oversight

Acquisition and Use of Software Products for Automatic Data Processing Systems in the Federal Government

Published by the Government Accountability Office on 1971-06-30.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

REP
      llllllllllllllllllllllillllllllllllllllll
             LM095611
                  COMPTROLLER     GENERAL.    OF      THE    UNlYED   STATES
                                WASHINGTON.    D.C.     20548




B-115369




To the President of the Senate and the
Speaker of the House of Representatives


         This is our report   on the acquisition    and use of
software    products for automatic  data processing    systems in
the Federal Government.

         Our review was made pursuant to the Budget and
Accounting   Act, 1921 (31 U.S.C. 53)> and the Accounting
and Auditing   Act of 1950 (31 U.S.C. 67).

          Copies of this report    are being sent to the Director,
Office    of Management and Budget; Administrator       of General
Services;    Director,    National Bureau of Standards;    and the
heads of-Federal       departments and agencies,




                                                            Comptroller  General
                                                            of the United States




                         50TH ANNWERSARY                    1921.1971-
  I




      COMPTROLLERGENERAL'S                                          ACQUISITION AND USE OF SOFTWARE
      REPORT TO THE CONGRESS                                        PRODUCTS FOR AUTOMATIC DATA
                                                                    PROCESSING SYSTEMS IN THE
                                                                    FEDERAL GOVERNMENT
  I                                                                 B-115 369




      DIGEST
      ------


      WHY THE STUDY WAS MADE

            Software   is   a term   that   has   come into   use   with   automatic   data
            processing  (ADP) systems to identify    computer programs,     procedures,
            and related  documentation  and to distinguish    such features     from the
            hardware components of the systems.

  I         It is estimated   that      Federal agencies are spending between            $2
            billion   and $3 billion      a year for acquisition and in-house            development
  I         of software.

            The General Accounting  Office   (GAO) studied     the current   method of
            developing,  acquiring, and using software      products   because of the level
            of annual eeenditures   and the apparent     lack of coordinated      management
            guidance over such acquisitions.


      PRINCIPAL FINDINGS

            Many broad management problems were found during the GAO study.
            One important   problem that was not receiving        adequate management atten-
            tion involved   the change which was taking place with regard to the way
            computer services    were being marketed to the Federal Government by the
            computer vendors.     The acquisition     of software   from computer manufac-
            turers  has usually   been an unidentifiable      part of the total   price of a
            computer system.

            During the past few years, many changes in marketing                    practices
            by computer manufacturers           have occurred.        These included      the separate
. 1         pricing     (unbundling)     of software      products,    the introduction       of diverse
  I
            contractual      arrangements      for acquiring      software,     the advent of general-
            purpose proprietary         software     packages,    and the licensing       of use of
* I         software     products    with overly      restrictive     provisions.      The Federal Govern-
            ment has had no centrally            guided or unified       approach for dealing       with
            these changes.         (See ch. 2.)




      Tear Sheet



                                                                               JUNE30,1971
                                                                                                                 t
                                                                                                         I
                                                                                                         I       1
                                                                                                         I       L
                                                                                                         I       L
                                                                                                         ’       .
                                                                                                         I       *
                                                                                                         I       *
     Federal users,    For the most part,         separately     acquired       their                    I
                                                                                                         I
     needed computer software    without         centralized     direction        or guidance.           I
     As a result,   they have:                                                                           I
                                                                                                         I
                                                                                                         I
       --Procured   computer programs unnecessarily    since             they                            I

          were already available   at other data processing                                              I
          locations  within  the Government.   (See p.22)                                                I
                                                                                                         I
                                                                                                         /
       --Procured     software   products  with overly    restrictive-                                   I
          use provisions      and thereby required    additional
                                                                                                       ?
          software   procurements     in multiuse  instances.         (See p.23.)                      I
                                                                                                       I
                                                                                                       I =
       --Acquired      like computer programs at varying prices                within                  t
          a relatively      short period of time.  (See p. 22)                                         I
                                                                                                       I
                                                                                                      I
       --Deprived    the Government of an opportunity             to benefit                          I
          from  quantity  procurements.  (See p. 23.)                                                 I
                                                                                                      I
                                                                                                      I
       --Used various     criteria    and techniques   for selection                                  I
          and evaluation     of computer software     which resulted                                 I
                                                                                                     I
          in the acquisition       of many variations    (some being                                 I
          better  than others)      of the same product.     (See p. 24)                             I
                                                                                                     I
                                                                                                     I
       --Duplicated       unnecessarily    technical     evaluations     of                          I
                                                                                                     I
i         computer     programs.      (See p. 24)                                                    I
                                                                                                     I
rI   The acquisition    practices   followed     by Federal agencies were                            I
                                                                                                     I
     necessitated    because of limited     activity     by central management agencies              I
     of the Government in providing        policy    guidance for acquiring   and utilizing          I
     computer software.       (See ch. 5.)                                                           I
                                                There is a definite   need for:                      I

       --More positive       central    guidance and more effective                                  t
                                                                                                     I
          procurement    regulations       specifically directed    to                               I
          software    acquisitions.                                                                  I
                                                                                                     I
                                                                                                     I
       --Future    planning     of software    requirements     on a Govern-                         I
          ment-wide basis.                                                                           I
                                                                                                     I
                                                                                                     I
       --Coordinated      research     in software     development.                              I
                                                                                                 I
                                                                                                 I
       --Better   communications  between        the central  manage-                            I
          ment levels  of the Government         and the Federal agencies                        I           l


          with data processing   systems.                                                        I
                                                                                                 I
                                                                                                 I
                                                                                                 I *
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
                                                                                                 I
               --More effective     use of E'ederal     Supply     Schedule         contracts
                  in software   procurements.

               --Use of the ADP revolving        fund   administered  by the
                  General Services    Administration       (GSA) to acquire
                  generalized  software   packages      for Government-wide
                  application.

Q/             --Better     procedures
                  specifications.
                                         for   more clearly      defining      software


i    I         --A catalog,   inventory, or central reference                 index of
                  computer programs that have been developed,                   tested,
                  or in use by the Government.

               --Software     standards      which would promote greater inter-
                  changeability      of computer programs among Federal data
                  processing     installations.

               --Better      quality    of software documentation           which    would
                  facilitate       reuse of computer programs.

             GAO believes     that,  to better       manage the vast resources       invested
             in data processing       facilities,       the Federal Government needs a master
             plan.     Such a plan would include           agreed-upon   goals or objectives    against
             which quality      and progress       could be measured.       It would provide  resource
             planning,    implementation        procedures,     and appraisal   and feedback procedures.

             The central   agencies of the Federal Government should provide         the
             guidance and leadership     necessary   for procuring   computer software     as
             efficiently   and economically    as possible.     Management of ADP resources,
             however, involves    more than procurement.      Thus existing   policy   directives,
             such as Office    of Management and Budget (OMB) Circular       A-54, need to
             be amended to include    policy   guidance on software    management.

             The Federal Government-- as the largest        single    user of ADP--should
             adopt a policy  against  restrictive-use       provisions     in contracts    for
             computer programs that it acquires        and should consider       all alterna-
             tives available  for satisfying       computer software      needs.    (See ch. 3.)
         I
    *I       Substantial    savings can be realized     by the Federal Government
             through proper evaluations,     acquisitions,      and uses of generalized
             computer software     packages as tools for expediting      its data processing
             activities.     The National  Aeronautics     and Space Administration      has
             reported    annual savings of $2.3   million    from such practices.       (See ch.      4.1
                                                                                                            I
                                                                                                            I
                                                                                                          I     :
                                                                                                         I      L
                                                                                                         I
                                                                                                         I
                                                                                                         I
                                                                                                        I
                                                                                                        I
    Substantial      savings can also be realized          through the use of a                         I
                                                                                                        I
    single-purchaser       concept whereby one agency would acquire           and manage                I
    all software      products     of a similar    nature.     This would provide for                   I
                                                                                                        I
    bulk procurement,        single evaluation,       and elimination    of duplication                 I
    as well as better       procurement     techniques.                                                 I
                                                                                                        I
                                                                                                        I
                                                                                                        I
RECOMMENDATIONSOR SUGGESTIONS
                                                                                                        /)

    GAO recommends     that the Director,    Office of Management and Budget,                       I
                                                                                                    I
    arrange for the      formulation   of a master plan for the acquisition   and                  I ”
    use of software      and the structure   needed to implement the plan.    GAO                  I
    recommends also      that OMB Circular   A-54 be amended to include specific                   I
                                                                                                   I
    policy  guidance     to user agencies for the acquisition,    management, and                  I
    use of software      throughout  the Federal Government.                                       I
                                                                                                   I
                                                                                                   I
    Relative    to the guidance   and leadership necessary    for the                              I
                                                                                                   I
    procurement    of software,   GAO recommends further   that the:                                I
                                                                                                   I

      --Director,      Office   of Management and Budget provide                                   I
                                                                                                   I
         coordinated      management and central  policy  direction                                I
         to users for determining       the most economical                                        I
                                                                                                   I
         and efficient       means for obtaining computer software.                                I
                                                                                                   I
                                                                                                   I
      --Administrator       of General Services     employ the single-                             I
         purchaser    concept,    use formally    advertised    procurement                    I
         contracts,    strive   to obtain nonrestrictive        or license-                    I
                                                                                               I
         free contractual      arrangements    for software     with rentals                   I
         based on use, consider        buying outright     software   pro-                     I
                                                                                               I
         ducts that would be widely used throughout             the Government,                I
         and maintain     an inventory     of computer software.                               I
                                                                                               I
                                                                                               I
      --Director    of the National    Bureau of Standards establish                           I
         and maintain    a reference   index of computer programs,                             I
                                                                                               I
         make detailed    technical   evaluations  of computer programs                        I
         for use by all Federal ADP installations,        and promulgate                       I
                                                                                               I
         Federal standards      for computer languages and program                             I
         documentation.                                                                        I
                                                                                               I
                                                                                               I
    In addition,      GAO recommends that,    pending the issuance of more                     I
    specific    policy   guidance,   the operational  and cost factors     described           ID
                                                                                               I
    in this report      be used by Federal agencies in reaching      decisions     on          I
    software    needs.     (See app. V.)                                                       I
                                                                                           I *
                                                                                           I
                                                                                           I

                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                                                                           I
                                       4                                                   I
                                                                                           I
                                                                                           I
    AGENCY ACTIONS AND UNRESOLVED ISSUES

          Some of the management problems associated         with acquisition
          and use of computer software     in the Federal Government have been
          recognized and discussed    at two Federal interagency        conferences
          sponsored by OMB in 1969 and 1970.       GAO believes     that the practice
          of holding these conferences     should continue      and the conclusions
I         and recommendations   be formalized    in writing.

          OMB has advised that it plans to issue instructions             to guide
          executive     departments    and agencies in software    acquisition.    'These
          instructions,      coupled with the actions   recommended in this report,
          should provide      the guidance and leadership     needed in the procurement
          and use of software       products.,


    MATTERS FOR CONSIDERATION BY THE CONGRESS

          The Joint Economic Committee and the House Government Operations
          Committee have had an active     interest     in computer procurement       and
          management problems for some time.          Both committees    have held hearings
          within   the past year on the subject.        This report    contains    a description
          and analysis     of numerous management problems pertaining           to the sub-
          stantial    annual expenditures  of the Government for computer software
          products    together  with recommendations      to executive   branch agencies
          for strengthening     management practices.

          Accordingly,  GAO suggests that the Congress explore    these matters
          with the executive  branch for the purpose of obtaining     improvements
          in the Government operations   in this area.




     Tear Sheet
                                Contents

                                                                            Page

DIGEST                                                                        1

CHAPTER

   1      INTRODUCTION
              Some definitions
              Scope of study
              Scope of software  problems
              Appendixes to this report

   2      SEPARATE PRICING FOR COMPUTER SERVICES (UNBUNDLING)                11
              Impact on Federal Government                                   12
              Recommendations                                                13

   3      RESTRICTIVE-USE LICENSES ON PROPRIETARY SOFTWARE
          PRODUCTS                                                           14
              Potential  for increased costs to the Government               17
              Recommendations                                                17

   4      ACQUISITION AND USE OF PROPRIETARY SOFTWAREPRODUCTS                19
              Need for active GSA participation            in
                software     procurements                                    19
                   Automatic     flowcharting   software                     20
                   File management software                                  21
                   Information      retrieval  software                      21
                   Simulation      software                                  21
                   Compilers                                                 22
                   Applications       software                               22
              Savings available        to the Federal Government
                through use of proprietary          software  packages       25
              Potential     for savings                                      26
              Recommendations                                                27

   5      OTHER SOFTWAREMANAGEMENTPROBLEMS                                   28
              Central    guidance                                            29
              Procurement     regulations                                    29
              Inventory     of computer software      in Government          31
              Catalog of available        programs                           31
              Technical     evaluations                                      31
              Software standards                                             32
              Planning needed for future         software  requirements      32
              Coordinated     research                                       33
              Communication      between central     management and users    33
              Delegations     of authority     by GSA                        34
              Awards of Federal Supply Schedule contracts            for
                 software                                                    34
                                                                   Page

CHAPTER

                The Federal Supply Schedule for ADP procurements    35
                Use of the ADP revolving        fund                35
                Specifications                                      36
                Software     documentation                          36
                Need for stronger       central   guidance          37
                Recommendations                                     37
                GSA, NBS and OMB comments                           38

APPENDIX

       I   COMPUTERSOFTWARE--AN OVERVIEW                           41
              Growth in use of ADP systems                         41
              Evolution     of software                            42
              Operational     systems concept                      43
              Software developed in-house                          45
              Software exchange libraries                          48
              Software    firms                                    51

  II       FEDERAL MANAGEMENTPRACTICES FOR COMPUTERSOFTWARE        55
               Office     of Management and Budget                 55
               General Services Administration                     56
                     Guidance to users for procuring   software    57
               National     Bureau of Standards                    58
                     Duplication   of effort                       59
                     Standards                                     60
               Communication--    A problem in the management of
                  software                                         61
                     Policy guidelines                             62
                     Regulations                                   62
                     Inventory                                     63

III        PROCUREMENTOF COMPUTER SOFTWARE                         64
              Federal Supply Schedule contracts                    64
               GSA delegations      of procurement    authority    66
              ADP fund                                             66
               Individual     agency headquarters     control--
                  a step toward central       management           67
                     Software   for subordinate    installations   67
                     Software   for agencywide applications        68
                     Software for grantees                         68

 IV        EXAMPLES OF GOVERNMENTORGANIZATIONS USING PROPRIETARY
           SOFTWAREPACKAGES                                        71
               MARK IV File Management System                      71
                                                                                        Page

APPENDIX

                AUTOFLOW                                                                 76
                QWICK-QWERY                                                              82
                NAVFLOCHART-C                                                            83
                GOCHART                                                                  85
                SCERT (COMET)                                                            86
                AUDITAPE                                                                 87

       V   FACTORS TO BE CONSIDERED IN MAKING SOFTWAREACQUISITION
           DECISIONS                                                                     88
               Types of need                                                             88
               Methods of satisfying          needs                                      89
               Characteristics         and reliability          of software  products    89
               Hardware considerations                                                   90
               Quality    of documentation,           training,     and maintenance      91
               Contractual       terms                                                   92
               Financial     factors                                                     92

   VI      PLANNING NECESSARY FOR FUTURE MANAGEMENTOF SOFTWARE                           94
               Growth in need for technical      personnel                               94
               Need for standardization      and compatibility                           95
               Use of computational     research                                         97
               Need for improvements      in computer applications                       99
               Need for planning     mechanisms                                         100

 VII       MANAGEMENTCONTROL                                                            101
              Need for software          management                                     101

VIII       RESUME OF PRIOR GAO GOVERNMENT-WIDE ADP MANAGEMENT
           REPORTS                                                                      102
               June 1958                                                                102
               December 1960                                                            102
               March 1963                                                               102
               April  1964                                                              103
               August 1965                                                              103
               April  1968                                                              103
               June 1969                                                                104
                                                   ABBREVIATIONS

        ADP        Automatic        Data Processing

        COBOL      Common Business           Oriented      Language

    I   FORTRAN    Formula      Translator        Language

        FPMR       Federal      Property      Management Regulations

        GAO        General      Accounting        Office

        GSA        General      Services      Administration

        IBM        International           Business     Machines   Corporation

        NASA       National        Aeronautics        and Space Administration

        NBS        National        Bureau of Standards

        OMB        Office      of Management and Budget'

        RCA        Radio      Corporation        of America
i




        1OMB was formerly   known as the Bureau of the Budget prior
         to July 1, 1970.    Throughout this report we have referred
         to this office   as OMB.
COMPTROLLERGENERAL'S                                      ACQUISITION AND USE OF SOFTWARE
REPORT TO THE CONGRESS                                    PRODUCTS FOR AUTOMATIC DATA
                                                          PROCESSING SYSTEMS IN THE
                                                          FEDERAL GOVERNMENT
                                                          B-115369




DIGEST
------


WHY THE STUDY WAS MADE

     Software    is a term that has come into use with      automatic    data
     processing     (ADP) systems to identify    computer programs,     procedures,
     and related     documentation  and to distinguish    such features     from the
     hardware components of the systems.

     It is estimated   that Federal agencies are spending between                 $2
     billion   and $3 billion a year for acquisition and in-house                 development
     of software.

     The General Accounting  Office   (GAO) studied     the current   method of
     developing,  acquiring, and using software      products   because of the level
     of annual expenditures  and the apparent     lack of coordinated      management
     guidance over such acquisitions.


PRINCIPAL FINDINGS

     Many broad management problems were found during the GAO study.
     One important    problem that was not receiving        adequate management atten-
     tion involved    the change which was taking place with regard to the way
     computer services     were being marketed to the Federal Government by the
     computer vendors.      The acquisition     of software   from computer manufac-
     turers  has usually    been an unidentifiable      part of the total   price of a
     computer sys tern.

     During the past few years, many changes in marketing                    practices
     by computer manufacturers           have occurred.        These included      the separate
     pricing     (unbundling)     of software      products,    the introduction       of diverse
     contractual      arrangements      for acquiring      software,     the advent of general-
     purpose proprietary         software     packages,    and the licensing       of use of
     software     products    with overly      restrictive     provisions.      The Federal Govern 1-
     ment has had no centrally            guided or unified       approach for dealing with
     these changes.         (See ch. 2.)
Federal users,    for the most part,          separately    acquired       their
needed computer software    without          centralized    direction        or guidance.
As a result,   they have:

   --Procured   computer programs unnecessarily      since          they
      were already    available   at other data processing
      locations  within     the Government.   (See ~~23.1

   --Procured    software    products  with overly     restrictive-
      use provisions      and thereby  required    additional
      software   procurements     in multiuse   instances.         (See p.23.)

  --Acquired      like computer programs at varying   prices              within
     a relatively      short period of time.  (See p.23.)

  --Deprived   the Government of an opportunity              to benefit
     from quantity  procurements.  (See p-23.)

  --Used various     criteria    and techniques   for selection
     and evaluation     of computer software     which resulted
     in the acquisition       of many variations    (some being
     better  than others)      of the same product.      (See p-24.)

  --Duplicated       unnecessarily    technical     evaluations    of
     computer     programs.      (See pa 24.1

The acquisition    practices    followed     by Federal agencies were
necessitated    because of limited       activity     by central management agencies
of the Government in providing         policy     guidance for acquiring   and utilizing
computer software.        (See ch. 5.)      There is a definite    need for:

  --More positive       central    guidance and more effective
     procurement    regulations      specifically directed     to
     software    acquisitions.

  --Future    planning    of software     requirements      on a Govern-
     ment-wide basis.

  --Coordinated      research     in software     development.

  --Better   communications  between         the central  manage-
     ment levels  of the Government          and the Federal agencies
     with data processing   systems.




                                         2
  --More effective     use of Federal       Supply   Schedule       contracts
     in software   procurements.

  --Use of the ADP revolvinq     fund      administered   by the
     General Services Administration          (GSA) to acquire
     generalized  software packages        for Government-wide
     application.

  --Better     procedures   for   more clearly   defining       software
     specifications.

  --A catalog,   inventory, or central reference              index of
     computer programs that have been developed,                tested,
     or in use by the Government.

  --Software     standards      which would promote greater inter-
     changeability       of computer programs among Pederal data
     processing     installations.

  --Better      quality    of software documentation        which    would
     facilitate       reuse of computer programs,

GAO believes     that,  to better       manage the vast resources       invested
in data processing       facilities,       the Federal Government needs a master
plan.     Such a plan would include           agreed-upon   goals or objectives   against
which quality      and progress       could be measured.       It would provide  resource
planning,    implementation        procedures,     and appraisal   and feedback procedures.

The central   agencies of the Federal Government should provide          the
guidance and leadership     necessary    for procuring   computer software     as
efficiently   and economically    as possible.      Management of ADP resources,
however, involves    more than   procurement.     Thus existing   policy   directives,
such as Office    of Management and Budget (OMB) Circular        A-54, need to
be amended to include policy      guidance on software     management.

The Federal Government-- as the largest          single user of ADP--should
adopt a policy   against   restrictive-use       provisions  in contracts    for
computer programs that it acquires          and should consider    all alterna-
tives  available  for satisfying        computer software   needs.    (See ch. 3.)

Substantial    savings can be realized      by the Federal Government
through proper evaluations,      acquisitions,       and uses of generalized
computer software     packages as tools      for expediting   its data processing
activities.     The National   Aeronautics      and Space Administration      has
reported    annual savings of $2.3 million        from such practices.       (See ch.    4.)
    Substantial.     s;iv?lnr;c 7an alsia be realized                  tnrovi~h the use of a
    single-purchaser         conce~~t where'by one agency would acquire                    and manage
    all software      products            of a similar         nature,     Thi,? would provide     for
    bulk procurement,          sinqle evaluation,                 and elimination     of duplication
    as well as better          FrOC?lrement        techRiqUeS.




RECOMMENDATIONSOR SLJGGCSTIONS
                         __-
    GAO recommends       that the Director,    Office  of Management and Budget,
    arrange for the        formulation   of a master plan for the acquisition      and
    use of software        and the structure   needed to implement the plan.       GAO
    recommends also        that OMB Circular   A-54 be amended to include     specific
    policy  guidance       to user agencies for the acquisition,    management, and
    use of software        throughcut  the Federal Government.

