action. For example, if a computer is rented, can we require one manufacturer to cable connect another manufacturer's tape units to his system? Who provides maintenance? In case of failure how do you determine which part of the system is at fault? Should we have one set of policies for rented equipment and another for purchased equipment? Very critical and broad questions of the above type are pertinent whether the particular component under discussion is a tape unit, a disc unit or any other directly connected device. These kinds of questions are the ones under study by the General Services Administration and also the General Accounting Office. Specific suggestions such as that of this employee led to identification of the broader questions because implementation of such specific suggestions is impossible without making other major changes. Evaluation of the total impact can be made properly only when the broader questions have been analyzed. I hope that our reasons for rejecting further consideration are more meaningful to the suggester than our first letter. Sincerely, EDWARD F. KELLEY, Budget and Management Officer. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OFFICE OF THE SECRETARY, Washington, D.C., April 3, 1968. Subject: Employee Suggestion Concerning Substitute of Other Brands for IBM Tape Drives, submitted anonymously by a Public Health Service employee. Mr. EDWARD F. KELLEY, Incentive Awards Office, Executive Office Building, Bureau of the Budget, Washington, D.C. DEAR MR. KELLEY: We have been requested by the Suggestion Coordinator of the Public Health Service to submit this suggestion for further consideration and re-evaluation, since the previous evaluation does not appear to be responsive to the main items proposed. We enclose a copy of a memorandum from Public Health Service which lists three items that should be considered. Sincerely yours, Enclosures. HOWARD JORDAN, Department Suggestion Coordinator. MEMORANDUM, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, PUBLIC To: Mr. Howard Jordan, DHEW Suggestion Coordinator. Subject: Request for Reevaluation of Anonymous Suggestion OSG-68-11 (HEW-68-A30). Subject case is hereby returned and reevaluation requested. The March 8, 1968 letter of rejection signed by Mr. Kelley, Bureau of the Budget, does not seem to be responsive to the main thrust of the suggestion. The suggester used many words in paragraph 12 of the suggestion form to propose, in essence, that: 1. The Government validate claims of superior performance of newly advertised tape drives. 2. If the claims of the manufacturers of the new tape drives are found valid by test, they should be included in the GSA schedule, and 3. Use of the improved tape drives be encouraged by Government installations (or required) where a net cost benefit would result. It is recognized that the thrust of the employee suggestion could easily be overlooked when considering the large amount of additional data the suggester submitted pertaining to the calculation of cost benefit to be derived, information regarding sources of improved equipment, etc. It is requested that this memorandum accompany the case when it is resubmitted for evaluation. ALFRED A. CHALMERS. Enclosure. EXECUTIVE OFFICE OF THE PRESIDENT, BUREAU OF THE BUDGET, Washington, D.C., March 18, 1968. Mr. HOWARD JORDAN, Department Suggestion Coordinator, Department of Health, Education, and Welfare DEAR MR. JORDAN: We have read the material submitted by you on February 1. 1968, with the employee suggestion number HEW-68-A-30-OSG-68-11 proposing substitution of other brands for IBM tape drives. The suggestion that the Government procure EDP components separately and directly from their manufacturers is not a new one. For example, congressional testimony before the Subcommittee on Economy in Government of the Joint Economic Committee on November 30, 1967, dealt with this subject in some detail The many facets of such a proposed procedure are currently being studied by the General Services Administration. Since the idea is already under evalua tion, further consideration of the subject suggestion is not warranted. The suggester, however, should be commended for his interest in improving management practices in the Government. Sincerely, EDWARD F. KELLEY, Budget and Management Officer. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, Mr. EDWARD F. KELLEY, OFFICE OF THE SECRETARY, Washington, D.C., February 1, 1968. Incentive Awards Office, Executive Office Building, DEAR MR. KELLEY: The enclosed employee suggestion proposes substitution of other brands for IBM tape drives. Although the technical evaluation of the sug gestion will probably be done by the National Bureau of Standards, we have forwarded the suggestion to you because of the Bureau of the Budget's leadership role in fostering better ADP practices and effecting economies throughout the Government. Please keep us advised on the evaluation progress. Sincerely yours, Enclosures. HOWARD JORDAN, Department Suggestion Coordinator. U.S. DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, EMPLOYEE SUGGESTION FORM INSTRUCTIONS TO SUGGESTER 1. Read information on other side before preparing this form. 2. Describe your idea on this form, filling in all numbered items. 