Senator PACKWOOD. Mr. Roback, has the Office of Federal Procurement Policy made any comment on your procurement paper?

Mr. ROBACK. Excuse me?

Senator PACKWOOD. Has the Office of Federal Procurement Policy made any statement on your procurement report?

Mr. ROBACK. Yes; they have made certain statements.
Senator PACKWOOD. What do they say?

Mr. ROMEDY. Pretty much they support our study. We worked very closely with them in doing the study, since they are the source of all procuren.ent policy, and they reviewed it in draft form, and so did the General Accounting Office, and the ASPR Committee, DOD, and the General Services Administration, so the product of the final report, which is now in the printer, the final copy is not distributed yet, was thoroughly staffed with all of the agencies involved.

I might also add that in preparing that portion of the study concerning the 250 problem, we checked with both large and small industry, and small industry was almost unanimous in saying, if you can get me an easier way of getting that report made out, to make it simpler, you are doing me a great service. One of the reasons it is such a great service, it enhances their ability to get payment on a timely basis.

Senator PACKWOOD. Tell me how you would simplify that?

Mr. ROBACK. Basically the 250 is the document that is keved for the contractor to get paid, once he delivers the material, and the Government accepts it on that document.

When the contractor goes to fill it out, there are about 28 lines and 56 possible entries, and very complex distribution instructions, up to 16 copies could go out.

About half of the information is in the contract, and the Government has the other, and nowhere in the contract is all that information in one place.

The contractor has to go through the whole contractual document, and some of them are 3 inches thick, in finding these bits and pieces. and frequently he finds it missing. Then he has to make phone calls to get professional and technical people involved, and sometimes he has to call all the way back to the Government buying office to get it.

We are recommending that he have that information on a single sheet, cross coded to the data entry-point, as a part of the contract, then the contractor gives that to the clerk, and his people have that information, and there is very, very minimum chance of rejection at that point, because the Government has provided the information in a summarized way for him to fill out. It is a source of great bitterness to contractors when they get these things rejected.

Senator PACKWOOD. Can we speed things up, is imprest funds a workable procedure for payments, or is it going to give you problems on control of costs?

Mr. ROBACK. The armed services procurement regulations spell out that in detail, how it will be conducted, but it is a good possibility. Senator PACKWOOD. Could you do it and still have your control? Mr. ROBACK. Well, you have audit controls, and you have other kinds of controls.

It depends, I think you have to relate to the control policy to the size of the transaction.

Generally in small purchases, you deal with a contractor on a good faith basis, and if there is any trouble, you might want to discuss it. Mr. ROMEDY. It is a golden opportunity for the Government and the contractor to save time and paperwork.

He gets his cash. There are problems when you have a warehouse where goods are being delivered, and you do not want cash, and not too secure an environment.

One of the reasons that recommendation was made, we wanted to point out that there are many options in how to make small purchases. Some of them are just loaded with paperwork and delays.

You heard the witnesses mention that you have to match up the receiving report, the invoice, it has to be approved by the contracting office, sent to a finance office, he gets all of the paperwork together, and he finally makes payment.

Some of these procedures can be allowed to go on a charge account payment basis, if it is a real small purchase, and the organization can set it up in a secure way. We wanted to point out that we saw lack of good management in small purchases that increased the burden on contractors. The Commission has quite a few contractor horror stories such as the purchase of 15-cent spare parts. It took 9 months for the vendor to get his payment. He got so mad, he just threw his hands up in disgust. We can reduce the paperwork through a system of paying immediately.

Mr. ROBACK. This was a direct Commission recommendation.

Senator PACKWOOD. Very good. GAO in its statement, I do not know if you heard them say, they indicated that 45 percent of the delays, the Government's payment delays were due to failure to require documentation of receipt and acceptance.

You recommend reducing complexity of this type of documentation, specifically what would be considered excess documentation, and you would recommend more standardized forms.