    Relative    to the guidance        and leadership necessary    for the
    procurement    of software,        GAQ recommends further   that the:

      --Director,      Office   of Xanagement and Budget provide
         coordinated      management and central   policy  direction
         to users for determining        the most economical
         and efficient       means for obtaining  computer software.

      --Administrator       of General Services     employ the single-
         purchaser    concept,    use formally    advertised    procurement
         contracts,    strive   to obtain nonrestrictive        or license-
         free contractual      arrangements    for software     with rentals
         based on use, consider        buying outright     software   pro-
         ducts that would be widely used throughout             the Government,
         and maintain     an inventory     of computer software.

      --Director    of the National   Bureau of Standards establish
         and maintain    a reference  index of computer programsI
         make detailed    technical  evaluations   of computer programs
         for use by all Federal ADP installations,       and promulgate
         Federal standards     for computer languages and program
         documentation.

    In addition,      GAO recommends that,    pending the issuance of more
    specific    policy   guidance,   the operational  and cost  factors     described
    in this report      be used by Federal agencies in reaching       decisions     on
    software    needs.     (See app. V.!
AGENCY ACTIONS AND UNRESOLVED ISSUES

     Some of the management problems associated        with acquisition
     and use of computer software    in the Federal Government have been
     recognized and discussed   at two Federal interagency        conferences
     sponsored by OMB in 1969 and 1970.      GAO believes     that the practice
     of holding these conferences    should continue      and the conclusions
     and recommendations  be formalized    in writing.

     OMB has advised that it plans to issue instructions             to guide
     executive     departments    and agencies in software    acquisition.    These
     instructions,      coupled with the actions   recommended in this report,
     should provide      the guidance and leadership     needed in the procurement
     and use of software       products.


MATTERS FOR CONSIDERATION BY THE CONGRESS

     The Joint Economic Committee and the House Government Operations
     Committee have had an active     interest     in computer procurement       and
     management problems for some time.          Both committees have held hearings
     within   the past year on the subject.        This report    contains    a description
     and analysis     of numerous management problems pertaining           to the sub-
     stantial    annual expenditures  of the Government for computer software
     products    together  with recommendations      to executive   branch agencies
     for strengthening     management practices.

     Accordingly,  GAO suggests   that the Congress explore  these matters
     with the executive  branch for the purpose of obtaining     improvements
     in the Government operations     in this area.




                                          5
                                          CHAPTER 1

                                        INTRODUCTION

           During the early years of computer development,                 management
    had difficulty       keeping abreast of rapid changes and was preoccupied
    with the acquisition         and application     of the costly     machines.    The
    increased      complexities     of programming,     the shortage of programmers,
    the increased      cost of this effort       to the point where it surpassed
    the cost of the machines,          and   the new   marketing   trends,    all contributed
    to a need to inquire         into how well the Federal Government was managing
    this resource.        To this end, the General Accounting           Office   has studied,
    on a Government-wide        basis,    the acquisition      and management of computer
    software.

    SOME DEFINITIONS

          Computer software    consists     of programs,     routines,    codes, and
    other written  information     used with computers,         as distinguished      from
    computer hardware.      A software    package-- also commonly referred          to
    as a computer program or software         product--is      an accumulation    of
    fixed sets of instructions       expressed in a specific          manner and assembled
    into one unit along with the related          written    material    which instructs
    computer machinery    to react in a specific          manner when processing        data.
    These packages are generally        categorized     as:

          --Systems     software     which controls  the execution      of
             computer programs and which may provide            scheduling,
             debugging,     input/output    control,   accounting,    compila-
             tion,  storage assignment,        data management, and re-
             lated services.

          --Utility   software   which provides    for file     creation
             and maintenance    capabilities,   information      retrieval,
             report  generation   capabilities,    applications       pro-
             gramming aids, systems evaluation        techniques,      etc.

          --Applications     software    which provides     capabilities
             for performing     specific    data processing    functions
             such as payroll,     inventory     control,  accounting     and
             statistical    work, and any other data processing
             activity    to which the computer is applied.

    SCOPE OF STUDY
                                                                                                .
i           Our study concentrated      on the Government-wide    policies     and
    practices    followed    in acquiring    and managing software     products,
    particularly      general purpose software     that can be reused by




                                               6
others.   Excluded were those programs prepared   for unique applica-
tions.   This study did not consider   the extent and type of utiliza-
tion of the computer software  products.    More specifically, we
examined into the:

      --Policies   established    by the Office   of Management
         and Budget and the General Services       Administra-
         tion regarding     the acquisition   of computer software.

      --Activities       of GSA and the National    Bureau of Standards
         in the procurement       of computer software     under Public
         Law 89-306--an      act which provides    for the economic
         and efficient      purchase,   lease, maintenance,     operation,
         and utilization       of automatic   data processing    equip-
         ment by Federal departments         and agencies.

      --Marketing    of software    by the   computer    industry.

      --Policies   and practices       of Federal and commercial
         user organizations     relative    to the selection,      procure-
         ment! and management of computer software            in lieu of
         in-house  development     of such software.

      --Savings     available    to the Government if     software
         packages were obtained        as an alternate    method of
         satisfying     computation    requirements.

      --Savings     available  to the Government through    a
         single-purchaser     concept for the procurement     of
         software    packages in lieu of acquisitions     by in-
         dividual    agencies of the Government.

      --Factors  affecting   decisions    concerning  the acquisition
         and use of generalized     computer software    packages.

      The conclusions and recommendations  resulting  from this study
have been reviewed with officials   of OMB, GSA, and NBS and their
views were considered  in the preparation  of the report.

      This report  is one of a series      dealing with ADP management
in the Federal Government. L The more recent reports            in this series
concerned the acquisition    A    peripheral    equipment   for   use with ADP
systems and the maintenance     of ADP equipment used by the Federal
Government.    Appendix VIII   provides    an overview    of the Goverrunent-
wide ADP reports   issued by GAO.
SCOPE OF SOFTWAREPROBLEMS

        The use of data processing          services   by the Federal Government
has increased      at a very rapid rate.           At June 30, 1960, there were
531 general-purpose        computers in use in the Government,              and this
number increased       tenfold    to 5,277 computers by June 30, 1970.               The
annual Federal expenditure            for ADP operations      cannot be readily
determined.      In congressional        hearings    conducted during July 19701
it was estimated       that the Federal Government was spending from $4
billion    to $6 billion       annually   for ADP activities.          Software   is
estimated    by the ADP community to equal more than one half of the
total    ADP costs.      Thus we conservatively        estimate    that the Federal
Government spends in excess of $2 billion               annually     for computer software.

       Computer software,  as we know it today, is the product           of
many years of development     and improvement.      The manufacturers       of
computer systems have provided,      for a stipulated      price,   a total
operational    system which included    equipment,    software    and services.

       Data processing      requirements     of many of the larger        users
of computers required         special   programs beyond the software           services
provided     by computer manufacturers.          To satisfy    these software
needs, larger     organizations       developed in-house      programming      capabilities.
The preparation      of software      by various   individual     organizations       without
coordination     with other users has led to some duplication                of effort.

        In an attempt      to avoid duplications          of effort,      software   exchange
libraries    were established           and sponsored by computer manufacturers,
users, and the Federal Government,                to foster      reuse of computer pro-
grams that were already             developed.      At times,     reuse was not
achieved because of the expense and effort                   needed to modify the
original    programs.        Difficulty      or impracticability        of modifying
programs for reuse was attributed,                in part,     to the inadequate
documentation      (written       support    of the coded machine instructions)
that accompanied the programs.

       Another source of programming            services    was the firms of
software    specialists      who were hired to provide          these services
on a contractual        basis.     A by-product     of the work of the soft-
ware firms was the emergence of general-purpose                   proprietary
computer software        products.      As a result      of this development,
a potential    source of reusable         computer programs became available
to all computer users with similar              equipment.

      In the summer of 1969, some computer manufacturers    adopted
the concept of separate  pricing  of computer hardware,  software,
and related  services.  This marketing  strategy  has been widely



1Hearing  before the Subcommittee  on Economy in Government
  of the Joint Economic Committee,  91st Cong., 2d sess.,
  dated July 1, 1970, pp. 17 and 18.
                                                8
described       as "unbundling."        Under this concept,           computer manufacturers
sell equipment,           software,  and other services          separately.       Additionally,
software       concerns are marketing         proprietary       software     products     for
use with hardware provided by the computer manufacturers.                             Both
the computer manufacturers             and software       firms have imposed certain
restrictions         on the use of these software            products    in an effort         to
protect      their proprietary       interests.        These restrictions,          as well
as matters        relating     to the acquisition       and management of reusable
software,       present problems that must be considered                 in Government-wide
management of computer software.

APPENDIXES TO THIS REPORT

        Appendix I provides    an overview of the growth in use of ADP
systems and the evolution       of computer software         as a separate marketable
product.     It explains   how software   that is not provided         by
computer manufacturers       under their  total    operational     systems
concept can be obtained.        It also discusses       the duplications
of effort    that can result    from uncoordinated        in-house programming
activities     by the many data processing      installations      of the
Federal Government.       (See p. 4~)

        Appendix II discusses          the Federal management policies             for
the acquisition       and use of computer software             as set forth      in
Public Law 89-306 (Brooks Bill) I and the lack of development
of these policies       by the responsible          central    management agencies
of the Federal Government.               This appendix recognizes        the need for
more effective      means of coordination           in the Government-wide           manage-
ment of ADP facilities,            and the need for an inventory           of software.
Appendix II recognizes           further     that central     policy   guidelines      for
computer software,         similar     to those that were issued in OMB circulars
and bulletins      for computer hardware , need to be established                    to promote
effective     Government-wide         software    acquisition      and management de-
cisions.      (See  p.55.)

       Appendix III discusses   the extent to which policies,                     plans,
and techniques    have been coordinated      by the departments                 and agencies
of the Federal Government in the procurement          and use of                computer
software,   and points out a need for the establishment         of               a single-
purchaser   concept for the acquisition       and management of                 software
used on a Government-wide     basis.    (See   P.64.)

      Appendix IV presents   examples of proprietary        software
packages that have been independently        procured by Government
agencies to satisfy   their  immediate data processing         needs.
These examples demonstrate    unnecessary     duplications     of effort,
varied contractual   arrangements,    contracts     that provide un-
warranted    restrictions     on use of software    products, and factors
resulting    in large unnecessary      additional   costs emanating from
uncoordinated       efforts  by the individual    Government agencies for
the procurement        and use of such software    products.  (See p.71 .I

     Appendix V suggests  some measures to be considered   in the
acquisition   and management of computer software   by the operating
agencies of the Federal Government.     (See p. 88.)

      Appendix VI points        out the need for the Federal Government to
capitalize      on its investment       in computer software           and the need
to establish       a planning    mechanism for the future             management of
software     used in Federal data processing              activities.         This appendix
discusses     the phenomenal growth in demand for technical                     data processing
personnel;      the  lack    of standardization       and     compatability       in computer
software     used by the Federal Government;              the failure       to capitalize
on and centrally        coordinate     computational        research     sponsored by
the Government;        and the need for improvements               in computer applica-
tions in an effort         to use the full      potential        of data processing
capabilities       of installed     equipment.       (See p. 94 .)

       Appendix VII discusses    the need for          management     control
over    software.   (See p.lO1.)

    Appendix VIII        presents a resume of prior Government-wide                 ADP
management reports        issued by GAO. (See p. 102.)




                                               10
                                         CHAPTER    2

             SEPARATE PRICING       FOR COMPUTER SERVICES          (UNBUNDLING)

      Since the beginning        of the computer industry,         it has been a
common practice        for most computer manufacturers           to include   software,
engineering     support,    and educational       services    as part of the price
of hardware.        This technique     of single pricing       for automatic     data
processing     equipment and related        services     was one of the issues in-
cluded in antitrust        suits   against   the International        Business Machines
Corporation      (IBM) instituted      by the Federal Government and other
private    organizations.        Some of these suits       are still    pending.

       In June 1969, IBM introduced         a substantial       change in its pricing
policy.     The new concept,      commonly referred         to as "unbundling,"        is a
restricted     form of separate     pricing    which provides         for pricing
computer hardware,        utility  and applications         software,     certain    engineer-
ing services,       and most customer education         programs separately.           The
control    programs     (systems software)     and related        maintenance     were not
separately     priced.      The manufacturer    indicated       that these items were
an integral     part of operational       hardware components.           Additionally,
IBM has not unbundled hardware           maintenance      for rented computers.

      Although    IBM has historically     provided leadership     in the pricing
structure     used by most computer equipment manufacturers,          not all
manufacturers       followed  the newly established    policy.     An analysis     of
the action     taken by seven other manufacturers,        as of January 1971,
showed that three manufacturers         have unbundled and four others still
offer    the operational     systems concept to their     customers.     In addition,
one of the three manufacturers         that unbundled also separately        priced
maintenance.

      Other variations     have also occurred     in marketing     strategy   as
 a result   of the separate-pricing      announcement.        For example, the fiscal
 year 1971 Federal Supply Schedule contract           with the Radio Corporation
'df America (RCA) offers       both the separately      priced   and system-priced
 concepts for certain      of its computer models.         Government users are
 given the option to determine        the pricing    arrangement     to be applied
 to their   new acquisitions.

      The prices    that manufacturers       charge for each element of a system
under the separate-pricing         policy    do not necessarily       relate    to the
prices    charged under the total-system          concept.       For example, under the
separate-pricing       concept,   IBM announced that its hardware would cost
3 percent     less than the former total-system           price.     IBM, however, assigned
a variety     of prices    for certain    software,    engineering      services,    and
education.       A user who needs only the hardware stands to spend 3 per-




                                              11
cent less than he formerly         did but users in need of separately         priced
services     may spend more than they previously       did for the same services
obtained     under the total-system     pricing  concept.      It is generally      re-
cognized that the rates announced for separate            pricing   resulted     in a
total-system      price increase    for the average user.

      There is     much speculation       as to the advantages    and dis-
advantages of      separate    pricing.       We visited  several non-Government
ADP users and      have elicited       comments on the expected impact of these
new marketing      trends.     Generally,      these users were of the opinion
that ADP costs       will  increase,     but there was no evidence available
to relate   the    expected increase        to separate pricing.

      Most non-Government        computer users believe       that separate pricing
will  force them to reevaluate         their  method of operation       to minimize
the projected     increase    in ADP operating     costs.     As a consequence,
they foresee more emphasis on justifying             requirements,    expanding in-
house capabilities,        and increasing    consideration      given to alternate
sources when procuring        software    and other support services.

       The overall       effect    of separate pricing    on the data processing
operations       of the Federal Government cannot be evaluated              at the
present    time.      On the basis of the announced changes in marketing
practices     to date, we believe         that the most important     change will      be
the opportunity        to procure     only the services    that are needed.        Related
to this change, however, is the question               of whether the cost reduction
for the main hardware in a computer system is commensurate with the
reduced services         and whether the restrictions        on the use of software
products     will   afford      the user the most economical      and efficient     means
for satisfying       data processing        needs.

IMPACT ON FEDERAL GOVERNMENT

       The Federal Government,           as a whole, is considered           the largest
single user of ADP systems.              The Government ADP community,            how-
ever, is comprised of many small and large users who operate as
independent     entities.       The impact of separate pricing             on each in-
dividual    user will      vary according       to circumstances.         Large users,
for example, are apt to have large in-house                 capabilities.         The
separate   pricing      concept will       favor these users since it will            not
be mandatory for them to separately               procure programming,          engineering,
or educational       services.        The small user, on the other hand, may not
have such in-house         capability     and therefore     will  be dependent on
providers    of such separately          priced   services.




                                               12
        To benefit   fully     from separate    software    pricing,     to promote in-
house self-sufficiency           to the optimum degree, and to establish             a more
effective    procedure     regarding     the acquisition      of computer products,
there is need for more management attention                toward ascertaining        the
most efficient,      effective,       and economical     method of acquiring        computer
software    for use with Federal ADP systems.              Under the framework of
the Brooks Bill,       each using agency is responsible              for determining     its
own ADP needs.       Therefore      these agencies need to:

      --Critically        evaluate   their  requirements,       especially
         software       services   which are separately        priced.

      --Consider       the optimum      use of in-house     programming
         capabilities.

      --Consider        all alternate     sources   for   satisfying
         software       requirements.

       In this       latter     connection,    user agencies need to make
detailed    cost       analysis    studies    and apply other evaluative
techniques     to      properly    select   the most advantageous    sources
for software         and to support the make or buy decision.

RECOMMENDATIONS

      GSA, as the Government agency responsible         for the procure-
ment-of ADP services,     must provide   the leadership     in negotiating
with software   suppliers   and must guide Federal agencies to capitalize
on the benefits   of unbundled software.       For these reasons,       we re-
commend that the Administrator       of General Services:

       --Strive   to obtain   the most favorable   prices   and terms
          for software   products  from all available     sources.

       --Consider    buying outright    the computer software    products
          which are used widely      in data processing  operations
          throughout   the Federal Government and make such soft-
          ware available    to user agencies on an as-needed basis.

       --Provide   direction  for utilizing        some of the available
          Government in-house    capabilities       to develop common-
          use programs when favorable        prices   are not available.

       --Create    joint use in-house  capabilities             to satisfy
          the programming   and support service             requirements
          of users.

       --Provide  guidance        to user agencies        as to the best
          way of satisfying         software needs.



                                               13
                                              CHAPTER 3

                                 RESTRICTIVE-USE LICENSES ON

                               PROPRIETARY SOFTWAREPRODUCTS

        The suppliers    of general-purpose      computer programs are in
some cases restricting          the use of their   proprietary  products    to
specific    central   processing      units or data processing   locations,
or for use within       certain    elements of an organization.      Some
vendors of software       products     offer terms that are more restrictive
than others.

      The Federal Government--the                world's     largest  user of computer
systems--procures         many of the same general-purpose               software      products
to satisfy      its data processing          needs.      The unnecessary      costs attributable
to the restrictive         use of software          products     are not easily      measurable
at the present        time due to the lack of an inventory                 of such products
being used by the Government.                 Increased     acceptance     of various       types
of restrictive-use          licenses     by the Federal Government will              result      in
more costly       data processing        activities      than if the Government could
purchase these products            outright      or have the ability        to freely       use
the products       within     the Government on an as-needed basis.                  In order
to realize      the most economical          and efficient        use of proprietary          soft-
ware products,        the Federal Government must be free to acquire and use
commercially       available      software     products     with as little      restriction
as possible.

       In its June 1969 separate-pricing             announcement,      IBM stated
that certain     types of computer programs would no longer be furnished
as part of the hardware price but must be obtained                  separately.       These
programs were not offered             for sale.   Instead,    IBM announced that it
would copyright      all newly developed program products               and would execute
a standard    license     agreement with its customers,          restricting      the use
of its program products           to specific    central   processing      units within
a data processing       installation.         Among other things,       all data pro-
cessing users that accept the IBM program products                  under the terms
of the license,      agree that:

       --Use of a computer         software product   is limited    to a
          specific computer        system (single   central   processing
          unit).

       --The user must pay the full      monthly rental   for each
          software    package used, with no discounts   for multiple
          use of the programs.      For some programs an initial
          charge is paid for each program at the time of in-
          stallation.      A minimum of 3-months rental  must be
          paid before a license     can be terminated.




                                                14
      --The manufacturer     can change the monthly rate for
         use of its programs at any time, discontinue        the
         license  agreement upon 6-months notice,       and does
         not guarantee   the results    of using its programs
         or assume any liability     for consequential    damages
         as a result   of using the subject     computer software.

      --The user cannot make more than five copies of a
         program or its related     documentation,    distribute
         such copies to anyone outside       of the data pro-
         cessing center,     and must destroy    all copies made
         upon discontinuance     of use of the programs.

        As to software     vendors,   our study showed that in the past some
vendors have sold their         respective      computer programs outright.              We
have been informed by several           vendors of computer software             products
that there is now a general tendency throughout                  the industry       not
to execute outright        sales of products,         as control    over their      pro-
prietary     rights   would be too difficult          to manage.     Additionally,
outright     sales create a problem in the maintenance               of software.
The user of a proprietary          package usually       does not receive        the
necessary      documentation    or source data to perform updates,               modi-
fications,      or other maintenance       activities     on the programs.          On
the other hand, the user of a leased package is provided                     certain
contractual      maintenance    arrangements       by the vendor of the software
product.

        The use of the leasing      techniques   for software      products    affords
manufacturers     and developers      of such products    certain     degrees of
control    over their   products.       Control over the software       products
usually    takes the form of restrictive-use         agreements which states
how and where the product         is to be used.     The restriction        on the
use of a software     product     could be to a specific      central     processing
unit,    computer installation,       division  or unit of an agency, or to a
complete agency.

        In most instances,        however, the arrangements          offered       by in-
dependent software         vendors were more liberal           than those announced
by IBM. Most noteworthy             is the fact that some software              firms
offer     substantial     discounts    for multiple-installation            procure-
ments.      Additionallyp       rental   arrangements      are provided       for a
fixed period of time and are not unilaterally                    cancellable.          Any
alterations       to the lease agreements        are usually       negotiable         between
the lessee and lessor,           whereas the IBM agreement reserves                 to IBM
the right      to alter     its lease arrangements.




                                                  15
      It is not practical       to estimate      the total      financial   impact
that licensing       computer programs for use on each c_>erating central
processing    unit --such as the arrangements            announced by IBM and
agreed to by GSA contract         negotiations       for fiscal     year 1970--will   have
on the Government's       data processing      operations.         No mechanism exists
to determine     the extent of use or number of copies of a software                pro-
duct that would be used by the Government.                 With the lack of such a
mechanism at the time of acquisition,              the Federal Government is not
in a position      to negotiate    quantity    procurements        or to determine  the
most economical       means of satisfying      its software        needs.

      The advertised    prices    for each proprietary         software    product
awe ar , for the most part,       to be relatively       inexpensive     unless long-
term or multiple     acquisitions     are being made. In most instances,             the
Government would need more than one copy of a software                  product.   In
all probability,     it would not be necessary         to have a copy of each
program for each computer.          Nevertheless,    to show what it could cost
the Government if three packages were obtained               for all the computers
on which they are capable of operating,            we selected      the following   packages.

                                                                    Monthly
                                          Computer                  license
Program   product                       configuration               fee

Generalized    Information
   System                            360/50    or larger            $1,500

Information    Management
     System                          360/40    or larger                600

Project   Management    System       360/25    or larger                300

      The Federal Government could spend up to $6.7 million         a year
if it acquired   copies of these programs for every computer that could
use them.    The same three packages used at an installation,        such
as the social   Security  Administration in Baltimore,    Maryland,    which
had 13 IBM 360-30 and 12 IBM 360-65 computers as of June 30, 1970, would
cost $400,000 per year if each computer had a copy of each package.

