United States General Accounting Office

GAO Report to the Chairman

and the Ranking Minority Member,

Committee on Appropriations,

U.S. Senate

September 1997 GOVERNMENT

PRINTING OFFICE

Information on

September 1996 Major

Inventory Reduction

GAO/GGD-97-177

GAO United States

General Accounting Office

Washington, D.C. 20548

General Government Division

B-277904 

September 16, 1997

The Honorable Ted Stevens

Chairman

The Honorable Robert C. Byrd

Ranking Minority Member

Committee on Appropriations

United States Senate

In addition to providing printing services to the federal government, the

Government Printing Office (GPO) provides government publications to the

public through its sales program at 24 bookstores across the country; by

telephone, fax, and mail order sales at its headquarters in Washington,

D.C.; and through consigned sales agents in other agencies. GPO

periodically reviews its inventory of publications to determine whether

any can be considered excess—i.e., no longer expected to sell—and then

disposes of the excess copies. This report responds to your request of

July 21, 1997, that we review GPO’s procedures involving the management

of its inventory of publications that it determines to be excess, particularly

its management of a major inventory reduction of excess publications that

took place in September 1996.

Specifically, our objectives were to determine the facts surrounding the

September 1996 inventory reduction: whether it followed existing policies

and procedures, and how 3,258 copies of The Senate 1789-1989, a

four-volume set written by Senator Byrd, were destroyed as part of that

reduction.

We obtained the information for this report from GPO’s policies and

procedures manuals, inventory and financial records, interviews with

agency and contractor personnel, and observations at GPO’s warehouse in

Laurel, Maryland. Our review was conducted in July and August 1997 in

accordance with generally accepted government auditing standards. A

more detailed discussion of our scope and methodology is contained in

appendix I. On September 5, 1997, we provided a draft of this report to the

Public Printer for review and comment. GPO’s comments are discussed at

the end of this letter and included in appendix IV.

Results in Brief When for the first time in 15 years a potential financial loss was identified

in GPO’s sales program in June 1996, the Superintendent of Documents,

who heads the sales program, initiated several actions intended to improve

the program’s long-term financial condition. One action, which was carried

Page 1 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

out in September 1996, involved a special identification and disposal of

excess publications from its inventory. The Superintendent of Documents

said he wanted to dispose of the excess inventory by September 30, 1996,

to take the losses in fiscal year 1996, and to do so by identifying and

disposing of as much excess inventory as possible in fiscal year 1996

rather than in later years, when it otherwise would have been identified,

disposed of, and charged to expense. The Superintendent of Documents

also said he had erroneously believed that it was necessary to physically

remove excess publications from inventory storage by September 30, 1996,

in order to record them as an expense in the financial records for fiscal

year 1996.

During the major inventory reduction, GPO identified 2,127 different

publications1

 as excess and disposed of them by selling them to a

contractor, who subsequently shredded them and sold the scrap paper for

recycling. For fiscal year 1996, GPO charged about $9 million in surplus

publications expense in its financial records to account for the

publications it excessed and disposed of. Of this, about $3 million was

attributable to the special inventory reduction in September 1996.

Although the Superintendent of Documents had policies and procedures in

place to prevent the disposal of publications that the issuing agency still

wanted, in June 1996 he instructed his staff to disregard those policies that

would interfere with his goal of disposing of as much excess publications

inventory as possible by September 30, 1996. Acting under the

Superintendent’s overall instructions, GPO sales program staff disregarded

a policy that has existed since at least 1984, which provides that, before

disposing of any excess copies of publications, GPO should offer them to

the issuing agencies. Sales program staff also did not follow an established

procedure by which several GPO supervisory personnel were to review and

approve each publication to be disposed of. Had sales program policies

and procedures been followed, the four-volume history by Senator Byrd,

The Senate 1789-1989, about which the Senate Historian’s Office had

expressed interest in receiving excess copies to GPO, would not have been

disposed of.

As part of the special inventory reduction, GPO excessed and disposed of

3,258 copies (some of each volume) of the four-volume Senate history, the

printing and binding costs of which accounted for about $83,000 of the

$3 million surplus publications expense. On the basis of the contract GPO

1

Each volume of the four-volume set of the Senate history is considered a separate publication in

GPO’s inventory.

Page 2 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

has with the firm that picked up the excess copies from GPO’s warehouse

in September 1996, we estimated the scrap value GPO received for these

copies to have been about $600. In August 1997, GPO estimated that the

annual storage cost for the copies of the Senate history that were disposed

of would be about $2,500 and that the reprint cost would be about

$210,000.

In explaining its inventory reduction to Senator Byrd, GPO said that it had

found that it was generally more cost-effective to dispose of excess

inventory and reprint if necessary, than to hold it in storage indefinitely.

