Mr. MOLLOHAN. The only interest we have here is to try to develop as chronologically and as appropriately as we can the facts. If you feel Mr. Gunther at this point can contribute something, we shall be happy to hear from him.

Mrs. GRIFFITHS. I would like to ask a question. I want to know if Divco and Twin Coach are owned by General Motors and controlled by them?

Mr. GoFF. I have no idea. I don't think they are.

Mr. PLAPINGER. Is there any connection between the two companies?

Mrs. GRIFFITHS. Divco is a part of General Motors, isn't it?

Mr. GoFF. I don't really know. I don't think Twin Coach would have any connection. Is there any witness here who would know? Mr. PLAPINGER. Are they both owned by Mr. Fageol?

Mr. GOFF. I really don't know.

I think it might help you if I give you some of the copies of the report.

This is a portion of the final report of the Heller Associates, and it might be helpful to you. We are trying to give you the information as quickly as possible.

This was furnished by the Heller Associates and Mr. Gunther thought that it should be furnished you by some representative of the Department rather than by somebody else.

Mr. MOLLOHAN. Will you identify yourself?
Mr. GUNTHER. My name is Robert H. Gunther.

STATEMENT OF ROBERT H. GUNTHER, PARTNER, ROBERT HELLER & ASSOCIATES, INC.

Mr. GUNTHER. I am a partner in Robert Heller & Associates, Inc., in Cleveland, Ohio. My connection with this work began in 1953, and extended through November 1954. My particular phase had to do with the industrial engineering department, the organization and development and the promotion of projects underway at the time I came into the Department.

Mr. Goff has asked me to explain the experimental work that was going on in 1953 and 1954 on the functional vehicle design and experimentation. I think that perhaps I can best do this by reading directly from our final report dated December 31, 1954.

Mr. MEADER. Mr. Chairman, I think there is a little ambiguity. You were an employee or partner of Robert Heller & Associates, Inc., which had a contract with the Post Office Department?

Mr. GUNTHER. I am a partner of Robert Heller & Associates, Inc. Mr. MEADER. You were never an employee of the Post Office Department?

Mr. GUNTHER. Never. As consulting management engineers, we were employed by the Department in 1953 and 1954.

Mr. MINSHALL. You used the expression, "When I came to the Department." You mean you were employed by Heller Associates and came to the Post Office Department to investigate this matter. Is that correct?

Mr. GUNTHER. That's correct.

Mr. MEADER. Did your contract relate only to these vehicles or was it broader?

Mr. GUNTHER. It was a much broader contract than just engineering. It had to do with the entire phase of the reorganization of the Post Office Department in all departments, not just engineering. In all functions and operations, the entire operation of the Department. My particular phase had to do just with engineering.

Mr. MEADER. I see.

Mrs. GRIFFITHS. Mr. Chairman, what was the fee for the contract? Mr. GUNTHER. I believe that is a matter of record.

the information.

Mrs. GRIFFITHS. How long did it run?

Mr. GUNTHER. I think that is a matter of record.

Mrs. GRIFFITHS. But you don't know.

Mr. GUNTHER. I think you have that information.

I don't have

Mr. MOLLOHAN. Do you know the answer to the question, Mr. Gunther?

Mr. GUNTHER. No; I don't know the specific amount or time, but I think it is available.

Mr. MOLLOHAN. Proceed, Mr. Gunther.

Mr. GUNTHER. I would like to quote from our final report of December 31, 1954, submitted to the Honorable Arthur E. Summerfield:

Delivery vehicles of functional design which were developed in the course of this assignment are now being used in two areas. The 34-ton sit-stand vehicles are being used in the Ohio area and 4-ton 3-wheel scooters are in use in the Florida area.

Savings accomplished on mounted and former foot routes are shown in exhibit 4.

Exhibit 4 is the actual cost developed as a result of tests in the Ohio area, specifically Akron, Canton, and Youngstown. This was an application for 48 functional vehicles. The costs are shown before and after application, and the net savings at each station.

The total amount $97,000, or approximately $2,000 annual saving per vehicle under this test period.

The Florida area does not relate to the 34-ton, but rather the quarter-ton vehicle. [Reading:]

These savings were realized before the Christmas season in Akron, Canton, and Youngstown. Savings in Warren were not calculated, because vehicles were not yet available to mechanize a complete station, but estimates indicated savings comparable with those in Youngstown.

If similar results were achieved on a national basis, savings would reach an estimated net of about $40 million annually, as follows:

Curbside delivery and combination curbside and house delivery, annual net savings, $4,184,000. House delivery, annual net savings, $35,951,667. Contract routes other than curbside or house delivery, annual net savings, $892,000. Total, $41,022,467.