       Over the years,     the Government has been able to use its competitive
advantage to obtain substantial          savings by negotiating     large procure-
ments of similar      equipment.      The advantage of this technique       may be
lost if quantity      discounts    are not offered    on unbundled software      or
a mechanism is not established          whereby the Federal buyer can give
recognition     to the total     needs of the Government for a software         product
under consideration.         Such a mechanism could be readily       established     if
all Government users made known to GSA their            firm software    package
requirements      and GSA, in turn, advertised      for a firm requirements
contract    for the combined needs of all agencies.



                                              16
       Computer users in the non-Government              ADP community have
indicated      to us that greater       emphasis will      be placed on in-house
programming       in those installations        which are large enough to
maintain      such capabilities.        Moreover,    we were advised that greater
effort    will    be placed on competitive        procurements.        The Government
should pursue the same course of action.                 It should consider          outright
purchases      and contracted     development     of programs and strive           to obtain
more satisfactory        leasing    arrangements,      such as leases based on usage.
This latter       concept primarily      consists    of the vendor assessing            a fee
each time      his product     is used by a data processing          installation,         in
lieu of charging        basic monthly or annual rental           fees.

POTENTIAL FOR INCREASED COSTS TO THE GOVERNMENT

        The policy     of assessing      a fee for the use of a computer program
on the basis of each designated              central     processing       unit is a significant
departure      from current     procurement       practices,     and will      undoubtedly
increase     the data processing         costs for the Federal Government.                  For
example, in installations            where two or more central             processing    units
are necessary       to perform     like data processing          activities,       the Government
will    be required      to pay the full       price    for the same software          package
on each central        processing     unit on which it is used.               Because of this
significant       change in pricing       policy,      which has a potential          for sub-
stantial     and unjustifiable        increases      in the price paid for computer
products,      there is a need for the Government to adopt a policy                       against
this software       pricing    concept and to consider           the alternatives         that
are available       to it.

RECOMMENDATIONS

       GSA is responsible    for the procurement        of ADP services,
and should take the leadership       in negotiating       contract      terms that
are favorable      to the Federal Government.       Additionally,         GSA should
provide    guidance to Government users for satisfying             their    software
requirements     free of undue contractual     restrictions.          Towards this
end, we recommend that the Administrator          of General Services           give
consideration      to:

      --Alternative    sources of supply              for     software    products
         such as in-house    or contractual                 developments,     in-
         dependent vendors,    or libraries.

      --License-free   agreements for               software  products which
         were produced with the help                of Government funds.

      --Non-restrictive         COntraCtUal         arrangements.

      --Licensing         of packages         on the basis     of usage.
--Multiple-purchase           discounts    offered    by some
   software     vendors.        In this respect,      we further
   recommend that the Administrator                consider   the
   use of advertised          requirements      type contracts
   for procuring        proprietary     software     packages and
   other software        for which specifications           have been
   clearly     defined.




                                       18
                                           CHAPTER 4

              ACQUISITION    AND USE OF PROPRIETARY SOFTWAREPRODUCTS

       There are instances       where it is beneficial         to use proprietary
software    products    marketed by computer software           firms.      Many variations
of the same software        product--some     better    than others--are        available
and are offered      under various      marketing    programs.       The Federal user,
therefore,     is confronted     with the problem of selecting            the right     pro-
duct for his needs and of using the most advantageous                    way of acquiring
such services.       This problem has been compounded by the fact that the
use and acquisition        of proprietary     software     products     has not received
the necessary      coordinated    management and central          policy    direction.

      Prospective    Federal users have to make an evaluative          study of
the various    packages available     to select  a software    package for a given
task.    Some of these studies     have been more thorough      than others and
have consisted     of a full  canvass of the field,      whereas other studies
have consisted     of outside  assistance    from consultants,     published  services,
or from other users.

       Much effort  is needed to properly       select     the most appropriate
software   package.     On October 27, 1970, a representative          of the Systems
Development Division      of NBS reported    on a study that was made to identify
data management systems software        packages.       This study identified
159 data management systems packages.           Sixty-five      of the packages
were found to be written       in Formula Translator         Language (FORTRAN)
or Common Business Oriented       Language (COBOL) and 47 of these 159
packages were identified       as being in the public         domain.  This last
fact is important     to Federal users,     as some of these were developed
by the Government and are available         without     charge.

        This report     of NBS personnel       filled     a void for this type of
information.        Potential   users of data management systems now have a
starting     point   for their    studies.       It will    still.    be necessary  to
evaluate     the capabilities       of the pertinent        packages to determine      which
best fulfills       data processing      needs.       These evaluations,       if made by
a central      agency such as NBS, would eliminate                 the need for all potential
users to perform        independent     studies,      and would help to standardize
the criteria       used in the evaluation          processes.

NEED FOR ACTIVE GSA PARTICIPATION
IN SOFTWAREPROCUREMENTS

      Prior    to fiscal    year   1971,   very    few software    products    were covered




                                              19
by Federal Supply Schedule contracts.                   Thus Federal ADP users individually
have had to be alert           to the availability        of software      products   and to
make their       own procurements         of these products.       Since the users have
received    little       or no guidance from responsible           central     agencies
to evaluate        effectively      the many available      software    packages with
similar   capabilities,          they were not properly        equipped to decide
when it was in the best interests                 of the Government to acquire
commercially        available      software    products   in lieu of developing
in-house    Government software.

        We reviewed the acquisition        of certain     generalized    proprietary
software    packages procured      by Federal data processing          users.     Our
efforts    were directed    primarily    toward the acquisitions         of utility
software    products,    as this type of software        has greater     general-
purpose applicability.         We did, however,       consider    on a limited      basis,
the acquisition       of some generalized     applications      software    products,
to determine     if similar    management problems also exist with this
category    of software.

Automatic    flowcharting     software

       A flowchart   is a graphical   representation         of a sequence of opera-
tions that uses symbols to represent         the detailed         steps and depict
the logic used within     the operation.       This type of representation            was
performed    manually in the past.      Computer programs have been developed
which allow for the computer.to       perform this detailed             task automatically.
We reviewed acquisitions      of the following       automatic       flowcharting    soft-
ware packages by Federal data processing           installations.

      --AUTOFLOW 7094--this   software         package was developed
         under a Government contract          as a research    and develop-
         ment effort  and is available,         without   charge,  to
         all Government agencies.

      --AUTOFLOW 360--this   proprietary            software  product      has
         been acquired by Federal data            processing    installations
         since fiscal  year 1967, under           the provisions      of Federal
         Supply Schedule contracts.

      --GOCHART--this       software   package was contractually
         developed for      GSA, to satisfy    an immediate need and
         for potential      Government-wide    use.

      --NAVFLOCHART-C--this    software        package was internally
         developed by the Department          of the Navy and is made
         available   to all Government        departments and agencies
         without   charge.




                                             20
        File   management     software

                File management software      packages are computer programs designed
        to be used for creating        and maintaining    data files  within   a computer
        system.      Some of these software      packages also provide     a capability       for
        the computer to prepare reports          on an as-needed or systematic        basis.
        We reviewed the actions        taken by several    Federal data processing        in-
        stallations      for acquiring    the following   proprietary  file   management
l       software     packages.

               --MARK IV--Federal      data processing     users have independently
                  acquired    at least  14 copies of this software      package since
                  1968.    The Department    of the Air Force awarded a Government-
                  wide call contract      for fiscal   year 1971 for use by Federal
                  departments    and agencies.

               --SCORE--at    least four copies of this proprietary    software
                  product  were acquired    by agencies of the Government before
                  GSA negotiated    a Federal Supply Schedule contract    for this
                  product  for fiscal   year 1971.

        Information     retrieval        software

               Information       retrieval      software    consists     of computer programs
        that provide       for the recovery         of desired     information    from a collection
        of data stored in a computer system.                   We reviewed the procurement
        actions     taken by Government agencies on the following                   proprietary
        information      retrieval       software    products.

               --HASKINS & SELLS AUDITAPE--the              marketing      strategy      for
                  this software     product     differs     from that of most pro-
                  prietary   software      packages in that rental            is based on
                  use and it can be used on any computer system for which
                  intended,    whereas use of most other proprietary                   programs
                  is generally     restricted       to central     processing       units,   data
                  processing    installations,         corporate    entities,       etc.

               --QWICK-@JERY--this      proprietary   software   product    was pro-
                  curred in 1968 by GSA for its internal         use.     Another agency
                  subsequently  purchased the services        of this product     from
    .             the vendor in lieu of acquiring        the product     for in-house
                  use.   GSA negotiated     a Federal Supply Schedule contract
                  for this product     for fiscal   year 1971.

        Simulation     software

             Simulation  software packages are computer programs which                         allow
        a computer to perform pseudoexperimental  analyses of proposed                         or




                                                       21
desired   operating systems through the USE of mathematical            or physical
models that can perform in a manner similar           to a computer.     This
technique   is used as a tool to evaluate,        among other things,     proposed
hardware and software    configurations    within     a computer sysiem.      We
reviewed the acquisition     of the following      simulation   software   products.

       --SCERT (COMET)--this    simulation  software  product was pur-
          chased by the Air Force in 1964 for $173,730.       Maintenance
          costs have ranged from $60,000 to $EiO,OOO annually.       The
          Air Force was permitted    to use this product   to perform work
          for any Government agency.

       --SCERT 50 (COMET 50) --this    package is an updated version
          of the above-mentioned    SCERT software product.  Annual
          maintenance  costs average $35,000 to $40,000 per agency,
          and serve as rental    of the product.

Compilers

       A compiler  is a program-making       routine  which produces a specific
computer program by determining         the intended meaning of certain          items
of data input and replacing      them with a series of instructions            in
machine language.     These instructions        are usually   called subroutines
and are incorporated    in the newly developed computer program.               The
computer program which results        from compiling      is generally   a trans-
lated and expanded version     of the original       program.     During our
study, we reviewed acquisitions         of the following     compiler   software
product.

       --SIMSCRIPT 1.5--this   compiler has been acquired by many
          agencies since 1967, at varying   prices.  No Federal Supply
          Schedule contract  had been awarded for this software  pro-
          duct as of January 1971.

Applications    software

       As defined   in chapter 1, applications      software     provides  the
computer with capabilities      for performing     specific     data processing
functions.      The following  applications    software     package was included
in our study.

      --CEP--this   proprietary  software package has been separately
         acquired by at least six grantees     of Federal programs
         since 1968, to provide   data handling   operations   within
         computer systems used for the Concentrated       Employment
         Program administered   by the Department   of Labor.




                                           22
                                                                                             Y




            Details    of the acquisition   of       these selected    generalized
    software      packages are included   in        appendixes III and IV of this
    report.       These appendixes discuss          some of the questionable       procure-
    ment practices       noted in our study         of selected   packages.     In summary,
    we found that Federal users:

t         --Procured      computer programs that were already available
             at other data processing       locations    within   the Federal
             Government.       For example, many data processing          installa-
             tions are acquiring      automatic    flowcharting     software
             packages, data management systems packages,             generalized
             simulation     software  packages, etc.,      for individual       use,
             rather    than sharing the use of such products           already
             available     elsewhere in the Government.

          --Procured      utility       software     products     with restrictive-
             use provisions.            For example, the use of the computer
             program is limited            to operation        on a specific       central
             processing       unit or for use within             a specific      data
             processing       installation.           IBM software      products      are
             limited    to specific          central     processing     units.      AIJTO-
             FLOW, SCORE, and SIMSCRIPT 1.5 are examples of soft-
             ware products         whose use is limited           to specific       data
             processing       installations.           A need for the same soft-
             ware service         on other central          processing     units or at
             other data processing             installations        within     an agency
             necessitates         the acquisition          of additional       copies
             of the same software             package.

          --Acquired     like computer programs at varying prices.
             MARK IV has been acquired      separately by several
             Federal agencies since 1968 through the payment of
             one-time    license fees ranging from $6,500 to $32,500
             per installation.      At least six grantees    separately
             acquired    the CEP software   package, at prices    ranging
             from $3,500 to $4,000 each, since 1968, to maintain
             management files    and prepare periodic    reports    required
             by the Department of Labor.

          --Generally    procured  software   products    to satisfy    their
             individual   needs.   Consequently,     the Government did
             not receive    the benefit   of substantial    discounts,
             ranging from 20 percent      to 80 percent,    offered    by soft-
             ware vendors for quantity      procurements.      The Marine




                                                     23
         Corps, however,     centralized     its software  procurement
         actions,   and realized      savings of about $182,000 for
         the acquisition     of eight copies of MARK IV and about
         $14,000 for the acquisition         of 12 copies of AUTOFLOW
         when compared to prices         of single  copies of these
         products.

      --Used various       techniques    for selection    of computer soft-
         ware.       We found that some agencies performed           thorough
         technical     evaluations     of the products    whereas others
         performed     cursory    reviews of the written     material
         accompanying the product,          prior  to its selection.        The
         latter    type of evaluation       cannot always be relied       upon
         by subsequent users thus necessitating            additional
         evaluations     prior    to acquisition.

      --Performed     duplicative     computer program evaluations             as
         a result   of a lack of effective           coordination      of efforts
         among data processing        installations.         We found that two
         agencies technically        evaluated      MARK IV, among other
         software   packages,     during October 1968.            Current procure-
         ment procedures       of the Federal Government necessitate              in-
         dependent technical        evaluations      by each data processing
         user prior    to acquisition       of a software       product.

     This uncoordinated             approach to procurement     has not provided
the Federal Government             with the most economical     and efficient   means
for acquiring  computer            software  for use in its    data processing   operations.

       We visited   several    non-Government     data processing      installations
that had procured     commercially     available     software   products,      and found
that they generally      included    in their    considerations     for use of
software   products   such factors     as:

      --Need.

      --Speed       of implementation.

      --Savings       to be realized.

      --Acquisition        cost.

      --Potential       reliability      of the software
         product      and related      support services.

It was noted that these users             deemphasized the slight      decrease
in computer system efficiency,             if any, in their    decisions    to
acquire  generalized proprietary             computer software   products.




                                              24
             The terms obtained         by these non-Government           organizations         in
    procuring      packages from software           suppliers      were similar       to those
    obtained      by the Federal Government,             with the exception         of quantity
    discounts       and restrictive-use         clauses.      These non-Government             users
    generally       employed a single-purchaser             concept whereby purchase was
    made for the corporate            entity    on a volume basis.           Relative      to re-
    strictive-use        clauses,     the terms provided         that the use of those
    software      products    be limited      to a single       data processing         installation:
    although,       in a few instances,         the software       products    wexe merely re-
    stricted      for use within        a corporate      organization.

    SAVINGS AVAILABLE TO THE FEDERAL GOVERNMENT
    THROUGH USE OF PROPRIETARY SOFTWAREPACKAGES

            In the studies     or evaluations      by agencies leading to decisions
    to obtain software       products,     it was usually        estimated      that obtaining
    such packages in lieu of developing             a custom program would result
    in savings in time and cost.             Savings to be realized           in the improve-
    ment of the task or work by using the software                   products      were also
    considered      in these evaluations.         Unfortunately,         users who have
    justified     the acquisition      of a product       on the basis of expected
    savings do not document, as a matter of course,                    the actual      accomplish-
    ment of that saving after          the product      is acquired       and put in use.

          From all available   evidence,      however, substantial         savings are
    sometimes available    by obtaining      proprietary     products.      Savings
    accrue when it is necessary      to expedite       a data processing       need and
    the nature of the need is nonrepetitive.             Additionally,      if a user
    does not have an in-house     capability       or if the in-house       capacity    cannot
    accomodate the current    need, the procurement          of proprietary      products
    is invariably   more economical     than the acquisition           of a custom designed
    computer program.

          Although     it is difficult     to verify     the claimed financial       benefits
    of using proprietary       software    products,     the National    Aeronautics
    and Space Administration,          Goddard Space Flight      Center,   reported    that
    their  acquisition      of such a product      resulted    in annual savings of
    $2.3 million     to their    agency, and they estimated         that additional
    savings of about $11 million          were realized     by other Federal agencies
    who used the same product.

           In 1966 Goddard needed a flowcharting      product   which would automati-
    cally    flowchart  and analyze computer programs operating       on its IBM 7094
c   series     computer system.   This task was performed     manually at
    Goddard, since the only known available      proprietary     product,   AUTOFLOW,




                                                      25
was not operable   on the      IBN 7094.   The AUTOFLOWvendor had developed
versions  of its product       to operate on the IBM 360 and other computers
but had not planned to        develop one for the IBM 7094 since the po-
tential  market was too       small to warrant  the investment.

       In exchange for a Government free-use            license,     Goddard sub-
sidized   about $87,000, out of a total         estimated       development    cost of
$250,000,   for an IBM 7094 AUTOFLOWpackage.                Prior to the development
of this flowcharting      program, both an internal            and a contractual     survey
were performed     to evaluate     the requirements       for such a tool at the
Center and to evaluate       the available     software      which could satisfy
these needs.     It was concluded that no suitable              software   was then available       .
and that savings equal to the entire           Government-sponsored          development
costs would be realized        through use of the software           product   at the
Center.

     We noted that Goddard treated   the contractual    development of
AUTOFLOWas a research   and development   effort  and it was not coordinated
with GSA prior  to the development  of the software   package.

      In addition  to satisfying its own needs with this product,          the
Center has provided   about 50 Government and contractor     installations
with copies of the 7094 AUTOFLOWprogram for their       use.

       Subsequent to the development        of the 7094 AUTOFLOWsoft-
ware package, Goddard awarded contract           No. NAS-10587 to the same
vendor for the development         and implementation     of preprocessing
units    for the UNIVAC 1108, DDP 24, SDS 900, and CDC 3200 computer
systems.     The total    cost of this development       effort   was about $88,000.
These preprocessing       units were designed to allow fox the use of the
vendor's    proprietary    360 AUTOFLOWsoftware       product   to automatically
flowchart    the software     designed for the four respective        computer systems
in use at the Center.

        Goddard officials     informed    us that preprocessing       units were
developed for use with the 360 AUTOFLOWproduct                rather   than the existing
Government-owned       7094 AUTOFLOWsoftware       product,    because of Goddard's
long range plan to replace          its second-generation       7094 equipment for
third-generation       computer systems.       The Center subsequently       acquired
a 360 AUTOFLOWsoftware          product   under the rental     provisions    of the
Federal Supply Schedule contract           awarded by GSA. Although NASA obtained
third-generation       equipment,     it was still  operating     second-generation
7094 computers at the time of our review.

POTENTIAL FOR SAVINGS                                                                           3


      We believe    that   substantial   savings    can be realized     by the Federal




                                           26
Government through proper evaluation      and use of generalized   computer
software   packages as tools for expediting    its data processing   activities.
Such savings would be realized   through the relief    of in-house   computer
programming personnel    from:

      --Performing   detailed routine  tasks            of document-
         ing computer programs manually.

      --Writing   special programs to process one-time
         or occasional   reports for management.

      --Requiring        as much contractual    assistance from
        other       sources to satisfy    computer programming
        needs.

       Additional   savings could also be realized  by the Federal Govern-
ment through use of a single-purchaser      concept whereby one office
within    the Federal entity  would acquire and manage all software
products.      This practice would provide  the Government with an oppor-
tunity    to:

      --Capitalize       on the substantial        quantity     discounts      offered
         by software      vendors.

      --Eliminate  the need for duplicative               technical      evaluations
         of the same software  products.

      --Decrease       the number of like software            products      used in
         its data      processing activities.

RECOMMENDATIONS

       We recommend that the Director,      Office  of Management and Budget,
through the General Services Administration         and the National     Bureau
of Standards,     provide  coordinated   management and central    policy    direction
to users for determining       the most economical   and efficient   means for
obtaining    software.    When it has been determined     that use of proprietary
software    should be used, we further     recommend that GSA employ a single-
purchaser    concept for satisfying    these needs.




                                              27
                                              CHAPTER 5

                           OTHER SOFTWAREMANAGEMENTPROBLEMS

       There are many problem areas in the Federal Government relating
to the acquisition    and use of computer software.       These
                                                          groblems
from the limited    amount of central     management guidance for agencies
within   the Government to follow when makrng decisions         regarding    the
best means for satisfying    their    respective  computer software       needs.

         In addition      to the management problems associated          with separate
pricing,     restrictive-use         licenses    that  accompany   some proprietary
software     products,       and the independent       means employed by agencies for
acquiring     proprietary       software     products,    there are many other areas
that warrant        centralized     attention      and guidance to achieve better
and more economical           management of computer software.          There is a
need for:

      --More      detailed       central     guidance        to operating         agencies.

      --Procurement    regulations              specifically            geared    toward
         software   acquisition.

      --An     inventory        of computer      software         in Government.

      --A     catalog      of available       programs.

      --The     elimination         of duplicate           technical       evaluations.

      --Software         standards.

      --Planning         for    future     software        requirements.

      --Coordinated            research.

      --Greater         communication        between        OMB, GSA, NBS, and users.

      --More delegations      of procurement                  authority       by GSA to
         qualified  agencies.

     --Faster   awards of Federal                Supply       Schedule       contracts
        for software.

     --Improvement    in the use of Federal                      Supply      Schedule
        contracts  for ADP procurements.

     --Greater          use of the ADP revolving                fund.




                                                      2%
      --Definite     software     specifications.

      --Better     software     documentation.

These and other problem areas have, in our opinion,        resulted    from
ineffective  or nonexistent   central    agency policies,  guidelines,     and
procedures,  relating   to the acquisition     and use of computer software
in the Federal Government.

CENTRAL GUIDANCE

        Agencies of the Federal Government have, for the most part,              been
satisfying     independently     their  computer software    needs.     This practice
has resulted      in the use of different      criteria   for considering:     (1)
how computer software        needs should be satisfied;       (2) how to select
software    products    to be procured;    and (3) whether such software        should
be Government-owned       or licensed.

       OMB has, from time to time, prescribed              Government policies       for
ADP activities      by issuing      circulars   and bulletins     to the heads of
executive     departments     and establishments.        These circulars      and bulletins
do not pertain      to the acquisition        and use of computer software
but to the selection        and acquisition       of equipment,     to studies
preceding     the acquisition       of equipment,    to sharing     of equipment,      etc.
Circular    A-54 is a good case in point.            It establishes     policy    guidance
for the selection        and acquisition      of hardware but does not cover
software.       We believe    that the need for guidance on software            procure-
ments and administration          is just as great if not greater          than for
hardware.

