Government Printing Office: General Management Review

Published by the Government Accountability Office on 1990-07-19.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                United States General Accounting OflIce

For Release      Government Printinq      Office:
on Delivery      General Management      Review
Expected at
9:30 a.m. EST
July 19, 1990

                  Statement  of
                  J. William  Gadsby
                  Director,  Federal Management           Issues
                  General Government Division
                  Before the
                  Joint Committee      on Printing

                                                                   GAOForm 160(12/87)
Mr. Chairman          and Members of                     the Joint              Committee:

We are pleased              to be here              today        to discuss           our management                   review
of the Government                Printing            Office.              My statement              will       focus      on
(1) the need to define                       what        the     role      of GPO should               be in
providing         printing            services           to the government                   in the           future      and
(2) certain          operational              problems             at GPO that              can be addressed                   in
the   short        term.       Correcting                the operational                  problems            should      be
done regardless               of the outcome                    of any future               role      discussions.

GPO was created               to lower             the    cost         of congressional                    printing,       and
opened      for     business           on the day of Abraham Lincoln's                                      inauguration
in March 1861.                Gradually             increasing              in size,         sophistication,                   and
responsibility,               GPO became the government's                                 printer           in 1919.
Legislation          generally              requires            that      all      federal         government
printing          and binding              work be done by GPO.

An organization's                 environment                  shapes       its     operation.                The
environment          of private              sector            printing           today      is characterized                  by
rapidly       changing          technology               driven         by computer            and other
equipment          advances.               But,     a powerful              environmental                  factor      at GPO
is    the   legal      authority              to control               most       federal      printing.               This
monopoly-like              authority              has insulated                 GPO from market                 forces,        and
has manifested               itself         in high            costs      and limited              responsiveness
to customer           needs.           -
In-house      Production            Costly

The cost      of doing           work      in the GPO plant                 has been generally                   double
the cost      of procuring               it.       Some of the factors                   contributing                to
the high      production             costs        are operational               in nature         and can be
addressed        in the        short       term.        One is the             scheduling         of weekend

For the last           3 fiscal          years,      GPO has scheduled                   a significant
amount of work on weekends.                          The principal               rationale            given      by GPO
managers       is    the      need to finish               high     priority           Congressional             work
coming      in at the          end of          the week and due out                    the    following
Monday.        However,          our     analysis          of scheduling,               production,            and
delivery      data      for      1989,         showed that         only        about     17 percent            of
congressional           priority           jobs     were scheduled               for     Monday delivery
and about        a third         of them were received                      during       the    prior         four
days      suggesting          the    need for           weekend work.              Also,       idle       time
existed      during        the      regular        Monday to Friday                workweek.

To illustrate,             GPO reported             that        in fiscal        year        1989 its         major
machines       were idle            an average           of 53 percent             of the        time      they       were
scheduled        to operate             in press         and bindery--where                   documents           are
printed,       bound,         and packaged.                Yet,     the press           and the bindery
worked      50 of 52 weekends                   in 1989.           Weekend overtime               charges            in
the press        and bindery             were about             $5 million,            10 percent          of their
personnel        compensation.                  While      there     may be a need for                    some

   ..                                                       2
overtime       work,      it       also      appears         there       are opportunities                     to reduce
the reliance           on it.

Another       factor      contributing                  to high        production          costs         is paper
waste      and spoilage.                  During        1989,        28 percent       of the         total            paper
used by GPO was wasted                       or spoiled,              costing      GPO about             $7 million.
GPO's level            of waste           is at      least       twice     the     levels          set     by
industry       standards.                 While      some waste           and spoilage              is due to bad
paper       and the      need for            press       changes,         GPO managers              say it            is
also       due to operator                mistakes.             Lowering         paper      waste         should           be a
priority       for      GPO.

Equipment        age also            affects         production           efficiency.               Our analysis
of 85 pieces            of critical               GPO production                equipment          showed that                47
pieces       were at least                15 years         old       and 7 pieces           were over                30 years
old.        To date,         the     Joint        Committee           and Congress           has been cautious
in approving            major        equipment           adquisitions             because          GPO's future
direction        has not           been clear.

Because       of the         absence          of competitive               forces,        GPO needs                 strong
internal        systems            to promote           efficiency          and quality,                 but        current
systems       are weak.              Efficiency              goals,      often       based     on GPO's own
historical           experience,              are generally              not being          met,         and were in
some cases           lower         than     private          standards.           Also,      there             is    no
system       to proactively                  identify         and implement              quality

improvements,              relying         instead          on post-production                     inspections            to
identify       printing             and binding             errors.

