ECONOMY IN GOVERNMENT PROPERTY MANAGEMENT

PROCUREMENT OF DATA PROCESSING EQUIPMENT

JOINT ECONOMIC COMMITTEE
[Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.)

WRIGHT PATMAN, Texas, Chairman

WILLIAM PROXMIRE, Wisconsin, Vice Chairman
HOUSE OF REPRESENTATIVES

SENATE
RICHARD BOLLING, Missouri

JOHN SPARKMAN, Alabama HALE BOGGS, Louisiana

J. W. FULBRIGHT, Arkansas HENRY S. REUSS, Wisconsin

HERMAN E. TALMADGE, Georgia MARTHA W. GRIFFITHS, Michigan

STUART SYMINGTON, Missouri WILLIAM S. MOORHEAD, Pennsylvania ABRAHAM RIBICOFF, Connecticut WILLIAM B. WIDNALL, New Jersey

JACOB K. JAVITS, New York W. E. BROCK 3D, Tennessee

JACK MILLER, Iowa BARBER B. CONABLE, JR., New York LEN B, JORDAN, Idaho CLARENCE J. BROWN, Ohio

CHARLES H. PERCY, Illinois

John R. STARK, Executive Director
JAMES W. KNOWLES, Director of Research

ECONOMISTS

LOUGHLIN F. McHugh

JOHN R. KARLIK

RICHARD F. KAUFMAN
COURTENAY M. SLATER
Minority: DOUGLAS C. FRECHTLING

GEORGE D. KRUMBHAAR

SUBCOMMITTEE ON ECONOMY IN GOVERNMENT
WILLIAM PROXMIRE, Wisconsin,

Chairman
SENATE

HOUSE OF REPRESENTATIVES JOHN SPARKMAN, Alabama

WRIGHT PATMAN, Texas STUART SYMINGTON, Missouri

MARTHA W. GRIFFITHS, Michigan LEN B. JORDAN, Idaho

WILLIAM S. MOORHEAD, Pennsylvania CHARLES H. PERCY, Illinois

BARBER B, CONABLE, JR., New York
CLARENCE J, BROWN, Ohio

RAY WARD, Consulting Economist

(II)

CONTENTS

Page

1

Proxmire, Hon. William, chairman of Subcommittee on Economy in
Government: Opening remarks.
Bulletin No. 70-9, dated February 2, 1970, Executive Office of the

President, Bureau of the Budget...

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CHRONOLOGICAL LIST OF WITNESSES

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JULY 1, 1970

Staats, Hon. Elmer B., Comptroller_General of the United States, accom-

panied by Edward J. Mahoney, Deputy Director, Office of Policy and

Special Studies (OPSS); Harry J. Mason, Jr., Assistant Director (OPSS);

and James Hammond, Associate Director, Defense Division; U.S.

General Accounting Office (GAO)-

Johnson, Hon. Robert L., Office of the Secretary of Commerce, accom-

panied by James P. Nigro, Chief, Division of Information Processing

Technology, National Bureau of Standards (NBS)

Sanderson, Hon. Albert F., Office of Emergency Preparedness (OEP),

Executive Office of the President..

Ink, Hon. Dwight A., Assistant Director for Executive Management,

Office of Management and Budget, Executive Office of the President,

accompanied by Joseph F. Cunningham and Clark R. Renninger,

automatic data processing staff

Abersfeller, Hon. Heinz A., Commissioner, Federal Supply Service,

General Services Administration (GSA), accompanied by George W.

Dodson, Jr., Assistant Commissioner, Office of Automated Data Man-

agement Services, Federal Supply Service--

Warren, Col. Joseph B., U.S. Air Force, Deputy Comptroller for Data

Automation, Office of the Secretary of Defense, accompanied by Comdr.

Jan S. Prokop, U.S. Navy, Assistant Deputy Comptroller; Robert A.

Raup, Director for Automation Policy; and Henry Lichstein, Director

for Advanced Computer Techniques --

Caveney, L. Richard, president, Computer Peripheral Manufacturers

Association (CPMA)--

Harmon, George O., president, Comma Corp., New York, NY.

STATEMENTS AND EXHIBITS

Staats, Hon. Elmer B., Comptroller General of the United States:

Oral statement:

GAO recommended better inventory of automatic data processing

equipment (ADPE).

Need for better data to improve reutilization of ADPE...

Need for current and reliable information on ADPE..

Common practice to procure all ADPE from systems manufac-

turers.

Possibilities for large savings.-

Need for interfacing devices.

Industry working on standard interface media..

Slow progress by industry-

National Bureau of Standards responsibility

Lack of funds in NBS..

GAO making followup study to Report B-115369.

Memorandum-General Accounting Office, June 22, 1970-

Common facility for Foreign Affairs Community-

Reviews being made of computer systems..

Use of smaller manufacturers.

