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jority of those manufacturers of computer peripherals within the peripheral community.
PROGRESS MADE SINCE NOVEMBER 30, 1967 Since my appearance before this committee on November 30, 1967, charging the U.S. Government with locking out the peripheral manufacturers from bidding on peripheral equipment direct to the U.S. Government, and thus wasting the taxpayers dollars, I am very pleased to report the peripheral community has, in fact, penetrated to a small degree the U.S. Government market which has resulted in a sizable savings of tax dollars, which can be substantiated by the General Accounting Office.
During this campaign, I attained many titles, but the one I cherish most is "The Unbundler." The most titles I reaped and the hostility I met within the executive branch, indicated progress was being made. I might add that when the Comptroller General of the United States issued his report and directive in June 1969, whereby the Bureau of the Budget was directed to implement proper procurement procedures to reduce the cost of electronic data processing equipment leased, or to be purchased, by utilization of peripheral equipment from other than the original computer manufacturer, I was contacted and asked that if I were invited to attend a meeting with key officials of the Government to implement the Comptroller General's directive, would I attend but be unbiased. Needless to say, I did not attend the meeting but this is one of the many fine responses one receives from the Government when one "rocks the boat.” I do not expect to receive the Nobel Peace Prize, but knowing we have successfully rocked the boat and moved this complicated monster called Government to react to change is a satisfaction few people can attain.
I would like to add the success achieved could not have been accomplished without the support of the news media and of this committee and my deepest and sincere gratitude must go to two specific members of the committee, the Honorable Martha W. Griffiths and the Honorable William B. Widnall, because without their continual support, guidance, and assistance, the equal competitive position which the peripheral community achieved and the savings of tax dollars could ever have been accomplished. I would like to state further the President of the United States, specifically his staff, commencing in early 1969, were instrumental in providing the necessary exposure to this problem to all elements within the executive branch which also assisted greatly in reducing waste of tax dollars and thus allowed the peripheral manu
a facturers a competitive position with Snow White and the Seven Dwarfs. Peripheral manufacturers who formerly could not even receive the correct time of day from the executive branch of Government are today being treated, in the majority of cases, as equal competitors and receiving some contract awards.
MORE ACCEPTANCE OF GAO FINDINGS AND RECOMMENDATIONS NEEDED
A great deal more acceptance of the General Accounting Office's findings and recommendations by the various elements within the Executive Branch of Government must be achieved before billions of dollars in tax waste can be realized because only token acceptance has
been achieved to date. Unless the Executive Branch will allow the peripheral community to compete on an equal and impartial basis, otherwise this Association will be forced to use every possible means to achieve the objectives we seek.
We in the Association are very proud to report one major department of the Executive Branch is doing an outstanding effort in respect to evaluating peripheral equipment from the entire computer industry which will provide the U.S. Government with the best possible equipment; to do the best job; and at the best possible price. In short, this department is exercising sound management efforts and recognizing the savings the peripheral community can provide. This same department I mentioned in my testimony in November 1967, which was one of the first pioneers in the U.S. Government to achieve the highest order of savings in hardware savings, that is, this department did buv peripheral modules from various suppliers to their prescribed specifications and thus achieved a total computer system which they required but not just from one source, but from many sources within the computer industry. The department of which I speak is the U.S. Navr. They have an EDP selection office which is compact, efficient, com petent, and they are actually accepting the benefits that can be derived from pust plain common horsesence. They are very courteous and cooperative and treat everyone in the computer industry on an equal basis and it is a pleasure to see one large segment of the executive branch operate in an efficient and skilled manner. We pray this disease of the U.S. Navy will spread to the entire executive branch.
Dealing with the electronic data processing group within the General Services Administration is really an experience. I have had numerous contacts with GSA, like the majority of the peripheral community, with each having had the same experience. Receiving a Federal supply contract is like climbing to the top of Mount Everest without any equipment or assistance. It is the association's firm belief that GSA could be more flexible in negotiations with the peripheral community instead of trying to make us fit the total computer manufacturer's requirements and giving us the feeling they wish we would go away.
