GSA Amendment No. 164

ADMINISTRATIVE OPERATIONS FUND

PROPOSED AMENDMENT

On page 37 of the bill as reported to the House on line 21, strike out "$19,565,000" and insert in lieu there of "$21,840,000."

66.6

House Report No. 1413: Page 12, ‘Administrative operations fund': A limitation of $19,565,000 is recommended for administrative, financial, legal, automatic data processing, and other general supporting services for GSA programs. The amount included in the bill is $2,275,000 less than the budget estimate."

Summary highlights

JUSTIFICATION OF THE AMENDMENT

As indicated in the table above, the House allowance is $2,275,000 less than the 1965 budget estimate. If this reduction is allowed to stand, it will definitely have a most serious effect on our ability to economically and efficiently provide many support services essential to all GSA programs. The House allowance: (a) Is 10.4 percent less than our fiscal year 1965 budget estimate; (b) Is $397,000 less than the $19,962,000 available on a comparable basis for fiscal year 1964;

(c) Makes no allowance for handling the increased workload which is being generated under allowances in the House bill for substantive GSA programs;

(d) Would force us to curtail or cut back programs such as manpower utilization and automatic data processing which have produced demonstrable savings in the substantive program areas, reduced unit costs of operation, and increased employee productivity;

(e) Would result in the creation of backlogs, loss of about $250,000 in purchase discounts, excessive use of uncompensated overtime with its resultant adverse effects on employee morale, and impairment of working capital in revolving funds due to a buildup in accounts receivable. Automatic data processing is an integral and essential part of all GSA operations and, in particular, operation of the entire supply distribution system. These functions are, in reality, a performance of program functions by machine in lieu of manual processing by program personnel where such conversion clearly results in a continuing saving to the Government in both personnel and dollars. For example, in Federal supply system operations an annual savings of $2,100,000 was realized on 9 out of 47 systems elements previously performed manually, as compared to computer operations.

We have, over the years, been proud of our ability to streamline procedures and adapt our systems to automation to keep pace with ever-increasing workloads and to keep the cost of our administrative operations at minimum levels. From data we have been able to gather, our resources devoted to this activity are less than comparable amounts consumed in other Government agencies and private industry. For example, our accounting and auditing staff represents 2.6 percent of total employment as compared with 3.9 percent in manufacturing and 5.4 percent in nonmanufacturing private corporations and businesses. The 1965 budget request provided for further refinements in procedures and for extension of our automation program. However, the magnitude of the increased workload created by growth in GSA's operating programs cannot possibly be absorbed within the House allowance. The 1965 estimate represents the minimum financing to meet the anticipated workload. Therefore, it is most essential that the House reduction be restored in full. There follow selected statistics reflecting significant growth in programs requiring administrative and operational support:

Savings through centralization.-Although it is not possible to pinpoint the exact savings resulting from this concept of operations, following are some representative indicators of efficiency of operations:

(a) On June 30, 1963, GSA's accounting and audit personnel represented 2.6 percent of its total staff as compared with 3.9 percent in manufacturing and 5.4 percent in nonmanufacturing private corporations and businesses as reported in "AMA Research Study 55" published June 1962.

(b) Administrative operations costs, even including automatic data processing services, represent only 1.5 percent of GSA's estimated obligations for fiscal year 1965. By comparison, in certain other agencies-both large and small-the administrative services ratio ranges from 3 to 18 percent.

(c) Through a combination of automation and uniformity of procedures, productivity of employees has been increased as indicated by the following:

Conversion of the productivity increases for vouchers (above) to employee requirements shows that in 1965 we will need about 279 man-years to process 1.5 million vouchers. If we used the 1957 production rate of 2,350, we would require 638 man-years, an increase of 389 over the 279 projected. Using an average salary of GS-5, this represents an estimated savings of $1,828,000.

