REVISION OF SALES PRICES Mr. ANDREWS. Mr. Buckley, in the first paragraph of your general statement, you referred to the imperative need to undertake an earlier review of the prices of publications which you sell. Looking at the table on page 149 of the committee print, in the lower portion of that page, I note that whereas in all recent years the earnings which your operation has turned into the Treasury have substantially exceeded the total cost of operation; that is, both the cost of performing the revenue-producing functions as well as carrying out your nonrevenue-producing functions. The two seem to come together and equal each other in the current fiscal year, according to your estimates. In fiscal year 1969, you are projecting that for the first time in a good many years the appropriation for your expenses will exceed the earnings. That does seem to indicate that your publication prices may need some updating. What about this? When are you going to make the review? When do you hope to make the upward adjustment in your prices? Incidentally, what is the law on the point? Mr. BUCKLEY. Mr. Chairman, we have, with the approval of the Public Printer, designated a committee of officials both in the Documents Division and representing the other branches of the Government Printing Office concerned, and they are beginning immediately to make a study of the extent to which the cost factors involved in the pricing should be revised upward. We have not had any revision in this pricing formula since 1953. I think the figures that you cited a moment ago are conclusive evidence that we must take a look and make the prices of the publications more realistic in relation to the costs. To answer the question of the law on the subject, the United States Code, title 44, section 72(a), provides that the price at which additional copies of Government publications are offered for sale to the public by the Superintendent of Documents shall be based on the cost thereof as determined by the Public Printer, plus 50 percent. Mr. ANDREWS. You would not be complying with the law if you sold them for less than the cost to you? Mr. BUCKLEY. We are complying with the law, Mr. Chairman, in that the present prices do represent the adherence to the pricing formula that we have followed now for some years. The committee hopes to establish that the increased cost factors, costs of material which have increased and the other cost increases should be worked into this. The 50 percent will remain the same but the cost factors as determined by the Public Printer will probably be due for some revision upward. Mr. ANDREWS. Under the law you are supposed to make 50 percent? Mr. BUCKLEY. It does not state this specifically. Mr. ANDREWS. Read that section again about 50 percent. Mr. BUCKLEY. It says that the price at which additional copies of Government publications are offered for sale to the public by the Superintendent of Documents shall be based on the costs thereof as determined by the Public Printer, plus 50 percent. Mr. ANDREWS. It looks to me like you put 50 percent on the cost. That would be making a profit of 50 percent. Mr. HARRISON. Not necessarily. The actual cost of the publication is not the entire cost of distributing the publication. There is the handling of the publication and Mr. ANDREWS. The law says the price must be 50 percent above the actual cost of the publication? Mr. HARRISON. The costs the plant charges the Document Division. Mr. ANDREWS. Plus 50 percent ? Mr. HARRISON. Plus 50 percent. Mr. ANDREWS. So much of that 50 percent goes for distribution? Mr. ANDREWS. It is not the intent of the law that the publications be sold for less money than it costs the Government to print and distribute? Mr. BUCKLEY. That is right. Mr. ANDREWS. According to these figures, your costs for 1969 are more than your receipts; is that correct? Mr. BUCKLEY. Projected to 1969, Mr. Chairman, if we did not revise the pricing. It looks as if the costs would be slightly in excess of the receipts. Mr. ANDREWS. According to the table on page 149 Mr. BUCKLEY. Mr. Chairman, there does appear in the projection to be a difference in the current year of $4,000. We are not yet sure that we will not be able to break even. We will not do much better than that. Mr. HARRISON. Unless we revise the prices. Mr. ANDREWS. I hope that you revise the prices. Certainly the cost of everything has gone up since 1953 when you last established the prices. Mr. HARRISON. Right. Mr. ANDREWS. Elaborate on that for the record. Mr. HARRISON. Yes, sir. (The information follows:) Since the last revision of the pricing formula in 1953, there has been an increase of approximately 48 percent in the printing and binding costs of publications produced for sale. Other costs, such as postage, mailing materials et cetera, have also increased during this period. Part of the cost increases have been offset by savings resulting from improvement and modernization of methods and procedures. INCREASE FOR INTERMEDIATE SHIFT FOR GOVERNMENT AGENCY MAILINGS Mr. ANDREWS. In the last paragraph of your statement, on page 1, you refer to the heavy demands