The cost reductions associated with reduced carrier employment
resulting from the carrier motorization program are reflected in
the estimate for Delivery Service and exceed the above increases
by $2,876,000 in 1970, and $8, 141,000 in 1971. The combination
of these two estimates results in a net annual savings for each
additional average carrier motorization vehicle, of $396 in 1970
and $340 in 1971, after de ducting allowance for depreciation.

The $11,252,000 increase in program costs covers the following:
Mandatory Salary Increases of $738,000:

Annualization of Phase III Increase, $96,000: This increase represents the cost for the 11 days in Fiscal Year 1970 this pay increase was not in effect.

Within-grade Salary Increase, $527,000: The annual rate of step increases for employees in PFS level 7 is $241. After considering the effect of varying employee eligibility dates and the anticipated savings resulting from employee turnover, the estimate for within-grade salary increases averages $81 per vehicle service employee man-year.

Cost of Retirement Legislation Increase, $115,000: Public Law 91-93 approved on October 20, 1969, increases the retirement contribution from 6.5 percent to 7.0 percent beginning January 10, 1970. The full-year cost of $234,000 in 1971 is an increase of $115,000 over the half-year cost in 1970.

Workload Increases of $10,514,000:

The total workload increase represents an increase of 9.5 percent and is compared with the projected 18.9 percent increase in the average vehicle fleet and 22.7 percent increase in vehicle miles.

Employment Increase for Workload, $5,327,000: The estimate provides for an increase of 616 man-years of employment for a total of 7,099, an increase of 9.5 percent. This additional maintenance employment is predicated on the 12, 943 additional average vehicles, an 18.9 percent increase in the average fleet.

Other Workload Increases, $5,187,000:

Travel Increase, $7,000: The requested increase of $7,000 in travel, for a total of $77,000 in 1971, is related to the additional employment.

Contract Vehicles Decrease, $2,518,000: The decrease in Contract Vehicles is made possible by the annualization of the replacement of 5,000 high cost contract vehicles used in the delivery service with Government-owned vehicles in Fiscal Year 1970. The discontinuance of these contracts was effective for approximately 25 percent of Fiscal Year 1970, resulting in a carryover savings of $5,625,000 in Fiscal Year 1971. Partially offsetting this decrease in delivery vehicle hire is the motorization of an average of 3,651 new routes with contracts at an average of $1, 125 per year for Fiscal Year 1971, for a cost of $4, 107,000. This offsetting cost will result in a net reduction of $1,518,000 in 1971 contract vehicle cost for route motorization. Delivery of additional Government-owned vehicles and improved utilization of the Government-owned fleet will further