USE OF AUTOMATIC DATA PROCESSING EQUIPMENT BY FEDERAL DEPARTMENTS AND AGENCIES

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP66B00403R000300330004-0
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 8
• Document Creation Date: December 23, 2016
• Document Release Date: March 6, 2014
• Sequence Number: 4
• Publication Date: September 21, 1964
• Content Type: OPEN SOURCE

1964
Declassified and Approved For Release 2014/03/06: CIA-RDP66B00403R000300330004-0
CONGRESSIONAL RECORD ? SENATE
further Impoverishes the masses there, has
been kept to a modest 14.1 percent increase
by Lopez Mateos. At the same time, he has
raised wages 96.7 percent. Both facts, plus
a worker's profit-sharing program he intro-
duced, have increased the average Mexican's
real purchasing power (although per capita
income remains relatively low).
In addition, the Mexican worker and
peasant have made big social strides under
the present administration. Three times as
many of them are covered by social security
as in 1958. Increasing numbers are receiving
low-cost hou.sing?introduced on a large scale
during this Presidential term. Illiteracy has
been cut to a record low of only 28.9 percent.
Mortality is down to only 9.6 per 1,000, while
longevity has reached 64 years (compared
with 35 in many Latin countries).
All of these social and economic gains have
been made without straining the country's
finances or credits. On the contrary, its in-
ternal and international financial position is
sounder than at any time in the past half
century. Lopez Mateos leaves behind a rec-
ord $549 million in foreign reserves, backed
by another $345 million available in the In-
ternational Monetary Fund, and a reputa-
tion in world financial markets so high that
foreign financiers scramble over each other
to offer Mexico credits.
Above all, he kept Mexico's unit of cur-
rency, the peso, firm at 12.50 to the dollar?a
rate it has maintained consistently for a
deoade. And, to complete this part of the
story, he reduced Mexico's chronic unfavor-
able trade balance to economically tolerable
proportions.
If asked what he thought was his most im-
portant single accomplishment in 6 years,
LOpez MateOs' own answer would probably
be that he has distributed to the peasantry
more than one-third of the total amount of
land they had received from all his revolu-
tionary predecessors since the agrarian re-
form began in 1915. It amounted to some
35 Million acres, compared with 95,700,000
till 1958.
-
The broader significance of that act is that
it virtually ends the first, and most funda-
mental phase of the agrarian reform, divi-
sion of the land, and makes possible the full-
est concentration upon the next phase (al-
ready begun) : the complete modernization
of Mexican agriculture through universal ap-
plication of technology and efficient farming
methods.
American circles here were disappointed
when LOpez Mateos delivered a eulogy to
John F. Kennedy, in his final message to
Congress, without mentioning that which
the late President himself had regarded as
the most important program of his adminis-
tration: the Alliance for Progress. The
omission left the impression that the Alliance
has played no role in Mexico's great progress,
whereas the truth is that she has received
More than $800 million in Alliance funds?
$650 million of it from the United States?
since January 1961.
Cuba has been, of course, LOpez Mateos'
hair shirt, as it was the late President Ken-
nedy's, but for a different reason; he held to
the position that any effort to isolate or
punish Castro would constitute intervention,
while tolerating the very real and direct in-
tervention of the Soviets. That position was
reaffirmed in his September 1 message.
Now, however, that Uruguay has become
the last Latin republic to break off relations
with Castro, in compliance with the majority
sanctions vote at the American Foreign Min-
isters meeting on July 26, the price of LOpez
Mateos' inflexibility has been the complete
isolation of Mexico. She alone, among the
American States, continues to maintain
diplomatic relations with Havana; she alone
has refused to accept the decision of the great
majority of the American States.
No. 181-2
Though the Mexican attitude toward Cas-
tro has naturally irked our Government, it
has not been permitted to affect United
States-Mexican relations, which are the most
cordial both nations have ever enjoyed.
When the Chamizal territory is formally
turned over to Mexico later this month, that
will remove one? of only two remaining sore
spots between the neighboring countries.
The only serious problem that will be left,
said Lopez Mateos in his last state-of-the-
union message, is that of the saline water
from the Colorado River which enters north-
western Mexico and damages the crops there.
That is in violation of a 1944 bilateral treaty.
But both nations have been working to
resolve the problem amicably, and hopeto
so before long. Would that other ne'g bo
had equally serious problems.
USE OF AUTOMATIC DA 'FA PROC-
ESSING EQUIPMENT BY FEDERAL
DEPARTMENTS AND AGENCIES
Mr. McCLELLAN. Mr. President, I
ask unanimous consent to speak for 20
minutes.
The PRESIDING ?MC:hit. Without
objection, it is so ordered.
Mr. McCLELLAN. Mr. President, I
have today released a statelnent with
reference to proposed legislation intro-
duced in the present Congress directed
toward the improvement of Federal
policies governing the lease, purchase,
and coordination of automatic data
processing equipment and systems, and
I ask unanimous consent to have it
printed in the RECORD.
There being no objection, the state-
ment was ordered to be printed in the
RECORD, as follows:
Senator JOHN L. MCCLELLAN, chairman of
the Senate Committee on Government Op-
erations, today announced that the commit-
tee expects to take up bills relating to Fed-
eral procurement and use of electric com-
puters when the new Congress convenes in
January 1965. The principal bill is H.R. 5171,
introduced by Representative JACK BROOKS,
chairman of the House Subcommittee on
Government Activities, which passed the
House of Representatives on July 18, 1963.
President Lyndon B. Johnson has indicated
that he supports the enactment of legisla-
tion designed to bring about greater efficiency
and economy in the policies and practices of
Federal agencies which employ electronic
computers in their operations.
Senator MCCLELLAN said that the commit-
tee would go into the problems of electronic
computer procurement and utilization
thoroughly before reporting out a bill. He
noted that President Kennedy, at the sug-
gestion of the House Post Office and Civil
Service Committee, has directed the Bureau
of the Budget to make a comprehensive study
of automatic data processing in Government
'operations, and that the Bureau is expected
to present its findings and recommendations
to the President and the Congress within a
few weeks. Senator MCCLELLAN also indi-
cated that the committee will consider the
recommendations contained in various re-
ports of the Comptroller General of the
United States for strengthening electronic
computer management and reducing costs.
The chairman stated that the committee
will seek the views of Members and commit-
tees of the Senate and the House-of Repre-
sentatives, the executive branch, and repre-
sentatives of private industry on these mat-
ters.
Senator MCCLELLAN noted that the number
and variety of electronic computers leased
21677
or purchased by Federal agencies has in-
craased very rapidly in recent years and that
abOut 1,800 computers are presently in use
while plans are underway to obtain hundreds
more. The annual operating costs of ADP
equipment in place have risen from $251
million in 1959 to an estimated $1,053 mil-
lion in the 1965 budget. The equipment is
used in a great variety of operations ranging
from complex scientific calculations to the
maintenance of insurance and payroll rec-
ords. While computers have contributed
significantly to the efficiency and produc-
tivity of' many Government operations, they
present novel and difficult management
problems. The equipment is expensive, it is
subject to obsolescence due to rapid improve-
ents in technology, it requires highly
trained technicians, and its introduction has
raised new problems of manpower utiliza-
tion in the Government.
Senator MCCLELLAN said that the commit-
tee is aware that constructive steps have
been taken to deal with these problems by
such agencies as the Bureau of the Budget,
the General Services Administration, the
Civil Service Commission, and the operating
agencies. He noted that the committee has
assurances of full cooperation from the execu-
tive branch in the forthcoming hearings.
The committee staff, headed by Walter Rey-
nolds, has been instructed by the chairman
to begin a review of the Bureau of the Budg-
et's study as soon as it is available.
Mr. McCLELLAN. Mr. President, the
bill, H.R. 5171, to authorize the AclminisT
trator of General Services to coordinate
and otherwise provide for the economic
and efficient purchase, lease, mainte-
nance, operation, and utilization of auto-
matic data processing equipment by
Federal departments 'and agencies, was
approved by the House of Representa-
tives on July 18, 1963, and referred to
the Senate Committee on Government
Operations for consideration. This bill
was based upon recommendations of the
Comptroller General, that a Govern-
ment policy should be established pro-
viding for the purchase of automatic
data processing equipment, rather than
the prevalent program of leasing such
equipment primarily designed to meet
the individual requirements of each of
the Federal agencies.
