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General Services Administration or the agencies, themselves, would make as ordinary internal movements, but it is when they get a big one that
you would like to have a chance to bid on it? Mr. Smith. We would like to get our foot in the door any time we could.
Mr. BROWNSON. I think your foot is well in the door now.
Mr. Smith. Not in the Government moving. Very few contracts have been let.
I have a list here of about 5 or 6 that I know of in the last 8 years in which I have been in the business.
Of course, before the war, World War II, that was the common practice of the Government in this area, as I understand it. They did have to have a moving section that developed during World War II. Everybody being pressed for manpower, equipment, the Government expanding like it was, and having quick moves, private industry was not capable at that time and were not given the opportunity with priorities to expand.
Mr. OSMERS. Wouldn't you say, Mr. Smith, in view of the fact that General Services Administration now has this equipment, it is not a question here of whether the Government should enter into this field; the Government is in the field, and this situation would be corrected gradually, as the start has apparently been made with these contracts that have already been let and, according to General Services Administration, one effected savings of $60,000 a year, and don't you think Congress should make some effort along this line by cutting off the funds which enable them to expand and buy more equipment?
Mr. Smith. I agree, sir, but you will never be able to find that in an appropriation bill because these general activities of the general mov, ing section of the civilian and military agencies--that is all charged against their budget, and whatever part of their budget I'm not sure. Probably maintenance or office administration funds.
Mr. OSMERS. In other words, you mean
Mr. Smith. You will never find it in the budget, where the moving section has much of a budget.
Mr. OsmERS. You mean that the moving activities that are connected to the General Services Administration, to which you are referring, are reimbursed by the budgets of other departments?
Mr. Smith. Yes, sir; it is a charge-back proposition and, of course, if a survey was made of many of these civilian activities and the military, about their office moves, I think it would be most favorable for private industry to do this work.
Mr. Judd. Mr. Chairman,
Mr. Osmers. If there are no further questions, do you want to proceed with your second point?
Mr. JUDD. Mr. Chairman.
Mr. JUDD. You gave the names of the companies that bid, as I recall it, on the Veterans Administration job. None of them got the contract because Veterans' Administration said General Services Administration could do it more cheaply. Do you know what the figure was that General Services Administration turned in for its reimbursement from the Veterans' Administration?
Mr. Smith. No, sir.
Mr. Judd. Somebody ought to be able to find that out to see whether actually General Services Administration did move it and did use less Federal money that one of these companies that bid might have used.
I don't know where that information is, but it ought to be available. Somebody on our committee staff can dig it up.
Mr. McDonough. It ought to be available.
Mr. Judd. Mr. Smith says he can't get the information. Is that right? Mr. Smith. We have no way of getting it.
Mr. OSMERS. I think that is an excellent point for the Harden subcommittee to run down.
Mr. JUDD. That is right.
Mr. OSMERS. I might also say at this point, Dr. Judd, this should be a point where we ought to impose a restriction on the purchase of trucks, as we now do on autos.
Mr. Judd. That is right, but without these facts we don't know where we are. If General Services Administration was able to move it at a substantially lower cost, because if its existing fleet, we haven't got much kick; but if it costs just as much or more for General Services Administration to do it than these companies would charge the Veterans Administration, the taxpayers would be better off and business would be better off to have it done by the private companies.
Mr. OSMERS. There is this situation, speaking for the Harden subcommittee, Doctor: We have found the Government representatives are not in a position to give accurate cost figures because of the figures of depreciation and the use of space, Government space, and so on. All of those factors are not considered, and it would take a rundown by the General Accounting Office and then a comparison by someone familiar with the accounting procedures of private truckers to make an intelligent, detailed comparison.
Mr. Judd. That is right, but I would still like to know how much the Veterans Administration paid to General Services Administration for moving its equipment.
Mr. OsmERS. We can assume it was less than the private bid, even though the cost might have been a great deal more.
Mr. JUDD. Yes.