According to GPO, this statement referred to its publications inventory in

general, but it did not specifically refer to the Senate history volumes. In

September 1996, GPO had not calculated the cost of holding the Senate

history volumes in inventory or of reprinting them. However, GPO officials

said that they knew that the reprint costs would substantially exceed the

holding costs for these copies, given their relatively high printing and

binding costs.

In July 1997, after Senator Byrd inquired about the major inventory

reduction, the Superintendent of Documents orally instructed his staff to

retain the remaining volumes of the Senate history and, at our

recommendation, put this instruction in writing in August 1997. The

Superintendent further said that GPO was developing a new integrated

processing system that would help designate publications that should not

be excessed and, at our recommendation, agreed to develop a systematic

process for identifying publications to be held indefinitely for valid

reasons, such as historical significance. In addition, in response to another

recommendation that we made, he issued a written statement that the

policy to offer excess copies to issuing agencies before disposal cannot be

waived. To help avoid future misunderstandings on the reduction of

inventory, we recommended, and GPO agreed, that a written statement be

included in its policies and procedures specifying that excess inventory

does not have to be physically disposed of before being charged to surplus

publications expense, and that holding cost as a factor should be

considered when inventory management specialists develop data on

excess inventory. Finally, GPO has sent a legislative proposal to the Joint

Committee on Printing that would authorize GPO to donate excess

publications to schools or similar institutions. GPO does not now have such

authority, and this prevents GPO from donating its excess publications.

Page 3 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

Background GPO was established in 1861 to (1) assist Congress and federal agencies in

the production and replication of information products and services, and

(2) provide the public with government information products and services.

GPO provides printing services to all three branches of government—either

by producing work in-house or by procuring it from commercial printers.

Information dissemination is accomplished through GPO’s Superintendent

of Documents, who is to provide public access to government information

through (1) the sale of publications; (2) distribution of publications to

depository and international exchange libraries, to those recipients

designated by law, and for agencies on a reimbursable basis; and

(3) compilation of catalogs and indexes containing complete and

authoritative descriptions of government publications.

The public printing and documents chapters of title 44 of the U. S. Code

require GPO to fulfill the printing needs of the federal government and

distribute government publications to the public. GPO’s activities are

financed through a revolving fund, which is reimbursed by payments from

client agencies and sales of government publications, and transfers from

the Congressional Printing and Binding Appropriation and the Salaries and

Expenses Appropriation of the Superintendent of Documents. These

annual appropriations are to reimburse GPO for costs incurred while

performing congressional work and fulfilling statutory requirements

associated with the distribution of government publications.

Reimbursements from these appropriations to the revolving fund are

recorded as revenues. The sales program operates within the revolving

fund and is expected to recover its costs from its sales. According to GPO,

the sales program does not receive any direct appropriation.

GPO is headed by the Public Printer, who is nominated by the President and

confirmed by the Senate. The sales program is led by the Superintendent

of Documents, who reports directly to the Public Printer. The sales

program provides the public the opportunity to purchase government

publications and subscriptions at GPO’s 24 bookstores across the country;

through telephone, fax, and mail orders; and through consigned sales

agents at other agencies.2

 Within the Superintendent of Documents’ staff is

the Documents Sales Service, which includes staff in the Sales

Management Division and Documents Control Branch. Other key players

in the sales program include Customer Services, whose printing specialists

2

Two of the more popular publications are the Budget of the United States Government and the

Occupational Outlook Handbook; some of the more popular subscriptions are the Code of Federal

Regulations, Commerce Business Daily, and the Federal Register. Even though GPO’s September 1996

inventory reduction included subscriptions, our review involved only publications, although the

numbers of publications excessed and their costs cited include both.

Page 4 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

serve as liaisons with the issuing agencies until the publications are

produced, and the Office of the Comptroller, which keeps the financial

records, including inventory. For more detail on GPO’s organizational

makeup, see appendix II.

Once a publication is printed and enters the sales program, the Documents

Control Branch, within the Sales Management Division, maintains

inventory control, determines its continued salability, and makes

reprinting and disposal decisions. Working with the issuing agency, Sales

Management Division staff establish a life cycle for each publication that

represents the period during which sales demand is expected. According

to GPO, the average life cycle for a publication in its inventory is now about

12 months.

As of September 1996, the sales program carried 13,268 publications in its

inventory, valued at about $12.8 million based on printing and binding

costs.3

 The sales program did not report a loss between fiscal years 1981

and 1995. For fiscal year 1996, however, the sales program’s expenses of

$79.4 million exceeded revenues of $70.5 million, for a net loss of

$8.9 million. As of June 1997, the sales program was showing a loss of

about $537,000 for fiscal year 1997.