I wish to submit the following general
background data of prior congressional
studies and actions which relate to -this
proposal, for the information of the
Senate. This history of congressional
consideration given to the problems in-
volved in this most important area, and
the further facts developed by the Com-
mittee on Government Operations and
its staff, sets forth full details as to why
the committee was unable to recom-
mend action on H.R. 5171 or similar
legislation in the 88th Congress.
Prior to the introduction of this pro-
posed legislation, various committees of
the Congress held hearings and devoted
studies of considerable length into the
problems relating to the development of
automatic data processing systems, di-
rected primarily to research and devel-
opment programs and to the retrieval
of scientific and technological informa-
tion.
The Senate Committee on Government
Operations has been interested in auto-
matic data processing, particularly as it
relates to assembling, translating, ana-
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2.678 CONGRESSIONAL RECORD ? SENATE September 21
lyzing, abstracting, and disseminating
scientific and technical information, as
far back as the 80th Congress. At that
time, the committee considered a bill,
S. 493, to provide for the coordination
and dissemination of technical and scien-
tific information in the Office of Techni-
cal Services, through the use of auto-
mated retrieval systems. After hearings,
which continued for 10 days during May
1947, the committee reported an ab-
breviated bill which was approved by the
Senate but no action was taken in the-
House of Representatives. In the 81st
Congress, a substitute version of S. 493,
as originally introduced, was approved
as the Technological and Scientific Act
) of 1950, on September 9, 1950.
In the 85th Congress, following exten-
sive staff studies initiated in August
1957?before sputnik was launched?a
committee bill, S. 3126, the Science and
Technology Act of 1958, was introduced
on January 27, 1958. Along with pro-
visions for the establishment of a De-
partment of Science and Technology,
and standing major Committees on Sci-
ence and Technology in the House and
Senate, the bill proposed the expansion
and coordination of existing science in-
formation processing programs, Utilizing
all facilities of the Federal Government
then vested in agencies which performed
related functions. It also provided for
the undertaking of the establishment of
facilities to further scientific, engineer-
ing and technological research as well as
aiding in the development of inventions,
discoveries, products, processes, and
techniques.
The committee staff was specifically di-
rected to conduct a broad study of the
problems then existing in the operation
of Federal progi'ams in the field of sci-
ence and technology, including the util-
ization of ADP equipment. The com-
mittee approved staff studies which
recommended, among other essential
steps that would be required to perfect
the science and technological activities
of the Government, that it would be nec-
essary to coordinate and improve the
then existing facilities for automatic re-
trieval of scientific and technological in-
formation in connection with our defense
effort.
In May and June of 1958, the Subcom-
mittee on Reorganization, of which the
Senator from Minnesota [Mr. HUM-
PHREY] was chairman, held hearings in
order to evaluate the six basic proposals
contained in S. 3126 and another bill,
S. 4039, which authorized the expendi-
ture of funds through grants for the
support of scientific research. These
hearings were directed primarily at com-
piling information relative to existing
facilities available for assembling, co-
ordinating, retrieving, and distributing
scientific information. All witnesses
stressed the importance of improving
these facilities through the utilization of
the latest technical equipment and co-
ordinated systems as developed by the
industry. Although this bill was never
considered by the Senate in its entirety,
a number of its objectives were adopted
by separate actions in the 85th and sub-
sequent Congresses, some of which were
set forth in Senate Report No. 2498 of
the 85th Congress, entitled "Progress Re-
port on Science Programs of the Fed-
eral Government," and Senate Report
No. 120 of the 86th Congress on "Science
Program, 86th Congress," approved by
the committee.
The Subcommittee on Reorganization
also held further hearings on other legis-
lation during the 86th Congress, in April
and May 1959?S. 676, S. 586, and S.
1851?relating to the proposed establish-
ment of a Department or a Commission
on Science and Technology. These
hearings again placed special emphasis
on the need for improving science in-
formation processing procedures, par-
ticularly, as they related to the retrieval
of information and data which had been
developed either by Federal and non-
Federal agencies or through contractors
performing services for the Government
in the field of science and technology.
In June 1960, the committee approved
a staff study on Federal and non-Fed-
eral science processing and retrieval
programs, entitled "Documentation, In-
dexing and Retrieval of Scientific Infor-
mation," which was printed as Senate
Document No. 113 of the 86th Congress.
The objective of this report was directed
toward improving the existing systems
and reducing the excessive expenditures
that were then being made by certain
Federal agencies in the purchase of ADP
equipment which was found to be inade-
quate to meet the requirements of these
agencies even before it was fully in-
stalled and in operation. To meet the
demands of this document, the Senate
approved a resolution authorizing re-
printing of Senate Document No. 113,
and a supplement to the report which
was approved by the committee and
printed as Senate Document No. 15 in
the 87th Congress.
The Subcommittee on Reorganization
issued reports in the 87th Congress on
"Coordination of Information on Cur-
rent Scientific Research and Develop-
ment Supported by the U.S. Govern-
ment," which was printed as Senate Re-
port No. 263 on May 18, 1961, and a
committee print of a report on "Coor-
dination of Information on Current Fed-
eral Research and Development Projects
- in the Field of Electronics," containing
an analysis of agency systems for stor-
age and retrieval of data on on-going
work and of views of private companies
on indexing and communication prob-
lems.
The committee also reported to the
Senate a bill, S. 2771, in the 87th Con-
gress, to provide for the establishment
of a Commission on Science and Tech-
nology, after holding further hearings
on this proposal during May and July
of 1962. This bill was passed by the Sen-
ate without opposition, but the Commit-
tee on Science and Astronautics of the
House of Representatives, to which it
was referred, failed to act before the
87th Congress adjourned. The commit-
tee also recommended the printing of a
"Report to the President on Government
Contracting for Research and Develop-
ment," submitted by the President of the
United States to the Congress on April
30, 1962, which had been referred to the
committee for study and appropriate ac-
tion, as a Senate document?Senate Doc-
ument No. 94, 87th Congress.
In the present Congress, the commit-
tee reported a bill, S. 816?Senate Report
No. 16?similar to S. 2771 approved in
the 87th Congress. S. 816 was unani-
mously approved by the Senate on
March 8, 1963, and was referred to the
Committee on Science and Astronautics
of the House, where no action resulted.
This bill specifically requires that the
proposed Commission submit recom-
mendations to the President and the
Congress with the objective of insuLing
the maximum utilization of all available
scientific know-how and technological
information by coordinating the ,re-
search and development programs of the
Federal departments and agencies.
It also stresses the need for the elimi-
nation of undesirable duplication and
overlapping between Government de-
partments and agencies engaged in
scientific and technological research, in-
formation storage, processing and dis-
tribution services, and contained broad
declarations of congressional policy and
objectives toward the improvement and
advancement of Federal programs in
this area. These measures also placed
special emphasis on the need to solve
existing problems relating to the im-
provement of Federal programs for proc-
essing and retrieval of scientific infor-
mation. Specifically, the bills stressed
the need for "insuring the maximum
utilization of all available scientific
know-how and information by coordi-
nating the research and development
programs of the Federal departments
and agencies with those of American
business and industry and with non-
profit organizations," and called for
"_the elimination of undesirable duplica-
tion and overlapping between Govern-
ment departments and agencies engaged
in scientific and technological research,
and in information storage, processing
and distribution services, activities, and
functions, with particular emphasis
upon effecting the maximum utilization
of the resources of private industry and
nonprofit research organizations, includ-
ing universities and other educational or
technological institutions."
The Subcommittee on Census and
Government Statistics of the House
Committee on Post Office and Civil
Service held general hearings on this
subject in 1959, following which the
committee suggested that the Bureau of
the Budget and the General Accounting
Office should conduct a special study of
the cost and use of ADP equipment
throughout the Government. In Au-
gust 1960, the subcommittee issued a re-
port entitled "Use of Electronic Data
Processing Equipment in the Federal
Government." This report included 21
recommendations to Federal agencies
relative to the general management and
planning of ADP systems. The sub-
committee also held further hearings
and issued a report?House Report No.
627?on August 1, 1963, entitled "In-
terim Report on the Use of Electronic
Data Processing Equipment in the Fed-
eral Agencies."
Since 1960, the Comptroller General
has submitted numerous reports to the
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1964
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CONGRESSIONAL RECORD' ? SENATE
Congress relating to alleged excessive
expenditures by the various Federal-
agencies and Government contractors on
defense and other technological proj-
ects which involve leasing rather than
the purchasing of automatic data pro-
cessing equipment.