Annual Motor Vehicles Report, General Services Administration reporting all vehicles of the Federal Government, with the exception, I believe, of the military agencies. I notice the comment was made you are cutting down the number of vehicles. The last year that seems to have climbed from 1952 to 1953- they increased 32,000 vehicles.
I just thought that might be interesting.
Mr. Smith. The second complaint our local movers have concerning the Government competition in this area is the local crating operation that is carried on by the Army Quartermaster Depot at Cameron, Va., right outside Alexandria. Recently we have had an exchange of letters regarding this situation which I believe you will be interested to hear.
Our organization wrote a complaint to the Secretary of Defense on this competition and requested an investigation. That was about 2 months ago. We received a reply in return after a month's time from
Brig. Gen. W. A. Carter, Chief of the Service Division, Office of the Assistant Chief of Staff, G-4 Logistics, in the Pentagon. In essence, his reply was that according to their figures, including all overhead costs which seem complete on listing, they find their cost for crating to run $4.84 per hundred pounds compared to what they find the going rate in the commercial field at $6.50 per hundred pounds. Therefore, we have just answered General Carter as of the 9th of July in the following manner:
DEAR GENERAL CARTER: Thank you for your letter of May 24, in answer to our inquiry about Government competition, which has been referred to me by the movers division of our association.
Since many firms in the Washington area have been performing this same type of work in great volume for many years at competitive prices, we cannot understand how your costs can be so much lower if all factors and overhead are included, when they show that our rates are more than 34 percent higher than yours.
Would it be possible, in cooperation with your office, to reconcile items used in arriving at your cost figures, which we feel sure are available for public inspection. We would be very happy to pay for this survey by a cost accounting firm acceptable to both parties.
It is not that we doubt the accuracy of your figures but we feel that you have not found all of your costs. Since we are all paying taxes to support this competition, we would like to check into this matter for our mutual benefit and understanding Sincerely,
MORRIS DAVIDSON, President, DCTA. Mr. McCORMACK. That is a very courteous letter, I think, and they certainly ought to reply to it—whatever value my observation might be to help you out.
Mr. Smith. Thank you, sir.
As you know, most movers are also furniture warehousemen and as a part of their warehouse business they render a packing and crating service. Usually, a mover is in 4 or more different businesses under 1 roof. In this area we have over 15 large moving firms who do storage, packing and crating, and have large investments in their building and facilities for the packing and crating of household goods. As you may realize, there is a good volume of crating business in this city going overseas for both Government and civilians leaving this area and taking their personal effects with them to their overseas posts.
The local Navy operation has had crating and household goods contracts with these private firms since before World War II up to the present date. The Navy felt that they could save considerable money by completely eliminating themselves from household
goods crating and packing operations. Ironically, again, the Army Department at Cameron, Va., has continued their crating operations up to this date and is reported to do more than 11 million pounds of crating volume per year. At their own figures this could be over a $5-million crating operation per year. One slight invasion has been made by our local movers on this operation. The Cameron depot has seen fit to eliminate themselves from the preliminary hauling, packing and inventory of goods to their warehouse dock. They now have this work done for them by several local concerns. Then they continue the crating operation. They also have local concerns delivering their goods received to be unpacked and set up for officers returning from overseas to this area by local concerns.
This concession, evidently, has proven economical to the Quartermaster Depot at Cameron as they have eliminated themselves from
this hauling operation in the last several years. Still, we cannot convince the Quartermaster Depot that private industry should do the whole job of preliminary packing crating and shipping. They still continue to advance their theory and cost is far cheaper or as they say, 34 percent cheaper, than our local concerns. If this is true, certainly the Navy Department figures are wrong, for they continue to use private contractors and feel they are saving the taxpayers' money.
At the present time all we can hope for is an accurate accounting from an impartial person or firm who knows enough about Government to find their real cost of crating. We might also suggest that the General Accounting Office Investigation Branch investigate this situation to determine whether or not a savings could be made at the Cameron, Va., Quartermaster Station when all of the overhead costs have been applied.
Mr. Osmers. Thank you very much. That is a good statement, Mr. Smith.