Calculations are shown in detail in exhibit 5.

Without going into these calculations now, you can see how we arrived at the $41 million in exhibit 5. It is spelled out in detail, the estimated time, the dollar hourly calculation, the number of routes, 4,000 routes curbside, 45,000 routes house delivery, and the contract routes have 4,000. They are detailed calculations. [Reading:]

By December 1, 250 4-ton vehicles of functional design had been assigned to city delivery routes in the Ohio area:

Cleveland, 89; Youngstown, 40; Akron, 29; Warren, 26; Canton, 20; other smaller cities, 46; total, 250.

Installations are to be checked after the Christmas season to be certain of proper application and realization of potential savings.

82284-56-2

The 4-ton sit-stand vehicles have proved to be well designed and versatile delivery trucks. They are being tested on all types of routes-curbside, house delivery, parcel post, special delivery, relay and collection, and depot and intersection runs. Trucks of similar design are now being tested by bakeries. These trucks may well become widely accepted for all types of light delivery service. Application of the new trucks on curbside routes has been found to be a relatively simple procedure of replacing present trucks with the new vehicles. Routes are then adjusted, using velocity rates and procedures shown in exhibits 6 and 7.

I might say that these velocity times were developed in Miami, Fla., as a result of considerable tests with all types of vehicles, but we used the Marine base, and had very good cooperation in obtaining functional tests. This is after many months of work.

So exhibits 6 and 7 show the actual standards developed for the 4-ton sit-stand truck and the 14-ton 3-wheel scooter, the 2-wheel bicycle and also walking standards for delivering mail. [Reading:]

Application on former foot routes is more complicated because patterns for serving houses must be mapped in detail, considering movement of both vehicles and carriers. This can be accomplished best by using two-man teams and adjusting routes according to velocity rates and procedures shown in exhibits 8 and 9. Potential savings on former foot routes are generally greater than savings on mounted routes.

Maintenance and operating costs for the new trucks are now being analyzed in the Ohio area, using the procedures of the new motor vehicle accounting system. Results to date indicate approximately 10 percent reduction in truck operating and maintenance costs.

Results in Miami indicate manpower savings averaging about 1 hour per day per vehicle. Dollar savings accomplished in the Florida area are shown in exihibit 4. Routes have been adjusted by adding parcel post and additional deliveries to accomplish the savings, using velocity rates and procedures shown in exhibits 6, 7, 8, and 9.

Three hundred one-fourth-ton 3-wheel scooters are scheduled for use in Florida, earmarked as follows:

Miami, 180; Tampa, 60; St. Petersburg, 60; total, 300.

Miami has progressed more rapidly in the proper application of scooters than have Tampa and St. Petersburg, because of more intensive work by local supervisers and industrial engineering personnel. As of December 14, 90 scooters were in service in Miami, 34 in Tampa, and 34 in St. Petersburg.

Contracts with outside service organizations are now in effect for maintenance of scooters in Miami, Tampa, and St. Petersburg Operations, maintenance, and depreciation costs are expected to average 35 cents per hour as compared with the lowest 4-wheel vehicle costs of 50 cents per hour.

Then we include a check list of tasks remaining. [Reading:]

Checklist of tasks remaining:

1. Appoint a qualified project leader to develop a program for extending the application of new vehicles of functional design, setting up the numbers of vehicles needed, and the rates at which they can be applied.

2. Procure additional vehicles in accordance with specifications prepared by the chief industrial engineer which represent the features needed for most efficient service.

3. Establish a program for training regional engineers and local post office personnel in the application of new vehicles.

4. Allow local post office supervisors to use their own initiative in solving local problems; after they are fully conversant with the basic program, they should be encouraged to appraise suggestions of carriers and to direct the vehicle program within their own areas.

5. Use established procedures and targets to check results in each post office

area.

6. Provide headquarters with reports of savings using the system already developed for measuring and reporting savings

7. Apply the improved program for parking and maintaining vehicles in each area where vehicles are installed.

8. Broaden the use of new functional vehicles on applicable types of routes throughout the postal service, thus obtaining maximum economies through standardization.

We will be glad to elaborate further on any of the data contained in this report.

I think the exhibits give you the actual results of the tests up until the time of November, and the conclusions that we had reached at that point. The standards that were developed were very significant and required many hours and many days of hard work of the Post Office Department's personnel.

I think that concludes anything that I have to add to the functional test program.

Mr. MOLLOHAN. Mr. Meader, do you have any questions?

