lowered unit costs of doing business. These economies have been projected even though our costs, both for classified and wage board employees, have increased in recent years as a result of pay increases. In fact, actions leading to greater efficiency, placed into effect since 1964, have resulted in projected reduced operating costs for FY 1968 of more than $11 million, based on comparative volumes of business. More specifically, since 1965 our sales of stores stock have increased by more than 61%, while the attendant costs to handle this increase, including pay increases, have risen less than 33%. As the Committee will recall, over the past seven years we have found it necessary to request supplemental appropriations for the Federal Supply Service on six occasions and it is very likely that any reduction in our request could result in again seeking supplemental relief; hence we request full restoration of the House cut. The $3 million we are asking this Subcommittee to restore is absolutely necessary to maintain our supply support for DOD and Southeast Asia at the required level.

The 30% reduction for National Historical Publications Grants from $500,000 to $350,000 simply means that valid proposals for documentary publications under P.L. 88-383 cannot be started. The Law authorized a total of $2.5 million for five years as the Government's share in a joint public-private undertaking. Contributions from private sources have far exceeded those made available under this appropriation. Amounts appropriated for the last three years have been held to the $350,000 level which is not adequate for the program, cannot carry out the purposes of the law, and leaves the Federal Government far short of supporting an equitable share of the costs of this program.

Although it is a small appropriation request the $100,000 for the Working Capital Fund is essential if GSA is to continue the economical operation of centralized printing and duplicating plants in Federal office buildings. Without this capital we will be unable to satisfactorily equip the contemplated five new plants in 1968 or provide for necessary replacements in existing plants. This will result in higher costs and reduced services to the agencies we service. We believe the continuation of this program on a sound economical basis to be a prudent cost saving investment for the Federal Government as a whole and, therefore, urge restoration of the request.

I am reluctant to appeal the cut of $76,000 in the appropriation for Salaries and Expenses, Office of the Administrator. However, I must point out that without the minor increase requested the level of our support to the thousands of small businessmen doing business with GSA will be proportionately impaired and we will be unable to finance from this source the very effective pilot information center in Atlanta, Georgia, which was developed to provide responsive information, directions and assistance to the public who come to the Federal Centers we have built in principal cities across the nation in recent years. There is one last recommendation I would like to make before concluding my statement. Included in the General Provisions of GSA is the following paragraph which was inserted several years ago:

"No part of any appropriation contained in this Act shall be used for the payment of rental on lease agreements for the accommodation of Federal agencies in buildings and improvements which are to be erected by the lessor for such agencies at an estimated cost of construction in excess of $200,000 or for the payment of the salary of any person who executes such a lease agreement: Provided, That the foregoing proviso shall not be applicable to projects for which a prospectus for the lease construction of space has been submitted to and approved by the appropriate Committees of the Congress in the same manner as for the public buildings construction projects pursuant to the Public Buildings Act of 1959."

As you may be aware, the President has stated his objections to provisions in existing laws and bills which encroach upon exclusive Executive responsibility because that responsibility cannot be shared with a Committee of the Congress. Late last session and again early in this session we submitted to the Congress a proposed amendment to the Public Buildings Act of 1959, which substitutes for its objectionable Committee project approval provisions, new provisions requiring reporting of proposed projects 30 days in advance. Although our budget request did not recommend deletion of the above quoted general provisions which make the objectionable project authorization procedures of the Public Buildings Act of 1959 applicable to lease construction in excess of $200,000, we respectfully

80-124-67-pt. 1-14

ask that the Committee delete the quoted portion of the General Provisions as passed by the House.

This concludes my opening statement, Mr. Chairman. We are ready to respond to any questions which you and the members of the Subcommittee may wish to ask.

POST OFFICE AND FEDERAL OFFICE BUILDING, FARGO, N. DAK.

Senator MAGNUSON. Senator Young, did you have a question? Senator YOUNG. I have some questions I would like to address to Mr. Knott with reference to the post office and Federal building at Fargo, N. Dak. It is my understanding

Senator MAGNUSON. It might seem strange to you, but the Senator from Washington knows all about that post office.

Senator YOUNG. I understand the money available is $437,000 short of your needs to complete the building.

Mr. KNOTT. Short of the bids we now have, yes.

Senator YOUNG. You would have to have $437,000 more?

Mr. KNOTT. In order to make an award now.

