PROVISION LIMITING PURCHASE PRICE OF AUTOMOBILES Mr. BUCHANAN. What is the meaning of this other omission? Mr. JUMP. This other provision is omitted because, as I have been advised verbally by the Bureau of the Budget, there is submitted in the Treasury-Post Office chapter of the Budget a general provision covering either these features or some modification of them to apply to the Government as a whole, thereby rendering the language unnecessary in the different bills. Mr. BUCHANAN. That would be new legislation, would it not? Mr. JUMP. I do not think it would; it is a limitation on expenditures. Mr. BUCHANAN. But here the limitation applies only to the bill under consideration and not to other bills. Mr. JUMP. I will have to stand corrected on that, then. The next language change is the omission of the amendment put on this bill on the floor of the House, a similar amendment being added later to each of the other bills as they were reported out by the Committee on Appropriations, limiting the average price, and so forth, which could be paid for various types of passenger vehicles. The omission here is for the same reason as in the previous case. It is our understanding that the proviso has been covered by a general submission in the Budget, in the Treasury-Post Office chapter, to apply to all of the departments. I believe that covers all of the changes. We would be glad to give you any other information you want on passenger-carrying vehicles. GOVERNMENT OPERATION OF AUTOMOBILES MORE ECONOMICAL THAN HIRING OF TRANSPORTATION Mr. BUCHANAN. Let us have something in the way of a justification for these automobiles. Mr. JUMP. I think Mr. Ashley probably understands what you have in mind and he will make a statement on that in as much detail as you may require. Mr. BUCHANAN. I want to know whether or not there is any economy in authorizing you fellows to exchange old automobiles and to buy new ones. Mr. ASHLEY. We think there is a distinct economy in every case where we ask for an authorization to make such purchases. In the first place, we do not ask for special transportation in the form of Government-owned passenger-carrying vehicles unless we find that the ordinary means of conveyance open to the public either do not exist or are inadequate. That is the first consideration. The second consideration is how much of that special transportation we will require in a year. Mr. BUCHANAN. In a year and in the different places where we are locating the automobiles? Mr. ASHLEY. I am speaking now of the considerations in each instance. The second consideration is how much of that special type of transportation we will need. If the requirement runs up to somewhere in the neighborhood of 6,000, 7,000, or 8,000 miles a year, we know definitely that we can own, operate, and dispose of a Government-owned vehicle at about 1 cent a mile less than it would cost us to get that same transportation by paying the employee to operate his own car, even on the 5 cent rate. Mr. BUCHANAN. How about getting private conveyances? Mr. ASHLEY. To rent special conveyances commercially would multiply the cost probably by three, because private conveyances rent at from 12 to 15 cents a mile, whereas we authorize about 5 cents a mile to our own people. The 5 cents a mile, of course, is not the limit authorized by Congress, which is 7 cents; but the general arrangement in the department is to cut such allowances to 5 cents or lower, and not to permit an allowance of more than 5 cents. DISCOUNT ON PURCHASES OF AUTOMOBILES AND AUTOMOBILE ACCESSORIES, GAS, OIL, ETC. Mr. BUCHANAN. Do you mean to tell this committee it is cheaper to buy an automobile and pay the expenses of gas, oil, and upkeep to secure the necessary transportation, than it is to pay your employee 5 cents a mile to use his own car? Mr. ASHLEY. Yes; and it is only in those cases where the mileage is sufficient to make this true that we request authority to purchase a passenger-carrying vehicle. The reason why we can operate a car more cheaply than the private individual can operate it is, first, that in the purchase of the car we get a very large Government discount as a fleet owner. That discount runs up to as high, on the 18 to 20 per cent. Mr. BUCHANAN. On the value of the car? average, as Mr. BUCHANAN. Is that by reason of getting them by the wholesale? Mr. ASHLEY. That is because we are what the dealers call "fleet" owners; the Government as a whole buys many cars and they give us that advantage over the general public purchasing cars here and there, one at a time. Mr. JUMP. And then competition enters into it. Mr. BUCHANAN. In other words, several automobile manufacturers put in bids? Mr. ASHLEY. Always. Mr. JUMP. And on