Mr. MEADER. Mr. Gunther, did I understand that Robert Heller & Associates, Inc., had operated the task force of the 1949 Hoover Commission?

Mr. GUNTHER. I believe it was 1948 and 1949, and that is correct, sir. Mr. MEADER. And in this same field in which they had a contract which you have described?

Mr. GUNTHER. It was in the same general area. At that time, we came up with recommendations, but there were no implementations at that particular time. I believe our second assignment carried forth those recommendations, partially.

Mr. MEADER. And were you personally active in the Heller work for the Hoover Commission in 1948?

Mr. GUNTHER. Yes, sir.

Mr. MEADER. And they did deal with this matter of using vehicles on what had been foot-carrier routes?

Mr. GUNTHER. We recommended at that time that the study be set up and a thorough analysis be made of the delivery function.

Mr. MEADER. But no action on your recommendation was taken until 1953, when the Post Office Department employed Heller?

Mr. GUNTHER. No; I wouldn't say that. As a matter of fact, when we were employed and I reported on the assignment in 1953, we found that there had been some activity, limited activity, in trying to procure functional vehicles. I believe it went back to 1950. However, I think post office personnel can answer that. But they had some limited activity in that area.

Mr. MEADER. That is all.

Mrs. GRIFFITHS. Did the fee that was paid to your concern pay for any of the parts or any of the vehicles?

Mr. GUNTHER. No.

Mrs. GRIFFITHS. That was all supplied by the Department itself; is that right?

Mr. GUNTHER. That's right.

Mrs. GRIFFITHS. Were you the only engineer that was employed on the job?

Mr. GUNTHER. No.

Mrs. GRIFFITHS. How many other out of your concern?

Mr. GUNTHER. We had, I believe, a total of 10 or 11 men assigned to this particular

Mrs. GRIFFITHS. For the total contract or for just your part of it? Mr. GUNTHER. No; I would say 10 or 11 men were assigned to this particular contract, overall. Not just on this phase of the workvarious phases.

Mrs. GRIFFITHS. And the contract ran about 14 months, I understand.

I would like to ask you, in building up these specifications, did you name the trade item that was to go into the specification? Did you name any of the parts by trade name?

Mr. GUNTHER. No; it was a purely functional specification.

Mrs. GRIFFITHS. Then why couldn't Divco and International Harvester have supplied the parts?

Mr. GUNTHER. They could have. Anybody could have.

Mrs. GRIFFITHS. Well, what was the thing that was wrong when they bid? Why couldn't they meet the specifications?

Mr. GUNTHER. I believe they wanted to use their particular designs rather than procuring components that were available to anybody.

Mrs. GRIFFITHS. Well, now, is that your theory or do you know they wanted to use component parts?

Mr. GUNTHER. I know they do.

Mrs. GRIFFITHS. But could they have bought them at the price that Twin Coach is buying them?

Mr. GUNTHER. Oh, yes.

Mrs. GRIFFITHS. Then what was the real difference in the bid? Did you ever see a breakdown of the bids?

Mr. GUNTHER. You mean the price of the bids?

Mrs. GRIFFITHS. Well, you have that listed.
Did you ever see a breakdown of the bids?

Mr. GUNTHER. No.

Mrs. GRIFFITHS. Do you know if the Department ever got a breakdown of the bids?

Mr. GUNTHER. No; I don't know.

Mrs. GRIFFITHS. So that you don't know where this difference in price was allocated?

Mr. GUNTHER. No.

Mrs. GRIFFITHS. Nor why Divco and International Harvester at a cheaper price couldn't have supplied the item?

Mr. GUNTHER. No; actually, I do not.

Mrs. GRIFFITHS. Were you the person who said that Divco and International Harvester designs would not work?

Mr. GUNTHER. Designs would not work?

Mrs. GRIFFITHS. Their bid. The truck that they were going to supply at the price they named-did you say that it wouldn't work? Mr. GUNTHER. That it wouldn't work?

Mrs. GRIFFITHS. Yes.

Mr. GUNTHER. NO.

Mrs. GRIFFITHS. Who said it wouldn't work?

Mr. GUNTHER. I haven't any idea. I never heard that statement before.

Mrs. GRIFFITHS. Well, if they were not accepted at the price at which they bid, it was either because it wouldn't work-somebody must have decided it wouldn't have worked-or because it was not strictly in accordance with the specifications.

If it were not strictly in accordance with the specifications, then the Department, having checked it and found it would have worked, could have rewritten the specifications and asked for a new bidder. Mr. GUNTHER. That might have been so.

Mrs. GRIFFITHS. It would have been possible, wouldn't it?