In line with the Comptroller General's
recommendations, the Department of
Defense and several other major users of
ADP equipment changed their internal
procedures so that high-level or execu-
tive review is attained and approved
before leasing or purchasing additional
ADP equipment systems. Improvement
in this field was also ?reported in the
establishment of equipment sharing cen-
ters at the National Bureau of Standards,
the Internal Revenue Service at Phila-
delphia, and that another center was be-
ing established at the Federal Center in
Denver, Colo.
Pursuant to the recommendations of -
the Comptroller General, the House
Subcommittee on Government Activities
of the House Committee on Government
Operations held hearings on May 28,
1963, on the bill, H.R. 5171, with the ob-
jective of implementing the recommen-
? dations of the Comptroller General, at
which representatives of the General Ac-
counting Office and the General Services
Administration appeared in support of
the bill. None of the executive depart-
ments and agencies operating major re-
search and development programs were
afforded an opportunity to testify as to
the effect this legislation might have on
their programs.
After the House Committee on Gov-
ernment Operations reported the bill
favorably and it was approved by the?
House, Representative Tom MURRAY,
chairman of the House Committee on
Post Office and Civil Service, upon the
recommendation of the Subcommittee on
Census and Government Statistics, sug-
gested to President Kennedy, im-
mediately after House passage of H.R.
5171, that a special committee composed
of experts conversant with the Prob-
lems involved should be appointed to
evaluate ADP procedures and systems
and to develop guidelines for future Fed-
eral policy before final action was taken
on the proposed legislation. The Presi-
dent wrote the chairman that-
1 agree that the report (of the subcom-
mittee) and the bill (H.R. 5171) dealt with
many of the problems involved in the use of
automatic data processing equipment for
which there is no easy solution. I agree
with your recommendation and I have re-
quested the Director of the Bureau of the
Budget to initiate a study of the administra-
tion of automatic data processing in the
executive branch of the Government along
the lines you have suggested. The Director
will submit appropriate recommendations to
me and to the Congress by June 30, 1964.
The Director of the bureau of the
Budget, in response to the directive of
the President, issued an order on Decem-
ber 26, 1963, to the heads of the execu-
tive departments and agencies, announc-
ing the initiation of a study of the man-
agement of ADP activities throughout
the Government, and requested that all
of the departments and agencies coop-
erate with the Bureau. At the same
time, the Director announced the forma-
ion of an Advisory Committee on the
Coordination, Purchase. Lease, and Oper-
ation of ADP Equipment, with former
Representative Robert Ramspeck, as
Chairman. Ten other top-level individ-
uals from business, labor, commerce,
education and the Government were ap-
pointed to the committee for the purpose
of advising the Director and the Con-
gress on policy, manpower, and proce-
dures now being followed in connection
with the procurement, lease, and utiliza-
tion of ADP equipment in the Federal
Government. Mr. Carl W. Clewlow, for-
mer Deputy Administrative Assistant
Seretary of the Treasury, was appointed -
Staff Director of the task force of spe-
cialists assigned to make the survey.
The report of this special study com-
mittee, with appropriate recomenda-
tions for the improvement of these op-
erations, was scheduled to be submitted
to the President and to the Congress on
or. before June 30, 1964, but due to the
delay incurred as a result of the assassi-
nation of President Kennedy, and the in ?
ability of the members of the conunittee
to- agree as to the recomendations that
should be made to the Congress relative
to the need for legislation along the lines
proposed in H.R. 5171, that report has
not yet been made available to-the com-
mittee.
A companion bill to H.R. 5171 (S.
1577) , was introduced in the Senate on
May 21, 1963, and referred to the Com-
mittee on Government Operations.
Copies of this bill were forwarded to all
the major agencies in the executive
branch which were utilizing ADP equip-
ment, for their, comments and recom-
mendations. All responses to this re-
quest, except from the General Account-
ing Office and the General Services Ad-
ministration, were in opposition to the
proposed legislation as passed by the
House and as introduced in the Senate.
The Bureau of the Budget stated :
The bill poses serious questions regarding
the nature and degree of centralized con-
trol that should be exercised over equip-
ment that is so vitally linked to program
performance for which department heads
are held responsible. These questions de-
serve to be fully explored, and the views of
those affected by the legislation should be
obtained before acting upon it.
The then Director of the Office of
Science and Technology, Executive Of-
fice of the President, Dr. Jerome B.
Wiesner, also advised the committee:
My interest in computers lies in their use
for unique scientific and technical applica-
tions where they have revolutionized proce-
dures and brought about large savings of
time and money. In these areas, I believe
that the form of centralization envisioned
by this measure would sacrifice much of the
usefulness of computer technology to the
Government and might even lead to in-
creased costs. A system with predominant
control lying outside of the user groups
would markedly lessen the responsibilities of
operating agencies for setting computer re-
quirements and modes of operation, and
could hamper the Government's ability to
take full advantage of ADP in support of
agency missions. Timely development of
useful applications of computers depends so
intimately on the interests of the user that
it is essential for the achievement of agency
missions that the integrity and flexibility of
this relationship be maintained.
21679
It is also my view that our experience
with the management of these expensive
tools for scientific research indicates that
computers and their ancillary equipment
should be considered as part of a scientific
program, and budgeted as such, rather than
as a category separate from their research
applications. While in some aspects of Fed-
eral facility management the establishment
of a _centralized equipment pool may have
been proven justilable, I believe that such
experience is not at all comparable where
the needs of scientific research for comput-
ing equipment are involved.
My opposition to the particular approach
and mechanisms of this bill does not sug-
gest that I believe improvements in our
ability to manage automatic data-processing
activities may not be desirable. To this end,
I endorse the efforts to improve and
strengthen Federal management of ADP
equipment currently underway by both the
Bureau of the Budget and, under existing
statutory authority, the General Services
Administration.
In view of the opposition to H.R. 5171,
which developed throughout the Govern-
ment and from contractors performing
- services for the Federal Government,
the Bureau of the Budget conducted its
own study of these problems and sub-
mitted to the committee a suggested re-
vision of the language contained in H.R.
5171 as approved by the House of Rep-
resentatives. A 'committee print of the
proposed revised bill was again sub-
mitted to the executive agencies engaged
in major scientific research and develop-
ment programs for their further com-
ments. None of these agencies re-
sponded to the committee's request for
their views on the proposed reviSion, ex-
cept the Tennessee Valley Authority
which opposed the bill both in its origi-
nal form and as proposed to be revised,
unless further amended to exempt TVA
from provisions of the proposed legisla-
tion.
The chairman also requested the Hon-
orable Robert Ramspeck, Chairman of
the special committee appointed by the
Director of the Bureau of the Budget
at the direction of the President to study
the "Management of Automatic Data
Processing in the Federal Government,"
to submit his views and recommenda-
tions on the bill as proposed to ? be
amended. Mr. Ramspeck's reply, dated
July 27, 1964, follows:
As you know I am Chairman of a Com-
mittee, appointed by the Director of the
Budget, by direction of the President, which
is studying the "Management of Automatic
Data Processing in the Federal Government."
This Committee has not completed the study.
In fact the staff just made its first draft of
a proposed report about 2 weeks ago. The
Committee, after an all-day discussion of the
draft, asked the staff to revise the proposed
report. This revision will be considered dur-
ing the latter part of August.
In view of this situation I would not like
to comment on the proposed substitute for
H.R. 5171. Speaking for myself only, I
would hope that your committee would not
hold -hearings until our committee has re-
ported to the Director of the Budget and he
has had time to report to the President.
Since this Congress is close to the end of
its sessions, I think you will agree that no
action could be had at this session, espe-
cially as your committee staff anticipates
extensive hearings. I would agree with the
committee staff report that extensive hear-
ings should be held. Proper management of
automatic data processing equipment in the
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21680 CONGRESSIONAL RECORD SENATE
Federal Government poses some very tough
problems. Large sums of public money are
involved. The right answers will not be easy
to find in this comparatively new field where
new machines are constantly being offered.
The Committee received a letter dated
August 3, 1964, from Dr. Donald F.
Hornig, Director of the Office of Science
and Technology, Executive Office of the
President, who succeeded Dr. Wiesner,
stating:
Before commenting in detail on this im-
portant bill I would like to assess the view of
the major agencies engaged in research and
development as to the impact on their scien-
tific efforts of this measure as recently re-
vised. My office is now canvassing these
Views, and We will be in a better position to
respond to your request for comment when
our assessment is complete.
