MICHAEL F. DiMARIO

TUESDAY, JUNE 6, 1995

1310 LONGWORTH HOUSE OFFICE BUILDING

2 P.M.

Mr. Chairman and Members of the Joint Committee on Printing, I am pleased to be here this afternoon at this oversight review of the Government Printing Office (GPO).

From the outset, let me assure you of my longstanding commitment to transforming GPO into the leaner, more efficient, high-tech agency that it is becoming. We are pursuing every opportunity for savings at GPO, from increased computerization in all our operations, to space consolidation, to offering new electronic information alternatives, to reducing personnel costs, to constantly reviewing all of our operations to ensure they are essential to the continued performance of our mission.

We have reduced costs dramatically in the past two years while at the same time introducing vastly new information services, taking GPO from a status quo entity to a new role as a major player in the electronic Government information field. This transformation effort--which is still continuing and is far from over--has been made without negatively impacting GPO's traditional product and service provision or the needs of the various parties that depend on them, including Congress, Federal agencies, and public users of Government information. While we have encountered financial losses during this process, we have been able to sustain them without imposing an additional burden on taxpayers, and we will emerge from the loss period a stronger agency that is far better prepared to meet the demands of the future.

To assist you in the conduct of your review, my prepared statement provides the Joint Committee with background information on our transformation to electronics, on our financial system and financial condition, and on our programs and services, concluding by highlighting some topical issues that are relevant to GPO's programs and operations.

IMPACT OF ELECTRONICS

While printing remains the largest part of our work, the methods we use to print and disseminate publications have changed due to the impact of electronic information technology. We assemble electronic databases through our automated composition system. These databases can be output for printing and used for a variety of information dissemination formats, including CD-ROM and online dissemination. We now consider the electronic database the primary form of a publication, which can then be output in any number of multi-media formats. 

Congress itself recognized the opportunities made possible by the technologies we use when it passed, with the leadership of the Members of the Joint Committee on Printing, the GPO Electronic Information Access Enhancement Act in 1993 (P.L. 103-40). This Act requires us to provide a number of dissemination services in online format. P.L. 103-40 reflects the broader mission that GPO now performs: assisting Congress and Federal agencies in managing the life cycle cost of information products and providing the public with an expanding range of access to those products.

The record of this broader mission is already well-established. Since its opening in June 1994, the online service created under P.L. 103-40--the GPO Access service--has downloaded more than 1.3 million online documents to users nationwide. Today the service provides access to online versions of the Congressional Record, the Federal Register, the U.S. Code, congressional bills, General Accounting Office reports, and other information via the Internet. The service is available free of charge to the public around the clock through a network of public gateways operated in cooperation with participating depository libraries nationwide, rather than through a centralized resource in GPO.

The gateways have proven to be an effective model for devolving the responsibility and resources for providing online access to Government information back to the local level. So successful has this approach been that in December 1994 the Access service was awarded a Federal Technology Leadership Award by the Office of Management and Budget and Government Executive magazine. In March 1995, the Access service won the James Madison Award from the Coalition on Government Information, composed of library and Government information user groups nationwide.

Our other electronic efforts have also been well received. For several years, we have been a leading Government producer of CD-ROM. In 1992, we received the annual award of the Special Interest Group for CD-ROM Applications and Technology (SIGCAT), the largest CD-ROM user group in the world. In 1993, the GAO cited our CD-ROM program as one of the most cost-effective in the Government, specifically noting that GPO's CD-ROM products are among the least expensive for users. Today, CD-ROM is a standard product line at GPO. We also produce and distribute electronic formats on diskettes and in other media.

It is in the area of producing printed products, however, that the impact of electronic technology has been most pronounced. Under the leadership of the Joint Committee on Printing, we converted from hot metal typesetting to electronic composition 20 years ago. The conversion made it possible to vastly cut back on the number of personnel needed to perform printing. Two decades ago, GPO had 8,500 employees; today, there are less than 4,200. In the past two years alone, the workforce has been reduced by 722 positions. These were real cuts in staffing, not just in positions, and have yielded tens of millions of dollars in savings.