Legal responsibility of GSA.-

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Staats, Hon. Elmer B., Comptroller General of the United States—Con.
Prepared statement of Elmer B. Staats-

Reports to the Congress on ADPE..
Government inventory practices regarding ADP equipment.-
Potential savings available by the acquisition of peripheral equip-

ment from independent peripheral manufacturers-

Report recommendations.-
Interrogation:

Staffing needs of NBS.
NBS basically agrees with GAO on staffing needs.
Current use of NBS staff.
Savings on magnetic tapes in millions annually-
GAO estimates ADPE annual costs $4 to $6 billion...
$4 billion to $6 billion-a fantastic spread.
Government contractors not required to furnish costs on Gov-

ernment-owned ADPE.
ADPE cost breakdown for DOD, AEC, and NASA.
DOD costs are 62 percent of in-house total
ADPE purchases by contractors..
Contractors pay rent for industrial plant equipment (IPE) used

commercially-
When does contractor take title on purchase-rental equipment?.
ADPE procured under various types of contract--
BOB and GSA inventory of Government ADPE.
ADPE inventories of DOD, AEC, and NASA..
Use of ADPE for commercial work..
ADPE used part-time Government and commercial not in in-

ventory
Regulations controlling use of ADPE..
ADPE in hands of contractors not covered by OEP Order 8555.1.
Acquisition of ADPE by contractors.
Statement that contractors get title to Government computers.
Cost of ADPE for DOD.---
Over buy and use of computers..
Need for good planning before buying ADPE-
Quality of management of $47 billion stores in DOD.
Chairman of House Appropriations Committee interested in

ADPE costs.
GAO authority to set controls over Government property-
Remuneration to Government by contractors.-
GAO followup study-
Machine-by-machine use records opposed by some companies - -
Kind of records kept by companies--
What top agencies exert management control?
Followup collection action on contractors using Government

equipment.--
GAÔ to check into rental-purchase agreements-
OEP Order 8555.1 does not cover ADPE (only IPE)-
OEP is amending Reg. 8555.1 to forbid use of Government-owned

IPE held by contractors more than 25 percent commercially --
NBS budget request for interface research.
Responsibility for budget request.--.
NBS has failed to get a standard by consensus.
NBS has program in 1972 budget cycle-
Possibility of a supplemental request?-

Interface problem of particular importance--
Ink, Dwight A., Assistant Director for Executive Management, Office of
Management and Budget:
Oral statement:

New Office of Management and Budget (OMB).
ADPE inventory system for Government
4,666 ADPE systems in Federal inventory--
Federal Government and National Census of computers..
Equipment in the hands of contractors.
Procurement from small producers---
Unbundling by IBM..
Key conference called by BOB.

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Pago

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Ink, Dwight A., Assistant Director for Executive Management, Office of
Management and Budget-Continued
Oral statement-Continued

Conference conclusions.
BOB Bulletin 70-9--

Amended BOB Circular No. A-11.
Prepa statement of Dwight A. Ink.

Recommendations No. 6 and 7 of Subcommittee report.
Total Federal inventory of ADPE--
Distribution of Federal inventory according to supplier.
Equipment in hands of contractors.
Conference convened by BOB.
Conference recommendations

Comments on recommendations-
Interrogation:

NBS resources inadequate--
NBS appropriation cut for ADP work_
Justification for funds for interface..
Total expenditure for ADPE.
$1.9 billion spent for ADPE in Government inventory
Communications ADPE, etc., not included in inventory-
Costing ADPE in systems.
Overall cost of ADPE..
BOB puts total ADPE cost-$2.19 billion.
Inventory report of Government ADPE filed with committee.
Reliability of ADPE costs.
Government-owned ADPE only included in inventory
85 percent of ADPE costs for ĎOD, AEC, and Space.
ADPE included and omitted from DOD figures -
Weapons' systems ADPE not included.
General purpose ADPE on ships are included.
Military process computers omitted.--.
History of Government participation in use of ADPE.
Growth in use of computers--
Suppliers of ADPE to the Government.
Impact of delay on interface problem.-
Records kept by subcontractors vs prime contractors -
Use of breakout idea for other equipment purchases -
Lack of in-house capability in Government.
Need to know item costs_
Possible foot-dragging on interface standards.
Influence of industry in making standards -
Private industry has no veto..
Government know-how in making standards.
Dependence on external ideas by NBS.
Need for computer costs and analyses.
Role of Office of Management and Budget (OMB) -
Government equity in ADPE procured by contractors -
Potential savings from interface standards..
National Census of ADPE by selected years.
Federal inventory of ADPE by suppliers..
Government ownership versus private ownership of ADPE.
Government owned 12 to 15 percent of National Census in 1962.-
Government impact on industry development..
Steps taken by agencies in renting or buying ADPE..
Decisions by OMB.
Expertise in OMB.
Staff in OMB --
Decision on where to buy-
OMB not in procurement action-
GSA is procuring agency -
Special program for ADPE setup in BOB in 1966_
History of ADP activities in OMB...
Lack of data on total Government ownership of ADPE.
IBM's new 370 series..
Congressional interest in computer costs.-
Followup on Stubbings report..

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