GPO Completed a

Major Inventory

Reduction in 1996

In May 1996, financial projections indicated that the sales program

expected a substantial loss for fiscal year 1996, the first such loss in 15

years. These projections were based on information that indicated that

revenue was down and expenses were up for several reasons, including

declining sales, the effect of the government shutdown at the beginning of

fiscal year 1996, competition from other government sales programs,

increasing use of free electronic publications, and a substantial increase in

charges to surplus publications expense (i.e., the printing and binding

costs of publications in GPO’s inventory that are expected to be unsalable).

As a result of the projected loss for fiscal year 1996, the Superintendent of

Documents tasked a management team with developing an action plan to

increase revenue and reduce expenses, with the objective of returning the

sales program to full cost-recovery in fiscal year 1997. The plan, dated

September 1996, originally contained 44 individual projects and was later

amended to include 2 more projects. One original project was a special

effort, over and above GPO’s routine process for removing excess

3

When the sales program acquires publications for sale, it pays only the incremental printing and

binding costs for the copies it acquires. All start-up costs are borne by the issuing agency.

Page 5 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

publications, to move aggressively to reduce the inventory of surplus

publications before the new fiscal year began on October 1, 1996. Such a

reduction would increase the surplus publications expense for fiscal year

1996 but was expected to decrease those expenses in fiscal year 1997 and

subsequent years. In other words, the sales program’s losses for fiscal year

1996 would be greater, but GPO officials hoped that this would result in the

program breaking even or better for fiscal year 1997 and beyond.

The inventory reduction began in early September 1996, even before the

action plan was issued, with a deadline for completion of September 30,

1996. The September 1996 inventory reduction involved 2,127 publications

that had a printing and binding cost of about $3 million, which was about

one-third of the surplus publications expense GPO charged for publications

it excessed and disposed of in fiscal year 1996. (See appendix III for

examples of the publications disposed of in September 1996.) GPO’s

records and our discussions with GPO warehouse and contractor personnel

indicate that the publications inventory that was excessed during the

reduction was sold (for less than 3 cents per pound) to a scrap contractor,

who was required by contractual terms to shred and recycle it rather than

resell the individual publications.4

Policies and Procedures

Existed for Managing the

Disposal of Excess

Inventory

The Superintendent of Documents had issued policies and procedures for

determining excess, obsolete, damaged, and destroyed information

products and for managing inventory. Superintendent of Documents

Policy No. 38, dated May 28, 1984, provides that publication inventories

are to be reviewed quarterly to determine the quantities that are to be

retained and those that are excess. This policy applies to inventories that

are managed by headquarters staff. A separate procedure (Superintendent

of Documents Policy No. 38.6) applies to inventories in GPO’s bookstores.5

Under the existing policies and procedures, inventory management

specialists (IMS) in the Documents Control Branch are to review quarterly

the amount of inventory for the publications they manage. This review is

conducted to identify whether the inventory should be reduced based on

the sales history and projected life cycle of the publication. As part of the

Superintendent of Documents’ existing policy, which was issued by the

current Public Printer when he was the Superintendent of Documents,

4

By law, GPO has implicit authority to dispose of excess publications as scrap. GPO also has adopted a

policy to offer excess publications to issuing agencies at no cost.

5

According to GPO, its 24 bookstores keep a minimal stock of any particular publication on hand;

therefore, we did not include policies and procedures that apply to GPO’s bookstores in our review.

Page 6 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

once an IMS determines the number (if any) of copies of a publication that

are excess, he or she is to call the issuing agency to determine whether it

wants the extra copies.

As part of the inventory review process for publications of high dollar

value or with a large number of copies on hand, the IMS then is to complete

Form 3880, which includes such information as the estimated printing and

binding cost of the publication, anticipated sales, total copies sold, and

whether the issuing agency wants any of the excess copies. (The form

does not include the holding cost of retaining the copies in inventory.)

This completed form is to be sent to a Documents Survey Board consisting

of the Director of Documents Sales Service, the Chief of the Sales

Management Division, and the Chief of the Documents Control Branch. If

the Survey Board approves the form, the IMS then must prepare a notice to

be sent to GPO’s warehouse in Laurel, Maryland. At the warehouse, the

excessed stock (i.e., stock not wanted by the issuing agency) is to be

identified and moved to a separate area for periodic pick up by a

contractor, who is required by the contract to shred the documents and

have them recycled. The contractor is not permitted to resell the

documents other than for recycling.

