This amended estimate for administrative support is based on the revised projected volume of sales.

The amended program estimate for 1962 contemplates an increase of $33.2 million sales over the revised 1961 program.

Reductions in administrative operations fund unit costs for 1961 and 1962 under 1960 are projected notwithstanding pay act increases and the expanding scope of service for the supply program through further application of automatic data processing.

An RCA 501 electronic computer will be in operation for a full year for the first time. This new computer has the capability of combining customer order filling, inventory management, and related accounting functions into one integrated system.

The FSS order processing computer system is being redesigned to optimize the existing system and to provide many additional features, such as automatic preparation of bills of lading, consolidation of freight shipments, production control by station within a depot, and a standard production schedule.

In addition, the system will be enlarged to include service to inventory management with such data as automatic preparation of buy cards, automatic demand forecast by item, and automatic adjustment of replenishment schedule.

Assumption of additional program work is being accomplished with lower unit rate costs even though fund requirements increase.

Mr. YATES. Mr. Turpin, tell us about the operation of this aspect of your total fund.

Mr. TURPIN. Yes, sir. Mr. Chairman, in terms of dollars this is the biggest increase that we have in the administrative operations fund this year. That is directly related to the increase in business. Even though there is an increase in the total number of dollars, in unit cost per hundred dollars of business it is decreasing from $1.55 in 1960 to $1.49 projected in 1962. That is despite the pay act increases we had in 1960 and also despite the additional services we are providing for Mr. Bean's operation in automatic data processing.

Most of our expense under the administrative operations fund is for field activities. Further, of the total financial service costs in the field, about 60 percent is related to the supply operations. Through the improvements we are making in automatic data processing, we are giving the Federal Supply people much better service to enable them to manage their operation.

Mr. YATES. Put the summary statement on page II-50 into the record.

(The page follows:)

EXPENSES, SUPPLY DISTRIBUTION

SUMMARY STATEMENT ON "OTHER OBJECTS" FOR 1962

Although amounts for obligations by objects are explained in justifications of each activity, objects other than personal services are summarized below. Of the $29,374,000 estimate for 1962, $13,773,300 is for personal services and $15,600,700 for other objects, as follows:

12 Personnel benefits, $1,075,600.-$869,900 for direct contribution to retire ment fund, $113,800 for health benefits fund, $50,900 for group insurance, $27,800 cash awards, and $13,200 FICA.

21 Travel and transportation of persons, $412,000.—$303,300 for 13,187 days travel and $108,700 for motor pool services.

22 Transportation of things, $971,600.-$534,600 for local free delivery, $196,500 motor pool truck services, $160,000 transportation incident to relocating warehouses, and $80,500 transshipment of stocks between warehouses.

23 Rents, communications, and utilities, $2,651,200.-$1,853,300 for space rental; $375,000 for rental of equipment from GSF; $168,900 for postage fees, and $254,000 for normal telephone and teletype services.

24 Printing and reproduction, $727,400.-$215,000 for printing order process ing forms, warehouse procedures, and regulations; $354,900 for printing schedules, invitations to bid, and other purchase documents; $135,000 for printing two GSA stores stock catalogs; and $22,500 for miscellaneous printing and reproduction.

25 Other services, $2,884,400.-$1,426,400 for janitorial, guard, and other moving and maintenance services reimbursable to BM fund; $708,000 for warehouse relocations; $738,200 for commercial services including $625,900 contract labor and operating equipment repairs, $85,800 for laboratory testing and inspections, $26,500 for career management training courses; $5,000 for the GSA communications corps reimbursable to BM fund; and $6,800 for office equip ment repair.

25 Payment to administrative operations fund, $5,945,000.-For administrative operations necessary to support this program.

25 Services of other agencies, $379,100.-$214,300 for maintenance costs in military depots; $85,000 handling costs in military depots; $38,300 toward financing the President's Committee on Contract Compliance; $25,000 laboratory testing; $10,300 health room charges; $3,500 for security investigations; and $2,700 for library services.

26 Supplies and materials, $499,900.-$169,900 for administrative supplies and materials and $330,000 for operating supplies such as pallets, packing and crating materials, storage containers, etc.

31 Equipment, $54,500.-For office equipment for additional employees, and for replacement of obsolete equipment.

Mr. BEAN. Mr. Chairman, I have one other item I believe will be of interest to the committee. When Colonel Wallace first came to town. he made a survey of Government buildings in the city. He discov ered everyone was using space for the storage of lumber. We were crowded for space and he didn't like that very well.

Through working together we have now established a lumberyard outside of our Franconia warehouse so that we can take all of this space in buildings now being used for storing lumber and put it back into usable space.

This is our newest space. I think it is interesting to note that at the present moment we have plywood at $60 a thousand, the price at the mill now being $72 a thousand, and at the lumberyard it is s a thousand. We have been buying these things by carloads, of course, and saving the Government quite a little money on that.