Also, we cannot understand the over 2 years' time span it has taken for any peripheral manufacturer to receive more than token contract awards from GSA and I know personally a few awards were achieved reluctantly from GSA but only because of congressional insistence which should not have to be applied if sound procurement and management ethics were being adhered to. The association is still not convinced of GSA's role in EDP procurements because of the snails' pace they have exhibited to the peripheral community to date. However, we will watch, we will evaluate, but we will not wait as GSA has had ample time to perform their responsibilities.
DOCUMENT BY FEDERAL EMPLOYEE
The following document was written by a highly qualified Federal employee whom the peripheral community considers is one of the most competent individuals in Government, but due to the Federal employee system which seems to aspire to Peter's Principle: "If one is incompetent, he will be promoted,” this Federal employee will never be promoted and, therefore, his talents will be wasted and another waste of taxpayers' dollars will prevail. I have received his permission to use this document which is appropriate to my testimony:
CONTINUED DOCUMENTATION OF CURRENT WASTE IN COMPUTER PERIPHERAL
PROCUREMENT BY THE U.S. GOVERNMENT
SUMMARY OF FACTS ON ONE RECENT U.S. CONTRACT AWARD
This paper documents the waste of $160 million U.S. Tax Dollars in one recent contract award. These funds were wasted by paying 75 percent more for Electronic Data Processing (EDP) equipment than necessary. This award was made after congressional testimony, suggestion awards, and personal conversations had previously pinpointed this waste for Administration officials.
RELEVANT FACTS ON FEDERAL NON-AWARDS
On his May fifth nationwide television show, “First Tuesday," Sander Vanocur reported that Federal Government cut-backs in medical funds this year were forcing emergency clinics to close, were pushing the U.S. medical schools into a financial crisis, were definitely taking American lives at this time, and would be responsible for the loss of many more lives in the immediate future.
He referred specifically to the imminent closing of the Jacoby Emergency Clinic in the Bronx (New York) because of the Federal withdrawal of only $450,000 per year. The dean of the St. Louis University Medical School, Dr. R. Felix, testified that his medical school may have to close because of the recent withdrawal of Federal funds. Dr. Felix noted that several medical schools faced this crucial decision in a time of expanding need for physicians in the country.
Vanocur diagnosed the present condition of the United States health delivery system as "financial anemia.” His prognosis concerning the future delivery of health services to the U.S. public was bleak and harrowing.
FACTS ON FINANCIAL GLUT IN EDP PROCUREMENT
The extraordinary waste in present U.S. Government electronic data proc. essing procurement is described quite simply in the opening paragraph of the CalComp brochure. This brochure could be from any of fifty EDP peripheral manufacturers. The CalComp sales office is within walking distance of my office, so I picked up their current sales material to illustrate my point. CalComp says:
“The CD1 is plug-to-plug interchangeable and format compatible with the IBM 2311 disc storage unit, yet its cost is much lower and it is more than twice as fast ... The only differences between the CalComp unit and the IBM unit are price and performance—and the CD1 is the winner on both counts.”'
Stated another way, the evidence shows the CalComp unit to be at least two times less expensive and two times more productive than the IBM machinea four-to-one competitive advantage.
A FOUR-TO-ONE ADVANTAGE IS NOT ENOUGH
As a Government purchase, the CalComp instrument is 48.6 percent less expensive, yet produces "more than double” the "work” of the IBM unit. The CalComp unit has a purchase price of $12,720; the IBM unit it replaces sells for $24,750. Stated in dollars, this says that for every purchase dollar in “CalComp Dollars,” we would be required to spend at least $3.84 in “IBM Dollars.” Yet CalComp has not placed one CD1 unit within the Federal Government since its announced availability eight months ago, while the General Services Administration has just recently awarded IBM a $330 Million lease contract in “IBM Dollars."
On a leasing arrangement, the CalComp rents for $359 per month for all hours in the month; the IBM (2311) rents for $725 per month for eight hours a day only-additional usage is billed at hourly rates. The price disparity would be larger than four-to-one if usage was high and the equipment leased—the most usual case.
INFLATION—IBM STYLE; $160 MILLION WASTED Assuming that 65% of this $330 Million is for peripheral devices and terminals as the Diebold Research Program Projection indicates the relationship to be (chart attached), this means that the $214.5 Million (65% of $330 Million given in “IBM Dollars” could have been matched by $33.6 Million in “CalComp Dollars” or “Other Peripheral Manufacturers Dollars”. The difference, $164 Million is wasted in real American “GNP Dollars", which could be put into budget deficits or housing or whatever.
ONE HUNDRED EMERGENCY CLINICS AND EIGHTY-THREE MEDICAL SCHOOLS This documented example shows we could have kept over one hundred emer. gency clinics going this year, without any loss of capability in the electronic data processing sector. At the same time, we would have given over a Millior Dollars tar-free to every medical school in the country, with money left over to start a couple more to meet the United States doctor shortage.
SHOULD THE OFFICE OF THE PRESIDENT ACT?
From my vantage point, it is unconscionable to allow such procurement practices to continue when people are being allowed to die for lack of money and facilities, as Vanocur has reported.
Rapid remedial action is indicated not by what we are doing, but more importantly, by what we are not doing.
HAVE OTHERS ACTED? IS THERE PRECEDENCE FOR CHANGE?
Government and non-Government data processing installations using dise drives in this country number about 14,000. Within these 14,000 installations, there are some 28,000 IBM 2311 disc drives, as there are multiple units in some installations. An additional 6,000 other peripheral manufacturers' disc drives now exist in installations throughout this country-all non-Federal Government. Yet the General Services Administration is still looking into the “feasibility” of using these devices for Government applications as though private industry is not capable of making valid assessments regarding cost and performance.
Is indisputable evidence enough? These facts are indisputable and have been with us for some time. One original suggestion concerning a $700 million to $1 billion saving on tape drives (a different peripheral device) is 21,2 years old yet was disapproved by the Bureau of the Budget based on reasons bordering on pure stupidity:
Approval of this valid suggestion could have realized savings way back in the latter part of 1967 or early 1968 if competent people in the Federal suggestion program would review, act, and implement and not sit on their hands and disapprove because they don't understand or because it might require change, and this is the real point. Why must Congress always intercede where savings are very apparent, and why must the taxpayer come forth to Congress and badger and show that these things exist in Government?
Why can't Government, the executive branch, do it themselves, why?
One major point is brought out by this document. In November 1967 (plus or minus a few weeks) GSA states—if the peripheral maufacturers would apply for a Federal supply contract they could then be considered for an award once they were isued a Federal supply contract from GSA. This brings up a very sound question. If peripheral equipment manufacturers were issued Federal supply contracts from ĜSA for fiscal year 1970 and IBM had not been approved for fiscal year 1970, then why did GSA wait for IBM to be approved and then give them an award approximating $330 million and, further, we would like to know how many awards were given to those peripheral manufacturers that had a Federal supply contract during this same period when IBM had not yet been awarded a Federal supply contract. We have come up with some substantial answers to these questions which could lead one to assume dual procurement policies prevail and thus the conclusion can be made that it appears some hanky-panky is going on which indicates to us unethical procurement practices are still persisting and is the rule rather than the exception.
This is not a threat, but if ethics appear not to be the rule, then the CPMA will have to counter with the "goodies” we have in our medicine bag.
SOFTWARE AS POTENTIAL AREA FOR ECONOMY
There is one major area of savings within the EDP area in Government which needs the immediate attention of Congress to facilitate