In addition to requesting the views
of Federal departments and agencies
utilizing ADP equipment, copies of HR.
5171 as revised were forwarded to some
of the major industries which operate
ADP equipment under Federal contracts,
with a suggestion that they might wish
to submit their comments as to the pos-
sible impact the proposed legislation
would have upon their operations. The
following are extracts from replies for-
warded to the chairman in response to
this request:
J. L. Atwood, president, North Ameri-
can Aviation, Inc.: '
Our basic concern with H.R. 5171 stems
from the inclusion of the words "or at the
expense of," in section 111(a). These words,
together with the explanation of the coin-
mittee amendments, set forth on page 12 of
House Report No. 428, indicate that it is
intended that the provisions of the bill apply
to ADP equipment acquired by contractors
where all or a substantial part of the cost
would become a part of Government contract
prices.
Many Government contractors and sub-
contractors have developed and programed
systems for business applications and scien-
tific computing based upon the use of cer-
taM types of ADP equipment. If the Gov-
ernment could not furnish to contractors,
in a timely manner, equipment which was
compatible, the costs of reprograming and
the related operational problems would in-
volve amounts of money which could be very
substantial. In this context, it should be
borne in mind that the cost of using ADP
equipment, when compared to the total cost
of a contract under which it .is being used,
is relatively minor in most cases. Any delay,
therefore, in the work under a contract re-
sulting from failure of a contractor to ac-
quire or to be able to use ADP equipment
resulting for any reason from centralized
Government control would undoubtedly more
than offset any possible anticipated savings.
When it is considered that a large number
of organizations will be affected, the magni-
tude of this problem becomes apparent.
Aside from the problem of costs, we would
be very concerned with the effect of this bill
on contract schedules and particularly high
priority national programs which by their
advanced technological nature are the largest
users of ADP equipment. Our experience
indicates that it will be unrealistic not to
expect delays and difficulties in the acquisi-
tion by contractors of ADP equipment if it
is to be centrally controlled by the Govern-
ment. We are fearful that the ultimate detri-
ment to the Government of performance de-
lays may well far exceed any possible sav-
ings which could be realized by such central-
ized controls of contractor ADP equipment.
In summary, while we wholeheartedly sup-
port the goal of overall economy in the use
of ADP equipment by Government contrac-
tors, we doubt that this goal can best be
achieved by an inflexible requirement for
centralized control and management of ADP
equipment.
W. E. Zisch, President, Aerojet-General
Corp.:
In your letter of July 2, 1964, you requested
my comments on the amended version of
HR. 5171 which would authorize the Admin-
istrator of the General Services * * to
coordinate and provide for the economic and
efficient purchase, lease, and maintenance of
automatic data processing equipment by, or
'at the expense of,' Federal agencies."
We have quoted the phase "at the expense
of" to indidate -our concern with the impli-
cation of this provision of the bill. From
the recommendations of the General Ac-
counting Office it is clear that this phrase
was intended to include automatic data
processing (ADP) equipment in the posses-
sion of contractors doing a large part of
their business with the Federal Government.
Should this interpretation not be correct,
the balance of this letter does not apply; we
are not in a position to comment on how
ADP equipment should be provided and
administered for use within Federal depart-
ments and agencies. We are, however, vig-
orously opposed to any planned legislation
which would assign to a Government agency
the responsibility for purchase, lease, and
maintenance of ADP used by industry.
These responsibilities are management func-
tions which can be exercised most effectively
and economically by management itself op-
erating in a free competitive environment.
Specifically, we foresee that in the admin-
istration of this provision of the bill, the
following objectionable situations could
arise:
(a) The contractor would be placed in the
wholly untenable position of having to jus-
tify its requirements to the GSA while de-
fending its performance to the DOD, NASA,
and other Federal agencies.
(b) Vital ADP requirements could remain
unsatisfied while an administrative team
was getting around to investigating and
approving the requirements.
(c) The Government's management agency
Is likely to judge requirements on the basis
of minimum obvious needs directly con-
nected with a specific defense contract. The
contractor on the other hand must judge
his requirements on the basis of overall ef-
ficiency, maintenance of -competitive posi-
tion, and anticipated future needs.
(d) When units of equipment become un-
fit for service (as occasionally happens), a
Whole system could remain out of service
until the central agency could purchase a
replacement. Such delay or other inflex-
ibility could be critical since ADP is a key
factor in business efficiency. With the Gov-
ernment's increased desire for fixed-price
and incentive type contracts, contractors
should not be obligated to relinquish this
fundamental management responsibility to
the Government.
Aerojet feels so strongly about the impor-
tance of 'the ADP function and the need of
top level company management participa-
tion in it, that the highly competent tech-
nical and financial personnel who direct its
operations report to a vice president, who in
turn reports directly to the president of the
company.
Aerojet is convinced that ownership and
management by the Government of ADP
equipment used in the defense industry is
neither practical nor economical. ADP sys-
tems are not only important in the solu-
tion of scientific and engineering problems
relating to defense R. & D., but are becom-
ing increasingly important in the efficient
management of modern business enterprises
being used for accounting, payroll, inven-
tory control, production control, and many
September 21
other management functions. It is our be-
lief that the optimum use of such equip-
ment including determination-of the kind
and amount needed and how it is to be pro-
vided can best be made by the contractor
working in a competitive environment and
with incentives for overall cost reduction.
If the bill, as amended, is ultimately ap-
proved and signed into law, the basic pliilos-
ophy inherent therein may then be equally
applied to all types of items commonly used
"at the expense'of Federal agencies," e.g., (a)
furniture and fixtures, (b) automotive
equipment (c) stationery and supplies, (d)
warehousing facilities, etc. Where would it
end?
I appreciate this opportunity to express
my views and hope they are not considered
to be just emotional ones, but the convic-
tions of one who really believes that de-
fense contractors and the 'Government can
work together in the true atmosphere of free
enterprise. I also wish to advise you that in
the event your committee holds hearings on
HR. 5171, Aerojet-General Corp. would be
pleased to accept your invitation to have a
representative of our .company testify.
Erwin H. Graham, vice president and
comptroller, Chrysler Corp.:
. In our opinion, the amended H.R. 5171 does
not provide any substantive change to the
original bill and we therefore, are unable to
favorably endorse its passage.
Although the General Accounting Office
report (B-146732) and H.R, 5171 are pri-
marily directed toward government users,
we feel the end result will be unnecessary
costs to the Government.
The GAO assumptions on the "life of
equipment" are not necessarily valid in a
field in which *technological advancements
(and attendant cost reductions) appear to
obsolete existing systems on an approximate
21/5-year cycle.
The nature of Government business is such
that increasing complexity of computer op-
eration requires the ability to quickly re-
spond without being tied to an "outdated"
system.
Chrysler's non-Government experience in
computer systems is such that, out of an
existing complement of approximately 30
stored program computers, none were pro-
duced prior to 1960. In the past 12 months,
Chrysler Corp. has installed or replaced
eight separate computer installations due to
increasing job load and technical obsoles-
cense of the replaced equipment.
The fact that Government programs and
requirements for data are continually chang-
ing militates against purchase of equipment
with anything but maximum capacity and
throughput.
As an example, programs of PERT, PERT
cost, line of balance and other sophisticated
analytic 'techniques could not be economi-
cally processed on the majority of equipment
purchased (or leased) 2 years ago.
It is our thought that the proposed signifi-
cant savings to the Government accrued by
adoption of the GAO recommendations and
the attendant H.R. 5171 exists only because
many of the important factors of cost do not
appear to have been given appropriate con-
sideration (e.g., scheduling delivery of
equipment in optimum time for the con-
tractor, handling, shipping and installation
costs, physical facility availability, increased
costs of maintenance due to multiple moves,
technical obsolescence, insurance, freight
and storage, compatability with contractors
commercial equipment, and of extreme im-
portance, reprograming costs) .
Roger Lewis, president, General Dy-
namics Corp.:
In our business, automatic data process-
ing equipment has in the last decade become
an essential, almost indispensable, manage-
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CONGRESSIONAL RECORD ? SENATE 21681
ment, research, and engineering tool. While
these machines are used to perform routine
clerical tasks, their most 'important applica-
tion is in the performance of critical calcula-
tions in design, engineering, and produc-
tion. With them we are able to make tests,
simulate actions, and investigate alternate
possibilities which would require thousands
of man-years to accomplish manually. We
can fairly state that without the advanced
computers now available, the United States
would not be in the excellent technological
position it occupies today.