I think we will eventually utilize all the space in the buildings. Mr. YATES. Thank you, Mr. Bean.

Next is the general supply fund. This appears on pages 251 through 253. You are reducing this to $8 million. Can you explain the operation of this fund and the reduction ?

Mr. TURPIN. The general supply fund is a revolving fund which finances the supply and motor pool operations and other items. This fund finances the inventories that are in the stores depots, the procurement of motor vehicles, and other related items such as our accounts receivable.

Mr. YATES. Insert. H-51, II-52, and H-53 in the record at this point.

"This fund finances, on a reimbursable basis, a national supply depot system and a system of ordering supplies for direct delivery to agencies. Suppliers or services are sold from the fund at cost to other agencies and the District of Columbia. Related operating expenses are provided under the appropriation expenses, supply distribution (5 U.S.C. 630g).

"Also financed by the fund and reimbursed by the using agencies are operations of interagency motor equipment pools established in areas of high vehicle density.

"Budget program.-The estimates provide for continued increases in sales to the military under the program for progressively expanding use of these supply facilities by Department of Defense, and a slight increase in sales to civilian agencies. Activations of additional interagency motor equipment pools in 1961 and 1962 are also reflected.

"Supply distribution—(a) Stores items.-Stocks of common-use commodities are purchased in volume and stored in supply depots for issue to Government agencies. Sales reached an all-time high of $171.9 million in 1960 and are estimated to increase to $202.7 million in 1961 and $227 million in 1962.

"(b) Nonstores items.-Definite quantity requirements of commodities which are not susceptible to economical stocking in supply depots are purchased for direct shipment to customer agencies. Sales through the fund are estimated to increase from $97.8 million in 1960 to $130 million in 1961 with a slight reduction to $126.8 million in 1962 due to an anticipated decrease in household and quarters furniture sales.

"Motor pools.—Services are supplied to agencies through a system of interagency motor pools, still under development, to serve areas of high vehicle density. Sales are estimated to increase from $14.4 million in 1960 to $17 million in 1961 and $19 million in 1962 due to activation of additional motor pools. The number of pools in operation is estimated to increase from 56 in 1960 to 68 in 1961 and 74 in 1962.

"Rehabilitation and repair of furniture and equipment.-Furniture and equipment repair services, provided through commercial sources wherever feasible and economical, are estimated to increase from $1.2 million in 1960 to $1.5 million in 1961 and $2.2 million in 1962.

“Equipment_renta!.--Operating equipment necessary to carry out the supply distribution activity is acquired and charged on an accrual basis to the using activities. Collections from using activities are expected to remain relatively stable through 1962.

“Erport packing. --Stores and nonstores items are packed for shipment to oversea destinations. Recipts from this operation are expected to increase slightly from $4.6 million in 1960 to $5 million in 1961 and 1962.

“Other revenue and expense.- -Gain or losses on equipment disposals, adjustments between fiscal years, inventory writeoffs, and discounts are applied against operating costs.

"Operating results and financial condition.-Investment of the U.S. Government at the end of 1962 is estimated at $140.2 million, consisting of $128.8 million in direct appropriations, $9.7 million donated assets, $0.6 million capitalized surplus and retained earnings of $1.1 million. The estimates reflect $25 million to be requested in a supplemental appropriation in 1961 and $8 million requested for appropriation in 1962, required for continued expansion in warehouse

and motor pool sales, equipment investment, and improvement of service to customer agencies.

"Additional donated assets arising from transfers of motor vehicles from other agencies upon establishment of interagency motor equipment pools will be capitalized in the fund.

"Any operating surplus, as determined by General Accounting Office audit, must be returned to Treasury as miscellaneous receipts. Payments so made in 1961 were $1,013,000 and it is estimated that $1,397,000 will be returned in · 1962" (from the Budget for 1962).

APPROPRIATION LANGUAGE

"To increase the general supply fund established by the Federal Property and Administrative Services Act of 1949, as amended (5 U.S.C. 630g), $8,000,000."

JUSTIFICATION

The following table relates the sales volumes financed through the general supply fund to the volumes reflected in estimates for the appropriation "Expenses, supply distribution":

Add motor pools, repair shops, and miscellaneous sales which involve no costs under "Expenses, supply distribution".

Deduct portion of nonstores sales for which payment to suppliers is made direct by ordering agencies, and not financed through the fund..

Total sales financed through general supply fund....

290.2

356.5

380.4

These sales increases reflect a conservative projection of current trends, which would be expected to produce further increases beyond 1962. The estimates do not reflect increased sales to military agencies which may result from current negotiations with the Department of Defense regarding additional item assignments to GSA.

The sales volumes reflected require year-end assets, liabilities, and investment as follows: