JUSTIFICATION OF INCREASES AND DECREASES

Centralized administrative services enable users to receive high quality services at the lowest possible cost of operation. Operating services in this manner has resulted in a trend toward reduced unit costs for recurring operations in recent years. Anticipation of a continuation of this trend, as well as the most recent estimates of demand for service, serve as the basis for cost estimates for revised FY 1987 cost estimates and initial estimates for FY 1988.

Centralized administrative services are subject to regular oversight consistent with both Administration management initiatives and Departmental productivity improvement activities. This oversight is undertaken to determine whether these activities should continue as centrally managed services and offers Departmental management analyses of alternative operating methods. Enhanced productivity and cost-effectiveness result. The results of such oversight exercised in FY 1986 are reflected in the revised FY 1987 and initial FY 1988 cost estimates provided. As regular oversight is conducted, these estimates may be adjusted significantly, subject to review and approval by Departmental management.

The following is an explanation of program activity changes from FY 1987 to FY 1988 currently anticipated. Where not absorbed by individual activities, cost increases due to contributions to the Federal Employee Retirement Fund are reflected in the changes identified below.

1. A net increase of $182,000 for recurring operations of Supply and Other Central Services ($8,974,000 available for FY 1987).

A net increase of $182,000 in operating costs as follows:

Need for Change. The increased funding levels for Central Supply
Stores, Executive Correspondence and Records, and Central Shipping and
Receiving are due to increases in operating costs. The reduced funding
level in the Central Supply Forms operation is due to lower
administrative and management costs. The increase in Mail Distribution
Service is due to incorporation of automated mail list activities and a
partial offset stemming from management initiatives begun in FY 1987.
The increase in Central Excess Property Operation reflects more users
and higher demand levels for service. The Central Imprest Fund and
Agriculture Contract Automation System are new activities to the Fund
in FY 1987. The Central Imprest Fund consolidates eleven agency
managed imprest funds into a single Departmental fund to be used for
small purchases and cash advances. The Agriculture Contract Automation
System provides a data base of procurement language elements which
standarizes procurement documents and allows users to prepare documents
much faster and more accurately than previous methods would allow.

Nature of Change. General operating and inflation costs account for
the increases in Central Supply Stores and Executive Correspondence and
Records. Central Supply Forms expects to achieve lower operating costs
due to administrative improvements, particularly in the reduction of
space and other rental costs. Central Excess Property and Central
Shipping and Receiving are expanding their user clientele. The related
increase in workload demand accounts for the higher costs to be
incurred.

2. A net increase of $151,000 for recurring operations of Reproduction Services ($3,540,000 available in FY 1987).

A net increase of $151,000 in operating costs as follows:

Need for Change. The cost increase is due to the need to provide specialty, quick-turnaround duplicating services to Departmental users. The Printing Plant, which provided such services in addition to its general printing services, was closed at the end of FY 1986. Increased demand for copier service as a result of the Printing Plant closing also contributes to the increase.

Nature of Change. The increase in Copier/Duplication Center is primarily due to inflation and general operating costs associated with incorporation of some duplicating functions into this activity.

3. A increase of $139,000 for recurring operation of Video and Film, and Visual Design Services, ($2,866,000 available in FY 1987).

A net increase of $139,000 in operating costs as follows:

Need for Change. The increases are needed by Video and Film and the Design Center to maintain current quality and volume levels of service in teleconferencing, audiovisual production, and exhibit design and production.

Nature of Change. The increase for the Video and Film Services is primarily for inflation and depreciation charges for equipment. The increase in Design Services is due to inflation cost increases.

4. An increase of $1,048,000 for recurring operations of the Office of Finance and Management/National Finance Center (NFC) ($51,661,000 available in FY 1987).