Senator YOUNG. What part of the building would not be completed if you did not get the $437,000?

Mr. KNOTT. The interior finishes on the third and fourth floors. Senator YOUNG. These are floors that are needed immediately? Mr. KNOTT. The building would not be complete without them. Senator YOUNG. Would there be a saving in appropriating that $437,000 now over waiting until later and possibly deferring the finishing of these two floors until another bid?

Mr. SCHMIDT. If we had to invite bids for a later date for completion of the third and fourth floors undoubtedly the costs would be higher because of the increase in construction costs.

Senator YOUNG. And there would be a considerable delay in the completion of these third and fourth floors which are very much needed now for office space?

Mr. SCHMIDT. There very well could be.

INCREASES FOR CONSTRUCTION PROJECTS

Senator YOUNG. Do you have any other items of this type in the bill? Mr. SCHMIDT. We have several items in the 1968 bill for increases in construction costs; Bridgeport, Conn.; Evansville, Ind.; Lincoln, Nebr.; Buffalo and Rochester, N.Y.; Dayton, Ohio; and Baker, Oreg. In all of these cases the bids came in substantially higher than the original appropriations.

POST OFFICE AND FEDERAL OFFICE BUILDING, FARGO, N. DAK.

Senator YOUNG. Would you be in a position to make a rough estimate as to how much more it would cost to complete the building if we delayed appropriation of the necessary money to complete the construction?

Mr. SCHMIDT. It would range between 4 and 5 percent a year. Senator YOUNG. In the meantime you would lose the use of the two upper floors?

Mr. SCHMIDT. That is correct.

Senator YOUNG. I think that is all, Mr. Chairman.

I think it would be highly desirable if the amount to complete the building were appropriated. It might make a considerable difference in the contract to be awarded, and certainly a year or two in the time the office part of it could be occupied.

Senator MAGNUSON. Well, Senator Young, I think that Fargo is a somewhat different matter. This has become somewhat confused, as to the bids-as to whether the bids are on the original building or as to whether the bids are on an enlarged building. Is that correct? Mr. SCHMIDT. The finishing of the third and fourth floors are in alternate bids.

Senator MAGNUSON. Alternate bids. We will take a look at it and have the Administration take a look at it. In the meantime, is it true, that you have a cost factor involved?

Mr. SCHMIDT. Yes, sir.

Senator ELLENDER. You mentioned there were three or four other cases in which money was needed. You have named the places. Could you tell us what the overall amount would be to take care of all the cases including Fargo?

Mr. SCHMIDT. I would have to develop that. Are you speaking of those that are in the bill?

PROJECT BIDS

Senator ELLENDER. Aside from Fargo, as I remember, you mentioned four or five others in which there was a shortage of money and where additional funds would be necessary to meet the bids.

Mr. SCHMIDT. These projects that I mentioned are included in the bill before the committee. Bridgeport, Evansville, Lincoln, Buffalo, Rochester, Dayton, and Baker.

Senator ELLENDER. You mean the additional amounts?

Mr. SCHMIDT. The additional amounts so as to be able to award contracts for these or to complete the work.

Senator ELLENDER. And Fargo is the only one left out?

Mr. SCHMIDT. The Fargo bids did not come in until the 16th of May. There have been others since the budget was submitted.

Senator ELLENDER. I see.

Mr. JOHNSON. Also in partial answer to your question, Senator, the House added $4,406,200 for three projects in this category; Lincoln, Buffalo, and Rochester.

Senator YOUNG. Thank you.

Senator MAGNUSON. But if the Fargo building would fall within the same criteria, it is suggested the committee ought to consider whether or not they should ask for it. Is that correct?

Mr. KNOTT. Yes.

Senator YOUNG. It would result in a considerable savings in a year

or two.

Senator MAGNUSON. Right. All right, we will make a record on that for you, Milt.

Now, Mr. Knott, you have a statement to make.

Senator ALLOTT. While you are on this building thing, could I ask a question or two?

Senator MAGNUSON. We will be coming back to building projects shortly. Senator Young had to leave the hearing and he wanted to ask about this prior to Mr. Knott's statement. We will come back to the buildings. I expect we will have a lengthy testimony concerning the buildings.

ABSENCE OF ARCHIVIST

Mr. KNOTT. Mr. Chairman, we are pleased as always, to appear before this committee.