for mailings by Government agencies, more or less swamping your present capacity of space and equipment. How much are you asking for that intermediate 8-hour shift? Mr. BUCKLEY. $214,084, Mr. Chairman. Mr. ANDREWS. The mailings for other Government agencies, I take it, are nonrevenue producing for your appropriation? Mr. BUCKLEY. That is right. Mr. ANDREWS. What appropriation bears the postage costs for the mailing by you of publications for other Government agencies? Do you bear it or do they bear it? Mr. BUCKLEY. They bear it. This is under postage and fees paid of the department for which the mailing is done. BRANCH SALES OUTLETS Mr. ANDREWS. On page 2, in reference to the two branch sales outlets now in operation in Chicago and Kansas City, which you say have been highly successful and have received enthusiastic public response, what proof do you have of that? Mr. BUCKLEY. We know that, based on the 10-months report that we have made, the sales of publications for both the Chicago and the Kansas City branches have been more than we could have anticipated this time last year. The Chicago store opened on March 21, 1967, and for the first 10 months had gross sales of $76,931. During the same period, from April 24, the date on which the Kansas City branch opened Mr. ANDREWS. 1967? Mr. BUCKLEY. 1967-the Kansas City branch had $33,839 for the gross sale of publications. Mr. ANDREWS. How much did you make on each one? Mr. BUCKLEY. The miscellaneous receipts over and above the cost, in the case of Chicago were $49,236. In the case of Kansas City, $21,657 for the first 10 months. Mr. ANDREWS. Would you say that is a profit? Mr. BUCKLEY. Yes. Definitely. We are running ahead of the costs of operating the stores. Mr. HARRISON. Mr. Chairman, I might tell you this: In Chicago they have to run a real tough obstacle course to get to the bookstore. It is on the 14th floor in the back corridor between the two banks of elevators. It will eventually be moved to the lobby. Mr. ANDREWS. Is it a Government building? Mr. HARRISON. Yes, sir. Mr. ANDREWS. Do you pay any Mr. HARRISON. No, sir. rent? Mr. ANDREWS. Any utilities, janitorial services? What is the cost of operating that store? Mr. BUCKLEY. The cost of operating a branch is about $20,000 a year. That includes all costs, staffing, and everything else with which we are charged. Mr. ANDREWS. Your gross sales were $76,931 in Chicago? Mr. BUCKLEY. That is right. Mr. ANDREWS. You said that $49,236 is profit? Mr. BUCKLEY. This is the gross profit. Mr. ANDREWS. What do you subtract from that? Mr. BUCKLEY. Then we subtract the $20,000 staffing and operating costs from that, which gives you around $29,000 in the case of Chicago. In the case of Kansas City Mr. ANDREWs. Wait a minute. Even $20,000 to operate that store in Chicago? 92-655-68-12 Mr. ANDREWS. How many employees? Mr. BUCKLEY. Two. Mr. ANDREWs. What are the salaries? Mr. BUCKLEY. They are grade 5 employees. The specific salary figure for that grade is from $5,565 to $7,239 per annum. Mr. ANDREWs. Total cost? Mr. BUCKLEY. $20,571. Mr. ANDREWS. That is the total cost for operating it? Mr. BUCKLEY. That is right. Mr. ANDREWS. That gives you a net profit of $28,665; is that right? Mr. BUCKLEY. Yes, sir. Mr. ANDREWS. That goes into the Treasury? Mr. BUCKLEY. Yes, sir. Mr. ANDREWS. What about Kansas City gross sales? Mr. BUCKLEY. Gross sales were $33,839. Mr. ANDREWS. Cost of operation? Mr. BUCKLEY. Same cost. Mr. BUCKLEY. Yes, sir. Mr. ANDREWS. Two employees? Mr. BUCKLEY. Two employees. Mr. ANDREWS. You had a net profit there of $13,269? Mr. BUCKLEY. Yes, sir; less the cost of the publications sold, which amounted to $12,182. Mr. HARRISON. Mr. Chairman, I would like to add that this has relieved the main office to that degree. Mr. ANDREWS. Here in Washington? Mr. HARRISON. Because these people, instead of ordering from Washington, an already terribly overcrowded operation, buy their copies there with bulk shipments made by the main office. They have a deal where they send airmail orders in twice a day. Mr. DARLING. Through the postal service twice a day orders are mailed to a special post office box number. Then we give them 24-hour mail service to the bookstores or direct to the customers. Mr. ANDREWS. The correct picture for the two stores that you are operating in Kansas City and Chicago, you had gross sales of $110,770? Mr. BUCKLEY. Yes, sir. Mr. ANDREWS. You have two employees in each of the stores. The Chicago store had gross sales of $76,931, gross profit of $49,236; operating charges, $20,571. You made a net profit of $28,665 ? Mr. BUCKLEY. Yes, sir. Mr. ANDREWS. At the Kansas City store you had gross sales of $33,839. Cost of operation, $20,571. Net profit, $13,268? Mr. BUCKLEY. Yes, sir; less the cost of the publications sold, of $12,182. Mr. ANDREWS. You had net sales at both stores of $41,735 ? Mr. BUCKLEY. The $41,735 is reduced by the cost of publications sold in Kansas City, so the combined net sales of both branches is $29,553. Mr. ANDREWS. That money reverted to the Treasury? Mr. BUCKLEY. That is right. Mr. ANDREWS. You had two employees in each of the stores? |