MICHAEL F. DiMARIO

MAY 12, 1994

Mr. Chairman and Members of the Joint Committee on Printing, I greatly appreciate your leadership in seeking to help me improve GPO's financial picture. Unfortunately, GPO is suffering from a dramatic reduction in workload. Assuming there is no further decline in workload, we are facing a loss of $22 million for the year; of that, $8.7 million is attributable to the buy-out.

The workload in the plant is less than it was at this time last year. Revenues from procured work declined by over $100 million last year and have continued to decline. Agencies are not ordering as much printing from us, apparently due to budget restrictions. We are also seeing work siphoned off by inefficient agency plant operations.

Our procurement surcharge is not generating sufficient revenue for the program because private sector competitiveness is driving prices down and the paper market remains very soft.

Excluding inherently governmental work for the Executive branch which is done inhouse--such as the Federal Register and passports--GPO is putting 94% of all agency work out into the private sector for production. The taxpayer is saving millions under this program, especially because of current economic conditions in the printing industry, but it is causing serious financial problems at GPO.

While our workload is falling, our costs have not declined as rapidly as revenues. This is in part due to pay and other operational cost increases.

We are working to bring this situation under control. Last year, I imposed a hiring freeze on all administrative areas. Later, we implemented a separation incentive program that reduced GPO employment by 357 positions. Since the beginning of fiscal 1993, GPO has come down 585 positions, for a total annual savings of $29 million; this savings won't show up fully until next year, however, when the full effect of the buy-out kicks in. Also, overtime has declined for the second year in a row, with no degradation in service. Other cost-cutting and efficiency improvement efforts are in motion, such as facilities consolidation.

We're also working to increase revenues, as I stated in the short term plan I recently supplied at the Chairman's request. The plan involves diverting more work into the plant, but at discounted rates so agencies aren't penalized; using more firm pricing of work; making it easier for agencies to buy small jobs, with credit cards; offering new service contracts to assist agencies in their publishing activities; and a variety of other measures. Some of these measures are beginning to take effect: in March, the monthly loss, excluding the cost of the buy-outs, was only $293,000.

I have proposed setting up a joint union-management task force to review all GPO administrative and support operations for opportunities to achieve additional savings, and to propose appropriate technology applications to re-engineer work processes.

I'm open to discuss other cost-cutting and revenue-generating measures with you. On Tuesday I told the Senate Appropriations Committee that I would be willing to consider not providing upcoming locality pay to GPO employees under my administrative control if the situation doesn't improve. I'm also open to extending the current hiring freeze to all GPO positions, except those that are absolutely essential to the production of our core products and employee safety.

We're also working on legislative language to offset the effects of the April 7 Justice Department opinion on "duplicating." We will seek and greatly appreciate the Joint Committee's help on this matter.

We will continue to make cost reductions. But we need also to take additional measures on revenue generation, including adjusting GPO's rates closer to cost recovery levels. GPO's rates have not been changed since January 1990, more than 4 years ago, and I truly believe this issue will need to be addressed for the coming fiscal year, unless there is a dramatic turnaround in our workload levels.

Mr. Chairman, this concludes my remarks and I would be willing to answer any questions the Joint Committee may have.

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