Mr. COLLETTI. The quality approved manufacturer's program is an agreement that was established between the Quality Control Director of the respective divisions of the agency with the manufacturer, and the agreement is established after conditions have been satisfied where the manufacturer's quality control system is determined acceptable to that particular Quality Control Division, allowing that manufacturer to make shipments on his own certification without requesting a visit or inspection by the region 2 quality control inspectors for each and every shipment.

Senator CHILES. So that would allow them to sort of ship without having a GSA inspector have to look at the desk first.

You are saying from what you saw of those desks, they shouldn't have been on the quality approved manufacturer's program? Mr. COLLETTI. That's correct.

Senator CHILES. Tell us about your inspection visits to the GSA supply depots at the various regions throughout the country and what you found during those visits.

Mr. COLLETTI. Our first two inspections were made at the Fort Worth, Tex., depot, and the Stockton, Calif., depot, respectively. At these two depots we inspected only furniture manufactured at Art Metal. At the other depots that we visited we expanded our inspection to include furniture made by other competitors of Art Metal for comparison purposes.1

For Art Metal to be absolved of fault in the unsatisfactory conditions of metal furniture received at GSA supply depots, the method of damage, according to Art Metal, would have to be in one of the following areas:

One: Transit damage occurring between factory and the depot.
Two: Mishandling in unloading at the depot.

Three: Improper storage conditions.

Four: Mishandling when reloading for shipment to using agencies; and

Five: Transit damage in shipment to the user.

While conducting the inspection at the depots, we endeavored to do a surveillance investigation to see if any of these conditions existed. In the process of unloading metal furniture, the procedure is to set aside all visibly damaged cartons for settlement between the shipper and the carrier. We observed no evidence of mishandling in unloading procedures at any location.

We did observe improper storage in two isolated incidents in two different depots. In one instance a pallet was overloaded with one carton too many of five-drawer filing cabinets by Art Metal. When the band restraining the load was cut, the boxed cabinet fell on its side. It was set aside to be checked by personnel.

In the other instance, it was observed that at one location in the warehouse, desks were being stacked six high, which caused slight bulging of the cartons. These desks were made by Art Metal. The depot manager arranged to have the stock height reduced. These must have been considered isolated infractions.

We observed only one instance of possible mishandling when reloading.

1 Complete report is included in appendix.

At every depot visited, we invited comments from the supply distribution and quality control division personnel. The scope of comments came from all levels of personnel, ranging from the Regional Federal Supply Service Commissioner to depot inspectors and warehousemen. The consensus was that most manufacturers do an adequate job. The greatest source of problems lay with Art Metal products. This was attributed to improper car loading and underpacking individual items so that they are not properly afforded adequate protection. The inadequate packing was borne out repeatedly in our inspections.

Senator CHILES. Mr. Costello, tell me something about the items that you inspected at the depots; what did you find at the depots? Mr. COSTELLO. Mr. Chairman, during our inspection of metal furniture items for all the depots visited, we inspected a total of 603 units manufactured by the companies, which included Art Metal. For the 17 companies combined, we found 278 units out of the 603 inspected, or 46 percent, to be suitable for issue; 121 units or 20 percent were unsuitable for issue; and 204 units or 34 percent were undesirable but issuable. Of the 603 units inspected, we found 777 total defects.

Now, pertaining to Art Metal, for all depots visited we inspected 303 units manufactured by Art Metal. Only 49 of the 303, or 16 percent, were suitable for issue as found; 107, or 35 percent, were unsuitable for issue; and 147 units, or 49 percent, were undesirable but issuable. Of the 303 Art Metal units inspected, we found 654 defects. This is 84 percent of the total of 777 defects for the total of the 17 companies. Of all the items inspected, Art Metal supplied 50.2 percent.

Of those units deemed unsuitable, Art Metal is responsible for 107 of the 121 units, or 88 percent of the total.

A sample of 12 units was taken from 111 units which were reworked during the week previous to our visit by Art Metal personnel of the Auburn, Wash., depot. Out of the sample of 12 units reworked by Art Metal, 11 were found to contain defects for an average of 92 percent.

Products from 16 other companies totaled 300 units or 49.8 percent of the total of all the units examined. A total of 123 defects was found in the 300 units, or 18 percent of all defects found. The other 16 suppliers were responsible for 14 unsuitable units or 12 percent of the total found.