Because ADP know-how has become an
important industrial major resource, we fa-
vor new section 111(f), which provides that
the Administrator shall not interfere with
or control the use made of automatic data
processing equipment. We raise the ques-
tion, however, whether that section can be
reconciled, particularly insofar as Govern-
ment contractors are concerned, with preced-
ing portion of the bill which vest, in very
general terms, control of ADP equipment
in the GSA.
While the bill provides for relationships
within and between Government agencies,
it is not clear in this respect as to contrac-
tors. This is of concern to us. For instance,
If it is intended that joint use of computers
be made by two or more contractors or by
contractors and Government agencies, prob-
lems of priority, confidentiality of private
developments and information, and compet-
itive advantage will arise. The treatment of
contractors whose business is both military
and commercial is also not clear. The bill
establishes machinery to resolve differences
between Government agencies, but it is not
apparent what procedures will apply when
there is lack of agreement between the Ad-
ministrator and a non-Government user.
We note that under the bill the Adminis-
trator is not to interfere with or control the
determination of automatic data processing
requirements. The interpretation of "re-
quirements," however, could vary. We would
hope that "requirements" would include not
? only the number of machine hours needed
but also the type of equipment, time of usage,
and response, or turn-around,, requirements.
All of these are factors which could affect
a contractor's capability.
We do not presume to comment on the
need for this legislation in respect to Gov-
ernment agencies. We are concerned, how-
ever, with the application of the bill to the
very different problems which must be faced
by non-Government ADP users under diverse
contractual situations, varying from fixed-
price to cost reimbursement types, and from
Wholly company-sponsored projects to those
completely supported by the Government.
For the foregoing reasons, we recommend
that organizations other than Government
agencies be specifically excluded from the
bill. We believe that effective utilization of
ADP equipment by contractors can be
achieved through good contract adminis-
tration rather than through legislation of
this nature.
We are gratified by the interest your com-
mittee has shown in this important area
and hope that our comments will be help-
ful. We had not planned for a representa-
tive of General Dynamics to testify at any
hearing on this matter that might be sched-
uled.
Howard W. Merrill, vice president,
Martin Co.:
Our concern with the original bill centered
largely around the intent of this legislation
and the mechanics by which it might be im-
plemented. The proposed amendment limit-
ing the authority of the Administrator of
the General Services Administration in the
areas of determination of requirements for
and the use of automatic data processing
equipment is helpful, but the intent and
mechanics are still not clear to us.
We believe that it is in the best interest of
the Federal Government to encourage con-
tractors to provide their own facilities, in-
sofar as is practical, and let the forces of
competition control costs. Over the past
several years, the Department of Defense has
energetically pursued a program to divest it-
self of Government-owned and contractor-
used facilities, recognizing the economics of
contractor-provided facilities.
Where computers are used most effectively,
they have become an integral part of man-
agement and operating systems and have be-
come a tool of management which has the
same sensitivity and proprietary value as or-
ganization, policy, operating instructions,
and the like. The computers a company
uses may have considerable impact on its
competitive position. Control of computers
by a Federal agency, unlike other GFE, repre-
sents a serious penetration into the control
of private enterprise. Would it be possible,
under such legislation, for a Federal agency
to show favoritism by allocating more ad-
vanced equipment to one company than an-
other thereby influencing the competitive
position of the companies-involved?
It is Martin practice to use compatible
equipment at all three locations (Baltimore,
Denver, and Orlando) so that: (1) data
processing associated with interdivision work
may be handled more expeditiously; (2)
maximum utilization of the equipment can
be attained by having one plant with unused
machine time perform work for another plant
that temporarily has more work than its
equipment can handle; (3) programing of
similar type jobs at two or more locations
does not have to be duplicated; and (4) op-
erating and programing personnel training
and experience may . be shared. This prac-
tice, which has resulted in significant cost
savings, requires that upgrading of outdated
equipment must be continually studied and
accomplished on an overall company basis.
The success of this practice has beep realized
through the freedom to take advantage of
advanced techniques such as? high speed
teleprocessing.
While computer rentals constitute a con-
siderable expenditure, the costs of ' installa-
tion, operations and programing are usually
much greater. Today, Martin Co. has a con-
siderable investment in scientific and data
processing programs. This investment must
be measured in both time and dollars since
we do not have "instant programing" and
good programers are in short supply. Our
objective is to protect this investment so
that efficiencies may be realized. This pro-
tection is assured by careful planning in
both programing directions and equipment
selection to minimize reprograming and to
spread what has to be done over as long a
period as possible to minimize the impact
on programing resources.
Prior to giving our views at the proposed
hearings, it would be helpful to have an-
swers to the following questions by propo-
nents of the bill. Their answers could have
a significant influence on our position.
1. Would the General Services Adminis-
tration or the agency concerned (DOD for
instance) provide ADP equipment for use by
Martin Co. and other contractors?
2. Would Martin Co. have complete free-
dom of choice as to type, schedule and con-
ditions under which we could replace ADP
equipment?
3. Would Martin Co. be forced or pres-
sured into the use of equipment pools or
data processing centers operated by a Federal
agency or other contractor?
4. How would our relationship with the
various ADP equipment vendors be affected
particularly with respect to systems services
as opposed to equipment maintenance?
5. Is these assurance in the bill that the
power and authority of the General Services
Administration "to provide for * * and
utilization of automatic data processing
equipment by Federal departziaents and agen-
cies" would not be used to influence the
competitive position of contractors?
George J. Fleming, Planning Adminis-
trator, Data Processing, Boeing Co.:
Our main concern is the vagueness of the
phrase "at the expense of the Government."
Freely interpreted, this could include all
computing or data processing equipment
which is charged to overhead when any part
of the overhead is negotiated into a govern-
ment contract. It could also be applied to
the lowest level of subcontractors if they
use computing equipment. Such an inter-
pretation would be costly and in all prob-
ability an interference with the company's
ability to determine its method of operation.
It is our suggestion that the phrase "at the
expense of the gove nrnent," be deleted.
Section F (p. 8, line 21) of the proposed
amendment, deals with authority conferred
upon the administrator. This new section
serves to allay some of our concern; how-
ever, the word "requirements" (p." 9, line 3)
Is also subject to interpretation. For ex-,
ample, the administ ator might take the po-
sition that the equipment he selected is sat-
isfactory to fulfill the requirements deter-
mined by the agencies and other uses. In
this event, the user (Boeing) might be sub-
ject to the del'iys and uncertainties involved
in asking the Bureau of the Budget to re-
view and ,decided the controversy.
John B. ?Iverson, general coun-
sel, Electronic Industries Association,
Washington:
In behalf of the Electronic Industries As-
sociation, I wish to acknowledge your letter
of June 29, 1964, requesting our views on a
proposed amendment to H.R. 5171 which has
passed the House and is now pending before
the Senate Government Operations Com-
mittee.
As stated in its title, H.R. 5171 would "au-
thorize the administrator of the General
Services Administration to coordinate and
otherwise provide for the economic and ef-
ficient purchase, lease, maintenance, opera-
tion, and utilization of automatic data proc-
essing equipment. by Federal departments
and agencies." Section III(a) of the pro-
posed amendment still contains language at
variance with the title which, as the debate
on the floor of the House indicated, could
be interpreted as extending GSA control and
authority, over all such equipment acquired
by, or furnished to, contractors "at the ex-
pense of" the Federal Government. As
stated our October 18, 1963, letter to you, the
retention of this language in the bill would,
In our opinion, create serious problems in
the administration of defense and space pro-
curement programs.
? It is our view that if Congress desires to
enact legislation to coordinate the "purchase,
lease, and maintenance of automatic data
processing equipment" used internally by the
Government, we have no objections. On the
other hand, if the words "at the expense
of" remain in the bill, we still believe very
strongly that the consequences set forth
in our October 18 letter would occur. Thus,
the retention of this language would (1)
increase the costs of administering defense
and space procurement programs out of pro-
portion to any savings to the Government;
(2) create troublesome administrative and
funding problems in the negotiation of de-
fense and space contracts; (3) adversely af-
fect the orderly administration of contracts
by dividing authority and responsibility be-
tween GSA on the one hand, and the pro-
curing agencies on the other, in the pro-
curement of weapons and space systems in-
volving utilization by contractors of data'
processing equipment, which, under H.R.