A net increase of $1,048,000 in operating costs as follows:

Need for Change. The continuing development of cooperative processing and expansion of cross-servicing initiatives with other Federal Departments for financial and accounting operations require an increase in the level of support for the NFC. The workload increases stemming from these initiatives, while providing greater efficiencies in financial management operations, are the bases for the requested funding increase. The consolidation of many financial operations for the State Department, Smithsonian Institution, General Accounting Office, Office of Personnel Management, and others will be added to services already provided to the Departments of Commerce and Education, and the Merit Systems Protection Board. The increase in service will require support for acquisition of software and equipment so that managers will have adequate access to centralized administrative data. Nature of Change. In continuing initiatives to provide centralized Financial management services to both USDA and non-USDA clients, increased funding support is required to insure the technical and personnel resource capacity to deliver services. Maintaining the

5.

quality of technical support for NFC has required increases in software
and equipment purchases, thereby increasing depreciation charges, with
some offsetting decreases in ADP rentals. NFC has sought to hold down
acquisition costs by purchasing equipment when costs and workload
requirements allow. The purchase of equipment, both new and previously
leased, will provide the Government with cost savings over and above
the requested increase in depreciation costs. Cost increases are
directly related to the increasing workload demands on the part of
non-USDA clients. Although an increase is requested in this area,
there will be savings to the Government overall, since it now costs
non-USDA users of the National Finance Center less for the
administrative and financial services than when they provided services
for themselves. The remainder of the increase reflects inflation and
administrative support needs for new program initiatives.

An increase of $1,172,000 for recurring operations of ADP systems
($49,700,000 available in FY 1987).

A net increase of $1,172,000 for these activity as follows:

Need for Change. Increases at the Washington and Fort Collins Computer
Centers are needed to further modernize equipment to provide more
efficient service and provide adequate data processing capacity to meet
expected demand. The decrease at the Kansas City Computer Center
reflects more cost effective acquisition strategies. Increases in
Telephone Service Operations and Local Area Network are due to
inflation and communication cost increases, respectively. In the
Computer Services Unit, the increase is due to expected workload
increases.

Nature of Change. The Washington and Fort Collins Computer Center increases are due to higher ADP rental charges, necessary to insure adequate capacity to handle USDA and non-USDA demand. The decrease at the Kansas City Computer Center is due to large cuts in ADP rental charges reflecting acquisition of equipment in prior years.

6. An increase of $2,548,000 for capital equipment acquisitions ($14,703,000 available in FY 1987).

A net increase of $2,548,000 for capital acquisitions in FY 1988 as
Follows:

This level of equipment acquisition assumes the use of the $6,000,000 appropriation for additional capitalization of the fund in FY 1988.

(1) An increase for capital acquisitions for the Office of Finance and Management/National Finance Center of $4,970,000.

Need for Change. The additional capital equipment is needed to meet the projected workload increase, provide improved reliability, and to allow for the expansion of services to USDA and non-USDA agencies. Depreciation charges for this equipment will be billed to both USDA and non-USDA users on the basis of each user's demand for National Finance Center services.

Nature of Change. This equipment replaces an existing computer which is obsolete. The new system will provide on-line agency access to budgetary data, USDA-wide financial information systems, and other automated systems. The new system offers greater efficiency and offers lower energy consumption and lower repair and maintenance costs.

(2) A decrease for capital acquistions for the Office of Information Resources Management of $2,538,000.

Need for Change. The decreases at the Fort Collins and Kansas City Computer Centers reflect FY 1986 actual and FY 1987 planned acquisitions. Once the equipment is installed, the need for capital acquisition funds is diminished as the new equipment provides service. The increases at the Washington Computer Center and the Computer Services Unit reflect the need to maintain adequate capacity to service all users of these facilities.

Nature of Change. At the Fort Collins and Kansas City Computer Centers, efforts to upgrade and expand hardware capacity in prior years enables the Centers to reduce capital acquisition needs in FY 1988. At the Washington Computer Center and Computer Services Unit expenditures for hardware support and equipment upgrades will maintain service quality for system users.

(3) A decrease in capital acquisitions for the Office of Governmental and Public Affairs/Video and Film of $6,000.

Need for Change. The capital equipment acquired in prior years diminishes the need for new purchases in FY 1988.

Nature of Change. Video broadcasting and studio equipment installed in prior years provides better service to user agnecies. The result is a decrease in the number of needed purchases in

FY 1988. Purchases in FY 1988 will be used to support production activities.

(4) An increase in capital acquisitions for the Office of

Need for Change. The additional capital equipment is needed to provide expanded copier and duplicating services, and to improve and upgrade existing equipment for the Mail Distribution Service, Central Supply Forms, and Central Excess Property Operation.

Nature of Change. The Copier/Duplicating Center will acquire and upgrade high speed copiers to meet further increases in demand resulting from the closing of the USDA Printing Plant. The Central Supply Forms operation plans to acquire equipment to improve forms handling. The Mail Distribution Service acquisitions will improve delivery service and mail processing.