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FEDERAL INVENTORY OF AUTOMATIC DATA PROCESSING EQUIPMENT-DISTRIBUTION BY SUPPLIERS AS OF JUNE 30, 1969, SHOWING THE SUPPLIER PERCENTAGES OF FEDERAL INVENTORY

(Amount in percent)

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Representative Brown. I would like some indication as to which companies the Government did business with. I, of course, don't want to jump to any false conclusions, but I gather from your earlier remarks that this is a business that really began initially with the Federal Government anyway, didn't it?

Mr. CUNNINGHAM. Yes, sir.

Representative Brown. Is not private industry in this field today largely a spinoff from Federal undertaking in this area?

Mr. INK. A very large portion of it. The early impetus came heavily from the Government and actually from the nuclear weapons system.

Representative Brown. I suppose you could develop a company around a few good Government contracts for either purchase of equipment or rental of equipment.

Mr. Ink. I don't know just how the first companies were set up, but certainly the Government indeed played a heavy part in it.

Representative Brown. Maybe we ought to get another statistic and that is the percentage of computers in the Federal inventory as opposed to those in the national census.

Mr. CUNNINGHAM. That is what you have, the percentage figures are right in the testimony.

GOVERNMENT OWNERSHIP VERSUS PRIVATE OWNERSHIP

Representative Brown. No, I am talking about the number of computers owned by the Federal Government as opposed to the number of computers owned in private industry.

Mr. CUNNINGHAM. OK; the total computers in the country today are in excess of 62,000.

Representative Brown. Right.

Mr. CUNNINGHAM. That is an order of magnitude figure. Those are computers used in the companies. When you say owned

Representative Brown. The Federal Government has something in excess of 4,666 as opposed to 65,000?

Mr. CUNNINGHAM. That is right.

Representative Brown. I don't know whether we can includeonce again

Mr. CUNNINGHAM. Those figures are comparable. The 4,666 and the approximate 62,000, I will give you the full figures.

Representative Brown. In 1962 of all the computers being sold how many were sold to the Federal Government, 1 in 12 or 1 in 15 ?

GOVERNMENT OWNED 12-15 PERCENT OF NATIONAL CENSUS IN 1962

Mr. CUNNINGHAM. The Government inventory represented about 12 to 15 percent in 1962. It now represents about 7 percent of the national census.

Representative Brown. You see there is a big difference.
Mr. CUNNINGHAM. It is going down.

Representative Brown. That is right. But back when the industry was developing

Mr. Ink. Well, the Government would have been a much higher percentage.

GOVERNMENT IMPACT ON INDUSTRY DEVELOPMENT

Representative Brown. That is right, 1 in 7 and, of course, the Government had a greater impact back in the early 1960's on which companies grew and how much the industry as a whole developed.

STEPS IN RENTING OR BUYING ADPE

Mr. INK. I think there is no question but what that is true.

Representative Brown. Let me ask you this question about the purchase or the rental of computer equipment. Suppose I am a member of an agency in HEW or some other place, and want to get a computer for such and such a purpose. How do I obtain the computer using Federal procurement procedures?

Mr. CUNNINGHAM. The over simplified version is you have to make what is called a feasibility study to determine whether that is the least expensive, most efficient way of doing the job. It is then subject to program review by the agency and subject to review in the budget process.

Before they can go out for an acquisition they have to send a requirement to GSÄ where GSA determines how to go about the procurement.

Representative Brown. When you say it is subject to review by the budget process, what do

you mean,

who? Mr. CUNNINGHAM. The budget process in the agency and in the Office of Management and Budget.

Representative Brown. I understand the agency part. Let's assume the agency and the Department both decide they want the computer. Does the Office of Management and Budget then make the determination as to whether or not it should be purchased?

Mr. INK. They make the determination as to whether funds will be in the budget that the President recommends.

Representative Brown. Well, isn't that the same thing as determining whether or not the purchase for the agency involved is to be made?

Mr. Ink. Yes.

Representative Brown. Where is that decision made in the Office of Management and Budget; is it made by a wide variety of people or made by a few individuals?

Mr. Ink. Well, the recommendations are made by the examiners, and it is made much the same way that any other item is made.

Representative Brown. As a Member of Congress I am somewhat based by what it means. What does it mean?

Mr. INK. I am also baffled. I worked on the agency side a good many years, and the budget total, of course, is decided by the President.

Now you want to know practically what it means. As a practical matter

DECISIONS BY OFFICE OF MANAGEMENT AND BUDGET

Representative Brown. I am only worrying about the computer at the moment; I am not worried about the total national budget. Where in the Office of Management and Budget is the decision made whether the computer should be purchased or rented ?

Mr. CUNNINGHAM. That decision is made or recommended by the agency in the budget process. They may recommend leasing and we may disagree with them or they may recommend purchasing.

Representative Brown. That is what I want to know. Who in the Office of Management and Budget says don't buy the computer, rent it or go ahead and get it? ?

Mr. Inc. All right. The reason we are having trouble answering it is because it may happen in several places. It may be that a division, head of a division, in the Office of Management and Budget will say to the Department that he is not in position to recommend money for that. Then the Department will decide whether in the face of that adverse recommendation they want to go, they may nevertheless want to include it in their request for resolution either at the level of the director of the OMB or failing that resolution with the President.

EXPERTISE IN OMB

Representative Brown. Is there anybody in the Office of Management and Budget who is an authority on computers and decides whether or not the computer should be acquired?