AO fund growth.-The nature of the GSA mission has historically resulted in constantly expanding agency programs. More and more use is being made of GSA's centralized business management services, and additional programs and responsibilities have been added to the GSA mission by law, Executive order, or delegation of authority.

The most recent example of this expansion is the transfer from DOD of the complete supply management responsibilities for two categories of supply-paints and handtools. This transfer to GSA involved $60 million in annual stores sales and $62.1 million in stores inventories transferred.

A total of 700 employees and related costs identified as being directly related to this function was removed from the DOD budget for 1965.

To aid in clarifying the tasks financed under the AO fund limitation discussion is separated into two major classifications-customary staff services and automatic data processing.

Customary staff services

Consists of accounting, audit, other financial management, personnel, manpower utilization, legal, and other office services. The House reduction would have the following effect:

1965 budget estimate__.

1965 House recommendation_-_-_

Change from budget estimate__

$14, 790, 000

13, 416, 000 -1, 374, 000

The decrease from the estimate is actually $442,000 below the amount required to carry out this program support in 1964. The reduction is so severe that, for example, in the large area of accounting, if the pro rata share of this reduction is taken and no additional manpower provided for the increased 1965 workload the following results can be expected:

(a) Invoice payments.-Current projected workload for 1964 will total 1,450,000 vouchers. The estimate for 1965 represents an increase of 100,000 vouchers over 1964 and is directly related to the increase in FSS volume. Unless additional manpower requested can be applied in this area it is expected that a backlog of at least 100,000 vouchers will be created by the end of the year.

The results of such a backlog are estimated to cost the Government $250,000 in lost discounts; destroy the current good relationship with vendors by not paying them on a timely basis; and contribute to higher costs in bids because of waiting period. Within GSA it will cause excessive use of uncompensated as well as expensive paid overtime, decrease in voucher productivity per employee because of vendor inquiries on status of billings, each requiring an answer.

(b) Billings and miscellaneous accounting documents.-Current projected workload for 1964 will total 2,800,000 documents. The estimate for 1965 represents an increase of 300,000 documents. As in the case of invoice payments, by the end of the year a backlog of 300.000 documents can be expected if additional manpower is not made available. Bills must be processed within the normal accounting cycle, otherwise the financial management of GSA's substantive programs can be seriously impaired through reduction in working capital in our many revolving funds.

In a determined effort to effect economies in financial management, GSA is centralizing its accounting operations now located in 10 regional offices into 5 locations. This will provide for better utilization of modern mechanized techniques, increase our ability to handle increased workload without a direct commensurate increase in staff, reduce systems maintenance costs, reduce report preparation locations, and lower the unit cost per document processed. This will result in an annual savings in accounting of $400.000 when fully implemented by fiscal year 1966; but funds are needed in fiscal year 1965 for orderly execution of the centralization plan.

Under the guidance of staff experts financed from this fund, we have made much progress in improving our manpower utilization throughout the agency. We are emphasizing increased productivity for every measurable activity in GSA's varied and complex operation. The following illustrates the size of the job and the effectiveness of our strict manpower controls.

We intend to continue this emphasis through fiscal year 1965 by expanding coverage of our manpower utilization studies to the remaining six regional offices.

Also financed from the AO Fund is a nucleus staff for coordination of Government-wide ADP functions. Programs are coordinated with the Bureau of the Budget and other Federal agencies. In addition, this staff plans for the sharing of data processing services and operations by Federal agencies.

The Douglas-Brooks bills S. 1577 and H.R. 5171 now pending in Congress provide for Government-wide management by GSA of automatic data processing equipment and resources. The Comptroller General has stated that in the first 5 years of centralized management the Government would save $148 million and $100 million each year thereafter. Also under centralized management better utilization and control of Government ADP equipment and resources can be greatly improved and the Congress would be placed in a better position to review the program as a whole.

Automatic data processing:

1965 budget estimate..

1965 House recommendation___.

Change from budget estimate___.