PROCUREMENTREGULATIONS

        In January 1969, GSA issued amendment E-56 to part 101-32 of
the Federal Property     Management Regulations       (FPMR) which provided
some guidance to users for procuring      software.         These regulations
require    a user agency to consider  the potential         Government-wide    need
in determining     the best means of acquisition.         If it is determined
that such a Government-wide     need does not exist,         the user agency is
permitted    to acquire the software  product     without      the involvement   of
GSA.

      It is our view that these regulations        place an undue burden
on the user agencies,       who are not in the best position      for making
such judgments.      Decisions    of this nature should be made at a central
management level of Government where Government-wide           software    needs
can be systematically       determined   and not at the operating     level of
Government where a user has a mission to accomplish          and an immediate
need to satisfy.




                                                 29
       The need to change this regulation    was recognized  at the
Conference   on Management of Computer Systems in the Federal Govern-
ment held at Myrtle   Beach, South Carolina,    in July 1970.   This con-
ference was sponsored by OMB and was attended by representatives       of
numerous Federal agencies.

         In a written    summary of this     conference,      it    was reported
 that:

                "The regulations      should be changed to provide
                for GSA review of all such proposed software
                procurements     that exceed a specified  dollar
                level."

It was also stated that this would remove from the agencies the
making of a judgment regarding      the potential for substantial     use
of the software   elsewhere   and would bring this matter under central
management review.     At such a level of Government,   a coordinated
approach could be taken for the purpose of extending       the utiliza-
tion of the software    and reducing   its costs.

       In February      1971,   GSA amended FPMR section           101-32.403-2
as follows:

         "Agencies may procure software          for   use With     ADPE without
         prior  approval of GSA when:

         "(a)     The procurement   will occur by placing  a purchase/
         delivery    order against   an applicable Federal Supply
         Schedule contract     under the terms of the contract;    or

          "lb)  The procurement    is from other sources provided
         the composition    and structure   of the software       is
         such that the potential      for substantial      use elsewhere
         in the Government is not readily       identifiable;       or

         "(c)    The total procurement  for the specific   soft-
         ware package does not exceed $7,500 annual lease
         cost, excluding   maintenance,   or $10,000 purchase
         cost. "

        We believe     that this change in the regulation           is a step in the
right    direction.       However, we also believe        that the stated dollar
limitations        are too high and will       permit agencies to acquire many
software     packages without      prior    approval   from GSA. Additionally,
we believe       that the potential      for substantial      use elsewhere in the
Government can best be determined              at the central    management level
of Government.         It is recognized      that GSA cannot acquire       all soft-
ware needs for the Government, especially                unique software.      GSA,




                                            30
however, should be apprised    of such procurements              to systematically
coordinate the software   needs of the Government.

INVENTORY OF COMPUTER SOFTWAREIN GOVERNMENT

      There is no one organization         in the Federal Government that main-
tains a complete inventory           of the computer software       products  used in
federally    financed    installations.      Circular   A-83 issued by OMB in
April    1967 prescribed     the Government policies       relating     to the establish-
ment and maintenance        of a Government-wide      ADP management information
system.     Provision    was made in this circular       for GSA to include       in the
management information          system an inventory    of computer programs used
by the Government.

      At the time of our study--some            3 years later--we       found no
evidence that action had been taken to implement this instruction.
GSA officials      informed    us that they are not in a position               to
implement such a program unless additional                  staff   is made available
for this purpose.         During two conferences           sponsored by OMB in
September 1969 and July 1970 on the management of computer systems
in the Federal Government,           it was recognized         that an effort      should
be made to inventory        software    products      used in Federal data pro-
cessing operations.         We believe     that such an inventory          is a pre-
requisite     for effective     management of computer software,              to minimize
duplication      and to effect     greater    reutilization        of such products.

CATALOG OF AVAILABLE PROGRAMS

      In December 1966, OMB instructed           NBS to maintain     a reference
index of computer programs so that the need for development                   of pro-
grams already developed,        tested,    and being used elsewhere         in the
Government can be minimized.            A catalog   or reference     index of available
programs had not been prepared           by NBS at the time of our study.           This
subject   was explored    during the two conferences          sponsored by OMB on
the management of computer systems.              The proposal    was considered     to
be conceptually     sound, but because of the potential            magnitude of
the task involved,     the report       of the Myrtle Beach conference          suggested
that some selectivity      should be exercised         in determining     the contents
of the catalog.

     We believe     that such a catalog       would assist  potential     users
in selecting     software    in an unbundled environment,        in providing
access to information         on advances in the state-of-the-art,         and in
minimizing    the possibility      of writing    programs already     developed.

TECHNICAL EVALUATIONS

     Computer users       in the Federal      Government    have been independently
evaluating   software       products with     no uniform    formalized  set of standards



                                              31
against which to make judgments.         The emphasis placed on such evalua-
tions has been to satisfy      the immediate needs of the user.         There
have been duplicate    technical    evaluations   of similar   software   products
and of the acquisition     of varying    types of software   for the purpose
of satisfying   like data processing       needs.

        NBS was directed  by OMB in 1966 to perform technical     evaluations
of software    products  being acquired   by Federal data processing     in-
stallations.      We were advised by NBS officials    that they had been unable
to execute these responsibilities       due to the lack of financial     and
manpower resources.

      We believe        that the use of a single technical    evaluation  pro-
cedure,    using existing       expert resources   in the Government and documenting
the findings      for future     reference,   would eliminate duplicate  technical
evaluation     efforts.

SOFTWARESTANDARDS

         In 1966 OMB directed     NBS to initiate         a program for increasing
the compatability       in data processing       activities      by recommending
standards      for equipment,   techniques,      and computer languages.         It
was not until      March 1970 that NBS advised Federal departments               and
agencies of the objective         of a Federal Information           Processing  Stan-
dards program and solicited          their   views regarding       the order of
priority     for establishing     standards.

       At the Myrtle Beach conference           on the management of computer
systems,    it was reported        that the advantages      to the Government of
using standard      languages are generally         well recognized    and should
be encouraged,     if not required,        by all levels      of the Government.
It was reported,       however, that in the case of licensed           program
products,     the situation     had been complicated        by the reluctance    of
vendors to provide        products     in a standard    language.

      To facilitate the use of the products    across a wider range of
equipment models and to reduce costs,    it is essential   that standard
languages be promulgated  for all software    packages acquired   for
Government use.

PLANNING NEEDED FOR FUTURE SOFTWAREREQUIREMENTS

      To manage ADP resources     effectively       requires    a planning    mechanism
at the highest    level of Government for anticipating             future  require-
ments and methods of providing       for these needs.          More software     will
be needed as a result      of the ever-increasing         use of ADP services.
Employment of general-purpose      proprietary        software   products   will     not
completely  satisfy    these increasing      software     demands.




                                            32
          Plans must be laid out now to ascertain                   whether the growth
    in software      utilization      can be met with the forecasted            resources.
    These include plans by the Civil               Service Commission and others con-
    cerned with personnel           to make sure that enough trained            personnel
    are available        for Government needs.          Additionally,      plans should be
    made to support the advancement of the state-of-the-art;                        the exploita-
    tion of new technology;           the facilitation        of interchangeability        through
    standardization;          and the improvement       of man-machine communication.
    We believe     that such planning        can best be performed          by an organiza-
    tion such as OMB.

    COORDINATED RESEARCH
_
            Research efforts      for ADP activities       have been sponsored bx
    the various       Federal departments     and agencies with only limited           co-
    ordinated      efforts.     We found no procedure       in existence      that would
    identify     the ADP research projects        going on, and we found no one
    organization        managing and directing      these research     efforts     as well
    as ensuring       that the results    obtained     from such efforts       would be utilized.

            It    is recognized      that some of these research      efforts  are oriented
    toward       special    unique application     but coordinated    management of such
    efforts       will   provide   the opportunity    to capitalize    on the offshoots
    of such       research.      The knowledge gained from such efforts        is sometimes
    used in       developing     computer software    for general-purpose     use.    (See p-52.)

            We believe    that ADP research      efforts      should be centrally
    coordinated      by the Government.       With such centralized             administration,
    all agencies will        be in a better    position       to capitalize       on the
    results     of the research;    duplications        of research      efforts     can be
    controlled;      and priority   for research        projects,    to get the most out
    of available      resources,   can be assigned.

    COMMUNICATION BETWEENCENTRAL MANAGEMENTAND USERS

           There     is a need for greater  communication within  the Federal
    Government       on management of computer software.    Some Federal data
    processing       users have not been aware of what is going on outside    their
    organization       and, therefore,  have redone what already had been accomplished.

           Only limited  guidelines   for determining   the best means of procuring
    computer software    have been issued to the agencies to date.          The pro-
    curement regulations     issued by GSA in January 1969 concerning         the
    acquisition    of computer software   have not been effective.        GSA advised
    us that they have made no effort      to administer    these regulations.

           Effective   two-way communication    is necessary    for good management
    of ADP activities.       A starting   point for such communications        exists  in
    the form of the Government-wide        ADP management information       system pre-
    scribed    by OMB Circular    A-83 issued in April    1967.    The full    implementa-
    tion of this system is not yet operational         for software.



                                                 33
                                                                                           p




       Another effort   at communication     with central  management was
the two national      conferences    on management of computer system problems
sponsored by OMB. The conferees          addressed themselves   to pressing
management problems,       and written   reports  on these conferences    were
distributed.      The reports,    however, did not make clear as to how the
problems would be solved.

     It is necessary      that users and central     management be made aware
of the on-going ADP       activities    in the Government.      In addition    to
the above-mentioned       methods of communication,     information      should be
exchanged through    a    focal point and disseminated       both to and from
the data processing       installation.

DELEGATIONS OF AUTHORITY BY GSA

      The procurement    of ADP products,      particularly      of computer soft-
ware, requires     a technical   knowledge of the product          as well as a
knowledge of the procurement        process.      Such a capability      exists     to
some degree in some of the larger         Government agencies.         GSA has
delegated    some of its procurement      responsibility       for certain     software
packages to some of these agencies in an effort              to capitalize      on this
available    Government resource     as well as to relieve         some of the work
load for procuring      Government-wide      ADP requirements.

     The use of available         Government resources      is to be encouraged.
This procedure     should minimize the numerous delays encountered             by
suppliers    in their    dealings    with GSA (see next paragraph).        The technique
of delegating     authority     to certain    agencies,   of course,   does not relieve
GSA of its responsibilities          under Public Law 89-306 in providing
for the economic and efficient           acquisition    of ADP products.

AWARDS OF FEDERAL SUPPLY SCHEDULE
CONTRACTS FOR SOFTWARE

     Commercially   available software   packages have been available
since 1966.     However, GSA had negotiated    only one contract  in 1967,
one in 1968, and three in 1969, for the placement of generalized
computer software    packages on the Federal Supply Schedule.

      As of September 1969, there were 33 potential                vendors on a
GSA waiting       list   for contract     negotiations.      Although   these potential
vendors were on the waiting           list,    we noted that Government users had
individually        procured    these vendors'      products  at varying    prices and
varying     contractual      terms.

      GSA officials   advised us at that time that they were unable to
accomodate the requests      for contract     negotiations    with the existing
financial     and manpower resources    available      for such activities.




                                          34
        Following      up on this problem in January 1971, we were
advised by GSA that it had negotiated                  28 contracts      for fiscal      year
1971.     GSA also reported         that the waiting        list    of potential      software
suppliers        had been eliminated        by a new procedure        inaugurated      in
1970.     This new procedure          requires    potential      vendors to submit
complete contract          offers   instead    of only an application            to have their
product     considered       for the Federal Supply Schedule.               The restrictive-
ness of this new procedure             may account for the elimination              of the
waiting     list    but may frustrate        negotiations       with the hundreds of
other suppliers         not on the Federal Supply Schedule.                  We believe      that
all qualified        suppliers     should be included         on this schedule.

THE FEDERAL SUPPLY SCHEDULE
FOR ADP PROCUREMENTS

       Annually,    GSA has been negotiating       Federal Supply Schedule con-
tracts    for computer equipment and related         maintenance    activities   with
several     sources of supply.      These contracts,      in many instances,   represent
the commercially      available    prices   with quantity    and other discounts
along with contractual        terms which apply to all Government sales.            These
contracts     are not competitively       awarded.

       GSA has stated that the Federal Supply Schedule contracts
applicable    to ADP are to be considered       as a "permissive    source of
supply"    and that user agencies are required        to obtain their    ADP re-
quirements    on a competitive  basis.     Thus, it is necessary      in each procure-
ment for the agencies to prepare software          specifications    and determine   what
product    can best meet those specifications       at the best possible      price.
The only time that GSA becomes involved          in the procurement     process
is when the maximum order limitations         in the Federal Supply Schedule
contracts    are to be exceeded with large volume procurements.

       It is our view that GSA should strive           to develop a pro-
cedure that would provide        the user with a competitively          obtained
source of supply through use of a single-purchaser               concept.      One
such procedure     would require    the use of federally        developed specifi-
cations   to be used in formally        advertised    procurements.       Pending
such a change, it is possible         to obtain,     by GSA participation        in all
ADP procurements,      some of the benefits        of Government-wide      procurement.
Such participation      by GSA could lead to consolidation           of requirements
and competitive     procurements    of firm quantities        in an effort     to obtain
the best product     at the best price.

USE OF THE ADP REVOLVING FUND

         GSA made little  use of the ADP revolving                fund    to promote and
facilitate     an economical  financial arrangement                 for   computer software.




                                                35
    Public Law 89-306 authorized            the establishment       of an ADP revolving
    fund and in November 1967 the Congress appropriated                    $10 million     as
    initial   capitalization.          An additional      $20 million    was appropriated
    in January 1971.          The purpose of the fund is to provide              economies
    in the acquisition          of all ADP equipment and related           services.     To
    date, this fund has been used essentially                 to acquire    equipment where
    special,   unexpected,        and attractive     offers     were received.       The use
    of this financial         tool to achieve the goals of economy and efficiency
    in the acquisition          of computer software        should be increased.

    SPECIFICATIONS

             In reviewing   several    contracts    for computer software         develop-
    ments, we found that the Government generally                 experiences     a sub-
    stantial      number of engineering       change orders and contract          modifica-
    tions during a procurement          cycle.     We also noted that there is a
    tendency to use cost-reimbursable-type              contracts     for these procurements
    rather     than a fixed-price     mode of acquisition.          We were advised that
    such problems exist        in software     procurements     because Government users
    have, for the most part,         been unable to adequately           define their     soft-
i   ware requirements       to a point where firm specifications               can be written.

           We believe     that efforts     should be made by NBS to devise guidelines
    which can be used by the Federal data processing            users for writing
    software   specifications       which can be monitored    to promote better
    management of their        contractual    software developments.

    SOFTWAREDOCUMENTATION

          An accurate,     historical    reference     record or documentation      of a
    machine-acceptable       coded program is necessary         to use, understand,    and
    modify the program.         This record depicts       the logic,   reasons for changes
    in variables,     coding used, etc.        Without    a complete record of what
    is included    in a program, prospective         follow-on    users are unable
    to adapt the program for their          use.    There has been a general tendency
    to custom-design      software    to operate on a specific        computer configura-
    tion and to satisfy       one's needs without        concern or need for completely
    documenting    the program.

            With the introduction      of the generalized     computer software
    concept,    it was noted that programs could be exchanged by data pro-
    cessing installations        and used on several     types of computer systems.
    One reason Federal data processing          users have been unable to fully
    participate     in software    exchange programs is the lack of adequate
    documentation.      We believe     that minimum standards     for software
    documentation     should be issued by NBS to facilitate          interagency
    exchange of computer programs.




                                                36
NEED FOR STRONGERCENTRAL GUIDANCE

      The multibillion        dollar    Federal investment     in computers and the
annual expenditures        estimated      to be in excess of $4 billion      warrant
more effective      centralized       management attention     and control.    Many
of the problems discussed            in this report   are directly   related   to
the absence of this type of management.

       A basic framework for ADP management in the Federal Government
was established          by Public Law 89-306.      This law assigned certain      re-
sponsibilities         to GSA and NBS to be exercised       under the policy     and
financial      control     of OMB without   impinging    on the right    of user agencies
to determine       their    data processing   needs, select    the equipment to satisfy
that need, and determine           the types of utilization      of their   data pro-
cessing equipment.

      OMB, GSA and NBS, the central  management agencies for ADP, have
possessed the authority   to issue needed guidance to operating     agencies
and participate  in the acquisition  of computer software   products.
Yet they have for the most part limited   their  activities  to hard-
ware acquisition   and management.

      We believe   that these central      management agencies should pro-
vide the guidance and leadership         needed to obtain      for the Government
more effective    and efficient     procurement     of software.      For this
reason, we have recommended in earlier          chapters     in this report    that
these central    management agencies undertake           such action   as the cir-
cumstances indicated.        Federal ADP users need central          management
guidance and direction       in software    administration,      in addition   to
the purchasing    function.

         TO provide   the needed management over software            and other ADP
activities      and to properly       harness ADP resources      for the business
of Government, we believe           it is necessary     to formulate    a master plan.
Such a plan would include           agreed upon goals or objectives         against
which quality       and progress      could be measured.      It would provide      re-
source planning,        implementation      procedures,   and appraisal     and feedback
procedures.

RECOMMENDATIONS

      We recommend that the Director,       Office   of Management and Budget,
under authority      assigned by Public Law 89-306, sponsor the formulation
of such a master plan and the structure          needed to implement the plan.
We recommend, in addition,       that  OMB Circular     A-54 be amended
to include    specific    policy guidance to user agencies for the
acquisition,    management and use of software        throughout  the
Federal Government.




                                           37
     We recommend also        that     the Administrator                 of General   Services:

     --Require      users   to process      software            procurements
        through     GSA.

     --Maintain   an inventory          of software             products      in
        the Government.

     --Increase   its delegation     of procurement authority
         so that expertise   available   in other Federal
         agencies can be utilized.

     --Add all qualified        suppliers of software                    products
        onto the Federal       Supply Schedule.

     --Consider    the use of firm          requirements.            contracts
        for software   products.

     Additionally,   we recommend that                  the Director          of the National
Bureau of Standards:

     --Establish      and maintain       a reference             index      of computer
        programs.

     --Perform  technical   evaluations    of software products
        and make them available      for use by all Federal users.

     --Promulgate   standard         languages          for     use in Federal
        computer programs.

     --Issue  guidance for          preparation          of computer          soft-
        ware specifications.

    --Issue     standards     for    preparation              of software      documen-
        tation.

GSA, NBS AND OMB COMMENTS

     GSA and NBS generally  agreed with the above recommendation,
however,  they told us that they are not in a position    to implement
our recommendation  unless additional   staff is made available   for
this purpose.

     OMB officials      agreed that more policy    guidance is needed in
this area.      OMB officials     also told us that they are considering
amending OMB Circular         A-54 to correct some of the deficiencies
mentioned in this report.




                                                   38
APPENDIXES




    39
                                                                                 APPENDIX I


                               COMPUTERSOFTWARE--AN OVERVIEW

      Since the introduction   of the first                  general-purpose     electronic
computer in the early 1950's,        the number                of ADP systems and the
expenditures    for computer services     have               increased    at a rapid rate.
Many estimates     have been made concerning                   the number of computers in
use in the country     and the total    dollar               amount expended for ADP
application    on a national  scale.     These               estimates    have varied widely
because of the:

       --Lack   of clear      cut   definitions          of terms   used.

       --Lack   of uniform      data     for    reporting     and accounting.

       --Ever changing        characteristics         and capabilities    of
          and the other       improvements         in this new, evolutionary
          art.

GROWTHIN USE OF ADP SYSTEMS

     The following statistics,   accumulated and reported by GSA, show
the number of computer systems in the Federal Government and the re-
lated expenditures  for ADP activities.

                                                  Number of                 Annual ADP costs
        At June 30                                computers                     (millions)

           1960                                        531                   $      464
           1962                                     1,030                           595
           1964                                     1,862                        1,096
           1966a                                    3,007                        1,284
           1968a                                    4,232                        1,653b
           1970a                                    5,277                        2,201brc

aData subsequent to 1966 is based on the new ADP Management
 Information  System administered by GSA.
b Excludes costs of computers used for control        purposes                   and
  computers installed  in classified    physical   locations,                    although
  such computers are included     in the inventory    count.
C
    Estimated   costs   for     fiscal     year    1970.




                                                    41
APPENDIX I


      Excluded from the above statistics           are analog computers and
those computer systems which have been built               or modified      to special
Government design specifications         and are integrals       of weapon systems.
Additionally,     data on contractor-operated         equipment is excluded from
the above statistics      unless the equipment is operated             in performance
of work under cost-reimbursement-type            contracts    and related      subcontracts
for which the equipment is (1) furnished             by the Government or (2)
installed     in Government-owned,     contractor-operated       facilities.

        Ithas been reported       in congressional       hearings     that the above
statistics     represent    less than one half of the total              ADP activity
in the Federal Government.           Thus, the annual costs for total               Federal
ADP activities      should approximate        $4.4 billion.        Although    there is no
specific    dollar    amount reported     for computer software           expenditures,
it is generally       agreed in the computer industry            that more than one
half of current      data processing      costs is for the development              and
acquisition      of computer software.         We conclude therefore         that more
than $2 billion       is expended annually         by the Federal Government for
computer software        and related   activities.

EVOLUTION OF SOFTWARE

     The rapid growth of the ADP industry    has brought computer soft-
ware into prominence.   The software  segment of the industry    is, in
number of companies and gross dollar    volume, growing at a more rapid
rate than the hardware segment.

      Computer software       has been defined   as programs,  routines,
codes,    and other   written    information   used with  computers,    as
distinguished     from computer hardware.

      Computer programs have appeared in various             forms during the
evolution     of data processing     systems.      The current     techniques   of
using stored programs in computer systems were introduced                   by Dr.
John von Neumann in 1946.          The early stored programs were written
in a basic machine-dependent         language.       This digital     format severely
limited    the scope of programming       capabilities     and the magnitude of
work which could be processed within           a given period of time.          Improve-
ments have resulted        through the development       of higher level languages
 (resembling     the everyday spoken English language)            along with related
compilers     that are used to convert      these higher       level languages into
a machine-readable       form for execution     of the data processing         activities.

     computer software    currently       consists of fixed        sets   of instructions
expressed   in a specific   manner,       which are required        for   data input/output




                                            42
                                                                               APPENDIX I


operationsr     data    movements, arithmetic      operations,   and decisionmaking
techniques     within     an ADP system.     Generally,    such software   can be
categorized     into    the following    types.

