APPROPRIATIONS FISCAL YEAR 1964 AND ESTIMATES FISCAL YEAR 1965 Senator MAGNUSON. All right, the committee will come to order. We have this morning the General Services Administration, and we will put in the record the chart here which shows the appropriations on each item for 1964 and the budget estimates for 1965, and the increase or decrease in those estimates. (The chart referred to follows:) SUMMARY OF BUDGET ESTIMATES FOR 1965 AND COMPARISON TO 1964 (ADJUSTED IN ACCORDANCE WITH H. Doc. 240) 1 Includes appropriations in annual act; supplemental appropriations proposed for later transmission in 1964; transfers and comparative transfers. PREPARED Statement of the ADMINISTRATOR Senator MAGNUSON. Mr. Boutin is here, and he has a general statement which we will be glad to hear. Mr. BOUTIN. Mr. Chairman, with your permission, I would like to submit the general statement for the record, and speak to the highlights of our program. Senator MAGNSUON. All right. Mr. BOUTIN. I think it might be more informative to the committee, with your permission. Senator MAGNUSON. All right. We will put this in the record in full. (The statement referred to follows:) STATEMENT OF BERNARD L. BOUTIN, GENERAL ADMINISTRATOR Mr. Chairman and members of the committee, again it is a pleasure to appear before this committee to review the many programs of the General Services Administration and discuss the budgetary requirements for carrying them out. As I have stated on many occasions, this committee has been extremely helpful in advancing GSA's programs ever closer to accomplishing what the Congress visualized when it created the agency. Three factors have contributed to GSA's growth. First, as GSA became more proficient in providing its services, the Congress has come to rely on it through enactment of legislation adding new functions to GSA and the agencies which GSA serves have voluntarily requested an expansion of our services. Secondly, the centralized business management services provided by GSA have necessarily grown with the growth of the Federal establishment since 1949. Thirdly, functions of other agencies which tend to duplicate those vested in GSA are gradually being merged with GSA and this evolutionary process is expected to continue for the next several years. Although these factors have necessarily brought about increases in our appropriations to enable us to handle the increased workload, the record will show that our unit costs of doing business have come down or remained relatively stable despite significant trends of the past 13 years for increases in salaries and the cost of goods and services. Since I became Administrator of GSA, I have been dedicated to a policy of operating the agency's programs at minimum costs. The budget before you reflects this policy and the policy of the President for "a dollar's value for a dollar spent.' Evidence of application of the policy will be noted as we review the various segments of our budget which reflect such factors as (a) improved space utilization, (b) increased productivity by employees, (c) automation of operations wherever possible, and (d) improvements in Government-wide management and service activities in the fields of property, records, transportation, communications, and stockpiling operations. With your permission, I would like to discuss a few of the significant items in the GSA program reflected in our budget estimates and highlight some of our accomplishments and future goals. Under the purview of our Public Buildings Service and within the framework of Executive Order 11035, GSA has made steady progress in improvement of space utilization and fully expects that the office space occupancy rate will drop from an average of 146.8 square feet per person in 1963 to 144.6 square feet by the end of fiscal year 1965. Each square foot thus reduced saves an estimated $1.5 million in Government expenditures, a total of $3.3 million from 1963 to 1965. With the support of the Congress the building construction program has gained momentum. The total program now includes 415 projects with an estimated improvement cost of $1,435 million; $847.1 million has already been appropriated, $169.6 million is requested for fiscal year 1965, and the balance of $418.3 million is to be requested after fiscal year 1965. About 5 million square feet of newly constructed space will be coming into use in fiscal year 1965. This will help in filling the steadily increasing requirements of Government agencies and enable us to release about 1.6 million square feet of leased space and 1.1 million square feet of obsolete Government-owned space. As in the past, this budget reflects the best professional cost estimates for constructing the buildings planned in fiscal year 1965, and the geographical distribution of the projects selected is in keeping with the intent of the Public Buildings Act. The backlog in repair and improvement work is estimated to be $369.5 million at the beginning of fiscal year 1965. Although the rate of physical obsolescence adds substantially to the backlog each year, we expect to make a reduction in the total as a result of the proposed $15 million increase in the 1965 appropriation request. The budget also includes funds for the prepayment of certain public building purchase contracts which have a prepayment option in fiscal year 1965. By exercising the options, the Government can save approximately $1.8 million which otherwise would have to be paid out over the next few years in interest and taxes. As the committee is aware, GSA has just recently arranged to prepay the projects at Durham, N.H., and Burlington, Vt. This action adjusts our appropriation request downward under this head by $465,000 for 1965. The use of GSA's Federal Supply Service continues to increase throughout the Federal Government. GSA has recently assumed responsibility from the Defense Supply Agency for all paint and handtools. It is estimated that this takeover alone will