5171, would ,be acquired by, or funded to
them at Government expense; (4) impede the
development and advancement of computer
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21682 CONGRESSIONAL RECORD ? SENATE
technology; and (5) establish GSA as a
third party to all contracts on which data
processing equipment is used at Govern-
ment expense, thereby causing possible de-
lays in the procurement and delivery of
defense and space weapons. -
We also hold to the view that the ques-
tionable language in this bill would create
problems of interpretation as to when data
processing equipment is procured by the
contractor "at the expense of" the Govern-
ment under the terms of the contract. This
particularly would be a problem in connec-
tion With fixed price contracts under which
the contract price may or may not reflect
all or part of the costs of such equipment.
Moreover, we find nothing in the amended
bill which alleviates our concern over the
language which would give GSA authority
over automatic data processing equipment
used under Government contracts and
financed directly or indirectly by the Gov-
ernment. Subsection (f) would limit the
authority of GSA in some respects, but it
would not, in our opinion, preclude GSA
from exercising management control of such
equipment being used by defense and space
contractors in the performance of contracts
with the Defense Department and the Na-
tional Aeronautical and Space Adminis-
tration.
Also, vesting authority in the Budget Bu-
reau to settle disputes as contemplated by
subsection (f) would, in our view, further
create problems of administration. We do'
not believe that either GSA or the Budget
Bureau has the technical competence to
determine the type of data processing equip-
ment which contractors may need for the
performance of Government contracts, par-
ticularly those involving complex weapons
and space systems. This is a decision which
should be left with the contractor as part of
his legal responsibilities in performing un-
der his contract.
Your letter also inquires whether a repre-
sentative of EIA would desire to testify in
the event of hearings. If action is not taken
to eliminate the language we have referred
to, we would like to reserve the right to sub-
mit oral testimony or a more extensive state-
ment for the record.
We appreciate the opportunity extended to
us of expressing further our views on this
proposed legislation.
The PRESIDING OFFICER (Mr. SAL-
INGER in the chair) . The time of the
Senator from Arkansas has expired.
Mr. McCT.FILLAN. Mr. President, I
ask unanimous consent that I may pro-
ceed for an additional 10 minutes.
The PRESIDING OFFICER. Without
objection, it is so ordered.
Mr. McCLELLAN. Mr. President, the
following reports were submitted to the
committee by the Comptroller General
of the United States and the Tennessee
Valley Authority, the only two agencies
which commented in detail yelative to the
proposed Bureau of the Budget sub-
stitute for H.R. 5171:
Joseph Campbell, Comptroller General
of the United States:
In our letter to you of June 10, 1963,
B-151204, we submitted our views regarding
S. 1577, a similar bill to H.R. 5171. Also, by
letter of May 15, 1963, B-151204, we made a
report to the chairman of the Committee
on Government Operations, House of Rep-
resentatives, on H.R. 5171. In our comments
on each of these bills 'we expressed the be-
lief that enactment of the bills would be in
the interest of the Government and would
result in considerably more economical pro-
curement and utilization of automatic data
processing equipment.
In commenting on HR. 5171 we included
the following statement:
"In our report to the Congress dated
March 6, 1963 (B-115369), on the 'Financial
Advantages of Purchasing over Leasing of
Electronic Data Processing Equipment in
the Federal Government', we pointed out
that there is need in the Federal Government
for an effective mechanism to coordinate and
control the purchase, lease, maintenance,
and utilization of EDP equipment. Accord-
ingly, we recommended to the President of
the United States that he establish such an
office in his organization. We are of the
opinion that overall policy guidance and
direction of the Government's data process-
ing programs can be most effectively ac-
complished through the efforts of a small,
highly placed central management office in
the executive branch of the Government.
However, we recognize that there are various
ways in which central control can be exer-
cised over the procurement and utilization
of this type of equipment. H.R. 5171 pro-
vides such an alternate method. We are not
opposed to the method set forth in HR. 5171;
however, we feel that the mechanism pro-
posed in H.R. 5171 for carrying out the de-
tailed operations of coordination and con-
trol needs to be subject to the policy guid-
ance and overall direction of the Office of
the President."
More recently, in our report to the Con-
gress dated April 30, 1964, (B-115369), on
the "Review of Problems relating to Man-
agement and Administration of Electronic
Data Processing Systems in the Federal Gov-
ernment," we reviewed several problems per-
taining to the management of EDP systems
In the Federal Government. We commented
that these problems have arisen largely be-
cause of the decentralized system of man-
agement used whereby each using agency
makes its own decisions on the procure-
ment and utilization of EDP equipment with-
out regard to the economies available from
considering overall Government needs. We
further commented that our review of these
problems and the manner in which they can
be resolved to the maximum financial ad-
vantage of the Federal Government has rein-
forced our earlier conclusion that an ef-
fective central management organization
with appropriate authority and responsibili-
ty is needed to exercise control over the pro-
curement and use of data processing facili-
ties and- related costs being incurred by the
Government.
As you know, the Director of the Bureau
of the Budget, in response to a directive from
the President, is conducting a study of the
management of automatic data processing
activities throughout the Government. The
report of the study group could have a con-
siderable bearing on executive branch action
with regard to the organization and manage-
ment of ADP in the Government. However,
as of this time, the report has not been
issued and, in the absence of a positive ex-
ecutive branch program which would provide
for the central management organization, it
Is our conviction that the Federal Govern-
ment will continue to spend unnecessarily
substantial sums each year to obtain and use
needed data processing facilities in its
operations.
With reference to the policies and proce-
dures set forth in the bill, we offer the fol-
lowing comments for consideration:
1. We suggest that the following sentences
in subsection 111(f), pages 8 and 9, be
deleted:
"Authority so conferred upon the Admin-
istrator shall not be so construed as to im-
pair or interfere with the determination by
agencies and other users of their individual
automatic data processing equipment re-
quirements. The Administrator shall not
interfere with, or attempt to control in any
September 21
way, the use made of automatic 'data process-
ing equipment or components thereof by',
any agency or user."
We feel that these provisions would place
undue restrictions on the Administrator of
General Services Administration which would
preclude the attainment of the most effec-
tive and economical procurement and use of
automatic data processing equipment. Also,
with respect to the provision in subsection
111(c) for the establishment and use of an
indeterminate number of automatic data
processing funds, we suggest that this pro-
vision be revised to provide for a single auto-
matic data processing fund to be adminis-
tered by the Administrator of General Serv-
ices Administration. The establishment of
multiple funds in the individual agencies
would in our opinion result in the estab-
lishment of a number of separate manage-
ment entities which would mitigate against
central coordination and procurement and
use of these facilities from the standpoint of
the coordinated overall interests of the Fed-
eral Government.
2. The bill proposes to establish electronic
data processing funds for carrying out the
functions enumerated therein to be "avail-
able without fiscal year limitations." This
method of financing, not requiring annual
congressional authorization?as compared
with budgetary and appropriation processes
followed in financing activities through an-
nual appropriations?would materially di-
minish congressional control over such ac-
tivities and should not be permitted in the
absence of justifiable need therefor. It is
our opinion that an annual congressional
review of operations under the funds and
affirmative annual congressional authority in
respect of the availability of the funds are
necessary to place the activities of the funds
under complete congressional control. We
therefore suggest that the activities under
any fund established under this proposed
legislation be restricted to such amounts as
may be provided annually in appropriation
acts.
3. We suggest that, after a date determined
upon, existing appropriations and, unless
specifically so provided, future appropria-
tions of the agencies concerned, other than
appropriations to the fund, shall not be
available for the purchase, lease, or installa-
tion of automatic data processing equipment
of the types taken over by the Administra-
tor.
4. We note the term "organization" ap-
pearing on page 1, line 22, of the bill. If
by use of this term it be intended to au-
thorize the Administrator to make equip-
ment available for, or otherwise supply serv-
ices to, private organizations, which would
constitute an exception to section 3678, Re-
vised Statutes, 31 U.S.C. 628, requiring the
application of appropriations solely to the
'objects for which made and no other, in the
absence of specific authority to the contrary,
then adding the word "private" before the
word "organization" would obviate any doubt
in the matter.
We believe the enactment of the bill would
be in the interest of the Government and
will result in considerably more economical
procurement and utilization of electronic
data processing equipment. Therefore, and
subject to the changes suggested above, we
favor enactment of the proposed legislation.
We will be available to testify at the pro-
posed hearings and we will be pleased to as-
sist the committee in any respect- with re-
gard to this matter.