     --Systems     software,    comprising      the executive      and monitor
        operating     systems,   controls     the execution      of computer
        programs and may provide          scheduling,    debugging,       in-
        put/output     control,   accounting,      compilation,       storage
        assignment,      data management, and related           services.

     --Utilities       software,       including       the assemblers,       compilers,
        data management systems,               and routines       for systems evalua-
        tion--provides         for file       creation    and maintenance         capabilities,
        information       retrieval,        report     generation     capabilities,        applica-
        tions programming           aids, systems evaluation            techniques,        etc.

     --Applications         software,    provides      capabilities  for performing
        specific     data processing        functions     such as payroll,   in-
        ventory     control,     accounting     and statistical     work, and any
        other data processing          activity      to which the computer is
        applied.

OPERATIONAL SYSTEMS CONCEPT

        In an effort    to promote the use of their               respective      computer systems,
the computer manufacturers             developed and maintained             the systems soft-
ware necessary       to make the various           components of the machine operate
as a unit.       These programs,         therefore    p were considered          as part of the
computer manufacturer's          responsibility           in developing       a data processing
system.      Moreover,     to facilitate        the initial       sales of computer machinery,
the manufacturers         had to demonstrate          the capability        of their     machines
to perform user tasks such as payroll,                    accounting,      and statistical      work.
As a result      the manufacturers          developed and made available               to users the
utility     software    and applications          programs necessary          for the computer
to perform the data processing               tasks for which they were being procured.
These programs,        or software       packages,      included     everything      to make the
machinery work; such as the punched cards, tapes, written                            routines,
computer system specifications,                and the related        documentation.

     Manufacturers       distributed      their    programs to users and also
served as clearinghouses            for computer programs developed by others.
This practice      contributed        to a relatively     free dissemination   of
computer software        and was undoubtedly          a substantial  factor  in the
growth of the computer industry.

    This involvement   in furnishing   software   tended to establish
the computer manufacturer    as the purveyor    of complete systems,                         by




                                                   43
 APPENDIX    I




adding such services   as systems engineering,     maintenance,  and training
for use of the data processing     systems.    It should be noted, however,
that the computer manufacturer     added the costs for these services      to
the sales price of his machines.       As a result  each time a user procured
a computer,  he paid for not only the machinery being purchased but also
the related  services  included  in the system price.

      The total  operational systems concept used by computer manufacturers
to promote more widespread    use of their   respective    computers simplified
the acquisition    problems of the users although      the related     complete
system unit price created many inequities.        Most computer manufacturers
followed    the example set by IBM and provided    total   operational     ADP
systems to its customers.     Under this concept the manufacturers           provided
the:

     --Various   items of electronic,  and electromechanical
        equipment necessary   for the systems'   configuration.

     --Software   and related     documentation     required    for   the
        equipment to interact      coherently.

     --Necessary   people    to install,    maintain,    and support
        the systems.

     --Training   of user personnel   in the operation    and utili-
        zation of the total   computer systems.     Moreover,  backup
        equipment was made available    by the manufacturers      on
        an as-needed basis.

       Frequently,      computer users did not require       all the support
services      included     in the system price.    Some programs,       for example,
were developed by the computer manufacturer              for special-interest
groups;     thus, these programs were not generally           applicable      to the needs
of all computer users.            As another example, some users procured
quantities       of like computer systems for processing          similar     applica-
tions.      Such a user would not need duplicate           computer programs and
other support        services.     The system price concept does not take into
account these services           which are not required.

       Inequities       in the pricing    of ADP equipment,    and other marketing
practices,        led the Federal Government and other large users to institute
antitrust       suits     against IBM. These antitrust      suits   alleged, among
other things,         that the packaged pricing      concept had stymied the de-
velopment       of competition      in the various   fields  of computer services
and that this concept had enabled the manufacturer                to provide  free
services      to some customers while denying the same or similar            services
to others.



                                           44
                                                                        APPENDIX I


SOFTWARE DEVELOPED        IN-HOUSE

     As previously      discussed,      computer users have generally      obtained
whatever software       was furnished      by computer systems manufacturers
as part of the total         system.     There were many instances,      however,
when some of the needed computer programs were not available                  from
the computer manufacturers           or, when available,     programs were not
adequate to satisfy        the requirements       of the users.     This was
especially    evident    within    the Federal Government where there was
a need for military        environmental      systems,   advanced research    pro-
grams, and other special          unique applications.        In these instances,
it was necessary      that the user develop the needed computer programs
in-house   or sponsor such development            through other sources.

      The primary      purpose of developing      in-house    computer programs
was to solve specific         problems with the use of an available            computer.
To this end, the computer programs were developed to conform to the
configuration        of the specific    computer system used at the data pro-
cessing activity.          For the most part,     it was not the intent        of the
user to write programs for optimum use of the machines,                  in higher
level languages,        or in modular building-block         approaches or to pro-
vide for good documentation           and other general-6urpose        characteristics
necessary     to make programs adaptable        to various     purposes and hardware
configurations.         On the contrary,     the users were more concerned with
satisfying      their   immediate computational       needs.

      Because of the restrictiveness              and lack of flexibility             of the
written     programs,     it    was  necessary    for   the   users   to   rewrite     the pro-
grams whenever they changed the equipment configurations                           of their
respective       computer systems.          The massive rewriting          of computer pro-
grams, and the attendant             costs,   was a major concern at data processing
installations        whenever a new model or generation               of computer systems
was introduced         or whenever computer users upgraded or changed their
existing      systems.       It is recognized       that the computer manufacturers
attempted      to soften the impact of new hardware introductions                        by de-
signing     compilers,       converters,     emulators,     etc.,   to assist        a user in
converting       from one computer system to another.                 However, reprogramm-
ing efforts        were still     required    in most instances         for users who wanted
to fully      capitalize       on the potential       capacities    of the newly acquired
equipment.

      In a large organization,        such as the Federal Government,        there
are similar    problems within       each of its organizational      units having
data processing      installations.       The lack of documentation,      standardiza-
tion,   and other general-purpose         characteristics   in computer     software
has prevented     the free exchange of such programs among Government users.
Computer users within          the Federal Government have not been provided
with knowledge of available          computer programs at other Government in-



                                                45
APPENDIX I



stallations.      The installations        have had to independently   develop
solutions    to their   problems,       and to write programs for their   specific
computer configurations         similar    to programs that had already been
developed by other organizational             elements of the Federal Government.

      An illustration         of this duplicative      software      development     is
the multiplicity          of payroll    computer programs used in the Federal
Government.        For the most part,         the overall    payroll      system for
Federal agencies is standardized.                Our study shows however, that no
organizational        group within      the Federal Government has written              a
Government-wide         standardized      computer program for payrolls          which
could be easily         adapted for differences        in computer equipment con-
figurations      at the various        data processing     installations.        Instead,
each organization          responsible     for payroll    activities       has been in-
dependently      obtainin       or developing     its own computer programs for
processing      payrolls.     ?

       The existing       computer software     development      on an installation-
by-installation         basis results     in extensive     duplication    of programming
efforts      and inappropriate        use of computer programming resources.             The
costs attributable           to these duplicative      programming efforts        cannot
be easily       estimated      as there is no existing      inventory    of all computer
software      prepared     for use within    the Federal Government.

     Our study has shown that little               effort   has been made to either
centrally     develop or coordinate            the development     of computer programs
for multifacility         use on a Government-wide          basis.     A few agencies
however, primarily          within     the Department     of Defense, have taken steps
to centrally      develop computer programs to satisfy               their   internal  data
processing      needs.      These agencies established          programming     groups and
made them primarily            responsible     for the development      and maintenance
of computer programs for routine-type                 data processing      operations  for
use at multiple        facilities        of the same type.,

       The Department    of the Air Force, for example, has been able to
employ this technique          by requiring  that its base-level         data pro-
cessing operations       for supply management activities,            financial    accounting
activities,    etc.,    utilize     the same type of computer system.           The programs
used for processing         data were centrally        developed by the Air Force and
distributed    to each data processing          installation.      Any major modifica-
tion or revision      to these programs is controlled            by the centralized



1A payroll    study team under       the Joint Financial   Management
 Improvement     Program of the      Federal Government is currently
 studying   the feasibility    of      developing a single  computerized
 payroll   system for civilian        employees.
                                                                          APPENDIX I


programming group within  the Air Force to ensure standardization                          of
all copies of the programs used at the base level of operations.

       An alternative        to the use of standardized         programs centrally
developed in-house           is the centralized     data processing       concept
recently       instituted      by one command within      the Department       of the
Navy.       The Navy Facilities       Engineering     Command is currently           con-
verting      to the use of one central          computer for its data processing
activities,         by employing the use of telecommunication             facilities
between the field          locations   and the central       computer complex.           The
conversion        to this use eliminates        the duplicative      programming       efforts
and their        attendant     costs.  These in-house programming           efforts      have,
for the most part,           been concentrated     on internal      data processing
problems on an agency-by-agency              basis with little       or no coordinating
efforts      among the Government agencies or on a Government-wide                     basis.

      Our study has shown that there are certain                  management problems
associated      with centralized        in-house     development     of computer soft-
ware.     For example, it was necessary              for the Department of the Navy
to solicit      the needs of many users prior              to developing    computer pro-
grams for a standardized            system to be installed          at all naval shipyards.
Certain    compromises were made by the individual                  naval shipyards     in
accepting     the standardized         system.     Some data that previously          had
been prepared       for the management of certain             naval shipyards      was
eliminated      in the conversion         process.      Conversely,     data generated
under the standardized           version     of the system was not desired by
certain    individual       shipyard    management officials.           This situation
generally     results      when many existing        local management systems
are standardized         and automated as one entity.             However, once
such developmental          and implementation         problems are resolved,
the efficiencies         and cost savings of such standardization               usually
more than offset         the inconveniences        that are experienced        during
the conversion        processes.

      During the development    of computer software         for the standard-
ized system for all naval shipyards,         the Navy utilized       existing
computer programming talents      located    in its various      operating    in-
stallations.    For example, the following         shipyards    were assigned the
responsibility   for developing     software    for the cited phases of the
new system.




                                               47
    APPENDIX I

                                                            Assigned    area       for
          Name of shipyard                                 software    development

          Portsmouth                                       Design
          Boston                                           Production   planning  and control
          Philadelphia                                     Payroll
          Norfolk                                          Budget and work load forecasting
          Long Beach                                       Shop stores
          San Francisco    (note a)                        Material   control
          Mare Island   (note a)                           Financial   accounting

          a
              The current  San Francisco    Bay Shipyard               includes          the
              Hunters Point Division     and Mare Island               Division.

    Subsequent to the development          of the computer software          by the
    various    shipyard   programming groups, the Navy established                the
    Computer Application        Support and Development Office          to maintain,
I   revise,    and improve the standardized          computer systems and related
    programs.      For the most part,      the manpower resources         for this
    newly established      office     were obtained    from existing      programming
    groups within      the individual     shipyards.      This technique      allowed
    the Navy to decrease the level of programming effort                  that was being
    maintained     at each of its shipyards        and provided    for centralized
    control    of changes that were made to the software             for the standard-
    ized system.

           Although management problems currently                     exist    in the development
    of generalized          computer software        for agencywide use, we believe                  that
    substantial        benefits     can be derived        from such activities.                The cen-
    tralized      program development           concept provides          for a more economical
    and efficient         use of in-house programming               talents     within      the Federal
    Government.          Such a technique        eliminates       the need for each data
    processing       installation       to reinvent      the same software             routines.
    Additionally,         use of the centralized            program development             concept
    promotes greater           standardization       of languages,          techniques,        and other
    conventions        for processing        data in the Federal Government.                    Such
    centralization          and standardization         of software         would further
    facilitate       the implementation          of uniform      and consistent          manage-
    ment policies         and procedures,        as well as improvements              in visability,
    accuracy,      and timeliness         of data included         in management reports.

    SOFTWAREEXCHANGE LIBRARIES

        From the early days of the computer industry,      there has been
    an air of cooperation    among users.    Problems and experiences   gained
    by various  data processing   activities   were shared within   the automatic




                                                      48
                                                                        APPENDIX I


data processing      community through       such media as symposiums,            local
meetings,     and written    publications.        In this way, programs         developed
by a user were made available            to other computer users upon           request.
Computer-user     organizations       were established,    and computer         manufacturers
joined the movement.         Kanufacturers      provided  a focal point         for storage
and distribution       of these computer programs.

      The libraries     established       by the computer manufacturers             included
various    categories    of systems and utility           software     and applications
programs that were developed by both manufacturers                     and users for pur-
poses of resolving       specific      data processing       problems.       Although      the
software     programs were made available            for use by many users, much of
the software      was custom-made to specific            computer users'        data processing
operations      and respective     equipment configurations            rather    than
designed as a general-purpose              computer software       package.      As a
result,    it was generally       necessary      for potential      users to modify
segments of these programs before              they could be used in their             re-
spective     data processing      activities.

       Modification      of programs obtained     from libraries       was difficult
because of the inadequate          documentation     that accompanied many of
the software        packages.    The documentation      was not portrayed         in
detail    nor were standardized       documentation      formats    used.      This
situation      existed    because the programs were written          principally
to satisfy       the data processing     needs of specific       installations       and
were not written         with the intent   of making them available            for wide-
spread use.

     Other sources of computer software      are libraries       of generalized
program packages used by specific    scientific     disciplines.        Many of
these programs are developed by universities        with support      from the
Federal Government and industry.     Designated      organizations      as well
as computer manufacturers    serve as librarians      for these software
packages.   Each library  sets its own regulations         for program main-
tenance and support.

      One example of such activity         is a generalized           computer soft-
ware package called       the Integrated      Civil     Engineering      System (ICES)
which was developed at the Massachusetts                Institute      of Technology
 (MIT) Civil   Engineering      Systems Laboratory         during the period 1964
to 1968.     Support for the development            of this project       was provided
by a number of research         sponsors including         a computer manufacturer,
Federal and State agencies,          and private      industry.        The supporters
of this effort     contributed      about $2.35 million           for the development
of the ICES software        package, exclusive        of personnel       and data pro-
cessing services     furnished.       Approximately        one half million      dollars
of the contribution       was provided     by the Federal Government.




                                             49
APPENDIX I


     The ICES software   package and the related subsystem packayes
were made available    to users through the IBM program library.     Each
using organization    must adapt the generalized ICES software   package
to its own needs and assume the responsibility     for program main-
tenance.

      Another example of user group libraries        is the Automated Engineer-
ing Design (AED) software      system.     This software    package was developed
with Department     of the Air Force and industry        sponsorship by the MIT
Electronic    Systems Laboratory.      This software    was released  by the
Federal Government for public       use in July 1969.

      Subsequent to the development               of the AED software      package,
the Air Force awarded a l-year                contract  to a private     contractor
to distribute,      maintain,        and enhance the subject       software      package.
Moreover,      the software      firm is responsible        under the contract         for
the preparation       of additional         user documentation     and the organiza-
tion of a user group that will                sponsor further    development      after
the Air Force-sponsored            l-year     contract  has terminated.        It is
planned that the newly established                 user groups will    ultimately
finance    the subject      software      firm in maintaining      and updating        the
AED software      package in future          years.

       This procedure   will  give a potential        user an opportunity          to
obtain the AED software       package from a library           source which will
maintain     and update the software        system.     A potential     user also
will     have the opportunity     to procure     technical     assistance,      when
necessary,      from the software      firm maintaining      the software       exchange
library.      This type of assistance        was not generally        available     on
an as-needed basis for many of the computer programs obtained                       under
the other types of library          systems discussed      above.

      In addition    to the libraries      supported       by the computer manufacturers,
the Federal Government also established               and sponsored some computer
software   libraries     to facilitate     the availability          and exchange of
computer programs.         One such library,       identified       as COSMIC (Computer
Software   Management and Information            Center),     was established     in
1966 with support      from NASA. This library             contains    more than 400
computer programs and is located           at the University          of Georgia,
Athens,   Georgia.     About 70 percent        of the computer programs in-
cluded in the library        are written     in FORTRAN, and new items are
added at an average rate of 15 per month.

     The library   programs were developed for specific         applications
at specific    data processing    installations   by Government contractors,
by the University     of Georgia,    by NASA research  centers,     and by other




                                              50
                                                                         APPENDIX I


Government agencies.     Most        of these particular      computer programs
belong to the categories      of       scientific  applications     and general-purpose
mathematics.   The computer          programs are available      free of charge to
Government users,    and they        can be obtained     by non-Government    organiza-
tions at minimal costs.

      In conjunction      with the announcements of separate            pricing     discussed
in chapter      2, IBM announced that all software          available      in its supported
users'   library    prior    to the separate-pricing       announcement would continue
to remain available        free of charge.       However, the services          associated
with the use of this software,           such as modifying      portions      of the pro-
grams for adaptation         to specific   user's    equipment,    will    only be available
at established      hourly     rates.

       Notice was also given that new versions             or updated versions
of the software         programs previously      included   in the libraries    will
be made available          on a separately    priced basis,    comparable to all
new program products          introduced   to the user market.       Thus, it appears
that,     if other computer manufacturers           that sponsor software    exchange
libraries       follow   the example set by IBM, the "free"         software   available
from these software          exchange libraries       managed by computer manufacturers
will    rapidly      become extinct.

SOFTWAREFIRMS

     As the need for larger         and more sophisticated           computer systems
evolved,    it became necessary         for the larger        data processing       users
to employ outside      programming        assistance.       In particular,      the Federal
Government required       a substantial         amount of programming         assistance
for scientific,     military     command-and-control           systems and other manage-
ment information      systems.      The necessary        in-house    programming      capabilities
were not sufficiently        available,       and the computer manufacturers              were
unable to provide      the level of effort            necessary    to satisfy     the needed
computer program developments.

      In an effort    to satify     this need, the Federal Government and other
large computer users employed consulting              and personal    service   contracts
to obtain   the needed technical          programming   assistance.      Several in-
dependent organizations         were established      to offer   these services     on a
contractual    basis.    Some firms tended to specialize            in selected
aspects of software      development        and, as a result,    developed an
expertise   in their    specific      area of computer programming        that
surpassed that offered        by the computer manufacturers.

     The majority     of contracts    for these specialized     computer pro-
gramming services      were awarded on a cost-plus-fixed-fee        or time-
and-material    basis.     Generally,    the justification   for employing




                                                51
    APPENDIX I


    these procurement      techniques     in lieu of making procurement         on a
    fixed-price      basis was that the purchaser          was unable to specifically
    define the subject      programming       tasks.   The purchaser,    in effect,
    was unable to effectively         control     the efforts   of the software     con-
    tractor     during the development        of the software    being procured.

           In some instances       the computer software       firms were employed
    to provide      a complete program; but, more frequently,                those firms
    were employed to provide           certain  levels    of effort.       These computer
    software     firms have also been used to provide              additional     personnel
    to supplement       an in-house     work force.      This technique,        however, can
    result    in illegal     practices     for Government agencies and has proved
    to be more costly         in some instances     than employing the necessary
    talents     over a period of time.         These observations         were made and
    more fully      explained    in the following      reports    which were presented
    to the Congress in 1967.

I
          --Potential    Savings Available  Through Use of Civil
             Service Rather Than Contractor-Furnished    Employees
I            for Certain   Support Services  (B-1333941, dated
             June 1967.

          --Use of Contractor   Personnel to Perform Research
             Functions Within Facilities     of the Air Force
             Cambridge Research Laboratories      (B-146981),
             dated November 1967.

          The techniques         used for contractually             obtaining      computer pro-
    gramming services          and other personal           services      is a subject       of con-
    tinuous     concern to the General Accounting                   Office.      Additionally,
    software       firms engaged in such activities                have developed a much sought-
    after    skill;     i.e.,    experience,        knowledge,      and expertise       for specialized
    computer programming            activities.         In conjunction        with developing       these
    capabilities,         some software         firms have further          developed the concepts
    that were originally            financed       and developed for use by the Federal
    Government and others.              With the knowledge and the techniques,                   they
    have completed the development of general-purpose                           computer programs.
    These programs were initially                  marketed to specialized           classes of users,
    such as the medical,           banking,        and insurance       industries.       Additional
    developments        by these computer software              firms have generally           evolved
    into generalized          software      products     that could be used by many classes
    of users and on several             types of computer configurations.

        The developers         of packaged programs have devised various
    means for marketing         their  computer programs and for protection




                                                     52
                                                                        APPENDIX I

of their proprietary       interests   in their     respective  products.
The software     package procurements       discussed    in appendix IV pro-
vide some illustrations         of the methods used by various software
firms to distribute       and control    their packaged programs.         Many of
the marketing     techniques     are used because patent protection         is
not available     for most computer software         packages.   The user charges
and restrictions      on use of program products being marketed by IBM
are discussed in chapter 3.

      It is not practicable         to determine   the extent that these packaged
programs are duplicative          of the programs or concepts developed for
and financed by the Federal Government.               In some cases, only the
genesis of the programs,          conventions,   techniques,    or concepts were
developed under the aegis of the Federal Government.                  Whereas in other
instances,      the Federal Government sponsored the total            development of
certain     software    products.     It may be appropriate     therefore,    for the
central    policy     agencies of the Government to require         software    suppliers
to eliminate       from the price of their product        the value of the Government's
contribution       to the development of the software        product.

      Although the Federal Government has, in some instances,                  re-
ceived certain    rights      for use of computer soft&are           packages that
it sponsored during development,             the evolutionary      features   of
data processing     activities      result     in constant    updating and other
changes to existing        software     programs.     Our study has shown that
the Government rights         generally     have not been extended to updated
versions    of computer software         programs which, in effect,         has re-
sulted in the Government having a right               to a superceded and generally
unusable software      program.