This seems to be one of the critical problems in delaying payments. Mr. ROBACK. Our recommendations did not specifically go to this problem. It went to other problems that are relevant and contributory. We have recommendations on payment through imprest funds, progress payments, other means to reduce Government paperwork, and of course we want to eliminate unnecessary forms, and we go along that line.

We did not address your problems as an exclusive subject matter, but many of the recommendations bear upon it.

Senator PACKWOOD. May I ask you the same question I asked the others.

Do you think for routine unexceptional provisions of goods and services, 30 days after presentation of invoice, would be a satisfactory time to accept payment?

Mr. ROBACK. This seems to be the conventional rule in the procurement community, and I would assume that most contractors would be satisfied with that.

Senator PACKWOOD. I know most would be satisfied with that. Most of them would be happy with it.

Mr. ROBACK. I think that ought to be a Government objective.
Senator PACKWOOD. A Government what?

Mr. ROBACK. A Government objective.

Maybe that would be a suitable time, although there are some problems on the front end, but 30 days would seem to be a suitable time span to try to get payment out.

Senator PACKWOOD. I have no other questions. Thank you both very much for taking time to come to us.

Mr. ROBACK. Thank you.

Senator PACKWOOD. Our next witness is Mr. Bryan W. Mercer, Comptroller, Government Printing Office.

You may proceed, Mr. Mercer.

STATEMENT OF BRYAN W. MERCER, COMPTROLLER, GOVERNMENT PRINTING OFFICE

Mr. MERCER. Thank you, Mr. Chairman.

Mr. Chairman and members of this committee, I welcome the opportunity to appear before you today to tell you about two of the most important monetary operations of the Government Printing Officethe prompt payment of money we owe to private contractors, and the collection of money owed to us by our customer Federal agencies. Before I do that, let me give you some background information about the Government Printing Office and its printing and binding operations.

The Government Printing Office, headed by the Public Printer, is part of the legislative branch of the Federal Government and is overseen by the Congress through the Joint Committee on Printing. We presently have a total of about 8,100 employees-about 7,300 employees in the Washington, D.C. area, and about 800 employees located in GPO field installations, including a Public Documents Distribution Center, 5 field printing plants, 14 regional printing procurement offices, and 23 bookstores. We estimate fiscal year 1978 volume for printing and binding will aggregate $464 million. About $274 million, 62 percent, of which will be procured commercially. We have on our bidder's list more than 6,000 suppliers of printing and binding services, and 97 percent of those suppliers are classified as small businesses and the majority have fewer than 25 employees. During the 8-month period ending May 31, 1977, we paid more than $171 million to approximately 2,000 of these suppliers.

One of the principal reasons for our prompt payment to contractors is real concern and support by top management. Mr. Thomas F. McCormick was appointed Public Printer in 1973. He was formerly with General Electric Co. Shortly after he assumed office he issued a challenge to the printing industry to be more aggressive in seeking Government work. Responding to that challenge, literally hundreds of owners and managers let him know why they avoid Government work. Their complaints fell into three basic categories: Too much redtape, slow pay, and too little profit.

We have been working very hard to overcome those objections. As to the problem of too much redtape, we believe we have greatly simplified the procedures associated with bidding on Government

printing as well as the preliminaries involved in placing a firm on our roster to receive bid invitations. The margin of profit, of course, is a matter over which GPO has no control. However, we are willing to pay a fair price for the items we buy and we expect our suppliers to earn a profit.

Since about 1973 our contractors' bidder lists have almost doubled. This is due, at least in part, to our improvement in the promptitude of payments. The increase in bidders creates more competition and should result in better value for the Federal printing dollar. We strive to pay all our bills within 10 days after receiving the contractor's invoice, and we are presently paying about 90 percent of them within this time frame. We are proud of this record.

