Mr. ROBISON. Could you also provide, in supplemental fashion for the record, the location of those you presently have and the locations where you plan to put the additional ones?

18th and F Sts., NW., Washington, troit, Mich. D.C.

400 North 8th St., Richmond, Va. Jefferson Plaza, Arlington, Va. State Department, Washington, D.C. Naval Station, Building 113, Washington, D.C.

Federal Aviation Washington, D.C.

Mr. ROBISON. Give us some comparative idea of the size of these self-service stores. I suppose they probably range in size from small to large.

Mr. MEEKER. The average space is between 5,000 and 6,000 square feet.

TYPICAL SELF-SERVICE STORES

Mr. ROBISON. What would a typical one be in the Washington area? Mr. SPANGLER. The GAO Building would be a typical one. Also, the one at 18th and E in the GSA Building and the one in the DHEW Building. They are not too different from the House stationery room. Our people worked with the House stationery staff in setting it up, so they are much the same.

Mr. ROBISON. If the Social Security Administration wanted to buy 10,000 of the kind of pencil I am holding in my hand, would it send someone to the self-service store to pick them up?

Mr. SPANGLER. No.

Mr. ROBISON. How does it work?

Mr. SPANGLER. Normally the secretaries or someone in an office go to the store and maybe get two dozen of them.

Mr. ROBISON. As a small quantity item?

Mr. MEEKER. Yes, and they utilize the credit card to get it like in a normal business.

Mr. ROBISON. If Social Security were going to buy 10,000 of these pencils, they would buy them direct, then, from one of your supply distribution facilities?

Mr. SPANGLER. Yes, they would order from our wholesale distribution system. The self-service stores are strictly retail for small quantities.

WHOLESALE AND RETAIL DISTRIBUTION

Mr. ROBISON. At page II-7 there is a reference in the justifications to the unit cost per $100 of items sold; also a compilation of the actual sales in 1972-73, and as projected for 1974. I notice that the retail level unit cost per sale is substantially higher than at the wholesale level, and I understand why. But I notice, also, that you hope to bring the unit cost per $100 sale at the retail level down in 1974 from $8.23 in 1973 to $8.16 in 1974. How are you going to do that?

Mr. MEEKER. It is primarily through a 2-percent productivity

increase.

Mr. ROBISON. Productivity of the clerks or the whole operation? Mr. MEEKER. The whole operation.

UNIT COSTS

Mr. ROBISON. Overall, your unit cost per $100 of sales continues to go up. It was $5.08 in 1972, $5.21 in 1973, and $5.25 in 1974. That reflects what?

Mr. MEEKER. Primarily wage increases.

SELF-SERVICE STORES

Mr. ROBISON. You say, in your prepared statement, that your selfservice stores "do not compete with the private sector." Would you elaborate on that for the record?

Mr. MEEKER. The point is that these self-service stores are in Federal buildings, and they are in areas of concentration of Federal employees, and are utilized by Federal employees.

Mr. ROBISON. I suppose if "Sam Jones" around the corner had a stationery store, he might say you are still competing with him, wouldn't he?

Mr. SPANGLER. Normally, these Federal agencies would be ordering from our wholesale system if a self-service store wasn't in the vicinity. They are purchasing the same item, but from a different location. Mr. ROBISON. And the overall economies to the Government of this kind of operation are substantial?

Mr. SPANGLER. Yes.

Mr. ROBISON. Which is the justification for it?

Mr. SPANGLER. The items they would be buying around the corner from the local merchant they will normally continue to buy from around the corner at the local merchant.

Mr. ROBISON. Is there an effort on the part of GSA, and throughout the Government establishment, to encourage people to come down to the self-service stores and buy these items?

Mr. MEEKER. We have a very concentrated program to publicize our self-service stores to make people aware of the benefits of them and encourage them to utilize them.

PROCUREMENT

Mr. ROBISON. Turning to page II-13 of the justifications, there is a reference to small purchase contracts, and here we are told that, although a continuing effort is made to minimize small purchase contracts by using more economical methods of contracting, the number of small contracts in 1974 is expected to increase by 800 over 1973. I don't have any comparative figures here to know how large an increase that is. What are we talking about? You have an increase of 800. What did we have in 1973 or will have in 1973?

Mr. YEAKEL. The number of contracts increases from 86,200 to 87,000, or about a 1-percent increase.

Mr. ROBISON. What is the problem here-the economies available to you in mass purchasing?

Mr. SPANGLER. Not only that, but the fact that many of these items are slow-moving items; so the most effective and cost efficient manner to buy them is through a small purchase type contract.

Mr. ROBISON. Because you don't want 10,000 "dingbats" that are going to sit on the shelves forever?

Mr. SPANGLER. That is right. We are looking at it from the stand>oint of keeping our inventory down.

SUPPLY CONTROL

Mr. ROBISON. That fits in with my next question, which would relate o page II-16. Here, you tell us about your efforts to reduce inventory, hat you did reduce inventory available for issue from $182.5 million t the close of 1971 to $169 million at the end of 1972, which you tell s was accomplished primarily through elimination of slow-moving ems and reduction of long supply. Would you elaborate on this for moment?