I would like to express regret that Dr. Bahmer, our Archivist is not able to be here this morning. He is in Boulder, Colo. receiving a distinguished award as an alumnus of the University of Colorado. He has attained eminence in his field of endeavor. I thought you would be interested, Senator Allott.

Senator ALLOTT. I am very glad to hear that.

Mr. KNOTT. Dr. Rhoads, the Deputy Archivist is here for him. Mr. Johnson is the Assistant Administrator for Administration, replacing Mr. Turpin who appeared before the committee last year. Mr. Schmidt, who for years was Deputy Commissioner, is now the Commissioner of Public Buildings. Mr. Moody appeared in my absence last year as Deputy Administrator. Mr. Griffin still is Assistant Administrator. Mr. Williams is the new Commissioner of Transportation and Communications. Mr. Harlan is the Commissioner of our combined disposal operations, which we will be talking about later. It combines our defense materials and all our disposal operations into one service. Mr. Abersfeller is still our principal merchant in an ever-increasing supply operation.

BUDGET REQUEST

Generally speaking, the appropriation request which was submitted to the Congress this year to fund GSA's activities in fiscal year 1968 is the most austere request we have ever submitted. Anticipating increased productivity, reduced unit costs, and cost reductions flowing from organization adjustments and other management improvements, our request totaled more than $90 million below the fiscal year 1967 comparable amounts, yet the justification reflected that the volumes of work handled by all activities would be greater than ever before. For example, consolidation of our strategic and critical materials management and disposal program with our excess and surplus property utilization and disposal programs enabled us to reduce our related 1968 operating expense budget request by $1.6 million below the amount available in 1967, which the House allowance further reduced by $140,000.

HOUSE ALLOWANCE

In net total, then, the House allowance was $19,065,800 below our request, representing reductions of $30,073,000 against which there. were offsetting increases of $11,007,200 above the amounts requested for "Construction and Sites and Expenses."

Senator MAGNUSON. Now, Mr. Knott, this is your total budget you are talking about?

Mr. KNOTT. Yes, sir.

Senator MAGNUSON. And the House reduced the budget amount $19 million?

Mr. KNOTT. It is a net amount, the $19 million.

Senator MAGNUSON. Net amount?

Mr. KNOTT. Yes. They reduced what we submitted by $30 million. But they increased certain amounts by a total of $11 million. Senator MAGNUSON. This is the net difference?

Mr. KNOTT. That is right.

Senator MAGNUSON. But $30,073,000 is the reduction from the budget amount?

Mr. KNOTT. That is right.

Senator MAGNUSON. This is the total amount?

Mr. KNOTT. Yes, sir.

Senator ALLOTT. Wait a minute. I am looking at our sheet here. Senator MAGNUSON. I did not look at that.

Senator ALLOTT. You have requested a restoration of $29 million, but under the column the House bill compared with the budget estimate, it has a minus $18,925,800.

Mr. JOHNSON. That is correct, Senator. What Mr. Knott was referring to was the composition of the bill itself. In the House they made a reduction of $30 million composed of $12.9 million on the building in San Juan, Puerto Rico; $1,092,000 on site and expenses; $9,800,000 on repairs and improvements, and $6.2 million all other. In addition the House added construction funds for small buildings of $500,000, the increases we were talking about a moment ago for Lincoln, Nebr., Buffalo, and Rochester, $4,406,200. There was also added $6,101,000 to our sites expenses for Waycross, Alton, Syracuse, Mansfield, and Tyler, Tex.

Senator ALLOTT. The difference then between the $30,073,000 and less the increase of $11.7 million would bring you down, roughly, to $19 million?

Mr. JOHNSON. Roughly $19 million. The difference between that and the House report figure is the way they reflect appropriations for PMDS. The difference is $140,000.

Senator ALLOTT. What is PMDS?

Mr. JOHNSON. Property management and disposal service. That is our combined disposal operations.

Senator ELLENDER. The sum actually under the budget would be $18 million plus?

Mr. JOHNSON. Yes, sir.

Senator ELLENDER. And the others have been added by the House? Mr. JOHNSON. Yes, sir.

RESTORATIONS REQUEST

Mr. KNOTT. Subsequent to the House action I have carefully reevaluated our funding requirements for all activities and have determined that our program responsibilities will be carried out without major impairment within the amounts allowed for four appropriation items at levels lower than requested. However, to avoid serious