At the same time, technology has significantly improved productivity. For example, in terms of dollars adjusted for inflation, the Congressional Record today costs two-thirds of what it cost before we converted technologies. Today our prepress system is connected to Capitol Hill through a series of fiber optic links, permitting an increased amount of data to be input on the Hill and transmitted to GPO for production, which further reduces costs. Technology improvements have been primarily responsible for the relatively flat level of funding we have been able to maintain for Congressional printing over the past several years.

Technology has impacted other GPO areas as well. I recently attended a printing industry briefing on the outcome of the DRUPA print trade show, the largest such show in the world, which was conducted in Germany last month. DRUPA showcases the latest in print technology. This year the emphasis was entirely on the expanding use of digitized data systems. The briefing indicated to me that GPO is well in line with the printing industry in the use of electronics and the movement toward digitization. In fact, I would say we are literally state of the art if not on the leading edge in this area.

We are operating print-on-demand systems in our central office plant and in the Senate; we hope to work with the House to establish a similar system for them. These systems are networked so that electronic files of publications can be transmitted and downloaded directly for reproduction, a capability that has the potential for reducing costs by limiting production beyond the original print run only to copies produced on an as-needed basis.

Our new offset presses represent the latest technology available, from their electronic control panel to the robotic lifts for finished products. Three of these presses replace four outdated pieces of equipment that are more than 40 years old. The new presses require smaller press crews, utilize soy ink, and the quality of the work they produce is vastly superior to the former product. In addition, the presses included the capability to print in metric size and can be equipped with the most advanced direct-to-plate technology as that becomes available.

In our Depository Library Program today, through a combination of microfiche, CD-ROM, and online technologies, only 35 percent of all copies going to the libraries are distributed in traditional ink-on-paper format.

GPO FINANCES

Revolving Fund. Unlike most other Federal entities which are funded through annual appropriations, all of GPO's activities are financed through a business-like revolving fund. The fund is used to pay all of GPO's costs in performing congressional and agency printing, printing procurement, and distribution activities. It is reimbursed by payments from customer agencies, revenues from sales to the public, and transfers from GPO's two annual appropriations, the Congressional Printing and Binding (CP&B) Appropriation and the Salaries and Expenses (S&E) Appropriation of the Superintendent of Documents.

The revolving fund is GPO's checking account at the Treasury Department. GPO pays its expenses from this account either with a check or electronic funds transfer. The revolving fund is reimbursed when the Treasury Department makes an accounting entry that transfers money from agency appropriation accounts to GPO's revolving fund account when the agencies pay GPO invoices. This procedure also applies to the payment of transfers from the CP&B and S&E appropriations, and to deposits of funds collected from sales to the public.

Most executive branch agencies use the Treasury Department's electronic payment system known as OPAC - Online Payment and Collecting System. Cash does not change hands when the Treasury Department processes these payments to GPO; Treasury simply makes a bookkeeping entry that reduces the agency appropriation account and increases the GPO revolving fund account. The Defense Department (DOD), which is one of our major customers, is not on the OPAC system. As a result, our accounts receivable from DOD is now approximately $40 million. We have been working with DOD to expedite the payment of funds owed to us for work performed. We are continuing to press them on this.

GPO maintains a cash balance in the revolving fund that is used to pay all expenses. The cash balance fluctuates daily as payments are received from agency reimbursements, customer payments, and transfers from our appropriations. In order to avoid insolvency, GPO must maintain sufficient cash balances to pay our obligations as they become due.

When Congress established the revolving fund, it also required GPO to establish an accrual system of accounting for the fund. Under the accrual method of accounting, financial transactions are recorded in the accounts when they occur regardless of when payments are made. For example, revenue for plant printing operations is recognized when the work is performed. Revenue from printing procurement is recognized on the date the contract requirements are fulfilled. Revenue from distributing and selling publications is recognized when publications have been shipped or when services have been performed. This differs from cash basis accounting which records transactions in the accounts when payments are made or received.

