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choose his configuration, both hardware and software. This evolution has presented the user with one remaining problem, as was borne out by Colonel Warren's testimony, and that is the multiple sources of maintenance. Additional savings can be realized through procurement of independently manufactured peripheral equipment, provided the user can look to one company to solve his machine problems when they occur, and he should not be put in the position of being a mediator among a number of manufacturers.
POTENTIAL FOR SAVINGS ON ADPE MAINTENANCE
In 1968, the Boston Computer Group, at the direction of GSA, undertook a study on the maintenance of automatic data processing equipment. Let me point out a few of the significant findings of this study.
The Federal Government could realize an annual savings of $9.4 million in ADPE/PCAM maintenance costs.
This would be accomplished by the use of maintenance alternatives such as in-house, time, and material versus maintenance agreement, and third party maintenance or,
Local negotiations of contracts with third party organizations that are financially sound, and
Organizations maintaining equipment, not of their manufacture, should be encouraged to compete for Government maintenance busi
Maintenance of ADP equipment has generally been a neglected area due to the, quoting from the Boston Computer Group's report, “lack of awareness on the part of management as to the process and problems involved; the rental syndrome, where the manufacturer's rental policy disconnects the user, both legally and psychologically, from maintenance; and the small annual expenditure in ADPE maintenance relative to the total ADPE expenditure, 4 percent for the equipment, personnel, supplies, and service."
There is a growing industry of compatible peripheral equipment manufacturing which further complicates the maintenance marketplace. The selection of economical equipment by the user, coupled with the rental syndrome, forces the user into the untenable position of negotiating with two or more service organizations, neither of which is either capable or permitted to solve problems from an overall perspective.
There have been, and are, several local kinds of companies supplying maintenance services on selected equipment in selected areas and locations. These services range from refurbishing and reconditioning to maintenance on equipment owned by themselves or other manufacturers. Until recently, there was no independent maintenance organization in existence who could offer a complete line of maintenance services as their only product.
In December of 1969, Comma Corp., a nationwide computer maintenance company, was formed by three former executives from IBM's field engineering division.
Comma Corp. is the first major nationwide independent company that is offering an alternative to the original manufacturer's maintenance service of large scale computer equipment. The company is offering their services to both Government and commercial users on owned or third party leased IBM 1400, 7000, and system 360 series computers, and plug-to-plug compatible peripheral equipment.
A broad range of services have been structured by a team of professional field service personnel, all of whom have had extensive training and experience with a wide range of hardware and software. This training and experience gives them the edge when competence means the difference in keeping a system operational.
One of Comma Corp.'s major thrusts is providing service on the mixed computer system, that which is composed of units from more than one manufacturer. Not only is Commo Corp. providing excellent reliable service, but the rates are substantially lower than those being offered by the major manufacturer. This contributes to a new source of economy in the procurement of data processing service. The U.S. Government, as a whole, can benefit greatly by availing themselves of those services. Annual savings could be in the millions of dollars, with equal or improved service. And that, Mr. Chairman, concludes my prepared statement.
Chairman PROXMIRE. Thank you very much. Mr. Caveney, you are over your time. Can you give us just a brief summary of your final statement?
Mr. CAVENEY. Yes, we in the peripheral community feel that a great deal more could have been done and a great deal more savings could have been accomplished, and we also feel that there is a growing abundance of executive management people in Government who do not understand the technical philosophies of not only the computer industry but of other technical areas. As these stacks of suggestions from Federal employees point out, and specifically, this one here which my entire article, 'titled “$1 Billion Refused by Government” was written around. One suggestion which could have saved the taxpayers $1 billion, and this suggestion was disapproved for reasons beyond the realm of reason, and yet based on testimony here today, the Federal Government is in fact doing exactly what this Federal employee said, and I think he should be recognized and his suggestions should be approved. There are stacks of such technical suggestions from the low elements of the Government that are just literally being tossed in the wastepaper basket which could save millions of dollars of tax dollars, but it can never happen until competent personnel can review such suggestions, and this brings up that point again, why can't the executive branch without the continual insistence of the Congress, manage the executive branch without continual prodding from committee hearings, and this is our philosophy if it can't be done by the executive branch we will be here to prod Congress.