3. Use additional sheets of paper and include drawings or sketches as neces sary. 4. Submit this form to your immediate supervisor or incentive awards off cial. Suggestion number, OSG-68-11. Date Received 1/25/68. 1. Name of suggester: Mr. Arthur L. Kenney. 2. Position Title: Special Assistant. 3. Grade: San. Director. 4. Organization: OPPE, OSG, PHS. 5. Office Address: North Bethesda Office Center, 11420 Rockville Pike, Rock ville, Maryland 20852. I hereby agree that, upon acceptance of a cash award, the use of this sugges tion by the United States shall not form the basis of a further claim of an nature upon the United States by me, my heirs, or assigns. 6. Date: Jan. 23, 1968. 7. Signature: Arthur L. Kenney. 8. Office Phone: Code 14 68793. 9. May your name be used during the processing of this suggestion? Yes () No (). 10. This suggestion concerns: Substitute Other Brands for IBM Tape Drives. 11. The situation as it now exists (Briefly describe the present practice, condition, etc. which you believe should be changed.) At this time, responsible estimates place the number of magnetic tape drives currently being used in all U.S. computer installations at approximately 100,000 units. Considering $750/ month to be an average rental value per tape unit, this represents a $75 million per month national expenditure. The government's portion of the magnetic tape drive market is large; some experts estimate it at over 50 percent of the population, or about 50,000 tape units—a government cost approaching $37 million per month. IBM had a 90+% share of the data processing market at the time it became a real market in 1958, down to its presently estimated share of 70+%. This places the currently installed, IBM megnetic tape drive population in the U.S. at about 80,000 units. For purposes of estimation in this suggestion, we will assume that the government's share of the magnetic tape unit population is not over 50%, but rather that it is 40% or 40,000 units, of all types. We are assuming only 75% of these are IBM tape units, or 30,000 tape units, for the purposes of exposition and in order to generate cost analysis. Each tape drive must have an average number of tapes that can be "assigned" to it, as tape libraries are a large and important function in any computer installation. Our assumption is that there must be a minimum of 500 existing government-owned tapes per existing tape drive of 30,000 × 500 15,000,000 tapes at $30/tape or a $450 million existing investment in magnetic tapes. Thus government rental costs approaching $27,000,000 per year (30,000 tape drives $750×12 months) are coupled to a burgeoning, government-owned inventory of magnetic tapes valued at $450 million using original costs and the above assumptions. The expansion of these investments appears inevitable and warrants close scrutiny. 12. Idea for improvement (State your idea as clearly as possible. Tell how and where it may be used and what it will accomplish.) This suggestion concerns recent advances in technology which appear to make the currently marketed IBM tape drives no longer the instruments of first choice, either technically or economically, as the attached advertisement by MAI Equipment Corp. and Ampex indicates. MAI contends that the government might well expect to save $6,000 to $24,000 on each magnetic tape unit it owns or rents by utilizing directly interchangeable magnetic tape units-MAI's for IBM. This is a "savings" ranging from $180 million to $720 million, if differences in purchase prices are used as the criteria for savings. Ampex and Potter Instruments also claim they have more efficient and less expensive tape drives. This suggestion is that the Federal government, Exec. office of the President, test the units described in the attached materials immediately, to see if they meet the specifications the manufacturers (MAI-Potter and Ampex) has act out for them in their advertising, because utlization of these tape drives appear to offer enormous cost reductions on existing government computer equipment. These tests should take place as soon as possible in order to place these units within the reach of government users, because, at this time, these units are not on GSA schedule. Successful test results should result in an immediate requirement that govern. ment organizations make cost comparisons of their present IBM equipment and the MAI and/or Ampex equipment with the ultimate aim of reducing tape drive costs. The purchase agreement of MAI machines clearly indicated that, ". . . each MAI unit will perform operating functions in a maneer equal to (or better than) an IBM Unit of the aforesaid type and model with which it is interchangeable, except with respect to rewind speed." The slower rewind speed is part of the design that eliminates pinchfeed rollers and tension arms. High speed rewind is accomplished within the vacuum columns themselves, reducing friction and tape breaks; rewind speed is compromised for increased tape life. MAI expects at least a doubling" of tape life by this technique. Ampex, which uses a similar technique, contends that tapelife will be extended by "an order of magnitude" (10 times). This increased tape life could lead to substantial savings on magnetic tapes alone, not counting the cost avoidance