A significant benefit of accrual accounting is that revenue is reported as it is earned and accounts receivable are reported on GPO's financial statements. If, as in the case of DOD, payments are not made on a timely basis, operating results are not affected and GPO can still properly report its income and expenses. Congress recognized the deficiencies with cash basis accounting and required GPO to report on the accrual basis of accounting. GPO produces financial statements that have been approved as to their reliability by the GAO and its subcontractor, Arthur Andersen & Co.

At the end of April 1995, GPO's revolving fund balance was $83.1 million. Included in that amount was $78.4 million in funds that we consider to be restricted for specific purposes: $34.7 million is from people who have deposited their money with GPO in advance of receiving publications and subscriptions from the Superintendent of Documents Sales program; $23.4 million is in funds that have been paid by agencies in advance for their printing; $8.9 million is for employees for their wages; and $11.4 million is for the accrued liability on accumulated annual leave. 

In the past we have not permitted the restricted funds to be obligated for other purposes. However, I recently wrote to the Comptroller General for his views on certain cash management practices that GPO was required to invoke to deal with a cash shortage in the revolving fund. In order to maintain an adequate cash balance for the agency's printing and binding operations, GPO's Comptroller transferred $15 million in restricted funds from Sales of Publications operations to Printing and Binding operations. I requested advice about whether GPO could use funds deposited with the Superintendent of Documents to pay for printing and binding expenses. I expect to receive his reply in the near future.

Appropriated Funds. GPO has two annual appropriations, each for specific purposes. The CP&B Appropriation is used to reimburse the revolving fund for costs incurred in performing congressional printing. The S&E Appropriation is used to pay for costs associated with depository distribution, cataloging and indexing, statutory distribution, and international exchange distribution.

Unlike most appropriations to other Federal agencies, these appropriations are for work that GPO itself does not control. The CP&B Appropriation in effect is an appropriation by Congress to itself to cover the costs of its own printing. The appropriation is made to the Public Printer basically to relieve Congress of the burden of maintaining detailed accounting records for all the printing ordered from GPO both by law and by other congressional requisitions.

Congress, not GPO, controls the rate of spending the CP&B Appropriation. GPO can transfer funds from the appropriation to the revolving fund when, and only when, we perform congressional printing. While we try our best to estimate the volume of congressional printing in any given year, that volume can change due to circumstances beyond our control. If congressional requisitions fall short of our estimates, there will be a balance remaining in the appropriation at the end of the year. If the requirements exceed our estimates, we will spend more than the appropriation and incur a shortfall, for which we would need additional funding in a subsequent year. In any event, the appropriation is not available for expenditure for purposes other than congressional printing.

The S&E appropriation primarily funds the distribution of documents to depository libraries. As long as Federal publications meet the requirements established by law for depository distribution, GPO is required to distribute the publications. The volume of this work, and thus the rate of spending for the majority of the S&E appropriation, is determined by the publishing activities of Federal agencies and Congress. Likewise, funding for the statutory distribution of publications, for the distribution of publications to international libraries, and for cataloging and indexing is spent at a rate determined by the publishing activities of entities external to GPO. We use the funding provided by the S&E appropriation primarily in a ministerial role to ensure that the distribution requirements established by law are fulfilled. Like the CP&B appropriation, the S&E appropriation is not available for purposes other than those specifically required and authorized by Title 44.

For FY 1994, the total operating expenses charged against GPO's budget were $816.2 million. Appropriated funds from Congress provided $117.5 million of this amount, or about 14 percent. They included $88.4 million for the CP&B appropriation and $29.1 million for the S&E appropriation. vCost Recovery Mechanisms. We recover the costs of our printing operations through printing rates. The rates recover the costs of labor, machine time, and overhead (the costs of direct production support as well as general and administrative support costs). Standard rates are established for each production operation. Title 44 requires that GPO recover the cost of all of its operations. Thus, the rates have to recover the costs of operations that do not bear directly on printing, such as those that are mandated by law (e.g., our Inspector General function) as well as those that are necessary to the operation of any Government agency (e.g., personnel, budget, data systems, etc.). In addition, the rates are designed to recover an additional 1 to 2 percent increment to develop retained earnings to fund modernization costs.