Of the 15 other suppliers, four, namely Jetco, Inc., Federal Prison Industries in Marion, Ill., Medart & Harvard Interiors, supplied 96 units with 95 defects, or 77 percent of the total of the 123 remaining defects attributable to the 16 other suppliers. While the units supplied by these companies contained defects, the defects did not occur with the frequency or severity of those found in Art Metal products. Most units were considered undesirable rather than unsuitable.

Senator CHILES. You are saying that the furniture manufactured by Art Metal contained far more defects than their 16 competitors and that Art Metal's defects occurred with more frequency and severity than the other 16 companies?

Mr. COSTELLO. That's correct.

Senator CHILES. What kind of defects did you find in Art Metal's furniture that you didn't find in the other companies'?

Mr. COLLETTI. We consistently found the following defects in Art Metal's furniture:

Under the category of paint and finish, we found bare or dead paint areas, poor paint touchups, metal painted over foreign matter. We also found a high percentage of filing cabinets, case interiors, already rusted for the lack of adequate paint coverage.

Under the spot welding category we found excessive spot weld flash and splatters that weren't removed. Some weld splatters had edges sharp enough to cause injury. Under the cabinet case we found interior and exterior members of the cabinet case containing exposed, sharp, raw, unfinished edges with heavy burrs which also can cause injury. Under construction we found bubble tops, loose binding strips on desks, locks broken, keys missing, inadequate fit of the cabinet top to the body on filing cabinets. Where the chairs had adjustable means, some chairs would not elevate, and loose upholstery and buckles which should have been drawn tighter; filing cabinets with drawers out of alinement. Drawers were binding, not tracking properly. Keys were inoperative. On the typewriter desks some of the drawers were distorted and sprung. Desk legs not properly mounted. Vertical filing cabinets with lancets not securing drawers in position. Missing rubber bumpers. Under the category of plating we found interior hardware with rusted screw heads, lock levers, chrome plated suspensions were coated with rust. We also found shelves not properly patched, loose drawer dividers, and chair seat cushions badly indented by the edge of corrugated packing material.

Senator CHILES. Mr. Colletti, I think you have given me the picture. Art Metal had 52 percent of the furniture that you inspected, as I understand what your testimony is, and they had 84 percent of the defects that you found; is that correct?

Mr. COLLETTI. Yes.

Senator CHILES. Is there anything equivalent in commercial situations-in other words, could Art Metal be a supplier to a Sears, Roebuck or Montgomery Ward with that kind of defect level?

Mr. COLLETTI. In my determination, Mr. Chairman, in a commercial activity, their quality control people would not accept the quality level of merchandise that is offered by Art Metal to the General Services Administration.

Senator CHILES. I thank you both for your extensive work and what you did for the subcommittee, and for traveling around the country and making all these inspections for us. Thank you.

Senator DANFORTH. If you look at any piece of furniture with a very critical eye you will find something wrong with it. Take this ameplate for example. There is a little scratch on the front of it. There is a little bump on the top. It is very easy to be hypercritical of, I guess, anybody's piece of workmanship. Are you being hypercrital! Are you just looking for things to criticize, or are there defects the kind that any average person would take a look at and say, this very, very shoddy?

Mr. COSTELLO. Could I answer, Senator Danforth?

In the beginning, as we began this warehouse inspection, we determined to look at it from the user's standpoint, not by comparing it paragraph by paragraph or line by line with the specification. And so we categorized the furniture into three basic categories from the ser's standpoint, and maybe as I define this it will bring illumination on this.

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That which we called suitable was acceptable as found. In other words, as we opened the carton the piece of furniture would be ready to set up.

Undesirable would be having visual defects adversely affecting the appearance of the unit. In other words, scratches in the paint, dents and dings which make it unsightly. Of course, in offices where filing cabinets are set up in lines and rows this shows up very readily.

And then that category which was determined as unsuitable was having physical deformities which inhibits or prohibits the intended function of the item itself. In other words, the drawers would not open, the typewriter desk well drawer would be askew so that it would not properly open or close, and things of this sort, or having safety defects which would result in physical injury to the user, such as sharp edges and sharp burs and things of this type.

So to answer your question, sir, I would not say that we were hypercritical.