I might say to you I think the Harden subcommittee will want to check into some of the details of your statement here, particularly along the lines Dr. Judd has suggested.
I was particularly interested in your remarks concerning the Navy, and this is a Government fallacy that we have found in many placesthat the Navy, for example, says it is absolutely necessary for them to make paint, but the other services buy their paint and claim that it is better. Now, here the Army is doing crating and the Navy says it is more economical to crate the same kind of goods in the same market for the same purpose. So, obviously someone is wrong,
It would seem to me that the burden of proof should always lie with the Government in these matters to prove that the Government can do it better, cheaper and in every way more advantageously.
Mr. BROWNSON. Mr. Chairman.
Mr. BROWNSON. I would just like to make an observation: Either somebody is wrong or the Navy costs of crating under their type of operation were greatly out of line with the Quartermaster costs for crating.
Of course, the Quartermaster has been crating military effects since the start of the Revolutionary War. It isn't exactly a new and sinister move into private business.
What I wanted to ask you is this: From the moving industry standpoint in the shipment of personal effects and furniture here in the United States as involved in the transfer from one military station to another, does the moving industry regard it as cheaper to ship uncrated furniture or to crate the shipment. For instance, if you are going to ship furniture from Washington, D. C., to Denver, Coloordinary household effects that go into a five-room bungalowwould that furniture be shipped cheaper by crating or by shipping the furniture uncrated?
Mr. Smith. It has been proven that uncrated on a five-room house would be cheaper; yes, sir. Only when you have a small amount of goods, somewhere in the neighborhood of less than 700 pounds, something like that, is it cheaper to crate and ship. It is cheaper to crate and ship sometimes a small amount of goods.
Mr. BROWNSON. When the Quartermaster ships personal property within the continental limits of the United States, do they ordinarily ship it uncrated?
Mr. Smith. That is right.
Mr. CONDON. As these witnesses come before us, there is going to be testimony affecting other departments. For example, here we have mention of General Services Administration and the Department of Defense. Will there be witnesses from General Services Administration and the Department of Defense and other agencies who will be mentioned from time to time that will be before us?
Mr. Osmers. I don't want to speak for Mr. Hoffman, Mr. Condon, but I believe it is not intended to do here what we did in the Harden subcommittee, which was, as you know, if a statement of this character was made before the Harden subcommittee, General Services Administration would be called, the General Accounting Office would be called, other witnesses, as indicated by the testimony, and I feel that at this time the questions, such as the one you have raised, should be referred to the permanent staff of the Harden subcommittee for further investigation, as well as the very good point that Dr. Judd raised, so that we don't get off the track of considering the legislation and, yet, all of these unchallenged statements are run down to the extent that the Board or the administration that is charged wants to run it down.
Mr. LANTAFF. Mr. Osmers, in connection with the statement here of Mr. Smith and this letter that has been written to General Carter, I don't know whether, in connection with this legislation or as a request to the Harden subcommittee, or in what manner it should be handled, but I certainly would like to see spelled out what factors are to be taken into consideration by the Government and Government agencies in arriving at their cost estimates, because we realize that is one of the problems we are always running into, and the Government agencies do not give us a correct cost analysis of what it costs the taxpayers to do a particular job. While that is just a part of the issue of Government in business, nevertheless, I think it could be conclusively proven in many cases that it was actually costing the taxpayers more for the Government to engage in an operation than it would to contract it out to private industry, but you always run into that answer, and I don't know how it should be handled. However, at some point, either in this legislation or one of our subcommittees, we should take up that whole problem of cost accounting and cost analysis.
Mr. OSMERS. Of course, I want to make just one or two observations about that: In the first place, the Harden subcommittee has heard in great detail from the General Accounting Office as to the procedures of accounting of the various branches and departments of the Government. I don't want to be unfair to any of the departments, but I think I can made a general observation that the General Accounting Office finds most Government accounting, for the purposes we are discussing here this morning, to be rather deficient and elementary
The second point I want to make is that the Government, not having the profit motive, not having the normal overhead expenses and