Existing Policies and

Procedures Were Not

Followed

During the major reduction in September 1996, the Superintendent of

Documents’ staff followed his orders and disregarded policy and normal

procedures in order to reduce the inventory of excess publications before

October 1, 1996. When the Superintendent of Documents realized that the

sales program expected a substantial loss, he told his staff in a June 1996

memorandum that, while developing an action plan to increase revenue

and reduce expenses, they should: “Ignore politics and external influences.

Disregard current policies and practices that inhibit creativity and impede

change.” According to the Superintendent of Documents, his instruction to

ignore politics and external influences referred to frequent requests from

issuing agencies to have more copies of publications in the sales inventory

than GPO believes can be sold. The Superintendent further said that he

subsequently verbally instructed his staff to begin the inventory reduction

before the action plan was approved and told them to disregard policies

that would interfere with the removal of as much excess inventory by

September 30, 1996, as possible.

In order to maximize charges to surplus publications expense in fiscal year

1996, the Superintendent of Documents and GPO’s Comptroller advised IMS

staff to focus their attention on excessing publications that had high

Page 7 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

printing and binding costs, large quantities in inventory, and low sales

volume. Also, during this major reduction, IMS decisions on what

publications to excess did not receive the normal management review, and

IMS staff did not call the issuing agencies to see whether they wanted the

excess copies of their publications.

Superintendent of Documents staff told us that they disregarded policy

because they would not have had enough time to contact the issuing

agencies and receive answers by September 30. According to these staff

and Superintendent of Documents management officials, it would have

been very difficult to contact all of the agencies involved with the 2,127

publications being excessed and to wait for their various responses

concerning whether they wanted the excess copies. According to GPO, this

response period usually takes about 4 weeks, and GPO officials did not

believe that the agencies would be able to respond appropriately if given

only a few days.

According to Documents Control Branch staff, this disregard of policy

resulted from the Superintendent’s June 1996 memorandum and his oral

instructions to his staff regarding the formulation of the action plan to

increase revenue and reduce expenses. The IMS responsible for handling

congressional publications, and his supervisor in September 1996,

acknowledged discussing between themselves whether they should follow

GPO’s policy to offer excess publications to issuing agencies. They said that

they felt they had the authority to dispose of the publications without

notifying the issuing agencies because of time constraints and instructions

from the Superintendent of Documents to disregard policies. They said

that, given the Superintendent of Documents’ instructions, they saw no

need to tell management officials above them that they were disregarding

this policy.

The IMS responsible for handling congressional publications told us that he

made the decision on which publications to excess based primarily on the

criteria he was given—high printing and binding costs, large quantity in

inventory, and low projected sales. According to the IMS, his decisions on

which publications to dispose of in September 1996 were not reviewed or

approved by the Documents Survey Board, as generally would be required.

The publications selected for excessing by the IMS were approved by his

supervisor, but no one else’s approval was noted on the inventory records.

The Superintendent of Documents said that he was responsible for

policies not being followed and for the inventory reductions that took

Page 8 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

place at the end of fiscal year 1996. The Superintendent of Documents said

that he wanted to dispose of the excess inventory by September 30, 1996,

in order to take the losses in fiscal year 1996. He also said that he wanted

to identify and dispose of as much excess inventory as possible in fiscal

year 1996 rather than in later years, when it otherwise would have been

identified, disposed of, and charged to expense. According to the

Superintendent of Documents, he instructed staff to dispose of the excess

inventory by September 30, 1996, because he mistakenly believed that the

inventory had to be physically removed from GPO property before surplus

publications expense could be charged.

However, the inventory identified as excess by the IMS staff did not have to

be disposed of by September 30, 1996, in order that the surplus

publications expense could be charged to fiscal year 1996. Neither

generally accepted accounting principles nor GPO’s own accounting

procedures require physically removing the excessed publications from

GPO property before surplus publications expense can be charged. Surplus

publications expense can be charged whenever GPO staff determine that

inventory is obsolete or unsalable. In fact, GPO had another major

inventory stock reduction in fiscal year 1981, and at that time, according to

GPO’s Comptroller, certain publications had been identified as excess but

had not yet been disposed of when they were shown as an expense in

GPO’s financial records.

Both GPO’s Comptroller and the Superintendent of Documents agree that

the latter misunderstood how publications expenses were handled in GPO’s

accounting system at the time of the major inventory reduction in 1996.

They both said that, at that time, GPO had no written guidance or

instructions stating that excess inventory does not have to be physically

removed from GPO before surplus publications expense can be charged.

In July 1997, the Public Printer told us that, while he was notified that a

major inventory reduction would be taking place in 1996, he was not made

aware of the details of the reduction. He said that he did not know that the

policy to offer excess publications to the issuing agency, which he had

instituted when he was Superintendent of Documents, was not followed in

the September 1996 reduction.