Aubrey J. Wagner, Chairman, Tennes-
see Valley Authority:
This is in response to your request of June
29 for our views concerning the June 25
committee print on H.R. 5171, amending the
Federal Property and Administrative Services
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1964
CONGRESSIONAL RECORD ? SENATE
Act "To authorize the Administrator of the
General Services Administration to coordi-
nate and otherwise provide for the economic
and efficient purchase, lease, maintenance,
operation, and utilization of automatic data
processing equipment by Federal depart-
ments and agencies." The purpose of the
bill, according to its proponents, is to save
money for the Government and the taxpayer.
It is based largely on a. study repoilt made by
the Comptroller General in March 1963, in
which he found 'that substantial savings
could be achieved through (1) the purchase
of such equipment in lieu of leasing over ex-
tended periods, and (2) improved coordina-
tion among Federal agencies in its utili-
zation.
While the provisions of the committee
print are somewhat less drastic than those
of H.R. 5171 as passed by the House,, even
with the proposed revisions the bill would
vest in the General Services Administration
substantial control over the acquisition, as-
signment, and use of automatic data proc-
essing equipment throughout the executive
branch of the Government, including TVA.
Although subsection (f) of the bill states
that the authority conferred upon GSA shall
not be construed so as to interfere with the
determination by agencies of their individual
automatic data processing equipment re-
quirements or with their use of the equip-
ment, it is difficult to reconcile this provision
with the broad authority given GSA in sub-
section (b) as regards the acquisition, trans-
fer, and joint utilization of such equipment.
Indeed, subsection (f) appears to anticipate
controversy in these matters inasmuch as it
provides for review and decision by the
Bureau of the Budget in cases of dispute.
In either event, whether the decision were
made by GSA or by the Bureau of the Budget,
the effect would be to impair the ability of
TVA to carry out its operations in what it
finds to be the most efficient and economical
manner.
This is of special concern to TVA in the
operation of its power system. As you know,
TVA is required by the TVA Act to operate
its power system as efficiently and economi-
cally as possible so as to provide power to
the consumers in the area at the lowest
possible rates. Moreover, the TVA Board has
entered into a contractual obligation with
the holders of its 'power revenue bonds to see
that the power system is operated in a sound
and economical manner. Since the use of
automatic data processing equipment is vital
to the efficient and economical operation of
large steam electric generating plants as well
as the power system as a whole, the ability-
of the Board to make good on these obliga-
tions will obviously be impaired if the ac-
quisition and utilization of such equipment
is subject to the control of another agency.
We have an IBM 704 ADP system at Chat-
tanooga, Tenn., which is the headquarters
and dispatching center for the TVA power
system. Originally installed on a.lease basis,
TVA purchased the system as soon as its
usefulness had been demonstrated. This
equipment is used during part of every hour
of every day to check the loading of the pow-
er system. Between these calculations it is
used for a number of other purposes, such
as determining the moat desirable schedule
for water releases in the Tennessee River
water control system, preparing payrolls, and.
performing various other types of account-
ing work and engineering calculations. It
is operated on the average of 85 hours per
week, and new applications are added con-
stantly, increasing the value and the econ-
omy of the system operation. In fact, be-
' cause the rapidly expanding opportunities
for effective use of ADP equipment in TVA's
operations will soon exceed the capacity of
the 704, we have arranged to replace it by
1966 with a much improved and more versa-
tile system, the IBM 360.
From time to time TVA has made its equip-
ment available to other Government agencies
and will continue to do so as feasible, but
because it must be constantly available for
power system purposes, TVA must retain
custody of the equipment and control of its
use. Here, it seems to us, the objectives of
HR. 5171 are being achieved by TVA, and we
do not see how the intervention of the Gen-
eral Services Administration would better
serve those purposes.
A further and important application by
TVA of ADP equipment is in the control of
the operations ,of individual generating
plants. Because of the pressure to obtain
higher plant efficiency and to hold down
costs, the trend in power system operations
is increasingly toward automation, and the
steam electric generating plants now being
designed and constructed by TVA include
provision for automatic control through the
use of special ADP equipment. At TVA's
Paradise Steam Plant, for example, an elec-
tronic control controls the moment-to-mo-
ment functioning of the steamplant-24
hours a day, 7 days a week. To the ex-
tent this electronic unit is subject to manual
control, it is operated by steamplant op-
erating personnel, not computer operators.
Such equipment is activated by themo-
couple voltages, pressure sensor signals, and
switch contact closures rather than by data
from punched cards or magnetic tape as is
the case with computers used by other Fed-
eral agencies for the usual Government func-
tions. The ADP installations must be spe-
cially designed to meet the requirements of
each particular plant. The equipment-is not
leased 'but is purchased by TVA through com-
petitive bidding procedures and is paid for
out of power system proceeds, not appropri-
ated funds. Since this equipment is used
continuously in the operation of the plants,
there is no opportunity to share it with
other agencies. Consequently, there is no
basis on which the General Services Admin-
istration could- accomplish a reduction in
cost or promote more efficient use.
Within the next few years it is expected
that about $31/2 million will be expended for
additional specialized equipment of this kind
for installation at TVA's steam powerplants.
This amount is relatively small when com-
pared with TVA's total expenditures for tur-
bines and generators, transformers, steel,
coal, and heavy construction machinery, but
the installation of ADP equipment is as im-
portant in TVA's efficient operation of the
power system. Consequently, it is just as im-
portant that TVA retain full control over the
acquisition and use of the ADP equipment as
it is with respect to the other types of equip-
ment and materials required in operating the
power system.
It was in recognition of TVA's need for
continuing authority to acquire and utilize
without control by another agency the equip-
ment and materials required in TVA's force
account construction and chemical and
power operations, and also in recognition of
TVA's record of responsible exercise of such
authority, that the Federal Property and Ad-
ministrative Services Act has included in sec-
tion 602(d) (12) an exemption for TVA in
those respects. Since the reasons for such
exemption apply equally to ADP equipment
required in those programs, we urge that
TVA's existing exemption under the act be
left unchanged so that it will continue to
apply to ADP equipment acquired for use in
those programs. This could be accomplished
by inserting on page 8, line 17, of the Com-
mittee Print of Ha. 5171 the words ", ex-
cept as to paragraph (12) thereof," between
"Act" and "shall."
Mr. DOUGLAS. Mr. President, will the
Senator from Arkansas yield?
Mr. McCLELLAN. I yield.
21683
Mr. DOUGLAS. Do I understand cor-
rectly that the committee has decided
not to recommend the bill in this ses-
sion?
Mr. McCLELLAN. Does the Senator
mean in this session. of Congress? -
Mr. DOUGLAS. In this session.
Mr. McCLELLAN. Yes. The com-
mittee feels that there is need for study.
We conferred with the Bureau of the
Budget and others interested, and it is
the hope and expectation of the com-
mittee, that early in the next session of
Congress, the bill will be reintroduced
just as it passed the House, or as pro-
posed to be amended by the Bureau of
the'Budget, and obtain as speedy action
as possible on it.
This gets into an area where there are
many problems which need to be re-
solved. It is not a case of the commit-
tee being against the measure, or trying
to delay or obstruct it. It is the case of
a genuine desire to determine whether
legislation is needed and, if so, to recom-
mend legislative action which will be
beneficial in this field.
Mr. DOUGLAS. I appreciate that note
of reassurance on the part of the Sena-
tor from Arkansas. It so happens that
this is a question in which I have been
very much interested, as chairman of
the Joint Economic Committee, and we
have made studies on this question also.
We came to the conclusion that perhaps
hundreds of millions of dollars could be
saved by purchase rather than by rental,
because the IBM charges a very high
rental during the life of the automatic
data processing machinery. By purchas-
ing them outright, we could pay for the
rentals over the course of a few years,
and have permanent use of the machines
without rent for many years.
I introduced a companion bill to the
House bill. I believe it really has great
possibilities. I am very glad the Sena-
tor from Arkansas has now reassured us
that it does not mean defeat for the
measure, but merely postponement.
Mr. McOLELLAN. I know of no desire
,on the part of anyone on the commit-
tee to obstruct or defeat the measure. It
is a difficult problem and, since there
are many who wish to be heard, extensive
hearings may be necessary. No one
knows when the session will adjourn,
but anticipating adjournment in due
time, we thought we would not have time
to process the bill during the present
session. For that reason, and that rea-
son only, the matter is being deferred.
I wished to make this announcement,
however, to try to reassure Senators who
are interested in this question that the
purpose is to perfect this proposed leg-
islation and to expedite it when we can.
