The Post Office Department has gotten so exercised about the whole situation that they have asked us whether they could consider a separate appropriation for the handling of this type of operation because we have not had sufficient funds to do it. A lot of their workrooms have a lighting factor of around 8 to 9 foot candles, and they have to use case lights, making their operations very expensive. They have carried on an experiment themselves at a cost of $50,000 at Richmond, which they claim paid for itself in 1 year. We know that the conditions are very, very bad, and, as a matter of fact, the total of these two appropriations one is $10,000,000 for normal repairs, and the other was $5,500,000 that we asked for, which made $15,500,000-should be increased to about $25,000,000 in order to begin to catch up on this problem. EFFECT ON POST OFFICE OPERATIONS Senator MAYBANK. The Post Office Department called that to our attention in testimony in the Treasury-Post Office bill. Postmaster General Donaldson stated (reading): We are losing a lot of money because we cannot get them [GSA] to do something for us. In other words, he said that you are not able to do a good many things for them. Now, you say that the reason for that, as I understand it, is because you do not have the money. Mr. REYNOLDS. That is correct. That is the only reason. We have done a tremendous amount of research on color and lighting and so forth, and it pays tremendous dividends. The money apparently has not been appropriated on account of the demand for critical materials and so forth to do this sort of thing, but the situation is lessening up to the point where we can go in and start doing a renovation job on some of these working areas. Senator MAYBANK. The Postmaster General said that they were losing a lot of money because you do not have the money to expand the buildings. He said in that respect that, if the GSA were given the money to enlarge Federal buildings where space was needed very badly, we would save money, because the Post Office is handling mail in large quantities in inadequate rental places. Mr. REYNOLDS. We have two problems. One is renovation and the other is additional construction. It is true that in some places they are now handling the mail three times when they should be handling it just once. Senator MAYBANK. That is what he said, and it is costing the Post Office quite a lot of money. Mr. REYNOLDS. There is no question about that, and it is a pretty serious situation. Some of our buildings have not been painted for 8 or 10 years, and we have not put new lighting systems into the buildings where the old systems have burned out. We are in pretty bad shape. Senator MAYBANK. Will you go ahead, Mr. Larson. ECONOMIES UNDER CONSOLIDATION OF BUILDING-SPACE CONTROL Mr. LARSON. In order to hit some of the high lights that the Senator asked about the consolidation of space, or the management of space under GSA, I think here is a chart that will very quickly give you a picture of the savings that have accrued as a result. OPERATING EXPENSES AVERAGE COST OF PROVIDING BUILDINGS MANAGEMENT FOR EACH FEDERAL EMPLOYEE IN D.C 1. MORE EFFICIENT MANAGEMENT OF BUILDINGS. $12 $11 $29 2. BETTER UTILIZATION OF SPACE Misc. $1 $111 Contracts $2 $11 $179 Rent $10 Utlities $14 Supplies & Materials $73 Labor $189 $10 $19 $22 $127 Fiscal Year 1940 Fiscal Year 1940 Price Level Fiscal Year 1940 Estimated 1953 Repairs Senator MAYBANK. Are those charts the same as the charts that we have here in this volume? Mr. LARSON. Yes. For the fiscal year year 1940 and at 1940 prices, it cost $111 per Federal employee in the District of Columbia to furnish him space for 1 year. Now, if we project that to the price level of 1952, it would cost $236 per Federal employee per year. Actually it is only costing $189. Senator SALTONSTALL. Which item are you talking about now? Mr. LARSON. I am talking about the general item with reference to what savings were effected as a result of the consolidation of space management in one agency. Senator SALTONSTALL. I see. Mr. LARSON. Now, that comes about as the result of a higher utilization of space. In other words, Mr. Reynolds and his people, in conjunction with the Federal Supply people and the Records Center people, go in and survey the manner in which the agencies are using their space toward the end of eliminating excessive inventories of supplies and dead files which creates more useful space and which saves supplies and which cuts down on the cost of operations. Those are the advantages which the Hoover Commission envisaged. Those are the advantages which the Congress envisaged for GSA when they passed Public Law 152. Those are the goals toward which we are working. Now, I appreciate, I think, as keenly as anybody outside of an actual Member of Congress who has to stand for election and account to the people just how serious the problem of reduction of expenditures is. But I hasten to say that in this strictly service agency which General Services is, as the name indicates, we have no sex appeal in our programs. They are mundane, everyday housekeeping programs. I say to you that if GSA is to be the success that it can be, we have to be properly financed to carry on these services. The minute we become underfinanced, it becomes more expensive to run a central administrative agency than it does to turn it back to the agencies separately and let them go their merry uneconomical ways as they did for so many years before GSA was established. I think we are at the crossroads insofar