Better       Information             Needed For
Procured       Printing             Process

GPO's procurement                   operation          is     faced        with     a number of management
problems       that        affect       its     ability          to serve           its     customers.              GPO
allows       too many poor              performing             contractors                to continue           to win
contracts.            For example,              6 contractors                who were responsible                        for
1,753       orders        from July           to September             1989 delivered                   late    on 488 or
28 percent           of them.           Nevertheless,                 GPO awarded            additional             jobs       to
5 of the 6 in the                   next      six    months.           Only        3 out         of 23 agency
representatives               that      we surveyed              were more than                   moderately
satisfied          that     GPO was effectively                       sanctioning                poor    performing

GPO faces          significant              hurdles         in trying             to identify            and avoid
using       poor     performing             contractors             because          (1)    it     does not
validate        critical            data      showing         whether         contractors               delivered          work
on time       and     (2)     important             quality         of performance                 information
necessary          to operate              a sound contracting                     system         is not       readily
available.            Even when such                  information             is    available,             no guidance
exists       on how to best                 use it.

                                                                4      '
Customer Service                       Could Be IYore
Responsive            to     Customers

To be successful                       in a competitive                    environment,           an organization
must respond                effectively                to customer            needs.            GPO's environment
seems to provide                       few incentives                for     such responsiveness.                     For
example,        many of                the major           agency          and congressional                customers
that        we contacted                 cited       problems         with      the extent            of    information
GPO puts            on their            bills,         and provides             on the status               of their
jobs.         Customers                also      expressed           concern         about       how GPO resolved
their        complaints                concerning           the quality              and timeliness             of their
work.         Currently,                 GPO does          not   know the extent                  of the customer
dissatisfaction                    because           the    records          used to count               complaints
included            only         about        half     of the 2,700 complaints                        we were able            to
identify            for     1989.             Better       efforts          are needed by GPO to regularly
solicit        customer                 feedback        on its        performance.

More Effective                    Accountability
Strategies                @Jeeded

In GPO's environment,                             managerial           accountability                is also      important
because         there            are     no market           forces         promoting           efficiency.            Yet,
our analysis                of the performance                       plans         for     several         top managers
found        that         only         a few contained               elements            that    could        be used to
measure         performance.                      For example,              only         1 of 7 managers          with
responsibilities                        for      production          or procurement                operations          had a

       ..                                                            5
performance             plan         element       linked         to those         responsibilities.
Also,      the plan            for     only      1 of 8 managers                  who had dealings            with
customers           included           some aspect               of customer          service       as a
performance             element.               In addition,            a potentially            valuable
management             tool --GPO's             Executive          Information            System--lacked
useful          information            and response               time     was slow.

Define          GPO's Future             Role

Taken       together,           changing           technology,             operational            inefficiencies,
aging       plant       and equipment                 as well          as challenges            to its     control
over     government              printing          suggest          that     now may be a good time                      to
address          the     future         role     of GPO.           An important            step      has been
taken       by the         new Public             Printer--the             articulation            of three
preliminary              goals.          They are           to     (1) maintain           and improve           client
satisfaction;                (2) modernize               GPO operations;                and (3) determine
GPO's future               role.         The basic           step        needed next         iS for       the Joint
Committee              to take         the     lead    in bringing            together          the Public
Printer,           relevant           congressional               committees           and executive            branch
agencies,           and the GPO unions                      to address            fundamental          issues
related           to GPO's future.                    Critical           questions        to be addressed

           --     Should       GPO's control                over       printing        be maintained?
           --     Should       GPO become primarily                        a contracting            operation?
           --     Should        GPO charge            competitive            prices        to customers?

        --     What are the              implications             of new technology               on GPO, and
               on its         customers?

Answering            these     and other           questions        will      help    determine       what
lines        of business            GPO should           pursue     in the       future,

Once the strategic                    decisions          about     GPO's future            role    have been
made, GPO will                need to be organized,                   staffed,        and equipped           to
carry        out     that     role.       GPO's strategic                  planning    process       could        be
used as a forum                to assess           the    future      role      as well       as identify
strategies            to implement           it.

Mr. Chairman,                that      concludes         my prepared           statement,         I would     be
pleased            to answer          any questions          you and other            members of the
Joint        Committee         may have.