$7,050, 000 6, 149, 000

-901, 000

Automatic data processing has become an indispensable factor in GSA's growth. Without it we would be thoroughly bogged down in paperwork and hard pressed to employ enough personnel for manual processes regardless of cost.

Data processing performs for FSS the posting of receipts and issues to inventory; types shipping-billing documents and bills of lading; maintains registers of receiving reports and requisitions; keeps the stock locater system in the warehouse; calculates unit purchase cost of each item in inventory; prepares listings and reports on item balances. All of these operations and many are performed on high speed computers which, in the past, were performed manually and, dealing with today's volumes, could not have been performed in a timely manner without ADP.

A reduction of $901,000 from the estimate would cripple the existing data processing system.

For example, based on current estimates it is apparent that the costs of equipment rental alone for 1965 business will exceed 1964 costs by over $500,000. Equipment rental is a fixed monthly charge and the systems have been designed and programed for existing ADP equipment. There is no possible way of absorbing this reduction without imperiling the very existence of the supply system and related accounting and financial management of GSA.

GSA Amendment No. 165

WORKING CAPITAL FUND
PROPOSED AMENDMENT

On page 38 of the bill as reported to the House, insert the following after line 2:

"WORKING CAPITAL FUND

"To increase the capital of the working capital fund established by the act of May 3, 1945 (40 U.S.C. 293), $200,000."

LEGISLATIVE HISTORY

GSA budget justification: Pages III-100 to III-105.

House hearings: Part 2, pages 291 to 294.

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House report No. 1413: Page 12, 'Working capital fund': The committee is not recommending the $200,000 requested for additional capital investment in printing and reproduction equipment."

JUSTIFICATION OF THE AMENDMENT

GSA currently has 15 printing and/or duplicating facilities in operation throughout the country, with a total sales volume of approximately $3.5 million. So far only $150,000 in working capital has been appropriated to the revolving fund established to finance and account for this activity.

In keeping with the Federal Property and Administrative Services Act, recommendations by the Congressional Joint Committee on Printing and Federal Executive Boards, and in compliance with a Presidential directive of November 13, 1961, GSA is stepping up its program to consolidate numerous small Government-owned and operated printing and duplicating facilities into a single facility, where economical. Particular emphasis is placed on providing centralized duplicating facilities for all tenants at the time new Federal office buildings are occupied.

It is expected that an average of five new duplicating plants will be established each year for at least the next 5 years. Such action is taken where surveys show that significant savings of personnel, equipment, and space can be achieved. In the operation of these facilities under the revolving fund, advances of funds from using activity appropriations for services to be rendered have been utilized to the fullest extent possible. However, the need for additional investment in modern equipment and for necessary inventory of production materials and supplies, requires additional working capital to finance an operation of this magnitude.

Restoration of the requested appropriation of $200,000 for additional working capital is sorely needed if these plants are to be operated on an efficient and economical basis.

LIMITATION ON SPACE FOR PUBLIC BUILDINGS SERVICE

Mr. BOUTIN. In the language for the operating expense appropriation for PBS, the House has included a proviso prohibiting GSA funding of any new or expanded space unless at least a full year's cost has been transferred to GSA by the agency for which the space is being acquired.

We are in complete accord with this method of financing expansion space. However, we recommend its deletion from this year's bill because the other agencies have not budgeted on this basis for 1965. Senator MAGNUSON. I think we will save time if we ask questions here as you move along.

Mr. BOUTIN. Yes, sir.

ADDITIONAL RENTAL COSTS, FEDERAL POWER COMMISSION

Senator MAGNUSON. Now we just had the Federal Power Commission here and they said they wanted $16,000 more for rental because they moved some people from one building into another, put them all under the same roof. They were paying rent in the other building and we could not understand why it cost them $16,000 more when they consolidated.

Mr. Swidler said that because it was not a full year's cost he had to pay it rather than GSA. Will you explain this to us because we are getting a little bit mixed up here between agencies.