The costs of our printing procurement program are recovered through a surcharge. The costs of our sales program are recovered through prices charged for publications. As with printing rates, prices for publications and the surcharge are calculated to recover overhead costs for their areas.

Recent Financial Losses. Since 1991, GPO has sustained yearend losses. The losses have been the result of the combined effects of printing rates which have been under-recovering their costs, a decline in the volume of printing orders, and a highly competitive private sector market for printing which had a downward effect on prices and thus our revenues from the 6 percent surcharge.

The sharp increase in paper prices over the past several months has been primarily responsible for reversing the losing situation with respect to procured printing prices, since paper frequently is a large component of those prices. Also workload has picked up in congressional work in the recent period, although it remains down in agency work.

Our printing rates have not been adjusted since January 1990. In the interim, there have been cost increases due to mandatory and negotiated pay increases, as well as in the cost of utilities and materials and supplies. The paper price increase that has affected procured printing is also affecting our inplant printing. In the past year, we have seen an 85 percent increase in the cost of paper purchased against our quarterly contracts. Ordinarily, rates that under-recover their costs would not have been as serious in the presence of a stable or increased workload volume, since only marginal cost reductions would have been required to offset their impact. The combination of under-recovering rates with a decreasing volume, however, has necessitated serious cost reduction measures. The need for these measures was reiterated by the Joint Committee on Printing a year ago in the resolution directing GPO to break even without raising printing rates.

The losses sustained since 1991 have been marginal when compared to total revenues. In FY 1991, for example, the loss was one-tenth of one percent of total revenues. In FY 1992, it was six-tenths of one percent. In FY 1993, it was 1.7 percent. The largest loss of +$21.7 million, sustained in FY 1994, was 2.7 percent of total revenues, but that included $8.7 million which was retirement incentive pay, yielding a direct operating loss of 1.6 percent of total revenues.

GPO has been able to sustain these losses out of accumulated retained earnings in the revolving fund. These were the result of small annual earnings since the fund's inception more than 40 years ago. Under GPO's system of accrual accounting, net income earned throughout the years was accumulated as retained earnings, primarily to fund plant and equipment modernization. This strong balance sheet position has permitted GPO to absorb the losses. However, it also means that our costs, which were supposed to be recovered by our printing rates, were instead being subsidized out of our retained earnings that otherwise should have been available to pay for necessary modernization. These subsidies have gone not only to congressional printing costs, but to the costs of executive branch printing produced inhouse.

At the end of 1990, before the losses began, total retained earnings were $172 million. At the end of April 1995, they were $124.3 million. While GPO has been able to sustain the past losses, and will probably be able to do so again in 1995 should a loss materialize, losses cannot continue indefinitely into the future. Along with the continuing loss pattern, GPO's cash position has also been eroded. This prompted the transfer of restricted funds earlier this year. Our losses and cash position also prompted us to request an additional $15.4 million in working capital funds to pay for necessary safety and environmental improvements to GPO's buildings. This is the first time GPO has made such a request since 1974.

Cost Reduction Measures. We have been aggressively working to decrease costs, primarily through downsizing employment. These measures, which included a retirement incentive program last year, have been very effective; without them, our loss would have ballooned to nearly $50 million last year. Other cost reduction measures have included no pay raises for craft or white collar employees in 1995, a continued freeze on hiring, deferred maintenance on buildings and equipment, the closure of our Seattle regional printing office and the relocation of Superintendent of Documents employees from leased to owned space in Washington, DC, restrictions on travel and training, the elimination of awards, the cancellation of plans to buy additional property, and the continued review of all GPO functions to ensure that they are essential to our mission.