Mr. MEEKER. As of June 30, 1973, we have a target of $163 million. Mr. ROBISON. Do you want to bring it down farther?

Mr. MEEKER. For June 30, 1974, we are aiming for $143 million. Mr. ROBISON. I understand what a slow-moving item is. What is a "long supply" item?

Mr. MEEKER. A long supply item is one on which we have too much inventory.

Mr. ROBISON. You plan, you say, further reductions on the basis of reduction in "safety stocks." What is safety stock?

Mr. SPANGLER. Safety stock is a part of the inventory needed to protect against stockouts caused either by unusual requirements of agencies or by unforeseen delays in delivery of supplies to our warehouses. Mr. ROBISON. You have the same problem, then, as any other merchandising operation. You want to keep your customers, you want to have them keep coming, and if you don't have an item on the shelf when they want it, you are going to lose the customer.

Mr. MEEKER. We are no different than any retail or wholesale con

cern.

STANDARDS AND QUALITY CONTROL

Mr. ROBISON. Skip over to H-20 of the justifications and give me some elaboration on the quality-approved manufacturers programQAMP-which allows manufacturers with approved quality control systems to ship materials to agencies without Government inspection. And, you say, in 1972 this program resulted in a saving in inspection costs of $4.4 million. I would be interested in having you reassure us that this method does not reduce the quality of the product you eventually get.

Mr. MEEKER. This program, which we call the QAMP program, permits suppliers with good quality control systems and records, to deliver and ship without Government inspection on every order. Our inspectors visit the plants and approve their quality control programs. We have periodic surveillance visits to make sure the manufacturers assure adequate quality control. This procedure reduces Government inspections to minimum. For example, at the end of March 1973, 2,352, or 75 percent of the 3,133 manufacturer's locations were covered by such agreements. This is how we generate the cost avoidance you are referring to.

LABORATORIES

Mr. ROBISON. You have some laboratories for testing purposes?
Mr. MEEKER. Yes.

Mr. ROBISON. How many?

Mr. SPANGLER. Six acceptance laboratories.

Mr. STEED. Supply their locations for the record.

[The information follows:]

FSS ACCEPTANCE LABORATORIES

Quality Control Regional Laboratory, New York, N.Y.; Quality Control Regional Laboratory, Chicago, Ill.; Quality Control Regional Laboratory, Kansas City, Mo.; Quality Control Regional Laboratory, Fort Worth, Tex.; Quality Control Regional Laboratory, San Francisco, Calif.; and Quality Control Regional Laboratory, Auburn, Wash.

Mr. ROBISON. You have one apparently called the magnetic-surfaces laboratory. Why that one?

Mr. SPANGLER. That is a different type of laboratory. We have six laboratories for acceptance testing. The magnetic surfaces laboratory and the material evaluation and development laboratory are two product development laboratories. The magnetic surfaces laboratory is where we actually develop test methods that are made part of the specifications and standards for testing magnetic tapes and instrumentation tapes.

Mr. ROBISON. The reason for the interest in that is because the Government is now so computerized?

Mr. SPANGLER. Yes, sir. For example, on the last space shot we ran all night testing tape in order to get it to Cape Kennedy for the space

shot.

Mr. ROBISON. You inspect material which you want to buy, or have on order, at both the contractor's plant and also in the GSA depots? Mr. SPANGLER Yes.

INSPECTION

Mr. ROBISON. Where do you do the greatest share of your inspection? Mr. SPANGLER. At source.

Mr. ROBISON. Reference is made on the same page to the rejection, n 1972, of $21.2 million worth of items or of materials. Is that about Dar for the course, or high for the year?

Mr. SPANGLER. That is about par.

Mr. ROBISON. That rejection of $21.2 million, if I understand corectly, was out of a total material value looked at of $862.4 million? Mr. SPANGLER. That is correct.

Mr. ROBISON. In your budget request-out of which you hope to et increased productivity-you are going to have some additional spection capacity. Is that correct?

Mr. SPANGLER. Yes, sir.

Mr. ROBISON. Amounting, it says here, to 100 additional contracts. Mr. SPANGLER. That is right.

Mr. ROBISON. Do you have any special area of problems in this testg field; is any type of product giving you more trouble than others? Mr. SPANGLER. I would say that chemicals and floor cleaners are the pe of products that give us more trouble than anything else. Also, ixes and paints give us problems.

SPECIFICATIONS

Mr. ROBISON. You have already told us about the specifications rew to get back into a proper cycle. You might elaborate for just moment, if you would, about the value of that. This is on page II-21 the justifications. What is the purpose of reviewing these; it is bese, as Mr. Steed said, of new products coming in?

Mr. MEEKER. Failure to maintain current specifications results in an empt to procure items which are no longer manufactured items or ich could be considered as substandard, items which have had cuser dissatisfaction and consequently increase the incidences of rest for deviations in specifications, and possibly could result in >mplete use of Government stocks.

40-73 pt. 4 38