that results from not having to restruc ture magnetic tape data files because of tape breaks, or rerun programs because of tape malfunctions. In addition, we need not process purchase orders ordering replacement magnetic tapes throughout the government. At one agency, Social Security, there are 100,000 tapes; a 50% increase in tape life (a fraction of that claimed) represents a cost-avoidance of $1.5 million at that agency alone. Across the Federal establishment, this cost avoidance would be in the tens of millions of dollars. For example, NASA's Goddard Space Center in Maryland with over 150 tape drives could show a rental savings at $22,500 per month on tape drives ($150 X 150=$22,500 per month savings on tape drive rentals). Internal Revenue Service has over 75,000 tapes and 140 tape drives and could show equivalent savings. These organizations represent only a few of the installations that are affected by this suggestion. 13. Savings and/or other benefits which will result from your idea (see explanation sheet attached). A. Direct rental savings on tape drives ($150 average X 30,000 × 12) (year). B. Purchase price savings of current tape drive population ranges from $120 to $720 million (assumes purchase of all units in 1st year). C. Reduced tape wear (average) initial year savings (future year savings of $22,500,000). D. Computer time saved.. E. Clerical time saved.. Total savings calculated for the initial year. Rental savings for following years reduce to $89,150,000 per year... 1 Average. 2 1st year. EXPLANATION OF SAVINGS A. Direct Rental Savings on Tape Drives, $54,000,000 An average rental "savings" figure was approximated from the "usual" configuration of tape drives and the appended MAI Inc. schedule of rental prices, which range from $75 to $190 per month below IBM's. This figure of $150 per month was multiplied by the estimated government population of IBM tape drives of 30,000 units and then by the number of months in a year, which yields $54,000,000 ($150 x 30,000 x 12). B. Purchase Price Savings, $420,000,000 The MAI advertisement attached tells us that we may expect to save $6,000 to $24,000 per unit purchased. This gives a purchase savings "range" of $180 to $720 million ($6,000 x 30,000 and $24,000 x 30,000) on the existing government operated magnetic tape drives. An average value of $14,000 was chosen as a representative savings "across the board." This $14,000 x 30,000 tape units gives us an "average" purchase savings government wide of $420 million. C. Reduced Tape Wear, $275,000,000 Each of the two manufacturers of this new tape drive transport design predict a great savings in tape life due to lack of wear and "pinching." The extended life is quoted at "double present" to "an order of magnitude (10 times) better." If we use double life, the lowest estimate given, on our current stock of magnetic tapes ($450 million), we would be effecting a savings of $275 million on our existing tape population. Savings on future tape purchases would amount to $22,500,000 per year (the difference between $45,000,000, the cost of 10% per year tape replacement, and $22,500,000, the cost of 5% per year tape replacement). D. Computer Time Saved, $12,500,000 If the increased tape life and lack of wear on the oxide surface leads to one minutes greater reliability and therefore a lack of computer difficulty of “one minute per existing tape" (a conservative estimate), we will have saved one minute times the tape population in computer time, or 15 million computer minutes, which is equal to 250,000 hours of computer time. The average value of an hour of computer time is about $50, when one considers all costs including personnel, utilities and indirect items. Therefore, this one minute savings is worth $12,500,000 ($50 x 250,000 hours) throughout the Federal Government. E. Clerical Time Saved, $150,000 If we assume that we can double the life of the tapes currently owned by the government, this would be the equivalent of not ordering replacement tapes for this coming year. Replacement tapes would be valued at $45 million, if we assume a ten-year life expectancy for tapes. This means that the government would have to replace 10% of the existing $450,000,000 magnetic tape inventory each year. It is generally agreed that it costs the government $10 to process single purchase order regardless of its "value"-a one cent item or million dollar item. If we assume 100 tapes are placed on each purchase order on the average, it will require 15,000 purchase orders yearly to replace our tape inventory. This leads to a cost avoidance of $150,000 (15,000 x $10) in clerical savings per year. "Meet the Competition" Response by IBM, $54,000,000 The possibility exists that IBM might "meet the competition" and reduce its prices across the board if presented with an elaboration of these facts in a government-wide cost-analysis. The savings to result from such a move should be the same as the rental savings above, $54,000,000 per year. In this eventuality, we would not realize the savings on tape wear and clerical costs outlined above. No one could expect 30,000 replacement units to be available in a short space of time, so there will be a growth curve to these "savings" under the normal business condition. 49-580-70- -10 |