Senator DANFORTH. I don't know if you have an opinion on this, or the basis for an opinion on it, but what is the cause for such defects in workmanship? Do you have an opinion as to whether it is just maybe one or two employees are not very able in doing their work or whether it is willful and wanton activity, or whether it is trying to pull a fast one or cut corners or obviously not meeting specifications, or just occasional cases of carelessness? Do you have an opinion as to what the cause would be?

Mr. COSTELLO. Well, sir, I can offer that which was given to us by Art Metal, which is that they have a difficult time maintaining a crew of skilled, qualified people on their payroll constantly to produce a top quality item, and that with this personnel situation being what it is that it is difficult for them to get top quality workmanship, and so that would be a factor to consider.

The other could possibly be expediency. They have tremendously high production schedules to meet, and they employ every means as far as manpower and temporary tooling and so forth to get it done, and possibly the reason is that they are not-and maybe it is justifiedI couldn't say, because I didn't spend that much time in the plant, as to whether or not they took proper time to debug every operation in order to get a top quality product.

Senator DANFORTH. Do you know whether or not the products that they are producing are subject to some final inspection before leaving the plant?

Mr. COSTELLO. Oh, yes.

Senator DANFORTH. Who inspects them?

Mr. COSTELLO. Art Metal has an inspection staff who inspects the products in process as they come down the assembly line, and they are all equipped with crayon-type china markers, they call them in the trade, for marking visual defects and for correcting functional defects, maybe a crooked leg or something of that sort. And then to all intents and purposes Art Metal considers their inspection to be 100 percent. In other words, every unit is thoroughly inspected.

In the quality approved manufacturer's program, under which many of the items are manufactured at Art Metal, it is the responsibility of the GSA quality assurance personnel to conduct what is

referred to in our system as a quality assurance review where periodically they will spot check a lot of material prior to shipment, draw a statistical sample and inspect it to the specification requirements.

Senator DANFORTH. Had these products previously passed inspections by both Art Metal and the GSA?

Mr. COSTELLO. Well, sir, if they were inspected by GSA they bore no evidence, which would be a stamp. We have a rubber stamp which identifies a unit having been inspected by GSA. I don't recall, honestly, in any of the inspections that we made that we did find stamped items. Now, this is not to say that it couldn't have been checked by a GSA quality assurance person and they just omitted the stamping process, but when it reaches the warehouse and is ready for distribution to the user, whether it is inspected at source by GSA personnel or whether it is inspected by Art Metal personnel under the quality assurance manufacturer's program, it is deemed to have been adequately inspected.

Senator DANFORTH. That is where you saw it?

Mr. COSTELLO. At the warehouse, yes.

Senator DANFORTH. Does the fact that it did not bear a GSA stamp, does that indicate a departure from GSA procedures?

Mr. COSTELLO. No. They would not be required normally to stamp. That sometimes is a prerogative used by the individual inspector to indicate that he has performed this function.

Senator DANFORTH. But if the products had not actually been inspected by GSA before you saw them, would that be a departure from normal procedures?

Mr. COSTELLO. Well, sir, there are two programs, or two categories in the group of products furnished by GSA which are being shipped. One of these is and the bulk, I might say of the items being shipped by Art Metal, that is percentagewise, are being shipped under the quality approved manufacturer's program. Certain items, such as lateral files and the chairs, the rotary chairs which are manufactured, double shell rotary chairs, are being inspected at source or they were being, I should say, at the time we were in the plant-they were being inspected at the source by GSA region 2 quality control personnel.

Senator DANFORTH. They were being inspected?

Mr. COSTELLO. Yes.

Senator DANFORTH. Do you know that for a fact?

Mr. COSTELLO. We observed them doing it, yes.

Senator DANFORTH. And the items that you saw that you found to be unsuitable had actually been inspected by GSA personnel on the plantsite?

Mr. COSTELLO. Are you referring now to the warehouse items? Senator DANFORTH. To the items that were the subject of the statistical report you just gave.

Mr. COSTELLO. As I say, the bulk of those items were shipped under the quality approved manufacturer's program. The lateral files and the double shell chairs we found in the warehouse were inspected. Senator DANFORTH. Did you find them to be unsuitable?

Mr. COSTELLO. We found the double shell chairs to be an acceptable product without defect in all of the depots that we performed inspections.