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ECONOMY IN GOVERNMENT PROPERTY MANAGEMENTPROCUREMENT OF DATA PROCESSING EQUIPMENT

91-2

HEARING

BEFORE THE

SUBCOMMITTEE ON ECONOMY IN GOVERNMENT

OF THE

JOINT ECONOMIC COMMITTEE CONGRESS OF THE UNITED STATES

NINETY-FIRST CONGRESS

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For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.25

JOINT ECONOMIC COMMITTEE

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

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SUBCOMMITTEE ON ECONOMY IN GOVERNMENT
WILLIAM PROXMIRE, Wisconsin, Chairman

GEORGE D. KRUMBHAAR

RICHARD F. KAUFMAN

RAY WARD, Consulting Economist

(II)

HOUSE OF REPRESENTATIVES WRIGHT PATMAN, Texas MARTHA W. GRIFFITHS, Michigan WILLIAM S. MOORHEAD, Pennsylvania BARBER B. CONABLE, JR., New York CLARENCE J. BROWN, Ohio

CONTENTS

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_

CHRONOLOGICAL LIST OF WITNESSES

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, N. Y..

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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_

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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...

GAO 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.

Possibility of a supplemental request?..

Ink, Dwight A., Assistant Director for Executive Management, Office of
Management and Budget:

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NBS has program in 1972 budget cycle_

Interface problem of particular importance..

Oral statement:

New Office of Management and Budget (OMB).

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ADPE inventory system for Government_

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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

Prepared statement of Dwight A. Ink.

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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 DOD, 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__

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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..

Potential savings from interface standards_

Role of Office of Management and Budget (OMB).
Government equity in ADPE procured by contractors-

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Federal inventory of ADPE by suppliers..

National Census of ADPE by selected years

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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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