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TESTIMONY
OF
MITCHELL E. DANIELS, JR.
DIRECTOR
OFFICE OF MANAGEMENT AND BUDGET
BEFORE THE
JOINT COMMITTEE ON PRINTING
UNITED STATES CONGRESS
July
10, 2002
I am pleased to
appear before the Committee today to address the role of the Government
Printing Office (GPO) in handling federal agency printing needs and ways
for ensuring open and effective information dissemination. This Administration's
policy for addressing printing needs provides a useful illustration of
the President's instruction that his Administration should act forcefully
to improve the performance of government.
Our new approach
to printing, announced in May, reflects that agencies should be free to
seek the best price and service for their printing needs. While open competition
is simple common sense and common practice in most contexts, it has not
been the rule for executive branch printing purchases for over a century.
Instead, essentially all agencies have been required to have these needs
provided by or through the GPO, and thereby been unable to control either
the cost or the quality of products for which they are accountable.
It is difficult
to understand why the GPO has been granted a monopoly status for so long.
Americans have rightly been suspicious of monopolies throughout our history,
and tend to accept them only as a last resort, where no alternative seems
feasible. We recognize that free competition puts consumers in the driver's
seat, expanding choices and improving service.
Competition has
also been demonstrated to provide these same benefits to the federal government
when it acts as a consumer. The GAO and the Center for Naval Analysis,
who have studied scores of competitions, have come to the same conclusion:
opening services up to competition generates cost savings of 35 percent,
on average. Especially in the case of a service as common and commercially
available as printing, there is every reason to expect savings in this
range.
The Effects
of GPO's Monopoly Status
More than a decade
ago, the General Accounting Office (GAO) conducted a general management
review of the printing and procurement operations of the GPO. The Comptroller's
conclusion could not have been clearer: "Fundamentally, GPO's centralized
control over government printing has provided little incentive to improve
operations and provide quality services at competitive prices." The
report goes on to chronicle the problems associated with GPO printing:
- Printing performed
in-house by GPO can cost 50 percent more than printing done in the commercial
sector;
- Work is contracted
to poorly performing contractors; and
- Customer service
efforts are hampered by poor communications with customers and poor
systems for tracking and resolving customer complaints.
There is no evidence
of change in the years since this report was issued. Just two years ago,
in fact, the GAO again found that "GPO's monopoly-like role in providing
printing services perpetuates inefficiency because it permits GPO to be
insulated from market forces and does not provide incentives to improve
operations that will ensure quality services at competitive prices."
Recent agency experiences
bear out these shortcomings. Here are just a few examples of their complaints:
- There is no
incentive to be cost-effective. Federal offices in remote locations
(hundreds of miles from GPO offices) have been denied permission to
use private printers -- even for duplicating work under $1000 that is
required within 48 hours and color copying costing less than $500. The
Department of the Interior (DOI) informed us that repeated pleas in
the name of economy, speed, and simplicity of procurement, and promises
to report to the public printer on results annually to demonstrate the
effectiveness of a waiver, have gone unheeded.
- The process
invites inefficiency. Current protocol generally prevents agencies
from communicating directly with GPO contractors (when GPO decides to
contract out the agency's work). Misunderstandings result: contractors
may fail to understand what the agency needs; agencies are not always
aware of contractor capabilities. The Army Corps of Engineers told us
that, in one instance, it expended more money explaining its printing
problems to the GPO than the GPO's printing contractor was paid for
the printing job.
- Customer satisfaction
is not a priority. The GPO -- not the agency -- decides who will
perform the work. In essence, the GPO is authorized to substitute its
judgment for that of the agency, even though the agency is responsible
for mission performance. The Office of Personnel Management (OPM) reported
that despite its need for stringent quality standards, GPO selected
a contractor which proved incapable of meeting those standards, forcing
the agency to conduct multiple costly on-site press inspections. OPM
also told us that GPO failed to advise the agency when its contractor
encountered financial difficulties and was unable to continue meeting
its contractual requirements.
- You don't always
get what you pay for. Correcting unsatisfactory work, even for a
relatively routine effort, takes months when it should be solved in
weeks, if not sooner. Several agencies, including DOI, told us that
they ended up negotiating corrective action directly with the GPO's
commercial contractor -- despite the fact that the agency pays GPO a
fee to serve as a middleman.