account for an increase of some $60 million in sales in fiscal year 1965 through the GSA system. I am also glad to report that by making arrangements with other agencies for advances to the general supply fund to cover receivables due from them, there is sufficient capital on hand to obviate the need for additional capital appropriations in fiscal year 1965. In furtherance of our firm policy for utilizing Government-owned warehouse space wherever economically feasible, we were able to reduce our leased space from 22 percent of the total in use in 1962 to 14.8 percent of the 10.8 million square feet in use in fiscal year 1963. This budget includes funds for the purchase of the Franconia, Va., warehouse which presently costs us $700,000 in annual rentals. Among the more important objectives of the Utilization and Disposal Service of GSA is to attain the maximum utilization of Federal property within the Government and to dispose of surplus property at the highest possible dollar return to the Treasury. Utilization transfers of real and personal property were $620.1 million at acquisition cost in 1963 and are estimated to reach $710 million in fiscal year 1965. This represents very real savings in that new acquisitions of such needed property by Federal agencies are precluded. GSA's intensive program of surplus property sales produced a total sales price in 1963 of $87.6 million. We expect to exceed $112 million in 1964 and reach $127.6 million in 1965. It is important to note that many of the sales in the real property area were made to user-buyers which economically aid the areas in which they are again put to active use. There were 17 such properties sold in calendar year 1963 which are expected to employ 7,771 people with an estimated annual payroll of $48.3 million. The implementation of the Federal telecommunications system is well underway as a major function of our Transportation and Communications Service. We currently estimate that although only 10 percent of all voice and record communication traffic for Federal civil agencies was managed by GSA in 1962, approximately 90 percent will be covered by the voice network and advanced record system by the end of 1965. The voice network will cover about 350 metropolitan areas early in fiscal year 1965. This network, the record program, circuit procurement activities, local switchboard consolidations, together with the application of the bulk tariff offerings of the communication carriers will produce Government-wide economies in fiscal year 1964, in excess of $30 million. It should be noted that the budget before the committee reflects a reduction of $5.4 million of annual appropriated money heretofore carried under the GSA appropriation, "Operating expenses, Public Buildings Service." Beginning in fiscal year 1965 the system will be on a fully reimbursable basis with each agency paying for its use of the system. Assistance to other segments of the Government in the transportation area continues to produce substantial economies. Freight savings to the Government in 1965 are expected to be $15 million resulting principally from negotiations with carriers and carrier committees. Motor pool activity continues to reflect ever increasing use by Federal agencies of this more economical method of vehicular transportation. Seventy-five pools were operating at the end of fiscal year 1963, and during 1965 we estimate the number will reach 100. During 1963, motor pool vehicles traveled in excess of 294 million miles at an average cost of $0.074 per mile, a reduction of one-tenth of a cent below the previous year. For every mill per mile reduction, GSA operating costs are reduced by approximately $300,000. This is in addition to the estimated $9 million annual savings by pool use over the method of individual agency fleets. The cubic feet of records under management of National Archives continue to increase (from 8.3 million cubic feet in 1963 to an estimated 8.9 million cubic feet in 1965) concurrently with the downward trend of records held in more expensive agency storage and office space. The records program in 1963 in the area of file cabinets, shelving, and related space releases alone produced savings of $4.5 million. Under the Presidential libraries activity, the Hoover and Eisenhower facilities are well underway since their dedications on August 10 and May 1 of 1962, respectively. Work has actively begun to carry forward plans for the John F. Kennedy Memorial Library and $60,000 is included in this budget to accumulate papers of the President's associates, copies of official records, audiovisual material and other relevant materials for the Library. There is a substantial reduction (-$5,695,000) in the budget request for strategic and critical materials below the appropriation for 1964. This is due to nonrotation of cordage fibres and not only makes possible a lower 1965 request but also permits a reduction of $5.5 million in the current fiscal year. Disposal of excess stockpile materials is and will continue to be emphasized. The selling price of actual disposals in 1963 was $110.5 million with $158.6 million expected this year and an estimated $188 million in 1965. In addition to increased revenue accruing to the Treasury, recurring storage costs are also being brought down; from a high figure in excess of $10 million in 1962 we estimate a cost of $8.9 million for 1965. A significant contributing factor is our policy to utilize Government-owned storage facilities in lieu of commercial facilities wherever possible. As I mentioned earlier, this budget reflects the initiation of several actions designed to permit operation of the agency's programs at minimum costs and to make its maximum contribution to cost reduction on a Government-wide basis. I would like to comment on a few of the more significant steps we have taken in the past 12 to 15 months. We established a new manpower utilization program in GSA to develop and install