The Four-Volume History

Was Excessed During the

Inventory Reduction

As mentioned earlier, according to the IMS responsible for handling

congressional publications, the decisions concerning which publications

to excess were primarily based on the criteria of high printing and binding

Page 9 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

costs, large quantity in inventory, and projected sales. The IMS said that the

Senate history volumes met these criteria for disposal. According to the

IMS, he made his decision concerning the number of copies of the Senate

history to retain based on an estimate of future sales, using a 10-year

estimated life cycle for each of the four volumes. According to GPO’s

records, the 10-year life cycle was developed when the volumes were first

published, as a result of discussions involving the Senate Historian, House

Historian, Joint Committee on Printing staff, and staff from GPO’s

Documents Sales Service group.

GPO records show that, of the inventory that was excessed, 3,258 copies,

involving some of each of the four volumes written by Senator Byrd, were

disposed of. The 3,258 copies were about 10 percent of the total number

originally printed of the four volumes (32,386 at a total cost of $1,572,291).

The printing and binding cost of the 3,258 excessed copies was about

$83,000. The scrap value received for the shredded copies was about $600.

See table 1 for more detail.

Table 1: Scrap Value for Excessed

Copies of the Senate History Volumes

Volume

Number of

copies

excessed

Weight of each

copy

(in ounces)

Scrap value

per ounce

(in dollars)a

Scrap value of

copies

excessed

(in dollars)

I 1,188 125 $0.0017343 $257.54

II 918 99 0.0017343 157.62

III 660 98 0.0017343 112.17

IV 492 89 0.0017343 75.94

Total 3,258 $603.27

aThe scrap value contract was for $0.02775 per pound, which converts to $0.0017343 per ounce.

Source: GAO calculation based on GPO records.

According to GPO records, GPO retained 1,134 total copies of the Senate

history, which GPO inventory management staff kept in inventory based on

the estimated quantity needed to meet a sales demand calculated on what

they initially agreed with representatives from the Senate Historian’s

Office and others to be the life cycle for the publications. This life cycle

was to be 10 years from the dates the volumes were published; their

publication dates were 1988 (volume I), 1991 (volume II), 1994 (volume

III), and 1993 (volume IV).

Page 10 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
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Table 2 contains a breakdown of the disposition of the Senate history

volumes, including the number on hand as of July 1997.

Table 2: Inventory Transactions for the Senate History Volumes

Volume

Copies acquired

for sale from

2/89 to 9/96

Copies sold from

2/89 to 9/96

Other

distributionsa

Copies excessed

in 9/96

On hand as

of 9/96

On hand as

of 7/97b

I 4,397 2,356 504 1,188 349 211

II 2,454 720 504 918 312 224

III 1,000 167 0 660 173 91

IV 1,000 208 0 492 300 236

Total 8,851 3,451 1,008 3,258 1,134 762

aThese copies were given to the Senate Historian’s Office in October 1991.

bSixty copies of each of the volumes were distributed without charge to the U. S. Information

Agency at the request of the Senate Historian’s Office in June 1997 and thus are not reflected in

the inventory as of July 1997.

Source: GPO Office of the Comptroller and inventory control records.

A representative from GPO’s Congressional Printing Management Division

in Customer Services told us that, in June 1996, he told the IMS responsible

for handling congressional publications that the Senate Historian’s Office

wanted any excess Senate history volumes that GPO might have. The

responsible IMS said he knew that in the past the Senate Historian’s Office

had inquired about the status of the Senate history volumes on several

occasions and that, while he recalled the previous inquiries by the Senate

Historian’s Office, he did not recall being told in June 1996 that the Senate

Historian’s Office wanted any excess copies. He said that he proceeded

with the inventory reduction based on the Superintendent of Documents’

instructions to disregard policies and ignore politics. Inventory records

showed that he identified the copies as excess on September 6, 1996, and

September 9, 1996. Warehouse records show that the copies were removed

from the warehouse shelves for pickup by the scrap contractor on

September 10, 1996, and September 12, 1996.

All of the Superintendent of Documents staff we interviewed who were

involved in the September 1996 inventory reduction said that no specific

discussion of the Senate history volumes occurred during the

September 1996 reduction. The Public Printer said he did not know at the

time that the Senate history volumes were among those being excessed

and that, if he had, those books would not have been disposed of.

Page 11 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
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Actions Taken or in

Process Should Help

GPO Prevent a

Recurrence of

Inappropriate

Inventory Reduction

GPO has taken action or has actions in process that are aimed at helping to

prevent a recurrence of a situation in which excess publications are

disposed of without regard to established policies and procedures. While

GPO’s initial actions could have helped prevent a recurrence, they did not

appear to address all of the underlying causes of the problems associated

with the September 1996 major inventory reduction. During the course of

our review, we identified and brought to GPO’s attention several additional

actions that we believed would address those causes. As discussed below,

GPO officials agreed and took additional steps to prevent a recurrence.