These concerns are
even more troubling in view of the $50 to $70 million per year in premiums
and fees imposed by the GPO when it contracts work to private sector printers.
These results are classic characteristics of a monopoly and certainly
not the mark of a performance-based government.
Competition
as Key
There seems little
reason to accept these sub-par results when the many commercial contractors
who are not currently part of the GPO's network of providers are ready,
willing and able to perform. We've talked to individual printers and their
representatives with printing presses from all over America. There is
a desire to see much more printing go out to the private sector.
- The U.S. Chamber
of Commerce, the world's largest business federation representing
more than three million businesses and organizations of every size,
sector, and region, has long been a proponent of opening up the government's
commercial activities to greater competition and supports the philosophy
behind the Administration's new policy.
- National Small
Business United (representing more than 65,000 small businesses) and
the Coalition for Outsourcing and Privatization (representing 23 separate
organizations) have advised us that they welcome the opportunity our
new policy will provide by opening printing to broader marketplace
competition.
Even the consultants
hired by GPO in the late 1990s to evaluate its operations acknowledged
that there is strong need for improving the efficiency and effectiveness
of the organization. There is no better way to drive such improvement
than to require GPO to compete for its customers' business.
Those who most ardently
resist making GPO compete for work generally point to one of two arguments,
namely that: (1) agencies will lose the economies of scale the GPO achieves
in its role as a central buyer, or (2) decentralizing responsibility for
government printing will impair the public's access to government information.
These arguments are unpersuasive, and, even if they were, would not justify
trapping federal agencies as prisoners of monopolies.
Agencies will
gain, not lose, an ability to get good deals. Several vehicles exist
within the executive branch to help the government leverage its buying
power. For example, the Multiple Award Schedules Program operated by the
General Services Administration is designed to facilitate access to a
wide array of commercial contractors who compete for work offering their
most favored customer pricing. Agencies will be free to contract directly
with the commercial printers that demonstrate through competition their
ability to meet agency needs most effectively. In this fashion, accountability
for contracting will appropriately rest with those who are ultimately
accountable for mission results, rather than having an independent third
party calling the shots.
Expanding opportunities
for the private sector will not undermine effective information dissemination.
Efforts to vest printing procurement decision-making with the agencies
are met with concern that more government documents will become "fugitive"
-- never making their way to the Superintendent of Documents, who is responsible
for indexing, cataloging and distributing documents to the public through
the Federal Depository Library Program.
In announcing our
new policy freeing up the procurement of printing, we reminded agencies
of their ongoing responsibility to make documents available to the Federal
Depository Library Program, including when private printers are used.
We have asked the Federal Acquisition Regulatory Council (which oversees
the government-wide Federal Acquisition Regulation (FAR)) to promulgate
a rule requiring printing contractors to submit electronic copies of their
documents to the Superintendent of Documents for rapid distribution to
the Depository Library Program.
As a more general
matter, the Administration is aggressively seeking to take greater advantage
of the Internet. Dissemination of government information in electronic
formats, usually through agency websites, makes information available
to the citizen promptly, twenty-four hours a day, seven days a week. The
federal government makes some 33 million electronic pages of information
available to the public through its web portal at FirstGov.Gov; recent
enhancements to FirstGov have made it easier to access and use government
information.
The New Policy
for Printing
As a matter of Administration
policy, agencies have been requested to select printing and duplicating
services based upon the best quality, cost, and time of delivery. This
means that the GPO and the private sector should compete for work on a
level playing field, based on a full account of all costs to the taxpayer.
Specifically:
- The agency is
free to use the services of the GPO, in accordance with the Economy
Act, when the GPO can provide the better combination of quality, cost,
and time of delivery; and
- The agency should
contract with the private sector when it offers the better combination
of quality, cost, and time of delivery.
Agencies will report
to OMB annually on the overall cost of their printing and duplicating
operations. Reports will include a full accounting of all costs of the
work performed by GPO, work performed in-house, work contracted directly
to the private sector, and agency compliance with their responsibility
for making information available to the public, including through the
depository libraries.
Conclusion
Reflecting on the
state of government buying practices for printing, one former Public Printer
concluded that public printing law is out of date and should be revised
"to meet changed conditions, based on common sense ideas." The
Public Printer was Oscar Ricketts and the statement was made before the
Congressional Printing Investigation Commission in 1906. Almost a century
later, it is time to take his advice.
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