1. Supply Distribution (Continued) primarily located in Federal Office Buildings wherever there is a concentration of Federal activities. The space and related cost subactivity provides for expenses incident to the operation, maintenance, protection, and rental of warehouse space housing these distribution operations. a. Distribution Operations.- Stores sales in 1974 are estimated to be $490 million, the same volume projected for 1973. This volume represents only a minimal increase over FY 1972 actual. The net increase in unit cost of $0.13 from $5.08 in 1972 to $5.21 in 1973 is attributable to full-year costs for wage and salary increases effective in 1972 and 1973 offset in part by increased productivity. Full year costs in FY 1974 of 1973 wageboard cost adjustments amounts to $776,000 at a unit cost of $0.16 per $100 of sales in 1974. Further productivity gains offset this increase resulting in a unit cost of $5.25 per $100 sales for a net unit cost increase of only $0.04 over 1973. (1) Wholesale Distribution. This activity is responsible for the efficient operation of the network of wholesale distribution facilities maintained throughout the nation where inventories of stores stock items are received, stored, and issued to agencies on a worldwide basis. Sales are estimated to be $456 million in 1974. This is a slight reduction from the 1972 sales level of $457.2 million and the 1973 projection of $459 million. The volume of supplies shipped to the military is expected to decline in 1974 in anticipation of reduced demand for supply support by ordering activities overseas. Partially offsetting this reduction is an anticipated increase in sales to civilian agencies, reflecting a sustained upward trend in supply support to this sector of the Government. (2) Retail Distribution.- Sales from self-service stores are estimated to be $34 million in 1974, an increase of $5.3 million over the actual volume experienced in 1972 and $3.0 million above the 1973 projection. ales for 1972 reflected an increase of 15% over the 1971 sales volume of $25 million. During 1972, there were 59 self-service stores in operation or which modern self-service merchandising techniques and simplified illing methods are employed. Establishment of self-service stores provides for the consolidation f Government agencies supply outlets wherever there is a concentration f Federal activities resulting in a net savings to the Government in costs hrough the release of manpower, space, and equipment by other agencies that ere formerly devoted to operating agency stock rooms. The increase of 222,000 in 1974 provides for full year costs for those stores opened during Y 1973, and operating expenses of new stores to be opened during 1974. (3) Space and Related Costs.- A total of $6.9 million is required for FY 1974, an increase of $500,000 over the amount programed in 1973. This amount reflects restoration to minimum acceptable levels of facility cleaning and protection services. It also provides for increased reimbursement for utilities and wages of Public Buildings Service custodial, maintenance and protection employees assigned to the FSS Supply Distribution facilities. In 1972, the relocation of the New Orleans Export Distribution Operation to Harahan, Louisiana, and the consolidation of the Los Angeles Supply Distribution Facility Operations in Stockton, California, resulted in a reduction of 855,000 square feet 'of domestic operations space. Additionally, space to support the domestic operations at the Fort Worth, Texas Facility has been reduced by 130,000 square feet and at the Clearfield, Utah Facility by 190,000 square feet. These actions resulted in net annual savings of approximately $295,000 in OE, FSS direct space costs. Savings accruing as a result of these consolidations are being utilized to restore some of the services at the Supply Distribution Facilities as well as to partially offset increases in salaries of protection, custodial, and maintenance personnel, and to offset increases in utility costs. Had these savings not been realize the requirement for 1973 and 1974 would have increased approximately $300,000 each year for a total of $6.7 and $7.2 million, respectively. A cost benefit study has been initiated to determine the feasibility of closing the Shelby, Ohio Facility through consolidation into the Chicago, Illinois Facility. If this consolidation is determined to be feasible, space for domestic operations wil be reduced by 494,000 square feet, resulting in an annual savings of approximately $155,000. Any savings that may result from this consolidation will be used to finance one-time costs in FY 1974 related to this action. There are 22 Supply Distribution Facilities programed for 1974. These facilities contain approximately 17,000,000 square feet of storage space. Of this total, 94.0% is Government-owned and the remainder is leased. The total space cost of $6,900,000 consists of $6,149,000 for Government space and $751,000 for leased space. EXPLANATION OF DISTRIBUTION BY OBJECTS (See Activity Data Sheet) 11 Personnel Compensation and Staffing.- $18,907,000. For 1,659 permanent positions (1,790.0 average employment) distributed as follows: 1. Supply Distribution (Continued) 12 Personnel Benefits.- $1,714,000. $1,164,000 for direct contribution to retirement fund, $260,000 for health benefits, $80,000 for group insurance, $70,000 for FICA, and $122,000 for reimbursement to the Employees Compensation Fund, pursuant to P.L. 86-767, and $18,000 cost of living allowance. 21 Travel and Transportation of Persons.- $124,000. $84,000 for 2,100 days of travel and $40,000 for motor pool services. 22 Transportation of Things.- $62,000. $25,000 for motor pool truck services and $37,000 for miscellaneous transportation charges. 23 Rent, Communications, and Utilities.- $3,054,000. $511,000 for space 24 Printing and Reproduction.- $55,000. For general printing of materials relating to the operation and management of the supply distribution system. 25 Other Services.- $8,236,000. $4,972,000 for janitorial, guard, maintenance, and miscellaneous services, $54,000 for reimbursement to other GSA funds for services performed, $2,716,000 for ADP service, $200,000 for health rooms and services performed by other Government agencies, and $294,000 for commercial contracts. 26 Supplies and Materials.- $486,000. $35,000 for administrative supplies and materials, and $451,000 for operating supplies and forms. "Commodities are procured to maintain inventories at storage depots to insure availability in advance of sales orders and for direct delivery to agencies. Term contracts for commercial-type commodities and services are established for large aggregate volume requirements against which agencies place individual orders at uniform price advantages. Total procurement in 1972 was $1,635 million; procurement for 1973, $1,708 million, and procurement for 1974, $1,708 million, excluding ADP equipment." (From The Budget for 1974.) JUSTIFICATION The procurement activity has the contracting responsibility for commonuse items required by Federal agencies and other authorized users of the Federal Supply Service system. In addition to contracting and purchasing activities, the Procurement function includes selection of commodities for inclusion in the Stores, Non-Stores, and Federal Supply Schedule programs and determination of what methods of supply are the most economical and effective. The total procurement volume in 1972, excluding ADP equipment, was $1,635 million and is estimated at $1,708 million for 1973 and $1,708 million for 1974. Staffing and resources for this activity in 1974 is projected at the same level as 1973 as it is expected that the additional contract workload will be achieved through increased productivity. a. Contracts over $2,500.- The number of contracts in 1973 remain relatively constant while the cost per contract increases by $13.22. The increased cost per contract is a result of full year costs for salary increases effective in 1972. The number of contracts in 1974 increases by 200 over 1973 to 19,500 through continuing efforts to minimize small purchases and use of more economical methods of contracting. The cost per contract of $634.36 in 1974 reflects an improvement of $6.57 over 1973 primarily as a result of increased productivity. Increased effort in contract administration, contract termination and commodity management will improve the overall |