as GSA is concerned. I think that unless Congress recognizes that by giving appropriate and only appropriate financing to this program so as to keep extending it and to keep our ability to go into the agencies and put our finger in their eye, so to speak, and say, "Why are you using this space? Why do you have all of these files here? Why do you not do this? Why do you not do that? Why do you buy your supplies in the most expensive manner? Why do you not consolidate with us? Why do we not have a uniform catalog so that we will not be buying the same thing under a half dozen different names?" we will not be fulfilling our obligation. In order to accomplish that and savings such as we were able to make in 1951 as shown on this chart, we have to make expenditures for a regulatory and policing force, and that is what we are asking for. EXPENSES, GENERAL SUPPLY FUND Senator SALTONSTALL. Now, may I ask this: For the "Expenses. general supply fund," you are asking for the return of $5,600,000? Mr. LARSON. That is correct. The general supply fund was created by the Congress and the ceiling of $75 million of capital was authorized, of which $44 million has been appropriated. Now, at one time the expenses of purchasing and operating these warehouses, upon which Government agencies requisition their sup plies, were charged as overhead to the agencies that used those services. Congress decided to cut that out and make it a direct appropriation. Senator MAYBANK. Do you have any idea how much in terms of overhead those people saved. Mr. LARSON. Well, they are saving what they were previously charged. Senator MAYBANK. You charged overhead, and now Congress has stopped you from charging overhead. Would there be any estimate as to what the different departments are saving under the law that Congress passed to turn it over to you? Mr. LARSON. We have estimated that if the agencies had been performing all of these operations separately last year, it would have cost them over $25 million, $25,900,000, more to operate than it actually did cost them to operate. Senator MAYBANK. In other words, you operated for them at $25 million less? Mr. LARSON. That is our estimate. Now, because of the expansion of the Government. We cannot point right to the budget and say "there is the amount of that saving". Senator MAYBANK. I understood that was an estimate. Mr. LARSON. This is our centralized procurement program. This is our stores system. This is the very heart, you might say, of an ellicient, centralized procurement set-up, the general supply fund. (The following information was supplied:) The annual supply bill for civilian agencies alone exceeds $1 billion which excludes common-use items required by the Department of Defense. On an over-all basis it is estimated that approximately $500 million should be purchased and distributed through GSA's Federal supply centers in order to realize maximum savings from volume purchasing and consolidated warehousing and distribution. Against this background the budgeted rate of sales which increases from $44.8 million in 1951 to $73 million in 1952 and $157.8 million in 1953 does not appear overly optimistic as suggested in the House report. Further, by limiting the program to the 1952 level, price savings of $11 million will be foregone. This represents a loss of almost $2 for every $1 requested to be restored to the appropriation. Mr. LARSON. Now, we could be doing, in my opinion, a half billion dollars of business a year in this part. FUND BALANCE Senator MAYBANK. How much do you have in the general supply fund now? Mr. LARSON. We have $44 million of appropriated capital. We will do this year about $75 million worth of business. Senator MAYBANK. And the law provided a fund of $75 million, did it not? Mr. LARSON. We were authorized $75 million. The turn-over of our capital will result in our doing about $75 million worth of business this year, 1952. Now, next year we figure we will do on the order of $160 million. worth of business, but we have to have the space available to store these items and we have to have the people to put them out. We would have done $100 million of business this year if it had not been for the Jensen amendment and the Ferguson amendment, which cut down the people. The armed services are crying to take advantage of our central-stores facilities insofar as common-use items are concerned. Senator SALTONSTALL. What you are saying is that if we put back the $5,600,000, you will use that to do an additional amount of business which will result in an additional saving? Mr. LARSON. That is correct. Senator SALTONSTALL. And if the amount is not put back, the departments will have to do their own buying? Mr. LARSON. That is correct. SAVINGS DUE TO STORES OPERATIONS For ex Senator SALTONSTALL. Can you tell us in dollars and in a broad general way, what could be saved for every dollar spent? ample, would we save $3 for every $1 we put in? Mr. LARSON. We would save $1.61 for every $1 we put in. Senator SALTONSTALL. You say that we would save $1.61 for every $1 we would put in? Mr. LARSON. That is correct. Senator SALTONSTALL. Is that a calculated figure or is that an experience figure? Mr. LARSON. That is an experience figure. Senator SALTONSTALL. Based on how many years? Mr. LARSON. That was true in the fiscal year 1951. Senator SALTONSTALL. So based on that year's experience, there is a saving of $1.61 for every $1 put in? Mr. LARSON. That is correct. Also, in work of this kind, as our volume increases, our savings should be greater. |