Chairman PROXMIRE. Well, thank you, gentlemen, very much.
Mr. Abersfeller, you had the first word, Mr. Caveney had the last word, how do you meet Mr. Caveney's assertions, as I understand it, which are that GSA, among others, seems to treat peripherals somewhat cavalierly, the CalComp case was a clear mathematical example of an apparent excess cost to the Government for failure to procure on an efficient basis.
Mr. ABERSTELLER. Mr. Chairman, of course, I haven't had the opportunity to examine Mr. Caveney's statement nor did I know what he was going to say but I think we would need to get together and find out a little more about his computation.
There were, as of June 30, 1969, 416 of the particular units to which he referred—IBM 2311 disk storage drives—in the entire Government-leased inventory, and based on our calculations, as of February 1970, if we were to purchase them from an independent peripheral company, we could save about $2 million.
I don't know how he has extended this figure up to $160 million.
Chairman PROXMIRE. $2 million out of how much; what would be the total ?
Mr. ABERSFELLER. If we replaced by purchase all of the 2311 disk storage drives that the CalComp CD-1 is compatible with.
Chairman PROXMIRE. What would the total cost be is my question? I am just trying to find out what $2 million would represent as a savings.
Mr. ABERSFELLER. It would be on the order of 25 percent. We would pay about $7.2 million as against $9.2 million.
Chairman PROXMIRE. 25 percent.
Mr. ABERSFELLER. Indeed, and we are working on that particular thing now. That happens to be part of the inventory of the peripherals that we talked about earlier in my testimony, in getting the agencies to get them replaced with peripheral equipment made by other than the original equipment manufacturer. TRUTH IN NEGOTIATIONS ACT, APPLICABILITY TO COMPUTER BUYING
Chairman PROXMIRE. I do want to proceed to more general questions to the extent we have time I want to pin it down.
What about the Truth in Negotiations Act, Mr. Abersfeller, previous testimony indicated widespread noncompliance with the Truth in Negotiations Act by the manufacturers of computers. What is the situation now up to date? Are all computer contractors being required to supply the Government with cost and pricing data under the Truth in Negotiations Act?
Mr. ABERSFELLER. When applicable they are being requested to, Mr. Chairman, but to the best of my knowledge, they are not providing it.
Chairman ProXMIRE. They are not. Why not?
ONE-SIDED ACT INAPPLICABLE TO INDUSTRY Chairman PROXMIRE. Why can't you enforce the law?
Mr. ABERSFELLER. Well, the law is a one-sided law, Mr. Chairman. It does not apply to the industry. It applies to the contracting officer. It also allows a waiver to be provided by the head of the agency if the equipment is required by the agency; the head of the agency is offered no alternative but to grant the waiver and that is exactly how they have been bought over the years.
Chairman PROXMIRE. I am delighted to get that kind of response because it indicates that maybe we can improve it here in Congress, it is our fault if that law is one sided and I would like very much if you would suggest proposed language which would strengthen that Truth in Negotiations Act and make it two sided, and make it possible to make the contractor responsible, too.
Mr. ABERSTELLER. All right, sir. (See pp. 150–153.)
GSA TO OFFER IMPROVED LANGUAGE
Chairman PROXMIRE. Admiral Rickover in his testimony indicated that too many waivers are being granted. Why are they granting so many waivers?
Mr. ABERSTELLER. With regard to ADP?
Mr. ABERSFELLER. Again I think it goes back to the issue of the contractors unwillingness to provide the information and the agency
Chairman ProxMIRE. They are unwilling. All you feel you can do is give them a waiver.
Mr. ABERSFELLER. That is all you can do if you need the equipment and the contractor will not supply the data, Mr. Chairman.
Chairman PROXMIRE. So you are in position where it is up to him to cooperate, he does so voluntarily. Obviously if it would in his view diminish his profit he wouldn't cooperate, at least in his long term profit.