Three factors contributed to our fast pay effort. First, GPO personnel are guided by predetermined productivity standards and there are an adequate number of technical and clerical personnel to process contractors invoices within the 10-day time frame. We firmly believe that productivity standards, coupled with an adequate staff, is a key factor to keep ahead of the workload. Second, we use statistical sampling techniques in examining invoices valued at less than $500 which is authorized by law and permits faster processing. And third, it has long been our policy to begin the payment process based on "evidence of shipment" rather than "evidence of receipt." We ask contractors to attach copies of signed bills of lading or U.S. Postal Service receipts to their invoice for this purpose. Most agencies require evidence of receipt before they authorize payment. Also, we have our own disbursing officer who prepares checks for payment of invoices and we feel that this speeds up the payment process in that we can set standards and control her input and output, and so forth.

Another factor we believe is helpful, is our policy of asking contractors to submit their invoices to us within 5 days after they ship the material and also provide each contractor with specific instructions on how they should prepare their invoices.

Mr. Chairman, in order to pay promptly we must have the cash available to pay and we have had some problems in maintaining an adequate cash flow in that some of our customer agencies do not pay us timely. It would appear that GPO suffers the same slow payment problem that commercial firms do in some dealings with other Government agencies. Generally, the reasons departments and agencies have not paid us promptly can be summarized into three basic areas. (1) Multiple shipping points.

(2) Multiple appropriations.

(3) Inefficient procedures.

Multiple shipping points.-Concerning multiple shipping points, we are often requested to ship a printing job to several locations throughout the States or all over the world. However, the agency will not pay our invoice until they have received "confirmation of receipt" from each of the shipping points. This causes delays in recovering

our money.

Multiple appropriations.-Concerning multiple appropriations, an agency may have a printing job where several organizational units or several programs are involved with different appropriations funding their activities. The agency may attempt to prorate, obligate, and

liquidate from each appropriation involved before paying us. This also takes time and is not required.

Inefficient procedures.-Under this caption an agency may have built-in delays in their own system.

I would like to give you an example of how one of our customer's system operates. The agency told us that their goal is to pay GPO invoices within 45 days after receipt of our billing. However, they admitted that normal payment is made usually between 60 and 90 days. According to agency officials, the system works somewhat as follows: An agency installation, for example in Philadelphia, orders printing from GPO.

GPO performs the work and, in accordance with instructions from the agency, sends an invoice to the Agency Industrial Fund operations in Washington, D.C., where the accounting is performed.

The Agency Industrial Fund then prepares a bill and sends it to the agency installation in Philadelphia that ordered the printing for certificates of service received.

The agency installation in Philadelphia then reviews the bill and releases it to the agency center located in New York for transfer of funds.

The agency center in New York then transfers the necessary fund from an appropriation to the Agency Industrial Fund operation in Washington and the Agency's Industrial Fund operations in Washington then pays our bill.

In January 1975, this agency owed GPO approximately $11 million, 27 percent of which was more than 60 days old. As of May 31, 1977, the agency still owes us approximately $11 million, but now 45 percent is more than 60 days old.

We remind the agencies frequently to pay our invoices and the legislative appropriations subcommittees have from time-to-time assisted us greatly in reminding some of the agencies to pay GPO invoices promptly. It is absolutely necessary for us to have the cash available if we are to pay promptly.

Printing contractors, in general, are relatively small contractors and often work on borrowed capital. We would place an enormous burden on them if we did not pay promptly. And, as I've already said, as long as we pay promptly, more small firms will compete which helps them to get Government business and also tends to lower the cost to the Government for printing and binding services.

This concludes my statement and I will be glad to answer any questions you may have.

Senator PACKWOOD. I don't know whether to ask you the name of the agency you mentioned in your statement.

I used to practice trial law. I am afraid if I ask you, you will say the Congress.

Which agency is it?

Mr. MERCER. It is the Navy.

Senator PACKWOOD. The Navy with its great record of payment? I see how they do it now. That is interesting.

You made reference to the change of procedures which GPO undertook some years ago.