We have moved affirmatively and responsibly to address the losses. The measures we have undertaken in the past two years have resulted in substantial cost reductions and are working to put GPO back on the right financial track. At the end of April 1995, GPO's cumulative loss for the year was $6.1 million, a 70 percent reduction from the cumulative loss of $20.6 million at the end of April 1994. After sustaining losses in the first three months of the year due to Congress being out, we generated net income throughout the entire second quarter. We sustained a loss of $812,000 on $62.8 million in revenues in April 1995, or a loss of 1.3 percent, due primarily to the recess that month. Overall, however, revenue has increased 4.3 percent in plant printing operations, 12 percent in printing procurement, and is stable in our sales program. Total personnel compensation and benefits costs--the largest controllable cost in our budget--are down by 4.3 percent.

The fact is that we have made dramatic improvements in GPO's financial condition compared to where we were a year ago at this time. This condition will continue to improve as we adjust our operation to the new realities of the Federal printing and publishing arena, which is increasingly characterized by reduced spending on printing and a growing utilization of electronics. Excluding the funds payed for the retirement incentive in FY 1994, FY 1993 marked the largest direct operating loss GPO has sustained in recent years. The losses have been declining since then as we have continued to reduce costs.

To further ensure the reduction of any loss this fiscal year, I recently informed the Chairman of the Joint Committee of additional cost savings measures we will undertake. These include replacing overtime payments to supervisors with compensatory time off, negotiating no wage increases for 1995 plus seeking additional concessions on hours worked, and strongly encouraging the orderly consumption of annual leave by employees to reduce this accrued liability. At the same time, I indicated my intention to initiate a product pricing review to determine any necessary pricing adjustments that may be considered under current cost conditions. However, as I indicated at the opening of this statement, we will continue to aggressively pursue a broad range of options to reduce costs and make GPO a leaner and more efficient agency.

GPO OPERATIONS

Congressional Printing. Congressional work is performed in GPO's central office plant in Washington, DC, to provide Congress with immediate service in an environment that is under its direct control.

Before GPO was established, Congress experimented with a variety of systems for contracting out its printing. These were widely acknowledged as failures for their inability to perform the work and for the corruption that was frequently associated with congressional printing contracts. To remedy these problems, Congress established the closely-supervised system of printing in GPO that continues today. Under this system, we work in concert with a number of congressional offices in both Houses to ensure that all congressional work is done promptly, uniformly, and economically, and is delivered in a timely manner to facilitate the orderly conduct of legislative business.

The principal product for Congress is the Congressional Record, which is printed overnight and delivered the next morning each and every day that Congress is in session. The printing and distribution of the Record are required by law. Other major congressional products include bills, resolutions, and amendments; hearings; business and committee calendars; committee reports; committee prints; documents; miscellaneous publications, such as the Congressional Directory; miscellaneous printing and binding, such as letterheads; and document envelopes and document franks. We also detail printers to Congress to assist in preparing products for printing.

GPO's central office facility, by design throughout its existence, has been equipped and staffed to handle any eventuality in congressional printing. For example, the requirements for the Congressional Record can vary widely from day to day. GPO must be prepared to print a 20 page Record one day and a 400 page Record the next, depending on the needs of Congress. Likewise, GPO can only estimate the volume of congressional printing that is likely to be ordered in any year, based on historical knowledge of congressional printing cycles, and GPO by law cannot refuse to print any congressional requirement. The scheduling and volume of congressional printing are mandated by Congress, and GPO's job is to be prepared for any workload demands regardless of whether there is advance notice. If we are not prepared, the legislative process can be adversely affected.

Revenues from congressional printing in FY 1994 were $76.4 million. These were reimbursed to GPO by the annual appropriation for Congressional Printing and Binding. Along with additional copies of congressional products that were printed and paid for by Federal agencies, GPO produced and delivered 2.3 billion units of congressional work in FY 1994.