      Allied    to the problems associated           with Government rights
to updated versions        of Federally       financed    software      products
is the problem of the computer users obtaining                    the total      software
services     which they have leased or purchased.                 Generally,      software
firms have retained        either   portions      of documentation         or the program
source deck when providing          their products        to Federal users, as a
technique     used to protect     their proprietary          interests.        As a result
software     products    could easily become outdated             if vendors decided
not to maintain       their products       at some future       date.      This problem
area was considered        at the Conference on the Management of Computer
Systems in the Federal Government sponsored by the Office                         of Manage-
ment and Budget at Myrtle Beach, South Carolina,                     in July 1970.
The report      of this conference       stated that:




                                              53
APPENDIX I


      "The Government must make sure in negotiating             contracts
     that in all cases it gets adequate documentation               to use
     the product    in the first     place,    and that some provisions
     are made in the contract        to get source language state-
     ments and program maintenance          documentation    in the event
     the vendor becomes unwilling         or unable to maintain        the
     program.    Some unique techniques         may be required     to
     accomplish   this,    such as depositing      the documentation
     in a bank or with some third         party who can act as a cus-
     todian of a trust.        This issue should be considered
     further   by the General Services Administration            in con-
     tractual   negotiations     for FY 1972."

      Regardless     of the marketing         inequities      discussed   above and
elsewhere    in this report,        we believe        that computer software       firms
can offer    a capability       for Government use which, under certain                 cir-
cumstances,     can provide       substantial      benefits      to the Federal Government.
We further     believe    that these benefits            have not been fully     utilized
to date.     Facilities      for communication           of situations    where these
available    services     can be beneficial          to Government data processing
users have been lacking           in the Federal Government since no central
mechanism or other media has been established                      to communicate this
information     to the using agencies.             This aspect is further        discussed
in chapter     5.




                                             54
                                                                                 APE'ENDIX II


                             FEDERAL MANAGEMENTPRACTICES

                                             FOR

                                    COMPUTER SOFTWARE

     The acquisition        and management of computer systems by the Federal
Government has been guided by broad policies                     and guidelines      pertaining
to the procurement         of electronic        equipment rather        than computer soft-
ware and related        ser,vices.       This emphasis on hardware acquisition                was
due to the fact that,          under the total         operational      systems concept,
software    and related       services     were provided        by the computer manufacturers
as part of the hardware cost.                Without    central    policy     guidance for the
acquisition    of computer software             services,     the using agencies have
independently     fulfilled        their    software    requirements       through various
uncoordinated     practices.

      On October 30, 1965, the Congress enacted Public Law 89-306 which
provides    GSA with exclusive      authority       for procuring      all general-purpose
ADP equipment for use by Federal departments                 and agencies.        This law,
however, reserves        to the individual       agency the,right       to determine       ADP
requirements,      develop specifications         for computers,       and select     specific
types ,md computer configurations             to fulfill     its data processing          needs
and to determine       the use to be made of the subject              computer systems.
The Department       of Commerce, through NBS, is required              by the law
to provide    GSA and other agencies,           upon requests,      with technical
advisory    services    pertaining    to ADP and related          systems.     Additionally,
Public Law 89-306 assigned OMB the responsibility                    of exercising      fiscal
and policy     control     over GSA and NBS in the implementation              of their
respective     responsibilities      set forth      in the law.       The responsibilities
of these central       management agencies,         relative    to the ADP equipment,
also apply to the software         products      used in conjunction        with the
equipment.

OFFICE OF MANAGEMENTAND BUDGET

      For many years, OMB issued numerous policy    guidance and in-
structions   to the heads of executive  departments    and agencies con-
cerning the management and use of ADP equipment.

     In January 1966, OMB established       a new ADP management branch
to carry out its responsibilities       under Public Law 89-306.       This
group defined   the objectives     and overall  content   of working programs
to be performed    by GSA and NBS and issued policy       guidance letters  to
the two agencies on May 4, 1966, and December 15, 1966, respectively.
Also, OMB was the focal unit in interagency         forums and recently
two major ADP conferences      were held--one   at Charlottesville,
 APPENDIX II


 Virginia,      and the other at Myrtle Beach, South Carolina.      The
 reports     issued on the result  of the meetings indicate    that
 various     user and management problems were identified    and discussed.

      OMB is responsible   for providing    policy   guidance to the various
 organizations   of the executive   branch.      Whether this guidance flows
 through other central    agencies,   such as GSA and NBS or directly,
 it is necessary   to ensure that the guidance provided       is implemented.

 GENERAL SERVICES ADMIn'ISTRATION

       In May 1966, GSA received          pnlicy   guidance from OMB which pro-
 vided broad guidelines         for the implementation        of GSA responsibilities
 under Public Law 89-306.           This policy     guidance provides,       among other
 things,   that GSA evaluate        the procurement      processes    employed by the
 Federal Government for acquiring              ADP equipment and services       to deter-
 mine the areas in which revised            techniques,     methods, and practices
 would offer    greater   efficiency       and economy in acquisition         of the end
 product.     More specifically,        the evaluation      is required    to cover such
 things   as:

       "A determination     of the appropriateness   of continuing          the
        annual negotiation      of schedules for lease, purchase,           and
        maintenance     of equipment and services.

      "A more precise    definition    of the software  which the
       contractor   agrees to supply and more specific       penalty
       provisions   for failure     to deliver the promised software.

      "The possibility  of procuring        ADP equipment and ADP soft-
       ware as separate  and distinct        items,  not necessarily
       from the same suppliers.

      "The possibility     that additional  sources of procurement
       should be cultivated      to serve as competitive      alterna-
       tives  to procuring     equipment or services    directly     from
       the supplier.

      "The advantages  and possibilities   of consolidated  or other
       purchase arrangements   for equipment to be selected   by
       the agencies."

Additionally,        GSA was directed   to undertake      a program to assist      in-
dividual      Federal agencies in negotiating       "the procurement       of equipment
and systems support.          In this undertaking,      GSA is to ensure that the
Government profits         in each succeeding    acquisition       from the experience
of prior      procurements    and that attempts    be made to acquire        the data
processing       equipment and accompanying software,          training,    etc.,  at
minimum cost.


                                           56
                                                                                 APPENDIX II


Guidance   to users   for   procuring   software

     In January 1969, GSA provided guidance to Federal departments
and agencies for the procurement   of computer software.    Amendment
E-56 to part 101-32 of FPMR includes   section 101-32.403-2   which pro-
vides that:

    "Agencies may procure software              for use with ADPE available
    from a Federal Supply Schedule contract               in accordance with
    the applicable       provisions      of the contract.     Agencies may
    procure software        for use with ADPE from any other source with-
    out prior     review and approval of GSA provided            that the
    composition      and structure       of the software    is such that
    the potential       for substantial        use elsewhere in the Govern-
    ment is not readily         identifiable."

     The regulation     further    provides  that,   when a using agency deter-
mines that a software        product has applicability     in other Government
data processing     operations,     the agency should immediately    forward
the appropriate     documentation      to GSA for review and consideration     for
Government-wide     procurement      action.   Subsequent to the review by GSA,
the Commissioner of GSA may:

    --Delegate     to the agency the authority              to conduct    the
       procurement.

    --Arrange  for a joint-procurement             effort     between    the
       using agency and GSA.

    --Provide     for the procurement     by GSA or some other             de-
       signated     agency.

      Moreover,   section lOl-32.405(3)    (b) of the regulation     provides
that,    if no action is taken by GSA within      20 workdays after     full  re-
ceipt of the request for procurement,         the requesting   agency may pro-
ceed with the procurement       activity as if delegation    of authority     had,
in fact,    been granted.

      It is our view that the above provisions       of FPMR 101-32 place
an impractical      burden on the using agency to determine     if a commercial lY
available    software    package under consideration   for procurement      would
also be applicable       to other Government data processing    activities.

     The shortcomings    of the GSA regulation were also the subject
of discussion    at the Conference on the Management of Computer Systems
in the Federal Government sponsored by OMB and held at Myrtle Beach,
South Carolina,    July 20 through 22, 1970.   The report of this con-
ference stated,    in part:



                                           57
APPENDIX II



         "Current    General Services       Administration         regulations
        governing     agency procurement       of software         are too loosely
        drawn to provide       an effective       base for coordinating           the
        acquisition     and use of commercial          software       products.
        They require     GSA review and approval             only if,     in the
        judgment of the agency, the software                 has the potential
        for substantial       use elsewhere.        Because of the judg-
        mental factor,      agencies can decide,           rightly     or wrongly,
        not to submit the proposed procurement                  to GSA. The
        regulations     should be changed to provide               for GSA re-
        view of all such proposed software               procurements        that
        exceed a specified        dollar   level.      This would have the
        effect    of removing the judgmental           factor      ard bring
        under management review all proposed procurements
        of sufficient      value to warrant        a coordinated         approach
        for the purpose of extendinzlthe             utility       of the soft-
        ware and reducing       its cost.

NATIONAL BUREAU OF STANDARDS

     NBS received   policy   guidance,  dated December 15, 1966, from
OMB on its responsibilities       as set forth   in Public Law 89-306.
This policy   guidance provided     for specific   actions     to be taken
by NBS. Relative     to the computer software      activities,     this policy
guidance instructed      NBS to:

        "Provide criteria   to assist in evaluating    software   and
        hardware developments   that may be considered     during the
        systems studies.

        "Provide      guidelines,    criteria    and   techniques    for evaluating
        and selecting        equipment and related        software,    giving
        priority      emphasis to criteria       for   measuring the effective-
        ness and efficiency         of software.       Data on this subject
        will     also be furnished      to GSA for     consideration      in the
        procurement       of computers.

        "Maintain    a reference  index of computer programs                to minimize
        the need for the development     of programs already                developed,
        tested    and in use elsewhere."

        We found, during our study,           that only limited         action has been
taken     by NBS to implement these           policy  guidelines.         NBS officials



1On February    17, 1971, GSA issued Amendment E-89 to FPMR.                            This
 amendment quoted on p. 30requires,       in part,  that agencies                       obtain
 GSA approval    before acquiring  software   packages exceeding                        a
 specified   dollar    level.
                                        58
                                                                               APPENDIX II


    told us that limited      reviews were performed         at the request     of GSA, prior
    to awarding Federal Supply Schedule contracts               for the subject     computer
    programs r and consisted      of a cursory    reading of the program documenta-
    tion provided     by the software   vendors.       NBS officials      also said that
    they did not perform any simulation         activities        or other tests    to
    evaluate   the software    packages for GSA nor had they established               a
    reference    index of computer programs as required             by OMB, due to the
    lack of available      manpower and financial        resources    necessary   to perform
    the work.

         In discussing   these situations  with OMB officials,      they advised
    that this shortage     of manpower and financial resources      at NBS had been
    recognized   but that OMB had been unable to rectify       this condition
    at the time of our study.

    Duplication    of effort

          We noted that data processing       installations       within    the Federal
    Government independently       evaluated    the same computer software          packages
    prior    to the acquisition    of such software.         For example, the Pacific
    Missile     Range and Norton Air Force Base both evaluated              the technical
    capabilities     and performance    of the MARK IV software          package at about
    the same time, as evidenced by evaluation             reports    dated October 1968.
    The reports     show that,   during these evaluations,         other file    management
    systems, such as PRISM and COGENT II, were also being considered                    by
    both agencies.      Among other activities        performed    during technical
    evaluations,     we noted that users generally:

         --Reviewed    the software    documentation       in detail.

         --Visited   other users of the respective           software  packages
            to determine   their experience through          use of the product.

         --Ran simulation   tests of their       actual     needs of a computer
            system by using the specific        software     package under con-
            sideration.

    We noted that these two Federal data processing          installations       both
    visited    the same users,  as well as others,     during their      evaluation
    processes.     Our study further    shows that four other Government agencies
    have also independently     evaluated   the technical    capabilities       and per-
*   formance of the MARK IV software       package.   (See app. IV.)

         Many data processing     installations   of the Federal Government have
    also performed   duplicate    evaluations   on other commercially  available
    computer software    packages,     such as QWICK-QWERY, SCORE, SIMSCRIPT 1.5,




                                                59
APPENDIX II



and others.    Not only did we find a common practice           within   the Fed-
eral Government for each data processing           installation    to perform its
own technical    evaluations    of software    packages, but we also found
very little   evidence of interaction       between these Government users
during their   evaluation    processes.

      Much of this duplication     could have been unnecessary       had NBS
taken part in the technical       evaluations    and made available    to Govern-
ment users a reference      index of all computer programs.         At the Con-
ference   on the Management of Computer Systems in the Federal Government
sponsored by OMB at Myrtle Beach, South Carolina,          the evaluative
process was discussed     but the discussion      centered upon the techniques
to evaluate    computer programs.      The report   of the conference     does not
include   any mention of concern for the duplication         of effort    in evaluating
computer programs.

       The conference      included   a discussion     on the lack of information
concerning       the present     use of software    packages.     It was suggested that
an inventory        of software    in use in the Government be taken and that a
catalog     of software     products   be considered.       Recognition   was given to
the difficulty        in cataloging    certain    packages until     NBS established
parameters       for program identification.          The need for a catalog       to document
information        about software    packages was also expressed at the Conference
on the Selection        and Procurement      of Computer Systems by the Federal
Government held September 15 through 17, 1969, by the Federal Executive
Institute      at Charlottesville,      Virginia.

Standards

     In its policy   guidance dated December 15, 1966, OMB also pro-
vided that NBS would initiate         a program to increase      the compatability
in data processing     activities     of the Federal Government by recommending
Federal standards    related      to equipment,  techniques,     and computer languages.
In fulfilling    the responsibility,       the OMB policy    guidance stated that
NBS would:

     "***Immediately      begin to develop,     issue,     and maintain     a
       statement    of the Federal Government's         standardization
      objectives     and needs.     The statement     is intended       to
      guide the orderly       and logical   pursuit     of standardiza-
      tion in ways that are compatible          with identified        Federal
      interests."

     On March 24, 1970, NBS issued a memorandum to all Federal de-
partments   and agencies regarding         the objectives   and requirements    of
the Federal    Information     Processing     Standards Program.    This document
set forth   the potential      areas under this program and requested        these
departments    and agencies to evaluate         and to rank these areas in the
order of priority       for their   needs.
                                                                                           APPENDIX II



     Included     within    the proposed areas for Federal data processing
standards     was one covering       computer applications           and data.     The
primary    objectives     for establishing        standards     for computer programs
were to attempt        to eliminate    unnecessary       reinvention     of like computer
programs for data processing           activities      throughout      Government
departments      and agencies and to facilitate             the interchange      of
data at the same data element level within                  Government operations.
At the Myrtle Beach conference,             it was reported        that Government
ADP managers voiced their           concern on the subject           of standard
language and adequate documentation.

      Scientific     and technological        advisory   services,      support   of
industry     standards,   establishment        of uniform    Federal ADP standards,
and research      on computer science and techniques              are activities      long
overdue.       We believe   that these activities,          especially      as they relate
to computer software,         will    greatly   enhance the ability         of the Federal
Government to more effectively              manage software     acquisition      and use with-
in its data processing         detivities.        Moreover,    such activities       should
provide    Federal computer users with the capability                  for:

     --More   effectively         defining     their         computer    software      needs.

     --More   effective        documentation           for    computer    prcgrams.

     --Sharing  data processing      work loads to achieve the maximum
        economic result  from their      investments in computer equip-
        ment and related   software.

     --Elimination          of the existing      need for          continual        reinventions
        of computer         software  to fulfill     data          processing         needs.

     To achieve these benefits,          however, NBS must have the necessary
resources.      As previously     pointed   out, OMB recognized     that NBS had
a shortage    of resources      to fully   implement  the tasks and responsibilities
assigned to it by Public Law 89-306 and the OMB policy                guidance document.
We believe    that full    economic and efficient       acquisition     and utiliza-
tion of compu'zer software        or equipment will     be unattainable      under
the present     management structure,        unless NBS is provided      with the
resources   to discharge      its responsibility     under the legislation.

COMMUNICATION--A PROBLEM IN THE MANAGEMENT
OF SOFTWARE

      We have found a lack of an effective        means for communication
within   the Federal Government in the management of ADP, including
computer software     products.      There are no formal lines of communication
between users8 and communication          between responsible  management and
users has been limited.         Since many users are insulated      from the rest
of the Federal ADP community,         they have unknowingly   retraced   the same
steps previously    taken by other Federal users.
APPENDIX II


Policy     guidelines

        Only   limited   guidelines    for determining       the best means of
fulfilling        computer software      needs have been issued to operating
agencies       to date.    The OMB guidance documents to GSA and NBS included
guidance       only on certain      Government-wide      software   problems.     We believe,
however,       that GSA and NBS should provide           all user agencies with the
necessary        guidance for determining       and supporting      their    needs for
software       products   and the necessary      direction      for satisfying    these needs.

Regulations

      In January 1969, more than 3 years after            Public Law 89-306
was enacted,    GSA issued an amendment to the FPMR concerning             the
acquisition    of software   products.      This   regulation    has not  been
effective.     GSA advised us that they have made no effort             to administer
these regulations      for software    procurement.

      We found in our review,      for example, that the Naval Construction
Battalion    Center,    Port Hueneme, California,         was concurrently    renting
two generalized       computer software   packages;       one called AUTOFLOW, which
was ordered from the Federal Supply Schedule,               and the other called
SIMSCRIPT 1.5, which was independently             acquired   by the using agency.
We were advised by agency officials           that neither     of the above procure-
ments was coordinated        with or reported      to GSA as required      by FFMR,
section    101-32.403,    as they were unaware that such a requirement              existed.
Similar    conditions    have also existed      with other using agencies.

      The original      version  of this regulation       required    voluntary
compliance      by user agencies on the basis of their             understanding
of the potential        for the use of the product       by other users.         There were
no provisions       in the FPMR for ensuring      that the regulations          are complied
with.     Officials     of GSA have confirmed     our observations         and have stated
that it is their        view that GSA does not have the responsibility               for
administration        of these procurement    regulations       once they have
been released       to the operating    agencies.

       This regulation        was modified       in February 1971.        (See p. 30.)
This modified        version,    however, did not alter           the provision    dealing
with voluntary        compliance.        Moreover,      our study shows no instances
where GSA made an effort            to evaluate       the applicability      or effective-
ness of these regulations             in actual Government data processing              opera-
tions.     Officials       at GSA have expressed the view that another Government
agency, such as the General Accounting                   Office,    for example, should be
policing    their     procurement       policies     and regulations     once they are issued.
They have stated that GSA does not have the necessary manpower or financial
resources     to administer       its policy       regulations.




                                             62
                                                                                         APPEMDIX JI


       In our opinion,        the issuance of regulations              without      concern for
the applicability,          effectiveness,        and enforcement         of such regulations
does not satisfy         GSA's responsibility            under Public Law 89-306.             We be-
lieve that GSA should immediately                 take steps to oversee and manage computer
software      acquisitions       in the Federal Government.               It is our view that an
originating        agency of operating         regulations,        such as GSA, must take the
initiative       to review and evaluate           such instructions           to ensure that they
are in consonance with the needs of Government operations.                               Furthermore,
GSA should not depend on others to perform                     functions        that are properly
GSA's responsibility.              Moreover,     we believe      that GSA must take a more
active part in the acquisition                of computer software            for use in
the Federal Government to ensure that such software                           is obtained
in the most economical             and efficient       manner.      Only in this way,
can such a central          procurement       agency fulfill        its managerial
responsibilities         for ensuring       that economies are experienced                in
procurements        for data processing          activities     within      the Federal
Government.

Inventory

     There is no one source in the Federal Government where one
could obtain a complete inventory  of computer software products
used in Federal installations.

      OMB Circular      A-83, dated April          20, 1967, prescribed            the policies
relating    to the establishment           and maintenance           of the Government-wide
ADP management information             system.       This circular        provides      for inte-
grated subsystems         for inventory,       utilization,         manpower, cost, and
acquisition     histories       for each of the computer systems used in the
Federal Government.            The circular      further       pointed    out that additional
subsystems concerning           selected    information         on program plans,          budget
requirements,      equipment and software             performance,        applications,        etc.
would be considered          for development         and subsequently         integrated        into
an advanced management information                 system for data processing                activities.
GSA was designated          as the agency responsible              to accumulate        data for
the sys tern.    At the time of our review,                 the ADP management information
system had not been used to accumulate,                     and make available,           data on
software    products.

      At the Myrtle       Beach Conference      on the Management of Computer
Systems in the Federal Government previously                mentioned,      it was
reported    that there was a need for an inventory             of software      in
use by the Federal Government.             Accordingly,     GSA should undertake
the inventorying        of software     in use in the Government.           We believe
that whatever information           is accumulated,     either   informally     or
through a management information             system, is of little       value to the
individual     ADP practitioner       if he is not aware of the data.             There-
fore,    the availability       and information      on these programs must be
made known to all users.


                                                   63
APPENDIX III


                           PROCUREMENTOF COMPUTERSOFTWARE

      Annually    GSA has been negotiating        Federal Supply Schedule
contracts     for computer equipment and related          maintenance   activities
from several      sources of supply.        Each contract   is independently
negotiated     on a sole-source       basis with each applicable      vendor.       The
contracts,      in many instances,      represent   the commercially    available
prices    with quantity    and other discounts.         This activity   is in partial
discharge     of its responsibilities        to procure   computer products       for
Federal agencies.

FEDERAL SUPPLY SCHEDULE CONTRACTS

     These Federal Supply Schedule contracts      are not competitively
awarded, and using agencies are required       to obtain their    ADP re-
quirements  on a competitive   basis.     This means that each requester
of ADP products   must prepare specifications     and determine    who can
best meet those specifications     at the best possible    price.

       GSA has stated that the Federal Supply Schedule contracts             are
to be considered     as a “permissive     source of supply"       and that the
only time that GSA needs to be consulted            in a procurement     of equip-
ment that is on the Federal Supply Schedule is whenever the maximum
order limitation     stipulated   in the contract       is exceeded.     By being
notified    of large quantities     or large-dollar-value       items, GSA is
in a position     to participate    in the acquisition      process.

      The Federal Supply Schedule contracts         provide     users with a
partial   list  of suppliers     and the available     contract      terms.    In
some instances,      the Government has the opportunity          to technically
evaluate    the product;    but this is not necessarily         done.     In our
opinion,    the Federal Supply Schedule contracts          should be much more
useful.     We believe   that a major goal of a detailed           reexamination
of the GSA annual negotiation        of these contracts       should be to
develop an instrument       that would eliminate     the need for the duplica-
tive evaluation      of ADP products    by each user and that would provide
the user with a competitively        obtained   firm source of supply.

       Although      software    packages   have been commercially     available
for about 6 years,            the records   show the following   history     of con-
tracting      activity      for software    by GSA for the Federal Supply Schedule.

