With respect to the interagency furniture review, we submitted our draft report for comment to management on February 13, and we received a response on a priority basis on February 22. Since the response is quite detailed and complicated more time than usual has been required to finalize our report. However, as you requested, I will be glad to highlight the findings, recognizing the final audit report will present more fully not only our findings, but management's responses to these findings as well. The final report will be supplied to the committee as soon as it is available.

Our first finding is that the need for new furniture purchased was often not adequatedly documented. Of fiscal year 1979 obligations for furniture totaling $991,000, we reviewed 254 requisitions totaling $876,000 and found that 177 requisitions for $339,000 had no justifiable documentation. Management officals agreed with the need for adequate documentation and on December 4, 1979, issued strong instructions to require justifiable documentation on all future requisitions.

Another finding deals with year-end spending. $514,000 or 52 percent of the $991,000 of furniture obligations occurred in September. $398,000 of the September obligations was for "systems furniture" for which feasibility studies had been started in May and June and two out of the three required had been completed in September. "Systems furniture" is the furniture associated with open space layouts and requires specific cost-benefit justification. Accepting management's explanation that "systems furniture" could not have been obligated before September, we still are concerned that $116,000, or 23 percent of September purchases were for nonsystems furniture. We are recommending that DOL agencies plan furniture acquisitions so that unjustified year-end spending will be avoided.

Our examination of the DOL warehouse showed that almost two thousand property items were awaiting disposition action-rehabilitating, scrapping, surplusing or selling. Also, some furniture already declared excess to GSA was still being stored in the DOL warehouse. While we did not ascertain the length of time all the property was awaiting disposition action, we were informed that some items had been in the warehouse over 18 months. We were shown some items which, according to warehouse personnel, had been awaiting GSA disposition for over a year. Some DOL agencies with property in excess of their needs were storing it in hallways and offices because at the time of the audit the agency excess items had not been scheduled for turn-in to the warehouse. Although we were informed of recent action to rehabilitate an accumulation of wooden furniture, we are still concerned that delays in disposition determinations can lead to unnecessary new furniture acquisition, particularly since at the time of our audit listings of warehouse property were not available. We are also commenting on the need for quicker action by GSA to pick up surplus furniture from the DOL warehouse. We are making several recommendations to correct these problems.

It should also be noted that during fiscal year 1979, four agencies in the Department were authorized by GSA to procure systems furniture for 621 persons at a cost of $398,000. Since most of the systems furniture is being acquired for existing staff, it was suggested to us by DOL management officials that GSA should consider requiring a control program to assure that conventional furniture, made excess by systems furniture acquisition, be fully utilized and not discarded. We think this is a good suggestion, and we intend to follow up on the utilization of the replaced conventional furniture in DOL.

Based upon our review of property management in the Department of Labor, we think that the Federal Property Management Regulations (FPMR's) would provide better guidance to Federal agencies, and would reduce the potential for mismanage ment of property, if changes were made in the following areas:

1. More specific criteria or guidance for determining the stock level or pool of furniture that can be kept for future use; and

2. More specific instructions on how often to conduct surveys in order to fully utilize excess property, and a requirement for survey documentation.

When we observed the Department's pool or reserve of furniture, we noted considerable quantities of certain items-approximately 125 desks, 76 file cabinets and 325 chairs. Departmental officials could provide only a very general criteria or justification for the quantity of furniture maintained in the pools. By providing agencies with criteria or standards, GSA would have greater assurance that excessive furniture is not being stockpiled for future use.

While the FPMR requires agencies to continuously survey property under its control, no specific action by the agencies is required. The FPMR's should be revised to require some specific action on how often to survey and what records should be maintained. Specific provisions in this area possibly could have prevented delays in determining excess property mentioned earlier.

Mr. Chairman, this concludes my statement which has summarized the findings of our review. We will have our audit report ready for issuance very soon. I will try to answer any questions you may have at this time.

Senator CHILES. Our next witness will be Mr. Thomas Morris, the Commissioner of the Federal Supply Service at the General Services Administration.

Would you raise your right hand? Do you agree that the testimony you are about to give before the subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God? Mr. MORRIS. I do.

Mr. MILLER. I do.

Mr. MCCARTHY. I do.

Senator CHILES. Mr. Morris, we will place your statement in full in the record following your testimony. It appears to be a very large statement; if you would like to brief that quickly for us, we will have time to get in questions.

Mr. MORRIS. I would be very pleased to, Mr. Chairman.

TESTIMONY OF THOMAS D. MORRIS, COMMISSIONER, FEDERAL SUPPLY SERVICE, ACCOMPANIED BY JACK MILLER, ASSISTANT GENERAL COUNSEL, AND HERB MCCARTHY, DEPUTY COMMISSIONER

Mr. MORRIS. Mr. Chairman, I have been aboard, as you know, in my current job since January 2, and I have spent about half my time since then on this one subject. It is about 6 percent of my responsibility, but I think it is teaching us lessons that can be applied essentially to 100 percent.

We are responsible for about $3.5 million of Federal purchases. The items are purchased by Federal agencies through schedules and contracts of all kinds. My personal goal is to set a target of saving each year, a very substantial sum of money through better buying and better use of those products.

I want to thank you for the effort that you have caused us to apply. We would like to summarize two things quickly and then answer your questions.

First, what has happened since last October-our goal was to put a moratorium on and learn how to better manage GSA activities in the furniture field.

Second, the action plan we inaugurated on February 27, with the approval of OMB Director McIntyre.

First as to what has happened since last October-we virtually terminated issuing all stocks from our warehouses starting in October, for a period of 4 months. This little chart which I will submit for the record shows the first quarter of this fiscal year compared to the first quarter of last fiscal year; we issued only about $765,000 after the moratorium was applied this year, versus $12 million last year. Thus the moratorium during that period was a fully effective cessation of orders with limited exceptions that we felt were desirable.

Senator CHILES. Without objection, those charts will be admitted to the record. [Charts follow:]