Government purchases, it is surprising to see the prices they will bid for this business. Mr. ASHLEY. In addition to that, if we buy three cars at a time, whether of the same type or of several types, by buying three cars at a time, which is a carload, we can get the benefit of the carload rate for Government shipments, and when we get out into the Western country these rates drop to as low as 50 per cent of the commercial rates. That is our second saving. Then we have a third saving when we come to buy tires and tubes, because we buy those commodities through the General Supply Committee at for from 40 to 50 per cent of the retail prices. That is a very large item, of course, in the operating expense of a car. Then when we come to the gasoline and oil that we use in operating the cars, we pay no State tax. And, as Mr. Jump has pointed out, there again we have competition. Mr. JUMP. That tax amounts to 5 or 6 cents a gallon in some of the States. It is an important factor. Mr. BUCHANAN. Your employees would have to pay those taxes, would they not? Mr. JUMP. Yes; they do have to pay them on their own cars. Then, on the gasoline, consider the Government price, where you have contracts for the purchase of gasoline for the Government cars, joint procurements, you effect a big economy on the price you pay for gasoline and oil. Mr. ASHLEY. We get gasoline at prices several cents lowerperhaps, 2 cents lower, say, on the average-than the retail purchaser would have to pay for it at the filling station, where an individual, of course, pays all of the taxes, both Federal and State. Mr. BUCHANAN. How about oil? Mr. ASHLEY. The same applies to oil. We also take advantage of the Navy contract in the purchase of our oil, wherever practicable. Mr. JUMP. It is the same with oil, except the reduction is much greater. Where you have a Government or any other bulk contract for oil it makes the price for oil seem unbelievable to the man accustomed to driving in to a filling station and paying for oil at 30 cents a quart. Mr. ASHLEY. We can buy oil for about 30 cents a gallon. Mr. ASHLEY. Yes. Mr. BUCHANAN. What per cent of reduction on oil does the Government get? Mr. ASHLEY. As I have already said, we get, in the bid prices, anywhere from 25 cents to 35 cents and 40 cents a gallon; whereas you would be paying 25 cents a quart for that same oil if you had it put into your car at the filling station. COST PER MILE OF GOVERNMENT-OPERATED AUTOMOBILES Now all of these economies together make it possible for the Government to operate a Government-owned car at approximately 4 cents a mile throughout the life of the car. Mr. BUCHANAN. In that 4 cents a mile, is the value of the car, the purchase price of the car, included? Mr. ASHLEY. Everything is included from the purchase price of the car to the turn-in value we get for the worn-out car when we buy a new car to replace it. Now during the life of the car, it is customary, in computing costs, to assume a depreciation charge of a cent to a cent and a half a mile. I think the variation here is the reason why the figures vary which have been given you by the several bureaus, as they have come before you here. They have assumed in some cases $150 a year depreciation, say, or they may have assumed a cent-a-mile depreciation; whereas other bureaus, under different use conditions, would assume a cent-and-a-half-a-mile depreciation. Mr. BUCHANAN. In other words, the estimate of depreciation in the car has been different in the different bureaus? Mr. ASHLEY. Yes; and these slight differences, I think, reconcile the statements of the various bureaus. It would be a fair statement that the department, as a whole, operates its cars for somewhere in the neighborhood of 4 cents a mile, depreciation included. Mr. BUCHANAN. Some one testified here to 3.3 a mile up to 3.5 cents a mile. I do not know whether he had depreciation figured in that or not. Mr. ASHLEY. I talked with Captain Curtiss, of the Bureau of Public Roads, about that statement when it was made, and we both decided that that was due to the fact that the witness had assumed a lower rate of depreciation than we felt would be a fair rate for the department, as a whole, although it might be entirely applicable under the conditions of operation in a particular bureau. Mr. BUCHANAN. I understand you, then, to say that you can operate your cars, if Government owned, at 4 cents a mile?" Mr. ASHLEY. If Government owned; yes, sir. AVERAGE MILEAGE AND AVERAGE SAVINGS ESTIMATED FOR GOVERNMENT OWNED AUTOMOBILES Mr. BUCHANAN. Have you any estimate of how many miles, on the average, each car will travel in the department in a year? I want to get at what the saving would be. If you can operate at 4 