Agency Printing. We also produce some agency work inhouse, although the vast amount of agency work is procured from the private sector. The work produced inhouse falls into four general categories. About 45 percent is for four major agency products that we consider to be core Government products: the Federal Register, the Code of Federal Regulations, U.S. passports, and postal cards. Another 40 percent is other agency work printed in the central office plant, which includes both sensitive work, such as the President's State of the Union Address, the U.S. Budget and the Economic Report of the President, but other work we use to keep our equipment running during periods of reduced demand for congressional products. Slightly less than 10 percent of all the work produced inhouse is congressional work that is produced on the requisition of agencies and billed to the agencies. The remaining 5 percent is for work printed in GPO's 4 regional printing plants located in Chicago, New York, San Francisco, and Denver. A major core product, the Commerce Business Daily, is printed in the Chicago regional plant. We have been reviewing the continued need for all of these plants. We closed a printing plant located at the Washington Navy Yard in 1992. We recently closed the Seattle printing plant and will be requesting the closure of the San Francisco plant in the near future.

Revenues from all inhouse printing, exclusive of printing for Congress, were approximately $103.3 million in FY 1994. Another $17.4 million was generated from sales of blank paper to agencies, as authorized by Title 44, and $512,000 was realized from the sale of waste and scrap, primarily from the sale of waste paper. All of these funds were paid to GPO by requisitioning agencies or waste and scrap contractors.

Printing Procurement. The vast majority of agency work is contracted out through our printing procurement program, one of the most effective and successful procurement programs in the Federal Government. Of all the printing coming to GPO from all three branches of the Government each year, approximately 75 percent is contracted out to the private sector. Excluding agency work which is routinely produced inhouse (such as the Federal Register), between 90 and 95 percent of all agency work requisitioned from GPO is procured from the private sector. We do business with 130 agencies in the executive branch, represented by approximately 4,500 individual billing address codes. Our procurement activities are conducted from the central office in Washington, DC, and from 14 regional procurement offices and 6 satellite procurement offices nationwide that serve the needs of regional Federal agencies.

By maximizing competition for Government printing contracts in the private sector, GPO's procurement program obtains significant cost savings in Government printing. Another critical reason for procuring printing through GPO is to ensure that vast body of Government publications obtained through the procurement process are made available to GPO's distribution programs, especially the Depository Library Program.

GPO provides agencies with a broad variety of procurement services in exchange for a nominal surcharge on the value of the work procured, which is currently 6 percent. For this price, GPO provides all contracting services, including drafting specifications and bidding, awarding, and administering contacts, plus all associated work, such as certifying vouchers submitted by contractors and paying them. We also perform all work associated with selecting publications for GPO's distribution programs. Finally, the surcharge recovers costs associated with providing legal advice to contracting officers, dispute resolution through GPO's Board of Contract Appeals, and contract audits by GPO's Inspector General. For each agency (subunit represented by a billing address code) to provide such services would impose an enormous cost on the taxpayers.

At the same time, agencies can maintain a significant amount of control over their printing through direct deal term contracts. These contracts are established, competed, and administered by GPO, but they permit agencies to place orders directly with the contractor. Agencies also benefit from utilizing GPO's expertise in reviewing their print requisitions. We recently saved a substantial amount of funding for an agency based on such a review, and the agency has selected the GPO printing specialist who proposed the savings for an award.

Commercially procurable work going into the private sector generates employment, tax revenues, and a broad variety of other economic and social benefits nationwide. Approximately 12,000 private sector firms, or more than a quarter of the printing industry, representing an estimated 240,000 employees, are registered on GPO's master bid list according to their capabilities. The competition among them for Government printing contracts drives prices down. At the same time, GPO's centralized resource for printing procurement provides private sector firms with a one-stop-shopping capability that also keeps their costs down.

The printing procurement program generated total revenues of $526.8 million in FY 1994. These funds were paid to GPO by the requisitioning agencies. Of the total amount paid, $499.3 million was a pass-through cost: it was paid by the agencies to GPO for their work, and GPO subsequently paid this amount to printing contractors. GPO retained $27.5 million from the procurement surcharge to recover the costs of procurement services. The surcharge revenues, however, we're short of full cost recovery by approximately $6.2 million.