Designating the Senate

History Volumes for

Indefinite Availability for

Sale

In May 6, 1997, and July 11, 1997, letters to Senator Byrd, the Public

Printer said that GPO had made an error in disposing of the Senate history

volumes and that all four volumes, because of their historical significance,

would remain in print and available through the sales program indefinitely.

According to the Superintendent of Documents, this action was carried

out through oral instructions to his staff in July 1997. In response to these

oral instructions, the IMS responsible for handling congressional

publications wrote a note saying not to dispose of these volumes without

top management’s approval and attached the note to the inventory control

cards he maintained for these volumes. At our recommendation, the

Superintendent of Documents put his oral instructions in writing in

August 1997.

In response to our inquiries, both the Public Printer and the

Superintendent said that some publications, such as the Constitution and

the Senate history volumes, should be kept indefinitely because of their

historical significance. The Superintendent said that GPO did not have a

systematic process for identifying or designating such publications but

that, in response to our recommendation, GPO would develop a formal

system for identifying publications that should remain in inventory

indefinitely. In addition, he said that GPO was already developing a new

inventory management system that would allow publications that are to be

held indefinitely to be designated as such once they have been identified.

The Superintendent of Documents also acknowledged that his lack of

awareness about the planned disposal of the Senate history volumes

contributed to their being excessed.

Page 12 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

Strengthening Policy on

Offering Excess

Publications to Issuing

Agencies

On July 22, 1997, the Superintendent of Documents sent a memorandum to

his staff stating that no further exceptions should be made to the current

policy on excess, obsolete, damaged, and destroyed information products

and that “excess stocks will be offered to the issuing agency.” On July 23,

1997, the Superintendent of Documents asked his staff to revise his formal

policy document dated May 28, 1984, to address the problems that arose in

connection with the September 1996 inventory reduction. According to the

Superintendent of Documents, this revised policy will provide that

excessed inventory should be charged to surplus publications expense

when it is determined to be excess. The excessed inventory is then to be

held in the warehouse for a reasonable period while issuing agencies are

contacted to see if they want the excess publications. Under the

Superintendent’s revised procedures, the policy of offering issuing

agencies excess copies before their disposal cannot be waived.

We pointed out that we saw no written statement in GPO’s policies,

procedures, or guidance that specifically said that excessed inventory

does not have to be physically removed from GPO’s warehouse before it

can be charged to surplus publications expense. Both the Superintendent

of Documents and the Comptroller agreed that the lack of such a written

statement may have contributed to the misunderstanding that took place

in 1996. In August 1997, GPO’s Comptroller prepared such a statement.

Another action GPO has had in process for some time that could also help

prevent a recurrence of the problems of the September 1996 reduction is

the development of a new Integrated Processing System. The

Superintendent of Documents expects this new system, which GPO plans to

implement in October 1997, to provide his office with more flexibility in

tracking inventory and better information for making decisions to excess

publications. According to the Superintendent of Documents, the new

system will (1) allow GPO to designate inventory as excess without

physically relocating it in the warehouse, and (2) include a comment box

where the IMS can indicate that a publication is not to be excessed or make

other appropriate notations about its disposition. Until the new system is

implemented, notations concerning holding copies indefinitely must be

made on records that are maintained manually.

Finally, another dilemma GPO has faced in disposing of excess inventory is

the lack of authority to donate excess publications to schools or similar

institutions. Under existing law and policy, GPO’s current options for

disposing of excess publications are to offer them to issuing agencies at no

cost or to dispose of them as scrap. GPO is also precluded by statute and

Page 13 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

regulation from offering publications to the public at discount prices

except to those who buy 100 or more copies of the same publication or to

book dealers who agree to resell the books at GPO’s prices—in which case,

GPO can only offer a maximum discount of 25 percent. To address this

problem, in May 1997, as part of its recommended revision of title 44 of the

U. S. Code, GPO forwarded a proposal to the Joint Committee on Printing

that would authorize the donation of excess publications to schools or

similar institutions if the copies are not wanted by the issuing agency.

Aligning GPO’s Procedure

for Considering Holding

Costs of Publications With

Its Policy

In a May 6, 1997, letter to Senator Byrd, the Public Printer said that, on the

basis of a study GPO had done, it was more cost-effective to maintain an

adequate inventory of sales publications based on their projected life cycle

and to reprint if necessary, than to hold excess copies of publications in

inventory. According to the Superintendent of Documents, who drafted

the May 6 letter for the Public Printer, the study cited in the letter referred

to data supplied by the GPO’s Comptroller in 1996. These data showed that,

overall, GPO’s inventory of excess publications was growing and was

contributing to increasing charges to surplus publications expense. These

increased charges were, in turn, contributing to a worsening financial

situation for the sales program.