engineered productivity standards and reporting systems to assist in the accurate determination of minimum manpower requirements to handle the ever-increasing workload of the agency. Several pilot studies were conducted during the year and each one produced excellent results in terms of reducing manpower requirements and unit costs of operation. For example, in the case of our cataloging activity, the study pointed up methods by which the unit cost could be reduced from $7.43 in 1963 to an estimated $5.15 in 1965. The budget includes funds for accelerating the manpower utilization program in 1965 to practically every operational area of the agency and cover by the end of the year about 61 percent of the total agency employment. The GSA Institute, which had been recently established when we appeared before this committee last year, has been an outstanding success. It has been extremely well accepted by the agencies and virtually every course offered has been oversubscribed, with 7,061 Government employees having attended during the last 12 months. This year the Institute will offer approximately 300 courses in fields where GSA has Government-wide responsibility. Except for a small nucleus staff provided for in this budget, the entire cost of Institute operations is reimbursable from the agencies whose personnel participate in the training offered. As this committee knows, the Federal Property and Administrative Services Act provides GSA with a broad charter for conducting and controlling activities which bear on operations of all agencies of Government in the fields of property, records, transportation, and communications management. During the past year a thorough reevaluation and analysis of all regulations, and activities pursued during the past 13 years of GSA history resulted in modernizing our policies, procedures and organization and helped us to concentrate our greatest efforts where the prospects for economy and efficiency are greatest. In addition, this review has enabled us to lay down modern charters for the conduct of our many programs, provided a sound basis for planning future operations, and pointed the way for a broader and cooperative effort with other agencies in mutual fields of endeavor. For example: În addition to the transfer of paints and hand tools from the Department of Defense, we have worked out arrangements for joint efforts (1) to assist in the balance-of-payments program by expanding our export program, (2) to share computer tapes for the cataloging program, (3) for standardization and simplification of items carried in our supply systems, and (4) to exchange quality control services at contractor plants. The foregoing are only illustrative of the many actions taken to assist in the Government-wide cost reduction effort. We will be glad to discuss more specific actions as we review the detailed budget estimates later during these hearings. Our 1965 budget calls for an adjusted new obligational authority of $631.9 million. This figure is $3.6 million below the comparable amounts reflected for 1964. I again want to assure you that our request is held to the minimum believed necessary to handle our workload. We will be happy to answer any questions you may have at this point or proceed to the detailed discussion of the estimates contained in our justifications. 31-706-64-pt. 1—15 OFFICIALS PRESENT Senator MAGNUSON. Let the record show Mr. Boutin has with him the Assistant Administrator, the General Counsel, and other members of the Administration. All right. REQUESTS OF 1965, 1964 SUPPLEMENTAL REQUESTS AND REDUCTIONS Mr.BOUTIN. Mr. Chairman, in submitting our request for this year, I would like to point out to the committee that including the adjustments that President Johnson submitted to the Congress on March 9 that our total request is $3,556,500 less than the 1964 comparable amounts, including the supplemental for fiscal 1964. PUBLIC BUILDINGS, SITES AND EXPENSES Mr. BOUTIN. First of all, in touching on the public building program, we are requesting $29,500,000 in the S. & E. appropriation to provide for 41 new project starts which include design and site acquisition. These 41 projects will ultimately have improvement costs of $179 million. There is good geographic distribution all over the country. We have established priorities in selecting these projects and we stand on the necessity for each and every one of them. CONSTRUCTION, PUBLIC BUILDINGS PROJECTS In new construction we are providing in our request for the construction of 149 new projects, including many of the so-called small building projects which take us into almost every State of the Nation. One increase, which is for the customs facility in the Los AngelesLong Beach Harbor area, California, one conversion and remodeling project at Provo, Utah, and one acquisition, the Franconia warehouse in Virginia. The warehouse is leased at the present time with a purchase option and we can save a great deal of money by buying it. REPAIR AND IMPROVEMENT Our repair and improvement request of $90 million is $15 million over what it was last year. This is simply the good business of taking care of what we have, modernizing our buildings, keeping them efficient or as efficient as possible, to install air conditioning where required, to take care of outmoded heating equipment, repair roofs, and all of the other work that needs to be done in our many buildings all over the Nation. CLEANING STANDARDS, BUILDING MANAGEMENT In our buildings management area, I would like to point out we are not increasing our standards. We are still only slightly in excess of 70 percent of our building cleaning standards. We would like to see it at least 80 percent and could make a good case for it but in view of the budget restrictions this is not possible. We are just about where we were last year in the level of cleaning, the frequency of cleaning which we are providing. Senator ALLOTT. Can we interrupt there, Mr. Chairman? |