Mr. DOUGLAS. At an early time in
the next session?
Mr. McCLELLAN. The Senator is
correct.
Mr. DOUGLAS. That is most reassur-
ing. I hope that Senators and readers
of the CONGRESSIONAL RECORD will study
the report which the Committee on
Government Operations is making, to-
gether with certain other material which
our Committee on Defense Expenditures
has prepared, because I believe that it
will convince people that there are great
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21684 CONGRESSIONAL RECORD -- SENATE
..i
savings to be effected by purchase rather(
than by lease.
COMMITTLE ASSIGNMENTS OF
SENATOR 'THUR1VIOND
Mr. MANSFIELD. Mr. President, in
view of the fact that the distinguished
Senator from South Carolina [Mr. THUR-
MOND] has, on his own volition, changed
his allegiance from the Democratic to
the Republican Party, I feel that I should
make a statement relative to his commit-
tee assignments.
The present Senate ratio is 66 Demo-
crats to 34 Republicans?that is, with the
Senator from South Carolina [Mr. THUR-
moND] going over to the Republican side
of the aisle.
This means that the Democrats would
be entitled to 66 percent of the member-
ship on the two committees. The pres-
ent overall membership on both com-
mittees is 17.
Prior to Senator THURMOND'S change
of party, the Democrats had 12 seats on
each and the Republicans had 5.
When I refer to these two committees,
I refer of course to the Committee on
Commerce and the Committee on Armed
Services.
If the party ratio of the present mem-
bership of the Senate as a whole is ap-
plied to the 17-man membership of each
committee, it yields 11.2 Democrats and
5.8 Republicans. ? In the circumstances,
unless it is intended to change the old
ratio in some other committee or com-
mittees, it would appear that the Re-
publicans would be entitled to an addi-
tional seat on each of the two commit-
tees and the Democrats would lose them.
In short, the ratio would become 11 to 6
Instead of 12 to 5. Following precedent,
each party determines its choice of mem-
bers for each committee. In the pres-
ent circumstances, it would be, there-
fore, the decision of the Republican cau-
cus as to whether or not Senator TduR-
MOND retains his present membership on
the two committees or some other Re-
publican is substituted for him and he is
otherwise assigned. If he remains on
the Armed Services and Commerce by
choice of the Republican caucus, no Sen-
ate action is necessary. If the Republi-
cans decide to shift him, a pro forma
resolution of the Senate would be neces-
sary to reflect the shift.
Mr. DIRKSEN. Mr! President, will
the majority leader yield?
Mr. MANSFIELD. I yield.
Mr. DIRKSEN. I am delighted that
the majority leader has clarified this
question concerning the party ratio on
the two' committees in question. We
shall have a policy meeting tomorrow.
And it is entirely correct that this mat-
ter should be discussed. I am delighted,
Indeed, that the majority leader has
clarified the situation at this time.
Mr. MANS]oihLD. I thank the minor-
ity leader.
WATER RESOURCES PLANNING
Mr. HARTKE. Mr. President, the
water resources planning bill was passed
by the Senate last November, and is now
on the Union Calendar in the House of
Representatives, having been reported
on September 2. I know many Members
of the Senate are interested in its pas-
sage, and supported its enactment, as
I did.
Indiana, like many other States, has a
stake in such legislation. Because of
that concern, before the more compre-
hensive Senate bill 1111 was reported,
I introduced a somewhat similar bill,
S. 2280. It would set up a Wabash Basin
Interagency Water Resources Commis-
sion. If the more general bill is enacted
into law, I hope to see the Wabash in-
cluded as one of the regions for which a
planning commission will be established.
Its inclusion is needed for flood control
and other purposes, and there are now
indications that in the foreseeable fu-
ture the need will include that of water
supply.
Water supply and planning for its im-
provement, Mr. President, constitute a
growing problem in many areas of the
Nation. Despite relatively abundant
water supplies in Indiana, the district
chief of the Army Corps of Engineers
recently declared that the State is on its
way to becoming one of those which face
a shortage in the not-too-distant future.
I hope the water resources planning bill
will become law before the end of this
Congress, and that it may be possible to
set up a Wabash Basin commission such
as my separate bill calls for.
An editorial recently published in the
Pharos-Tribune and Logansport Press,
of Logansport, Ind., pointed up the im-
minence of water-supply problems in
Indiana.
I ask unanimous consent that the edi-
torial be printed in the RECORD.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
WATER SHORTAGE GRADUALLY DEVELOPING
Logan-land residents who have shown little
concern while other States have been re-
porting water shortages had better believe
that it can happen here too.
No less an authority than the district chief
of the Army Corps of Engineers in a talk
in a neighboring city last week declared that
Indiana is on its way to becoming a water-
short State in the not too distant future.
Cass, Miami, and Carroll County residents
have been interested in the Mississinewa, Sa-
lamonie, and Huntington reservoirs purely
from a flood-control standpoint. The rav-
ages of high waters in the flood seasons have
been their primary concern. However, the
time may come when we will be much more
thankful for the water storage they provide
than for the floods they prevent.
We have long taken our water resource for
granted. This is especially true here in Lo-
gansport because we are fortunate enough to
have two rivers from which we can draw our
water supply. However, it is becoming more
, and more a premium commodity as our popu-
lation grows and the amount of available
water remains the same. The conservation
of our water supply thus grows in importance
each year.
BANK CONTROL LEGISLATION
Mr. ROBERTSON. Mr. President, I
ask unanimous consent to have printed
in the RECORD at this point as a part of
my remarks an editorial entitled "Fast
Passage of a Moderate Law," published
in the American Banker for September
September 21
16, 1964, dealing with bank control legis-
lation.
There being no objection, the editorial
was ordered to be printed in the RECORD,
as follows:
FAST PASSAGE OF A MODERATE' LAW
The rapid passage of the bank control law,
signed by the President last weekend, brings
up a number of points.
One of the most important is the fact that
when there is a clear need for banking legis-
lation, it can be accomplished with consider-
able speed. There has been much concern
expressed over the glacial progress of much
legislation which many bankers want; but
the lesson taught by this recent rapid run
through the Congress is that the degree of
urgency, and particularly public awareness
of it, is crucial.
The recent outbreak of bank failures had
galvanized the Federal Deposit Insurance
Corporation into vigorous action to get a law
to help it prevent more collapses in the same
pattern. Congress clearly agreed with the
FDIC's concern, and with those who sup-
ported the FDIC in this effort, and answered
its request with fast affirmative action.
Most banking legislation, however, is not
so obviously in the public interest, or so
urgent. Quite simply, most of it does not
have the same kind of steam behind it as
did the ownership notification law. Most
banking legislation presently being worked
on or contemplated has to do with adjust-
ments in existing procedures, rather than
with response to a need urgently and clearly
defined. For the more modest goal of ad-
justment, pending legislation calls for more
deliberate evaluation, and particularly for
the reconciliation of conflicting objectives.
And so it properly should take longer to
percolate.
Another interesting aspect of the new law
is that it does not seek to prevent shifts in
ownership control of banks, but only to have
the regulatory authorities be given notice
when such a change takes place. In this re-
spect it is somewhat milder than what many
had considered desirable; but it was the
judgment of those responsible for getting it
enacted that their purpose would be served
just as well by the milder version?and that
the milder version had a far better chance of
passage.
just after the law was passed by the Sen-
ate, and before it was signed by the Presi-
dent, however, came a brusque reminder
that mere legislation cannot prevent bank
failures. Crown Savings Bank of Newport
News, Va., had to be closed, and for the
second time in a year, the FDIC had to take
the rare step of opening an interim bank on
the site, to handle its obligations.
Although there had been no recent change
in ownership, the failure followed part of the
same pattern of previous failures this year?
the bank had overcommitted itself to bad
loans outside its own area. And there is
nothing that legislation can do about that
problem?nor, in fact, would anyone main-
tain that in a free enterprise economy, any
legislation should try.
The responsibility Of the Government
should properly extend to protection of' the
rights of depositors. But the bank as a busi-
ness institution should be free to compete?
with the risks that that implies?without
special propping.
It still requires good banking practice to
maintain sound, efficient banks. Laws can-
not prevent poor performance.
And so, while the FDIC was right in asking
to be notified when changes in ownership
take place, it used good judgment and re-
straint in not asking for too much power
over bank operations. For it would be im-
possible for any agency to exercise such
power so that it would at all times be effec-
tive, or wise, or in keeping with the free-en-
terprise philosophy.
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