To help remedy this problem, according to the Superintendent of

Documents, the Comptroller recommended that the Superintendent

identify as much excess inventory as possible in fiscal year 1996 to

improve the sales program’s long-term financial situation. According to the

Superintendent of Documents, the statement in the May 6 letter pertained

to the typical publication, which he said has a printing and binding cost of

about $2 per copy; it did not specifically pertain to the Senate history

volumes, which had a printing and binding cost of $19 to $35 per copy.

In this regard, we noted that the printing and binding cost of the 3,258

copies of the Senate history volumes disposed of was about $83,000, and

that GPO’s estimated annual storage costs attributable to these copies was

about $2,500. These figures can be compared to GPO’s estimated reprinting

cost of about $210,000 should GPO reprint the copies disposed of, which it

has agreed to do if necessary.

During our review of GPO’s inventory management records, we also noted

that Form 3880, which IMS staff use to make recommendations and

supervisory personnel use to review actions on obsolete or excess

inventory, does not provide for inclusion of data on storage or holding

Page 14 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

costs for publications. This omission is inconsistent with a memorandum,

dated January 4, 1985, from the Chief, Sales Management Division, to

Documents Control Branch staff, which directed that reasonable life

cycles should be consistent with economic analysis of the following

factors: expected trend, reprint costs, expected revision date, and holding

costs. The memorandum also stated that, when reviewing records to

identify excess or consider extension of the life cycle, the following

factors should be considered: continued marketability, projected revenue,

and estimated holding costs.

We discussed this inconsistency with the Superintendent of Documents in

August 1997. He said storage or holding costs are usually not significant,

but he recognized that they should be considered in making decisions on

excess inventory. He agreed to modify Form 3880 to incorporate

consideration of such costs.

Conclusion To achieve its financial objective, GPO did not have to disregard policy and

procedures for notifying the issuing agencies of excess publications.

Because of the erroneous belief of the Superintendent of Documents, who

heads GPO’s sales program, that GPO had to physically remove excess

publications from the GPO warehouse by September 30, 1996, in order to

record them as an expense for fiscal year 1996, and because of his express

instruction to disregard policies and procedures, GPO staff disposed of

about 2,100 different publications without first contacting the issuing

agencies of those publications. As a result, 3,258 copies of the Senate

history were destroyed, even though the Senate Historian’s Office had told

a GPO representative that it wanted any excess copies. GPO has taken or

plans to take actions that, if effectively implemented, should prevent this

situation from recurring.

We made various recommendations during the course of our work that

GPO agreed to and either implemented the corrective action or is in the

process of doing so. Thus, we are making no further recommendations.

Agency Comments On September 5, 1997, we provided the Public Printer with a draft of this

report for comment. We received his written comments, included in their

entirety in appendix IV, on September 10, 1997. The Public Printer said

that the report fairly represents the events as they occurred during the

September 1996 inventory reduction. He also said that actions have been

and are being taken to ensure that no sales publications will be disposed

Page 15 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
B-277904 

of in the future without strict adherence to applicable GPO policies and

procedures.

We are sending copies of this report to the Public Printer of the

Government Printing Office and the Chairman and the Vice Chairman of

the Joint Committee on Printing. We will make copies available to others

upon request. Major contributors to this report are listed in appendix V. If

you have any questions concerning this report, please call me on

(202) 512-4232.

Bernard L. Ungar

Director, Government Business

 Operations Issues

Page 16 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Page 17 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Contents

Letter 1

Appendix I 

Objectives, Scope,

and Methodology

20

Appendix II 

Government Printing

Office Organization

Chart

22

Appendix III 

Examples of

Publications GPO

Disposed of in

September 1996

24

Appendix IV 

Comments From the

Government Printing

Office

25

Appendix V 

Major Contributors to

This Report

26

Tables Table 1: Scrap Value for Excessed Copies of the Senate History

Volumes

10

Table 2: Inventory Transactions for the Senate History Volumes 11

Abbreviations

GPO Government Printing Office

IMS Inventory Management Specialist

Page 18 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Page 19 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix I 

Objectives, Scope, and Methodology

As agreed with your offices, our objectives were to determine the facts

surrounding the September 1996 inventory reduction; whether it followed

existing policies and procedures; and the fate of the 3,258 copies of The

Senate 1789-1989, a four-volume set written by Senator Byrd, that were

destroyed as part of that reduction.