Publications Distribution. The institutional link between the production and distribution of publications in GPO ensures that the most comprehensive body of publications is made available for dissemination to the public. GPO distributes approximately 100 million publications annually. The share of these publications distributed in electronic format is growing sharply as we aggressively pursue increased CD-ROM and online business.

Comprehensiveness is especially important to GPO's Depository Library Program, which distributes publications to approximately 1,400 libraries nationwide where they are made available for the free use of the public. With antecedents dating to the early 19th century, the Depository Library Program is the nation's first "freedom of information" program, and today it continues to serve millions of Americans annually.Without the guarantee of comprehensiveness, the publications that belong in the program by law would likely be lost. Currently, such a problem exists with "fugitive" documents, due to their production elsewhere than GPO.

Libraries are designated as Federal depositories by Senators and Representatives as well as by law. GPO sends the libraries copies of all Government publications that are not purely of an administrative nature, cooperatively sponsored, or classified for reasons of national security. The majority of the libraries are selective depositories that tailor their acquisitions to local needs. Fifty-three libraries serve as regional depositories and are required to receive every publication distributed by GPO. The majority of depository libraries are located in colleges and universities, making the Depository Library Program an important element of the American educational and research system. This follows an earlier provision of law under which the earliest Congresses mandated the distribution of Government documents directly to the nation's colleges and universities and state historical societies. 

GPO pays for the cost of printing and distributing publications to the libraries, as well as all administrative costs associated with the program. The average cost of printing, cataloging, and distributing each publication shipped to depositories is approximately $1.00. We are reimbursed for all the costs of the Depository Library Program by the annual appropriation for the Salaries and Expenses of the Superintendent of Documents. In FY 1994, funding for this program in FY 1994 was $24.5 million.

Other S&E Programs. The Salaries and Expenses Appropriation also funds three other distribution programs. The Cataloging and Indexing Program is established under the requirement in Title 44 to index and classify all Government publications and prepare the Monthly Catalog of U.S. Government Publications. Access to the comprehensive body of all Government publications is especially critical to the effectiveness of this program. Funding for cataloging and indexing was $3.2 million in FY 1994.

Under the Statutory Distribution Program, required by various sections of Title 44, certain publications are distributed free of charge to recipients designated by law. One of these publications is the Congressional Record. The Congressional Printing and Binding Appropriation pays for the printing of statutory distribution copies, and the Salaries and Expenses Appropriation pays for the distribution costs. Funding for this program was $629,000 in FY 1994.

The International Exchange Program is conducted pursuant to international treaties and subsequently codified in Title 44. Under this program, U.S. Government publications are distributed to foreign libraries in exchange for copies of publications which are shipped to the Library of Congress. The Library administers this program and GPO distributes the publications. Funding for this program in FY 1994 was $712,000.

Sales Program. In addition to distribution programs funded by the Salaries and Expenses Appropriation, GPO operates two other distribution programs. One is the Sales Program. This is the GPO's largest distribution program. Under it, publications are offered for sale by GPO's Superintendent of Documents based on a pricing formula established by Title 44. Approximately 12,000 titles are offered for sale, and the program offers titles in print, CD-ROM, and online formats. 

Publications are sold through a mail order operation based in GPO's central office. They are distributed from facilities in Laurel, MD, and Pueblo, CO. GPO also operates 23 bookstores nationwide for walk-in customers. Major bestsellers include the U.S. Budget, the Dictionary of Occupational Titles, the Statistical Abstract, and the Federal Register, although congressional documents, such as tax reform legislation, frequently attract substantial public interest. The typical publication averages only $11.00 in price, which is far lower than prices for similar books in the private sector bookdealing industry.

