the volumes we projected in our regular budgetary presentation. These are very moderate assessments of the increased volume we can anticipate. It is as a result of the information which has been made available to us. Mr. EVINS. You state on page 19 there would be unanticipated increase of $26 million in store stock sales. What is the present store stock sales at this time? Mr. GRIFFIN. $344 million in 1965, and it will be $375 million in 1966, plus the $41,400,000 which has recently been made known to us by the military. Mr. EVINS. Then you say this will raise your store stock sales to $416 million. How much was it before this anticipated figure? Mr. GRIFFIN. $375 million. We have firm information from the military services showing an initial additional requirement for troop support of $26 million, plus general administrative items for the military services of $15.4 million. Mr. EVINS. Percentagewise, how much increase is this? Mr. GRIFFIN. Eleven percent. INCREASED STAFF REQUIREMENT Mr. EVINS. That is in supplies. How much increase in personnel? Mr. GRIFFIN. 475; 409 in the field, and 66 in the department; 26 of these positions are ungraded. These are for warehouse operation and stock issuance. The 66 in Washington are all in procurement, and 84 other procurement positions in the field; 264 in supply distribution, which are ungraded, and 18 others in supply distribution, the highest of which is grade 7. The remaining 43 positions are to perform source and destination inspections. Mr. EVINS. How much is the personnel increase percentagewise? Mr. GRIFFIN. About 10 percent. Mr. EvINS. You are asking for 10 percent personnel increase and 11 percent store stock sales increase because of the DOD emergency requests. That is about the situation? Mr. GRIFFIN. Yes, sir. Mr. JONAS. You have just given the percentages. Can you relate these increases in supply distribution on a percentage basis? BASIS FOR INCREASE IN SALES Mr. GRIFFIN. The increased request we are now making is based on the projections we made this year and the amount funded this year. Mr. JONAS. You think your sales increase will be 11 percent above what you thought they would be when you were in on the regular bill? Mr. GRIFFIN. Yes, sir. Mr. SHIPLEY. What percentage of this amount will be administra tive or operations money? Mr. GRIFFIN. It is all operations actually. The major portion of it is personnel, both the warehouse people, procurement people, and inspectors. MILITARY PROCUREMENT FROM GSA Mr. EVINS. Are they really putting a burden on your large staff and all of your warehouses? You have a lot of supplies on hand, and you are able to supply about what they want because over the years the military have been taking the greater portion of your sales volume. Are they really putting a burden on you at this time? Mr. ÅBERSFELLER. Actually in this particular case, Mr. Chairman, this supplemental is predicated on a detailed item list as contrasted with sales estimates we have been given in the past. This detailed list computes to the $41.4 million of additional material out of the stock stores. This is a detailed analysis based on the buildup in southeast Asia. There is, for example, $2 million worth of entrenching tools. Mr. EVINS. I think the committee is aware that with the military buildup in southeast Asia, there would, of necessity, be a correspond ing buildup in supplies and materials. How much is the Department of Defense procuring from GSA stores at the present time? This committee has been made aware that a great percentage of the GSA sales volume is military purchases. Percentagewise, how much is it purchasing at the present time? Mr. ABERSFELLER. Seventy-six percent. Mr. EVINS. You are anticipating, then, how much percentagewise buildup beyond your normal 76 percent? Mr. ABERSFELLER. We would expect it to exceed 80 percent. Mr. EVINS. Yes. NATIONAL SUPPLY SYSTEM Mr. RHODES. I am a little amazed that you would be supplying items such as entrenching tools to the armed services. What are the guidelines as to materiel which the armed services would procure from GSA and which they would procure on their own? Mr. GRIFFIN. I will comment briefly and then ask Mr. Abersfeller to fill in in more detail, Mr. Rhodes. This comes from the development of the national supply system, which envisions two principal procurement agencies for Government, eliminating all of the overlapping or duplicating. In the development of this, certain categories were assigned totally to GSA, and GSA in turn totally assigns and joins with DOD in assigning total responsibility of common-use items to DOD. Among the two principal total categories transferred to GSA are handtools and paint. So your entrenching tools, machetes, picks, shovels, and so forth, some of the items on the extensive list Mr. Abersfeller showed you, are those for which GSA has total supply responsibility. MILITARY ITEMS IN HANDTOOL CATEGORY Mr. ABERSFELLER. I think you have covered it pretty well, except, Mr. Rhodes, there are a lot of what we would call military items in the handtool category. Mr. RHODES. Items perhaps you might not think of as being military items, but which are or can be, and which are included in this list? Mr. ABERSFELLER. Just as an example, we also provide them support on the sniperscope repair kit, and the radar and radio repair kit. All of these are made up of common tools generally, or they might be distinctive. We also provide the infantry entrenching outfit, which is a very substantial outfit, running about $1,500. Mr. EVINS. I think you do a great work and I thank you gentlemen. Mr. GRIFFIN. Thank you very much. |