Mr. ABERSFELLER. I am not here to support the industry on this issue but there is another side to it. The industry does have a problem. If you get to push the state of the art, and I presume the Admiral was talking about procurement made by the AEC; they are one of the principal users of equipment which is far out. The producer doesn't know how much he is going to produce and obviously to be able to get cost and pricing data in meaningful form you ought to have some kind of judgment as to how many of the items he is going to produce to be able to divide that into his estimated costs, to come up with cost and pricing data and the allocation of overhead and things of that nature.
I think this presents a very serious and real accounting problem to the industry. I think the industry is reluctant to provide the information to begin with.
Chairman PROXMIRE. Certainly under those circumstances there ought to be some kind of a finding that you have a situation where the technology is so uncertain and research is so indefinite that costs are likely to be great, under those circumstances I think that is right, you have a different situation, and perhaps the Truth in Negotiations would have to be handled somewhat differently. But certainly in something that is relatively standardized there should be no exceptions.
Mr. ABERSFELLER. There is no problem in the relatively standardized items, Mr. Chairman, because all of those are sold in substantial quantities commercially and the data is not required.
Chairman PROXMIRE. Then I come back to my original statement, if you would suggest language to help us strengthen that.
Mr. ABERSFELLER. Very good.
GSA PROCUREMENT OF ADPE FOR DOD
Chairman PROXMIRE. Does GSA procure any computers or ADPE for the Defense Department? Mr. ABERSTELLER. Yes, sir, we do. Chairman PROXMIRE. How much?
Mr. ABERSFELLER. Mr. Chairman, let me provide that for the record. I thought I had it but I don't have it.
(The following information was subsequently supplied for the record by Mr. Abersfeller:)
The dollar volume for FY 70 is as follows:
$285, 000, 000 Separate contracts by GSA for DoD.
76, 000, 000
361, 000, 000 1 Estimated value based on FY 69 DoD percentage of total Federal Supply Schedule volume and actual FY 70 ADPE Federal Supply Schedule volume.
Chairman ProXMIRE. Is it fair to say GSA purchases ADP equipment for Defense which does most of its own purchasing?
Mr. ABERSFELLER. I think we do most in dollar volume of general purpose ADPE even for defense, Mr. Chairman.
Chairman PROXMIRE. In other words, you purchase more of the defense procurement than Defense does? Mr. ABERSFELLER. I think so.
Chairman PROXMIRE. Is that your understanding, Colonel Warren, too?
Colonel WARREN. I have the figures here in total which I could give you if you would like.
Chairman PROXMIRE. Fine.
Colonel WARREN. For fiscal year 1970 we had 62 selections total for 124 computers with a purchase value of $145,612,000, and of that GSA did the procurement for 34 of the computers with a purchase value of $56,063,000. Forty-six computers with a purchase value of $47,151,000 of the total computers were purchased through the GSA Federal Supply Schedule contract. The remaining 44 computers with a value of $42,399,000 were acquired under a delegation from GSA.
Chairman PROXMIRE. You are talking about general purpose com puters?
Colonel WARREN. Yes, sir.
DOD PROCURES ADPE FOR MILITARY EQUIPMENT
Chairman PROXMIRE. You are not talking about the ones used in military equipment which I guess Defense would purchase all of those.
Colonel WARREN. We purchase all of those; yes, sir.
Chairman PROXMIRE. Aircraft, ships, and so forth, you do all of that?
Colonel WARREN. Yes, sir; special-purpose computers and weapons systems computers are not handled by GSA.
Chairman PROXMIRE. Colonel Warren, would that, in your view and in your judgment—I guess it is a guess because nobody seems to have the figure—would that exceed in volume and cost the amount of general-purpose computers that Defense uses?
COST OF SPECIAL ADPE PROBABLY EQUALS GENERAL PURPOSE
Colonel WARREN. Yes, sir. I do not have any specific information on costs, but I feel that it is a safe assumption to say that we spend probably as much on computers for weapons systems and special-pur