The prices of publications sold through GPO's Sales Program recover all the costs of the program, which employs 625 personnel. No appropriated or agency funds are used to support the program. In FY 1994, the Sales Program earned $81.9 million in revenues, yielding a net income of $6.2 million. Net income is retained by GPO for program modernization. Major modernization projects include the recent installation of an upgraded telephone order system to provide improved service to the thousands of callers from around the nation that we deal with every day, and the development of an integrated order processing system. We also recently concluded a major consolidation of all Sales Program activities from leased to owned space in GPO's central office. The consolidation will generate major lease savings and was completed both on time and under budget.

Agency Distribution Service. GPO also performs distribution services for Federal agencies, under provisions of Title 44. The agencies designated the recipients and GPO distributes the publications. This is a reimbursable operation: GPO provides the service and is paid by the agencies. There is no appropriation to GPO for this program. The largest reimbursable operation in the Consumer Information Center in Pueblo, CO, which we operate for the General Services Administration. In FY 1994, GPO generated total revenues of $5.6 million from reimbursable distribution activities, yielding a net income of $250,000.

ISSUES FOR CONSIDERATION

Increased Use of Electronics for Congress. There is increased interest in Congress in using electronic information products as a means of reducing printing costs. We support Congress' move in this direction, and we are prepared to assist Congress in utilizing such products as the online Congressional Record. We are currently operating a pilot project in the Senate for dissemination of the online Record and look forward to doing the same in the House. We also fully support the implementation of print-on-demand systems, which are an effective means for delivering print products on an as-needed basis.

Another way to reduce costs is to encourage the increased submission of electronic documents by Congress. Theoretically, this would enable further reductions in the size of GPO's prepress operation, to the extent that electronic document submissions do not require subsequent intervention by GPO to proofread, correct, recode, or perform other necessary corrections prior to printing or online dissemination.

Our experience with the Federal Register is instructive. We offer financial incentives to agencies utilizing the Register to submit "verified" electronic documents, or electronic submissions requiring a minimum or no intervention by GPO prior to printing. While agency use of this program is mixed (some agencies take full advantage of it and save substantial funds off the standard Federal Register page rate, while others inexplicably make little or no use of it), it is a model worth considering for implementation in Congress. Along these same lines, we have had discussions with the Office of the Secretary of the Senate to develop data to show the benefits achieved by the Senate's automation efforts. We have agreed to do this and would also be prepared to do the same for the House.

Agency Printing and Duplicating Operations. Part of the decline in work coming to GPO in recent years (there was a decline of approximately $100 million in FY 1993) has been due to internal agency printing and duplicating operations, including sizable internal operations at the Defense Department, the General Services Administration, and in the Federal Prison Industries. Earlier reviews conducted by GPO's printing procurement personnel, GPO's Inspector General, and the GAO have indicated that much of this printing could be procured through GPO at less cost. Additionally, the publications being produced through internal agency operations are generally not being made available to the Superintendent of Documents' distribution programs.

We estimate that as much as $670 million in Federal printing is not sent to GPO. While some of this printing is statutorily authorized to be produced elsewhere, such as printing by the national intelligence agencies, there is undoubtedly a sizable proportion of work that should be sent to GPO to achieve increased savings and to insure public access through our distribution programs.

By the same token, agency use of contract design shops for preparing their publications for printing needs to be observed closely. Often these firms recommend designs and materials for publications that are not in concert with recognized guidelines that are intended to achieve savings in printing production. GPO offers design services through our Typography and Design Department that are fully in concert with these guidelines. We can also contract out for design services, as we did recently on a comprehensive design service package for the General Accounting Office. Agencies need to be encouraged to take greater advantage of GPO's services and be cautious of recommendations offered by design firms.

Finally, we have recently had discussions with representatives of the Office of Management and Budget, who met with members of the Interagency Council on Printing and Publishing Services to discuss the development of an executive branch policy on printing. We are willing to continue participating in these discussions, although we made clear that printing policy with respect to all branches of the Government continues to be the jurisdiction of the Joint Committee on Printing.

Mr. Chairman, this concludes my prepared statement, and I would be pleased to answer any questions you may have.

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Page #public-affairs/jcp95.html March 11, 1998