Mr. CUNNINGHAM. A member of my staff will work with the examiner on that and frequently make the decision “no, you should buy it. Don't rent it because you are going to have it a long time.”

STAFF IN OMB

Representative Brown. How many people in your division? Mr. CUNNINGHAM. Five. Representative Brown. How long have they been there? Mr. CUNINGHAM. An average of 3, 4 years. Representative BROWN. Anybody with a memory that goes back to 1960, 1962, and 1963 ?

Mr. CUNNINGHAM. That predates me.

Representative Brown. No, that wasn't the question. The question is have you got anybody

Mr. CUNNINGHAM. Yes, I have one person who goes back to that time.

Representative Brown. Now, presumably they don't decide where the computer is purchased, just whether or not one is needed?

Mr. CUNNINGHAM. That is right.

DECISION ON WHERE TO BUY

Representative Brown. Where is that decision made?
Mr. CUNNINGHAM. You mean from whom it is purchased ?

Representative Brown. From whom it is purchased or with whom the contract is written.

Mr. CUNNINGHAM. That is made in GSA procurement action.

Mr. Ink. General Services for general purpose computers. They would not make that decision for a weapons computer in, going into, a weapons system.

Representative Brown. I understand that, but are a fairly sizable percentage of the computers general-purpose computers?

Mr. INK. Yes.
Representative Brown. How large is that office?
Mr. CUNNINGHAM. Mr. H. A. Abersfeller is going to testify later,
I believe he has something in the neighborhood of 60 people.

Representative Brown. Were any of these people there in the sixties?
Mr. CUNNINGHAM. I am sure they have some people there.
Mr. Ink. We would assume this but we don't know, Mr. Brown.

Representative Brown. Is there an interrelationship between that section in the Bureau of the Budget which decides whether purchases or rentals of computers shall be undertaken and that section in the GSA which makes the decision on where the computers are to be acquired?

OMB NOT IN PROCUREMENT ACTION Mr. CUNNINGHAM. No, the Office of Management and Budget people are totally out of procurement action.

Representative Brown. How long has that been true?

Mr. CUNNINGHAM. Insofar as computers it has been true so long as I can remember.

Representative Brown. In other words, GSA has had the authority to make these decisions?

GSA IS PROCURING AGENCY

Mr. CUNNINGHAM. GSA has the procuring authority, the agency has the authority under the law for the selection of the equipment, and the General Services has the responsibility for the procuring of it.

Mr. INK. We look upon it as an operational activity which we like to keep out of the Executive Office of the President.

Representative Brown. Let me back up; is it correct that the decisionmaking capacity which the Bureau of the Budget exercises as to whether or not the computer will be purchased, or purchased versus rental, has existed since the Government began purchasing computers?

Mr. Ink. No, no, sir.

SPECIAL PROGRAM FOR ADPE SETUP IN BOB IN 1966

This goes back before my time, too, in the beginning the agencies, of course, handled this themselves. There was, in the early years, no special arrangement under which computers were handled, but as a result of interest, by Congressman Brooks, the General Accounting Office, and the Bureau of the Budget, there was established this arrangement under which General Services Administration had the responsibility for the procurement of general purpose equipment. Then a special unit was also established in the Bureau of the Budget to give special attention to computer activities.

Representative Brown. When was that?
Mr. CUNNINGHAM. 1966.
Representative Brown. And prior to that?
Mr. CUNNINGHAM. It had been a part of another staff.
Representative Brown. Where?
Mr. CUNNINGHAM. In the Bureau of the Budget.
Representative Brown. Where?

Mr. CUNNINGHAM. There were only two staff members working on computer activity.

Mr. Ink. There was special attention given to computers at the earlier date, I will have to supply that to you for the record, but it didn't have much muscle, and was a pretty low key, relatively low key, operation until 1966 when this special unit was set up.

Representative Brown. What I would like is the organizational history of computer procurement by the Federal Government.

Mr. Ink. Yes, sir. We will supply that for the record.
Representative BROWN. Thank you.

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HISTORY OF ADP ACTIVITIES IN OMB

(The following information was subsequently supplied for the record by the Office of Management and Budget:)

A study of Government-wide ADP responsibilities conducted by the Bureau of the Budget between September 1958 and June 1959 led to the immediate establishment of a small, full-time staff in the Office of Management and Organization devoted to the development of an ADP Management Program.

Earlier, in 1957, the Bureau had been instrumental in organizing and sponsoring an Interagency Committee on ADP which gave consideration to common problems relating to the growing use of computers by many agencies.

In January 1966, after enactment of P.L. 89306 in October 1965, Joseph F. Cunningham was appointed Chief, ADP Management Staff, with an allocation of six professional positions which constitute the present staff. Organizationally, the staff is currently located in the General Government Management Division.

LACK OF DATA ON TOTAL GOVERNMENT OWNERSHIP

Chairman PROXMIRE. In your answer to Congressman Brown on the percentage of computers owned by the Federal Government you were talking about a very limited ownership by the Federal Government apparently because you don't know how much in computers the Federal Government owns that are used for military purposes, which is a very, very big area. To my understanding it is a lot bigger than your general purpose computers, and you can't include that because you don't know what it is so when you say 7 percent that is 7 percent for general-purpose computers used by the Government and there may be another very large percentage used for military purposes, there is another very large percentage undetermined, unknown, that is used by Government contractors on Government contracts for which the Goverment pays for but is owned by the private contractor.

So in Federal work the amount of computer use is undoubtedly many times 7 percent, it could be more than 50 percent?

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