cents a mile and you have to pay for the cheapest transportation you get 5 cents a mile to employees in your department who own cars, then the saving would be a cent a mile. Mr. ASHLEY. We would save a cent a mile. Mr. BUCHANAN. Then how many miles do you travel? Mr. BUCHANAN. If you do not have them now, put them in the record when you get your testimony. Mr. ASHLEY. I can give you the figures now. If you will recall, last year Congress asked the Bureau of Efficiency to collect and submit to Congress a report on passenger-carrying vehicles for the entire Government service. As that report was compiled in my office for our department and sent forward to the Bureau of Efficiency, I took off some figures from which I was able to make the following computations: For cars which we operated during the entire fiscal year 1932-this report was made as of June 30, 1932-614 in number, a total mileage of 8,017,271 was accumulated. In other words, each of those vehicles averaged 13,057 miles. Mr. BUCHANAN. For that year? Mr. ASHLEY. For that year. That is a fair average, because we are talking about 614 units scattered throughout all sections of the United States and all of the branches of the Department. I have the figures also for the several bureaus of the Department. In the Bureau of Biological Survey, for example, with 10 cars operating the entire year, the average mileage per car was 19,394 miles. There is not a single bureau which shows an average mileage per car of less than 10,000 miles, with the single exception of the Bureau of Dairy Industry. It has one car out at Beltsville which is running back and forth around there and, of course, does not pile up much mileage. But even that car covered 6,493 miles during the year. The other 613 cars averaged over 10,000 miles a year. Mr. BUCHANAN. Well, that would make an average saving per car, at 1 cent per mile, of how much? Mr. ASHLEY. On every replacement of personally-owned cars at five cents a mile by Government-owned cars, one cent a mile on this average figure of 13,057 miles would save $130.57 per year per car. Mr. BUCHANAN. That is taking into consideration or adding in the purchase price of the car? Mr. ASHLEY. Everything; the purchase price of the car and all of the operating expenses-repairs, as well as ordinary operating expenses and giving final credit for what we call the "turn-in," that is, the allowance which the dealer grants on the old car when we buy a new one. Mr. BUCHANAN. How much did you say that saving was? Mr. ASHLEY. $130.57; because the average mileage, as shown by this report in 1932, was 13,057 miles. Mr. BUCHANAN. What would be your aggregate saving on that, based on the supposition you have to pay your employees 5 cents a mile? Mr. ASHLEY. On the assumption that we have replaced 5-cents-amile transportation with Government-owned transportation? Mr. BUCHANAN. At 4 cents a mile. Mr. ASHLEY. At 4 cents a mile Mr. BUCHANAN. What would that be-about $80,000? Mr. ASHLEY. I think probably the better way to state that would be this Mr. BUCHANAN. You have your total mileage there. Mr. ASHLEY. Answering that question, then, it can be said that had we been required, during 1932, to secure that transportation by purchasing it from our employees at 5 cents a mile, instead of getting it, as actually we did, by using Government-owned cars, we would have spent, in addition to what we did spend, $80,172.71. Mr. BUCHANAN. In other words, Government-owned cars, according to your research and investigation, can be operated at a saving of $80,000 by the Government operating its own cars instead of hiring the transportation? Mr. ASHLEY. Over the cost of the same transportation hired from our employees. Mr. BUCHANAN. Which is the cheapest transportation you can get. Mr. ASHLEY. Which is the cheapest transportation we can get otherwise. Mr. JUMP. That is the general picture. Off on both sides of that comes the shading of every conceivable type and condition of travel, character of use, average mileage per year, and the rates you have to pay employees, ranging from very low rates up to above 5 cents in certain special cases. But it is the best general statement you can make. AVERAGE MILEAGE ON EXCHANGED AUTOMOBILE Mr. BUCHANAN. What is the average mileage per car traveled before it is necessary to exchange it? Mr. ASHLEY. The cars in the lowest-price class would probably run from 30,000 to 40,000 miles on the average. Thirty-five thousand miles would probably be a fair average. Mr. BUCHANAN. I think some fellow said between 50,000 to 60,000 miles. Mr. JUMP. Yes, I recall that. If it is correct it is not typical. Mr. BUCHANAN. I want you to tell what you mean by "higherprice cars" and "lowest-price cars." |