In order to obtain information on GPO’s sales program and the inventory

reduction held in September 1996, we reviewed pertinent documentation,

such as GPO’s inventory control records, policies and procedures,

memoranda, and financial records and reports. We interviewed the Public

Printer, the Superintendent of Documents and his staff who were involved

in the reduction, the Comptroller and his staff who are responsible for the

financial records, and staff in the Congressional Printing and Management

Division who serve as the liaison with the Senate Historian’s Office for

Senate publications, including Senator Byrd’s books. We visited GPO’s

Laurel, Maryland, warehouse where excessed publications are disposed of;

reviewed its inventory disposition records; and interviewed a

representative of GPO’s contractor that had picked up GPO’s excessed

publications from its Laurel warehouse in September 1996. In addition, we

reviewed GPO’s authority to donate surplus books. We coordinated our

review with GPO’s Office of Inspector General.

The representative from GPO’s contractor told us that his company did not

maintain any records that would specifically show that the 3,258 Senate

history copies were shredded. Therefore, we had to rely on GPO’s records

and interviews with GPO staff and the contractor’s representative to

determine what happened to the 3,258 Senate history copies that were

excessed. Further, we did not verify GPO’s computerized inventory or

financial records or do actual counts of the remaining stock inventory of

the Senate history volumes at the Laurel warehouse.

Page 20 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix I 

Objectives, Scope, and Methodology

Page 21 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix II 

Government Printing Office Organization

Chart

Equal Employment

Opportunity and

Labor/Employee

Relations Staff

General

Counsel

Adminstrative

Law Judge

A

B

Customer Services Office of Administration

Departmental

Account

Representative

Division

Congressional

Printing

Management

Division

Engineering

Service

Occupational

Health and

Environmental

Services

Institute for

Federal

Printing and

Publishing

Typography

and Design

Division

Office of

Comptroller

Office of

Information

Resources

Management

Office of

Planning

Office of

Personnel

Office of

Administrative

Support

Page 22 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix II 

Government Printing Office Organization

Chart

IRM Policy and

Coordination

Staff

Office of

Budget

Office of

Congressional,

Legislative, and

Public Affairs

Policy

Coordination

Staff

Inspector

General

A

Public Printer

Deputy Public

Printer

Quality

Control and

Technical

Department

Printing

Procurement

Department

Materials

Management

Service

B

Library

Programs

Service

Office of

Electronic

Information

Dissemination

Office of

Marketing

Technical

Support

Group

Superintendent of Documents

Information

Dissemination

Policy

Documents

Sales

Service

Production

Department

Production Services

Page 23 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix III 

Examples of Publications GPO Disposed of

in September 1996

In addition to the Senate history volumes, we selected the following

examples of excessed publications to provide a mix of publications from

both the legislative and executive branches and, in some cases, to reflect

publications having high dollar values.

Biographical Directory of the United States Congress, 1774-1989,

 Bicentennial Edition

Black Americans in Congress

CPH3: 1990 Census Tract Maps, Washington, D.C.-MD-VA

Creating a Government That Works Better and Costs Less

Dictionary of Occupational Titles, Revised 4th Edition

Foreign Relations of the U.S. 1961-1963, Vol.3 Vietnam, Jan. to Aug. 1963

National Performance Review - Department of Defense

Our Flag

Senate Historical Almanac

Soviet Union: Area Handbook

Standard Industrial Classification Manual, 1987

The Coast Guard and the Greenland Patrol

The Senate 1789-1989, Addresses on the History of the United States

 Senate, Volume One, Bicentennial Edition

The Senate 1789-1989, Addresses on the History of the United States

 Senate, Volume Two, Bicentennial Edition

The Senate 1789-1989, Classic Speeches 1830-1993, Volume Three,

 Bicentennial Edition

The Senate 1789-1989, Historical Statistics 1789-1992, Volume Four,

 Bicentennial Edition

The U.S. Capitol - A Brief Architectural History

Understanding Federal Training and Employment Programs

U.S. Government Purchasing and Sales Directory, Revised 1994

Page 24 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix IV 

Comments From the Government Printing

Office

Page 25 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
Appendix V 

Major Contributors to This Report

General Government

Division

John S. Baldwin, Sr., Assistant Director

Michael W. Jarvis, Evaluator-in-Charge

Kiki Theodoropoulos, Senior Evaluator (Communications Analyst)

Accounting and

Information

Management Division

Robert W. Gramling, Director, Corporate Audits and Standards

Office of General

Counsel

Victor B. Goddard, Senior Attorney

(240268) Page 26 GAO/GGD-97-177 GPO’s September 1996 Major Inventory Reduction
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