                                                       Number of
      Fiscal    year                                 contracts awarded

           1966
           1967                                              1
           1968                                              1
           1969                                              3
           1970                                              4
           1971 (through       l-l-71)                      28


                                               64
                                                                                APPENDIX III


In addition   to the above statistics,      the Air Force has awarded a
Government-wide     call contract   (F19628-70-C-0269)    for the MARK IV soft-
ware product    for fiscal   year 1971.    (See app. IV.)

      Some computer software          firms visited      during our study expressed
concern over the apparent nonresponsiveness                  of GSA regarding     proposals
submitted     for contract      negotiations       so that their     respective    computer
software     packages could be made available             to Government data pro-
cessing users through the Federal Supply Schedules.                      An analysis
of this situation       as of September 1969 showed that there were 33
potential     vendors on a waiting          list   for consideration      of having
their    respective    software      packages placed on the Federal Supply
Schedule.       The records     showed that eight of the 33 vendors were
placed on this waiting          list    during calendar      year 1968, and no effort
was made to negotiate         contracts       with these potential       vendors through
September 1969.

     A further  analysis    of this waiting      list    of potential      vendors
showed that five of the applicable        software       packages on the list        had
been independently     acquired    and used by Federal agencies while the
vendors were waiting     to negotiate    contracts       with GSA. These
five software   packages were placed on the waiting             list    and installed
at Federal Government data processing          installations         as follows:

                           Date of                   Initial                  Packages
                         application            procurement  by               installed
Software    package        to GSA             Government agencies             as of l-l-70

MARK IV                  February  1968             February 1968                   14
QUICK-DRAW               September 1968             January 1969                     8
SCORE                    March 1969                 May 1969                         4
QWICK-QWERY              March 1969                 October 1968                     1
SIMSCRIPT                March 1969                 March 1968                       7

      Relative    to the MARK IV File Management System software                  package,
the 14 copies were acquired           by six separate       agencies at various        prices
and contract      terms.      (See app. IV.)     Moreover,     the contract       terms
for use of these packages are very restrictive                 as to equipment and
location.       Had GSA competitively       negotiated      a contract     for all
Government needs instead          of each agency independently          buying what
it needs, it is reasonable           to expect that substantial          quantity
discounts      and other advantageous       contract     terms could have been
obtained.       Additionally,     the duplicate      technical    evaluations       of
the same product        by each buyer would have been eliminated.

     GSA officials advised us in September 1969 that they were
unable to accommodate the requests  for contract   negotiations
with the existing  financial and manpower resources   available for



                                               65
APPENDIX III


such activities.       They told us that emphasis was placed on completing
negotiations      for hardware contracts  for each fiscal   year prior to
negotiating      such contracts  for commercially available   computer
software     packages.

      In a follow-up       inquiry    on this matter,         GSA advised us that
the procedures         for requesting     contract     negotiations        for the Federal
Supply Schedule were changed during the summer of 1970 to relieve
the situation        of having a large number of software                 vendors on a
waiting    list    for such negotiations.            Currently,     potential      vendors
are required       to submit complete contract            offers    when requesting
negotiations       for Federal Supply Schedule contracts,                  in lieu of
merely making an application            to have their         respective      products
considered      for the schedule.         It was emphasized that use of this
technique      has increased       the quality     of requests      for negotiations
and decreased the number of applications                  received      from vendors with
products     that would otherwise         not qualify       for the schedule.

GSA DELEGATIONS OF PROCUREMENTAUTHORITY

      The procurement   of ADP products,        especially     software    packages,
requires   a technical    knowledge of the product          as well as a knowledge
of the procurement     process.     Such capability        exists   in some of the
larger   Government agencies.       To capitalize       on this available       Govern-
ment resource,    as well as to relieve         some of the work load of procuring
Government-wide     ADP requirements,        GSA has delegated      to selected    agencies
some of its procurement       responsibility      for certain      software   packages.

      An illustration        of this use of available           Government resources        is
 the delegation       of procurement      authority     to the Department        of the
Air Force for the negotiation             of a Government-wide         call-type     contract
 for computer simulation         programs.        (See app. IV.)       In this case,
a number of agencies had a requirement                for this software         package
and the Air Force negotiated             a contract     for all known requirements,
as well as the provision           for adding future         requirements      on a call
basis.     The Air Force was also delegated               the responsibility       by GSA
to negotiate       a call-type     contract    for fiscal       year 1971 for the
MARK IV file       management software        package.       This contract      was negotiated
to satisfy      the MARK IV software        requirements        for the Department       of
Defense,     as well as the requirements            of all Federal agencies,          and
is jointly      managed by both the Air Force and GSA.

     The use of available    Government resources   is to be encouraged
as long as it does not degrade the contract       management or procurement
process responsibility    that has been assigned to GSA.

ADP FUND

     To promote     and facilitate       an economical      financial     arrangement


                                              66
                                                                               APPENDIX III


for data processing      equipment,      an ADP revolving     fund was authorized
by Public Law 89-306.        In November 1967, $10 million           was appropriated
initially   for this fund, and in January 1971, an additional                $20
million   was appropriated.        This fund has been used principally           to
establish   computational      service    center capabilities      for use by Govern-
ment agencies.     Some use of the fund has been made to procure               ADP
equipment for lease to other Government agencies.                 However, the fund
has not been fully     explored      for hardware procurements,        and it has had
no impact to date on the acquisition            of computer software      for use by
other Government agencies.

       It was reported    in the summary of the Myrtle        Beach, South Carolina,
Conference     on the Management of Computer Systems in the Federal Govern-
ment that the ADP fund does provide        flexibility      for funding equipment
in behalf of user agencies but that the limited             capitalization       has re-
stricted    its use; and further,    user agencies are not fully           aware of
the guidelines      under which the fund is to be used.           The possibility
of using the ADP fund to finance        the acquisition       of software     products
and thereby obtain the benefits       of quantity      purchases     or outright
purchase should be explored       to achieve the goals of economy and
efficiency     set forth by Public Law 89-306.

INDIVIDUAL AGENCY HEADQUARTERSCONTROL--A STEP
TOWARDCENTRAL MANAGEMENT

      To get uniformity     of results   from     Operating       UIIitS,  many in-
dividual    agencies have centrally      established          a control    over ADP
acquisition    and applications.       Centralized          agency control     provides
for more effective      and economical      applications,         better   data for
management, and a firmer        grip on the huge ADP expenditures                of the
agencies.     Such control    is a step toward the administration                 and
management of ADP by a central         management organization.

software    for   subordinate    installations

     The software    needs for operating     units'     applications     can be
centrally   obtained   and maintained    either     in-house,     under contract,
or purchased as a product.       The military       departments      have exploited
this management technique      by using a variety        of approaches.

      The Department       of the Air Force, for example, has standardized
the equipment and programs at each of its installations                  for certain
applications.         The software    is prepared by a separate        central   organi-
zation and copies are furnished            to all operating     units.     The Department
of the Navy used standardized            equipment in its shipyards        and had
selected      shipyards    contribute    to the production     of the software.       A
separate      organization     was afterwards    established     to maintain   the
software      for the Navy.       In another instance,      Navy headquarters     selected
a civilian       payroll   and leave accounting      system prepared     in COBOL by


                                                 67
APPENDIX III

a naval installation       for use by other naval installations              because
it met its criteria      of acceptability.        Also the Marine Corps pur-
chased a quantity      of proprietary      program products      for use by those
installations     needing them.       All these approaches are attempts            by
headquarters    of agencies to obtain better          managerial     control    over
ADP expenditures     as well as to obtain better         results     from the ADP
resources.

Software    for   agencywide   applications

      With the advent of management information     systems and other large
multilocation   management systems, it has been necessary       for agencies
to develop systems and methods to undertake       such programs.    These
programs are not repetitive    but are usually    one of a kind.    Thus,
the experience   gained by an agency in implementing      such a customized
program is lost to other potential    users due to the lack of central
management and coordination    of such resources.

      In our study, we examined into the procurement                  of the Centraliza-
tion of Supply Management Operations    System by'the                 Department of the
Army.    In this study, we found a need for:

     --A fully  staffed  system project    organization     to serve
        as the sole contact   for all information       and control.

     --Establishing      parameters    for    contractor   efforts.

     --Defining     subsystems and selecting    appropriate    type
        of contract     for each natural  development    element.

     --Sequential    development   of subsystems with the product
        of one phase becoming the definition        for the succeed-
        ing stages,   in lieu of parallel     development of subsystems
        with interdependency     on others to interface    results.

Due to the lack of interagency   coordination, other Government                  users
planning  to develop a larger  scale management system by using                  con-
tractors  may not be aware of these needs.

Software   for    grantees

      zany agencies have work programs which are carried    out by con-
tractors   or grantees.    More and more Federal funds are being spent
by grantees.     These grantees,  in many cases, employ ADP to do their
work and to account for their     stewardship  to the host Federal agency.

      We believe  that,   where the ADP operations  of grantees   are
solely   due to Federal work programs and applications      imposed by
Federal agencies,      it is logical for the Federal agency to be directly



                                              68
                                                                                APPENDIX III


involved    in the development    of the needed software           products.          This
involvement     would provide  for uniformity    of results         as well         as for
a control     over the costly  ADP expenditures.

      The software      product CEP is a case in point.       This software
reporting    system was written      by a software   supplier   as part of a more
comprehensive      information   system developed for the District        of Columbia
United Planning Organization.          The CEP software     was designed to improve
the reporting      system of the Concentrated      Employment Program carried
out by grantees       for the Department   of Labor.

      We found that the following   grantees   have purchased   this
software     product to assist them in preparing   reports   needed by
their    controlling   agency:

                                                                     Date of
                 Grantee                      Price                  installation

Chicago Committee      on Urban
  Opportunity
Chicago,   Illinois                           $3,500                 December 1968

United Planning Organization
Washington,  D.C.                               4,000                December 1968

Human Resources,   Inc.
Pittsburgh,  Pennsylvania                       3,500                December 1968

Human Development Corporation
Saint Louis, Missouri                           4,000                December 1968

Community    Renewal Team of
  Greater    Hartford
Hartford,    Connecticut                        3,500                December        1968

City of Baltimore
Baltimore,  Maryland                            4,000                February        1969

Surely,    the sponsoring        Federal agencies are better        equipped to
determine      their   reporting    requirements    and should be in the best
position     to have a computer program prepared           for use by all grantees,
rather   than to have each grantee           independently    satisfy    his data pro-
cessing needs.         The benefits     of such central    procurement      and distribution
are readily       apparent.

     In a slightly     different   potential   application,         the Manpower
Administration,     Department    of Labor, administers          and finances   all
administrative     costs-- including    data processing         costs--incurred




                                              69
APPENDIX III


by each State in discharging      unemployment compensation      and employ-
ment services   programs.     Each State has certain   reporting       require-
ments to meet which are prescribed       by the Manpower Administration.
Therefore   a centrally   devised program product    made available        to
each State,   would offer   great promise for uniformity,       efficiency,
and economy of operation.

     Another area where the concept of central                 agency participation
and control    promises better          management and economy is in the mush-
rooming Federal involvement             in sociomedical     assistance.        To illustrate,
the Social Security         Administration,       Department     of Health,     Education
and Welfare,      administers       Medicare insurance     programs through designated
insurance    carriers.        This administration       imposes many reporting           and
file  maintenance       requirements      on these carriers,       a situation      which
has some impact upon their             mode of recordkeeping.        During 1970, the
Social Security        Administration,       with contractual      assistance,       developed
a software    product      which could be used by its carriers             to process
part B (medical insurance)             Medicare claims.       This Government-owned           soft-
ware product      is provided       free to the insurance2carriers           and was being
used in several        States as well as the District           of Columbia as of
January 1971.

      In January 1968, the Electronic       Data Systems Corporation      pro-
vided a comprehensive     proprietary    program to process part B Medicare
claims and to provide     information    required      for reports  to be
submitted    to the Social Security     Administration.        This pro-
prietary    software product    has also been acquired        and used in
many States for processing       part B Medicare claims and preparing
reports   for the Social Security      Administration.

      The designated    insurance    carriers     in other States involved
with the Medicare program have independently                 satisfied     their    computer
software   needs through acquiring         proprietary       products    from other
software   vendors or through other means.              We noted, for example,
that three of the designated         insurance      carriers     in the State of
New York that process part B Medicare claims use software                       packages
acquired   from three separate       sources.       Two carriers       acquired pro-
prietary   software   products    from separate        vendors,      and the remaining
carrier   was in the process of implementing              the Government-owned         soft-
ware product    on its computer system as of January 1971.

     We can well visualize         the savings that would accrue to the
Government in data processing            costs,    as well as from the standardiza-
tion of techniques        for processing       and reporting   data on Medicare claims,
if all grantees       under the Medicare program were required             to use the
Government-owned       software    product.       Moreover,  we believe    that similar
savings could possibly         be realized      through the development       of a Govern-
ment-owned software        product    capable of processing       and reporting     part
A (hospital)      claims under the Medicare program.            Currently,     any
software     needs for processing       part A claims are independently          satis-
fied by the designated         insurance     carriers.

                                              70
                                                                                     APPENDIX IV


                 EXAMPLES OF GOVERNMENTORGANIZATIONS USING

                           PROPRIETARY SOFTWAREPACKAGES

       Following    are examples of proprietary        computer software   packages
that have been independently        procured by Government agencies for use
at their      respective  data processing    installations.      This information
is based on interviews        with software    vendors and data processing
officials      of the Federal Government and examinations          of selected
records.

     Examples of the diversified               techniques       employed by using agencies
of the Federal Government for acquisition                      of computer software          packages
are included       in the following       pages.        These examples are intended              to
demonstrate      duplications       of effort,       unlike      contractual      arrangements,
use restrictions,         and additional         costs that have resulted             from unco-
ordinated     efforts     within    the Federal Government for the procurement
of computer software          packages.        Also included         are examples of experi-
ences at individual          data processing         installations        relative      to the use
of and benefits        derived    from these software             packages.

MARK IV FILE MANAGEMENTSYSTEM

       The MARK IV File Management System, developed by Informatics                  Inc.p
Sherman Oaks, California,          is an advanced general-purpose           software  pro-
duct for use with IBM 36rj and RCA Spectra 70 computers.                   As a file
management system, MARK IV provides             the capability     to create and main-
tain data files       and to prepare    reports     from these files      in
variable    formats.     The software    product      can also be used to
provide    quick response for special         reports    and other one-time
requirements,      as well as for the development,           implementation,
documentation,       and operation    of business data processing           applica-
tions.

        The vendor applied    to GSA on February       19, 1968, for inclusion
of the IQRK IV product        on the Federal Supply Schedule.           Because the
initial     Government-wide     contract    was not available   until    fiscal
year 1971, each agency had to negotiate             its own contractual       arrange-
ments for all prior       procurements.       We found that the following         six
agencies had independently          acquired   14 copies of the MARK IV soft-
ware package during the period February             1968 through August 1969.




                                                   71
     APPENDIX IV


                        Government          agency                                    Sale price

                        U.S.      Dept.     of Agriculture                       $31,687a

                        Civil      Aeronautics           Board                    30,000    + $2,500b

                        U.S. Marine Corps
                          Kansas City, MO.                                        30,000    +    2,500b

                           3rd.     Div.      FMF, Okinawa                        10,000    +      500b

                           FPO, San Francisco,                    Calif.           6,000    +      500b

                           Parris         Island,       S.C.                       6,000    +      500b

                           San Diego,          Calif.                              6,000    +      500b

                           Camp Lejeune,             N.C.                          6,000    +      500b

                           Camp Pendleton,               Calif.                    6,000    +      500b

                           Headquarters,   Marine                  Corps
                           Washington,   D.C.                                      6,000    f    1,250b

                        National Institutes                 of Health
                          Chevy Chase, Md.                                        30,000    i-   2,500b

                           Bethesda,         Md.                                   6,000    +      500b

                        Deputy Inspector    General                   for
                          Inspection    and Safety                                30,875'
                        Norton Air Force Base
                        San Bernardino,    Calif.

                        Pacific Missile    Range
ii                      Point Mugu, Calif.                                        19,500d
 I




     aconversion      to purchase     after         3-month        lease.
     bspecial     Feature
     'conversion      to purchase     after 2-l/3              months       of a 12-month lease.
     d conversion    to purchase      with lo-day              notice       at any time during
       the 12-month lease.




                                                          72
                                                                                APPENDIX IV



    Following   are examples of independent  procurements   of the
MARK IV software    package prior to the negotiation   of a Government-
wide contract    for fiscal year 1971.

Deputy Inspector    General       for
  Inspection    and Safety
Norton Air Force Base
San Bernardino,    California

       On January 20, 1969, contract      F04607-69-C-0156      was awarded to
Informatics     Inc.,   for a 12-month rental    of the MARK IV File Manage-
ment System to be used by the Deputy Inspector            General for Inspection
and Safety on an IBM 360 computer system.            This procurement     was
justified     by the agency on the basis that MARK IV would improve the
responsiveness       to many special  data requests,     primarily   one-time
reports     on accident    data.

      Prior to selecting    MARK IV, the data processing       personnel    per-
formed a review of 21 available       software    packages.    MARK IV was selected
because it was considered      by the evaluators      to,be the only package that
met all requirements,      such as the capability       for handling  hierarchical
files    and for operating   on the existing    computer equipment.

       A data processing       official       told us that,      by using MARK IV, they
had experienced         a reduction       in programming hours required          for one-
time requests        for accident       data.     They decided to change the rental
contract     to a license       for perpetual        use of the software      product      as a
result    of the successful          application       of MARK IV to the accident
files.      On March 26, 1969, a proposal               was submitted    to the vendor
for a license        for the MARK IV product.             However, before the license
agreement was finalized,             the Department       of Defense issued Defense
Procurement      Circular     No. 71, dated June 25, 1969, requiring                military
components to obtain GSA approval                 prior   to the procurement       of com-
mercial     software     products      not available      on the Federal Supply Schedule.
Accordingly,       a request      for this procurement          was submitted    in August
1969 to the Air Force Directorate                 of Data Automation       for transmittal
to GSA for approval.            Subsequently,        the Air Force was delegated
authority      to negotiate       a Government-wide         contract.     (See p.75.)

      This   acquisition    illustrates     an independent    acquisition     which
resulted     in duplication      as discussed    in the following      pages.

Department   of the Navy
Pacific  Missile   Range
Point Mugu, California

      On August 29, 1969, a contract       was awarded to Informatics
Inc.,   for the   rental     of a MARK IV File  Management System to be used
at the Scientific        Data Analysis  and Processing  Department,   Pacific

                                              73
APPENDIX    IV




Missile     Range.     This contract,     in addition     to providing    for a 12-
month rental        of MARK IV, contained     a purchase option allowing          for the
application       of 50 percent    of the rental      payments toward a
perpetual      license    price of $32,500.      As acquired,      the MARK IV
monthly rental        charge was $1,625, or a total         of $19,500 for
the 12-month period.           The rental   authorization      for this acquisition,
received     from the Naval Air Systems Command, showed that future
decisions      on obtaining     the perpetual    license    arrangement     for this
software     package would be contingent         upon the results      of any
evaluation       of the vendor's    price   schedule made by GSA.

      The data processing         center at the Pacific          Missile     Range has
the responsibility         for providing      computer support         services   to the
various   range users and the departments                located   at the range.        These
services    include    file    generation,     file    maintenance,      data retrieval,
and report     generation.        The decision      was made to acquire a file           manage-
ment system to provide          the programming staff           at the data processing
center with a tool to increase             productivity.

     Prior to acquiring     the MARK IV software       package, the data pro-
cessing personnel    performed      an evaluation   of the major file        management
system packages available       at the time.      Preliminary     evaluations    elimina-
ted all but three of the packages.           A representative      benchmark program
was then submitted    to each of tie three companies for use in testing
with their   system.    On the basis of the results          of the testing     and
other independent    analyses,      MARK IV was selected      to meet the needs
of the data processing      center.

     This independent    procurement   action again shows duplication
of effort.    In addition,    it shows that different  contractual    arrange-
ments from the same software      vendor are obtained  through uncoordinated
procurement   efforts.

Headquarters,      Marine   Corps
Washington,      D.C.

       Headquarters,     Marine Corps, centrally       procures   all computer
hardware and software         for use by the Marine Corps data processing
installations.        Accordingly,     a contract    (M00027-68-C-0183)    was awarded
in April       1968 to license     the use of MARK IV at various      Marine Corps
installations.        As of December 4, 1969, eight Marine Corps installa-
tions were using the MARK IV software             package under a 20-year license
agreement at a total         cost of about $89,900, which included         support
services.

      The MARJF:IV software      package was tested for several     weeks
during   a free trial      period provided  by the vendor.     Moreover,  con-
tact was made with a commercial user of the MARK IV system to obtain
its viewsl    evaluations,      and user experiences  relative   to the use of
this package.


                                            74
                                                                                 APPENDIX IV


      We were advised that contact     with GSA in this procurement       was
limited    to determining    whether a Government-wide     contract   had been or
was being negotiated      for the MARK IV software     package.     The Marine
Corps officials     stated that they were unaware of the required          co-
ordination    with GSA for computer software     procurement      as set forth
in FPMR.

      It is the view of the Marine Corps officials                 that the vendor-
supplied    documentation      and support    services     has been more than
adequate to fulfill       their   needs.    They stated that the MARK IV
software    package provided      for flexible      formatting       of records    and
that the use of the subject          package substantially           relieved   the
routine    work load of the in-house        programming       staff.       The savings
realized    through use of this software          package have not been quanti-
fied as yet, nor has the information             on its experience          been officially
disseminated     to data processing       users outside       the Marine Corps.

     This centralized      procurement     action by the Marine Corps has
decreased the extent of duplicate           technical   evaluations   that other-
wise would have been performed          independently    by each of its data
processing  installations        and has resulted     in substantial    quantity
discounts  as was shown on page 72 m Such savings possibly                could
be more widespread      through    central    agency coordination    of such efforts
on a Government-wide       basis.



      We found no evidence,         during our study,          of any GSA parti-
cipation    in the acquisition         of the MARK IV software         products
noted above.       Moreover,     NBS had not conducted a technical              evalua-
tion of this software        product      for Government-wide        use.   Because
central    agencies had not participated             in the acquisition       of the
MARK IV software       product,     each using agency independently            performed
technical     evaluations     prior    to their     acquisition     of the software
product    and obtained     divergent       contractual      terms,  as discussed      on
the preceding      pages.

     In the fall   of 1969, the Department          of the Air Force recognized
a continuing   need for the MARK IV File Management System and requested
that GSA negotiate      a Federal Supply Schedule contract              for this product.
Upon receipt   of the request,       GSA delegated       authority    to the Air Force
to negotiate    a Government-wide        call contract      for the MARK IV soft-
ware product.     Both parties      participated       in negotiating      contract
F19628-70-C-0269     for Government-wide         use of MARK IV during fiscal
year 1971.    The contract      is jointly      administered      by GSA and the Air
Force and contains      a provision      that only the Air Force can alter           the
terms of the contract,       with concurrence        from the software       vendor.




                                                 7.5
APPENDIX IV


      A noteworthy     provision  of this Government-wide       contract   is the
quantity    discount    granted on the basis of total     packages purchased
during the year by the identified         agency and by the total        Government.
Briefly,    33 agencies or organizational       elements   (i.e.,    Marine Corps)
are identified       and the price of packages to each is as follows:

                Package                            Price

                First                             $26,000
                Second                             10,000
                Third through     fifth             7,000
                Sixth                               6,000
                All others                          5,400

      Additionally,     whenever total     Government-wide    purchases    fall
within    the following    quantities,     an additional   price   reduction,        equal
to the noted percentage,        applies.

                Quantity                           Percentage

                0 to    50
               51 to    74                                 2
               75 to    99                                 4
              100 to    124                                6
               over    124                                 8

       The contract    also makes provision    to apply 80 percent     of the
amount paid for leases toward the purchase price of a perpetual
license     for the package.      Finally,  any installation   which purchases
a package is authorized         to use it on any computer within     the in-
stallation.       This provision     is not as restrictive   as IBM's pricing
policy,     which limits   use of its packages to the central       processing
units.

     The negotiation      of this Government-wide       contract   has pro-
vided financial      benefits   that otherwise     would not have been obtained
and has provided      a basic contractual      arrangement     for use by all
Government agencies.

AUTOFLOW

      AUTOFLOW is a utility        software   package developed by Applied
Data Research Inc.,        Princeton,     New Jersey,     and initially    made
available    for commercial       use in 1964.      The vendor has advertised
this software      package as having the capability           of providing    two-
dimensional     flowcharting      documentation     from computer languages
such as COBOL, FORTRAN, and PL-1.             Additionally,      the AUTOFLOW
software    package has been advertised          as having the capability




                                            76
                                                                                         APPENDIX IV



to generate    complete statement     analysis,    page allocations     for
print-outs,    vertical   and horizontal      line drawings,    and source
input rearrangements.       Versions     of the AUTOFLOW software     package
currently   are available    for use on the IBM models 360, 7090,
and 1400 computers;     the RCA Spectra 70 computer systems;          and
the Honeywell 200 series       of computers.

       In general,         the commercial       procurement      terms for acquisi-
tion of the AUTOFLOW software                 package provide         for a 3-year lease
arrangement         with l-year      renewal options.           This lease arrangement
generally        restricts     the use of the software             package to individual
installations           and includes     training,      operating       manuals,      software
maintenance,          and other customer support            in the rental         price.       Our
study shows that the total               costs for a typical             3-year commercial
lease ranges from $4,200 to $13,600,                    resulting       in annual costs
ranging      from $1,400 to $4,533.              The vendor,       however, offers         quantity
discounts        to users of multiple           packages.       For example, a 25 percent
discount       is offered      at a second installation,              a 50 percent        discount
at the third          through the tenth and a 60 percent                  discount     for the
acquisition         of AUTOFLOW at each additional                installation       within     a
corporate        structure.

       Under the Federal      Supply Schedule contract         for AUTOFLOW for
fiscal     year 1970, Government installations           can obtain the software
package for a monthly rental            fee ranging between $137 and $206,
plus options,       which results     in annual costs ranging         from $1,644 to
$2,472.      Documentation,      support,   quantity    discounts,      and use re-
strictions       are similar   to those applicable        to commercial     procurement.
It is the view of the vendor that an operating                  agency of the Govern-
ment is equivalent         to a corporate     structure     for the purpose of applying
quantity      discounts.

     Following    are examples of Government acquisitions       of the AUTOFLOW
software    packages for use at its data processing     installations.

NASA
Goddard Space Flight            Center
Greenbelt, Maryland

     In 1966 the NASA Goddard Space Flight           Center determined    that
there was need for an AUTOFLOW software            package for use on its IBM
7094 computer systems.         At the time that the need was determined,
the vendor had not developed an AUTOFLOW software             package that could
be used for processing        data on an IBM 7094 computer.        As a result
the Center subsidized       the vendor's     development   of a 7094 AUTOFLOW
package.    The total    value of this subsidy was about $87,000 from
the estimated   total    development     cost of about $250,000.       NASA re-
tained the rights     for free use of the 7094 AUTOFLOWby all Federal
agencies and Government contractors,           in return   for the dollar    subsidy


                                                    77
APPENDIX IV


provided    for development    of the software package.  The contractor
retained    commercial  rights   to the 7094 AUTOFLOWpackage.

     Subsequent to development         of the 7094 AUTOFLOW software        package,
the Center contracted      with the same vendor for the development             and
implementation   of preprocessing        units   for the UNIVAC 1108, DDP 24,
SDS 900, and CDC 3200 computer systems.              These preprocessing     units
were designed to allow for the use of an IBM 360 AUTOFLOW software
package to flowchart      automatically       the software     designed for the
four respective    computer systems.         NASA officials      informed  us that
they had determined     that these preprocessing          units should be developed
for use with the 360 AUTOFLOWpackage rather                than with the existing
Government-owned    7094 AUTOFLOWpackage, because NASA had a long range
plan for upgrading    its data processing         equipment to third-generation
computer systems.

     The Goddard Space Flight  Center has recognized     and reported
annual savings in excess of $2.3 million    as a result    of using
these contractually  developed software  packages.      (See ch. 4.)

     This example is included  to show a technique   that can be
employed by Government departments   and agencies when a software
need arises  and the savings that can result    from the use of such
a technique.

NASA
Flight  Research Center
Edwards, California

      The Flight    Research Center issued a purchase order on May 10,
1968, for the installation         and rental     of AUTOFLOW for use on their
IBM 360 system.       This software     package was acquired      under the pro-
visions    of the Federal Supply Schedule contract           for AUTOFLOW, and was
installed     on June 13, 1968.       Because this software     package was pro-
cured locally      by the Flight    Research Center from the Federal Supply
Schedule,     no approval   was required      from GSA. At the time of acquisition,
consideration      was given to a flowcharting        package, available    from
the Goddard Space Flight         Center, which operated on IBM 7094 computers.
However, since it would have been necessary             to convert   the package to
operate    on their   IBM 360 computer,      no action was taken to obtain or
evaluate    the package.

      We believe     that Government-wide      coordination      is necessary   to
ensure the most economical           means for satisfying       computer software
needs.       Independent   acquisitions     of software     products   by data processing
installations       do not provide      the Government with an opportunity         to




                                            78
                                                                          APPENDIX IV


capitalize   on quantity   discounts     or to decrease      the extent    to
which duplications     of effort   occur.

Department  of the Navy
Naval Construction   Battalion      Center
Port Huenemep California

       The Naval Construction       Battalion      Center issued a purchase
order early in 1967 against           the Federal Supply Schedule for the
installation      and rental   o f AUTOFLOW for use on their         IBM 360 system.
This software      package was installed          during May and June 1967 and
was obtained      with the capability         to produce program documentation
from ASSEMBLY, COBOL, and FORTRAN source statements.                  The justifica-
tion for this procurement         was based on the computer program documenta-
tion requirements       at the Center and on the potential           ability    of the
software     package to save programmer time that otherwise               would be
devoted to program documentation.                The use of an automated flowcharting
package, available        free of charge from IBM, was considered            before the
Center rented AUTOFLOW; however, tests revealed                the IBM package to
be less efficient       and effective       than the AUTOFLOW software       package
 for accomplishing      the objectives        set by the Center.

     In April     1969, after   using AUTOFLOW for approximately          2 years,
the Center requested       a Government-owned       Navy flowcharting     package,
NAVFLOCHART-C, from the Navy Programming Languages Group, Washington,
D.C.     This software   package was tested        and compared to the AUTOFLOW
package,     and the Center determined        that it should continue      renting
the AUTOFLOW software        package in lieu of using the Government-
owned capability.       We believe       that such duplication     of technical
evaluations     would have been unnecessary         had such evaluations      been
centrally     performed   and the results       made available   for use by all
Federal data processing        installations.

Department  of the Navy
Navy Regional Finance Center
San Diego, California

      On April   30, 1969, the Naval Supply Center,  San Diego, issued
a purchase order against      the Federal Supply Schedule for the in-
stallation     and rental  of AUTOFLOW at the Navy Regional Finance Center.
Installation     was made on May 1, 1969, on an IBM 360 computer system.

     This software    package was rented by the Center to satisfy               an
immediate need for complete program documentation              records.      After
evaluating   the capabilities         of other Government-owned      flowcharting
software   packages,   it was determined       that the Center should rent
the commercially     available      AUTOFLOWpackage.      The Navy Regional
Finance Center then suggested that AUTOFLOWbe procured                  for other
Naval data processing       installations.       However, no action was taken
by the Navy at that time.           Thus, the opportunity    to realize      any

                                             79
APPENDIX IV


savings through    large-scale      procurements   or the chance to eliminate
duplicate  technical     evaluations     on a departmental  basis was lost.

Headquarters,     Marine    Corps
Washington,     D.C.

       Three Marine Corps installations            were each renting        the AUTOFLOW
software      package under separate        contracts     prior    to October 1968.
At that time, the Commandant of the Marine Corps, in accordance with
a newly established         Marine Corps policy        of centrally      procuring      all
ADP equipment,       issued one contract        for the use of AUTOFLOWby a
total     of 12 Marine Corps installations.              The applicable       Federal
Supply Schedule contract          for the AUTOFLOWsoftware             package, at the
time of this procurement,          provided     for multiple-package          discounts.
The Marine Corps capitalized           on these discounts          through centralized
bulk procurement        and reduced the annual rental            charge for the 12
installations       by about $14,000, or 47 percent             of the regular      rental
price.      Since the October 1968 procurement,              three additional       Marine
Corps installations         have obtained     AUTOFLOWand thereby have in-
creased the total        procurement     to 15 software        packages.

     We were advised by Marine Corps officials              that they were unaware
of the availability          of Government-owned   software      packages with automatic
flowcharting      capabilities,      such as GOCHART and NAVFLOCHART-C, which
perhaps could have been used at no cost rather                than the AUTOFLOW
software     package procured      from the vendor.

     Marine Corps officials        informed     us that no effort       had been made
to disseminate    information      relative     to their  experiences        of using the
AUTOFLOW software     packages at their         data processing      installations.
Moreover,   we were advised that the coordination             efforts      by the
Marine Corps for small ADP procurements              had been limited        to sub-
mission of a monthly financial           report    to the Department        of the
Navy, showing the total       dollars      spent for data processing           activities.

     The Marine Corps has attributed   significant     savings to the
acquisition   and use of the AUTOFLOW software     packages for the
purpose of documenting   its computer programs.      These savings have
not been specifically   measured by the Corps.

     Although the Marine Corps was not aware of the Government-owned
automatic    flowcharting      software    packages at the time   of acquisition
of AUTOFLOW, it is commendable that the Marine Corps combined re-
quirements     into a large-scale       procurement  to realize   substantial
savings in the prices        paid for the products     and in the costs elimina-
ted for technical       evaluations     that would otherwise    have been performed.




                                              80
                                                                                     APPENDIX IV


Department     of Agriculture
Washington,     D.C.

      The Department       of Agriculture       rented the AUTOFLOW software
package in June 1967 for use at its data processing                       center in
Washington,      D.C.    This acquisition         was made under the provisions               of
the fiscal      year 1967 Federal Supply Schedule contract,                   without       con-
sidering     other potential       software     packages and related           services,
since such information           was not readily        available      at the data
processing      center.     We were advised that this software                package
was initially       procured     to serve as a conversion            tool because the
center was in the process of upgrading                  its computer system.           How-
ever, the AUTOFLOW software             package has been retained            for use by
the data processing          center as a diagnostic           tool and a documentation
aid on new programming efforts               undertaken     by the Department.           It
is the view of Department           officials       that substantial        savings
have resulted       from use of the proprietary             software     package.      These
savings,     however, have not been specifically                 measured or documented.

       The Department      of Agriculture       has a total       of 15 data processing
facilities     which provide        services     for approximately          25 operating
groups.     While each data processing               organization       has similar     pro-
cessing needs and each could possibly                   benefit    from use of AUTOFLOW
or another software         package with similar            capabilities,        only the
Washington,     D.C., data processing            center has acquired           this package
to date.     We were advised by agency officials                   that there was no co-
ordination     of efforts       among the 15 data processing               centers prior
to the initial      acquisition        of AUTOFLOW, nor had there been any effort
made to disseminate          information     regarding        the advantages        and dis-
advantages     of using proprietary          utility      software      packages in data
processing     operations.

       The data processing        officials        stated that each of the 15 data
processing     installations        independently        satisfied    their   needs, as each
installation      locally     served various          combinations    of operating
groups within       the overall       Department.        Moreover,    the software
needs of each data processing               installation        are dependent upon the
local work loads imposed by the various                   operating     groups serviced
by these respective          centers.

     We believe    that,    at a minimum, coordination        of effort    is
needed to satisfy        computer software      needs at the 15 data pro-
cessing installations         within     the Department  of Agriculture.       Only
in this manner can the Department             decrease the potential     for dupli-
cations  of effort,       obtain     like and favorable   contractual    arrangements
with software     vendors,      and realize    potential  savings through bulk
procurement    of software       products,    as has been demonstrated       by the
Marine Corps.



                                                81
APPENDIX IV


QWICK-QWERY

     QWICK-QWERY is a proprietary        software    package marketed by the
Consolidated   Analysis    Centers,   Inc.,    Santa Monica, California,       which
has an advertised     capability    of retrieving,      analyzing,   and presenting
data in desired    formats     from an unmodified     user's    data file  structure.
This software   package is also advertised          as a machine-independent
system which operates      on large-scale,      general-purpose     computers.

     The vendor submitted   an application    to GSA on March 13, 1969,
for the inclusion  of the QWICK-QWERY software       package on the Federal
Supply Schedule.   A revised   proposal    was submitted   by the vendor on
August 28, 1969, and a Federal Supply Schedule contract          was sub-
sequently  awarded for fiscal   year 1971.

     Following     are two examples in which Government agencies
independently      acquired the use of the QWICK-QWERY software  package.

GSA
Washington,      D.C.

     In October 1968 the GSA Region 3 data processing             center,
Washington,      D-C., awarded a contract     to the software     vendor for
the installation        and rental of the QWICK-QWERY software        package.
The installation        and annual rental  prices   were $3,000 and $10,800,
respectively.        This software  package was acquired      for use on a
GE 400 series      computer at the GSA Region 3 data processing           center.

        The rental      contract  contained     an option-to-purchase        clause
which remained in effect           for the first      12 months following         installa-
tion.      The clause provided        for two purchase alternatives:             one applying
to the Region 3 facility           and the other to all 10 GSA regional               data
processing       installations.       On June 13, 1969, GSA exercised             the
purchase option          for the software     package installed        at their     Region 3
facility.        The purchase price,       after    applying    rental   credits,     amounted
to $22,950.         As of January 1971, no action had been taken by GSA to
exercise      the purchase alternative          for benefit     of the other GSA
regional      computer installations.          A Federal Supply Schedule con-
tract     (GS-OOS-84598) was finally          awarded by GSA for this software
product     for fiscal       year 1971.

      It is interesting  to note that GSA, which did not initially   ne-
gotiate    a Federal Supply Schedule contract   for the QWICK-QWERY software
package, was the first     agency to procure the product  for its
own internal     use.

Department    of Health,     Education and Welfare
Health Services       and Mental Health Adminis-
tration,   Arlington,     Virginia

     On April     21, 1969,    the Health     Services    and Mental     Health
                                             82
                                                                              APPENDIX IV


Administration       submitted   a request  for proposal   to the vendor for
the purchase of the QWICK-QWERY software           package and the contractor's
assistance     in its implementation.       The vendor responded with a pro-
posal on April       30, 1969, entitled    "Proposal   to Public Health Service
to Implement the QWICK-QWERY System on Public Health Service Data
Files".      The contractor     proposed a price of $29,981,     which included
$27,000 for purchasing         QWICK-QWERY and $2,981 for 4 man-weeks of
consulting     services.

      We were advised that,        before a contract          could be negotiated,
the data processing      installation        became aware of the FPMR which
required    the agencies to obtain          GSA approval       on software    package
procurements    when the package was not on the Federal Supply Schedule
but was potentially      useful     elsewhere      in the Government.         GSA did
not approve the agency request            to purchase QWICK-QWERY. The agency
subsequently     issued a contract        to the vendor for services            in the
preparation    and tabulation       of data concerning          the use of health
services    by low-income     individuals,       including      the use of QWICK-
QWERY in the preparation         of analytical        tables.      The contract,     with
a fixed price of $15,677, was effective                 on September 2, 1969.

      1t appeared that this contract  for services  was necessary
only because a Federal Supply Schedule contract     was not promptly
negotiated    with the vendor; and the agency did not receive    authori-
zation    from GSA to purchase the QWICK-QWERY software  package so that
it could perform its work on an in-house     basis.

NAVFLOCHART-C

     NAVFLOCHART-C is a Government-owned        utility   software      package
developed by the Department       of the Navy, which automatically            produces
computer-generated   flowcharts       and cross reference    listings      from COBOL
source programs.    We were advised that this software             package also
enabled conversion   of any program written         in COBOL to the ANSI
 (American National  Standards      Institute)  Standard COBOL and could
be used in software    diagnostics.

      The technique   employed in this software           package was originally
developed in-house     by the Charleston    Naval        Shipyard,  and was up-
dated in 1967 by the Department       of the Navy         to make it compatible
with all computer systems having a minimum               of 24,000 character
positions    of core memory.     It was the intent          of the Department    of the
Navy that this software      package be used on          a Navy-wide basis for the
following    reasons.

     --To   obtain   a better    quality    of program     documentation.




                                               83
APPENDIX IV


      --To relieve   in-house       programmer     time   for   more complex
         programming   efforts.

      --To promote standardization    of program documentation and use
         of ANSI Standard COBOL within   the Department of the Navy.

       We were informed     by Navy officials        that,   prior  to the modi-
fication    and updating     of NAVFLOCHART-C, no consideration            was
given to other available         software   packages because the groundwork
for the development       of NAVFLOCHART-C had already been established.
We were advised that this updating            effort      was not coordinated   with
GSA because the work was performed            in-house      rather  than on a contract
basis.     Moreover,   the GSA requirements          for coordination     were not
established    until   after   the in-house      effort     was well under way.

      The NAVFLOCHART-C software            package is made available        to Govern-
ment and industrial         ADP installations        at no cost.      The potential     user
provides    the tape onto which the software               package is reproduced      by
the Navy.      Moreover,      users can receive       updated versions     of the pro-
gram at no cost by providing             the tapes onto which the package is
reproduced.      The Department         of the Navy has placed more than 200
copies of the NAVFLOCHART-C software                package in Government and
commercial data processing            installations      to date.     These users
include   Federal,      State,    local and foreign        governments,   manufacturing
concerns,    hospitals,       and universities.

      Navy officials       advised us that dissemination             of information
on the availability          and capabilities         of its NAVF'LOCHART-C software
package has been primarily            by word of mouth.          In August 1969, the
Navy requested        GSA to disseminate         information    on the availability
and capabilities         of its respective         software   package to other data
processing     installations       within     the Federal Government.          This request
stated that "Possibly          the promulgation         of this information       may
prevent    the need for other agencies to purchase or 'reinvent'                      similar
products-"       We were informed by Navy officials               that,   as of January
1971, no effort        had been made by GSA to disseminate              information
on the availability          of the Government-owned          NAVFLOCHART-C software
package for data processing            activities.

    We believe    that there is a need for central       agency cooperation
in making known the availability     of Government-owned       software  to
all data processing    installations  within      the Federal ADP community,
in an attempt   to achieve greater   efficiencies      and economies in Govern-
ment ADP operations.




                                              84
                                                                               APPENDIX IV


    GOCHART

         The GOCHART software       package is a generalized         flowcharting     system
    contractually    developed for GSA, to satisfy            an immediate need of the
    GSA data processing      service     centers    and other Government agencies'
    needs for a flowcharting         software    package to be used on the Honeywell
    200 series    of computer systems.          Although   flowchart    documentation
    packages were available        at the time of this decision,          it was deter-
    mined that none were compatible           with the GSA Honeywell        200 computers.
    Since GSA estimated      that 75 such systems were to be in use by the
    Federal Government during         fiscal    year 1967, substantial       savings were
    expected to result     from making such a package available              for Government-
    wide use.

         Contract   No. GS-005-73703 was awarded to the Systems Applica-
    tion Corporation    in December 1967 for the development  of the GOCHART
    software   package.   Final acceptance  of the product was made on
    November 14, 1968, for $47,480.

         The GSA Federal Supply Service      advertised   the availability  of
    the GOCHART software      package for Government-wide    use by means of
    the ADP Sharegram published      by GSA on a regional    basis for the
    greater   Washington,    D-C., area.   This media was used to advertise
    the availability      of GOCHART in the New England region during
    February   1970.

           GSA is providing   this software    package to users on a lease
    basis.     This lease agreement provides        for a quarterly       rental  of
    $300 for each single data processing          location,    resulting      in annual
    rental    costs of $1,200,    and the following      discounts     for multiple
    locations     under a single   lease.

         Number of                             Discount     for      each
         locations                             additional         locations

              2                                             20%
              3                                             30%
              4                                             40%
              5 (or more)                                   50%

    The typical     lease arrangement     further  provides     that a user agrees
c   to limit    use of the GOCHART software       package to the locations       and
    organizations      specified   in the lease.     GSA officials      informed us
    that it was their       policy   that commercial   placements      of the GOCHART
    software    packages be made only to the contractors            that were performing
    Government work on a cost reimbursable           basis.




                                                 85
APPENDIX IV


      The technique       of having a generalized          software    product     con-
tractually     developed in lieu of developing              a customized      software
product    to satisfy       a data processing        need is commendable.          We
believe,     however, that greater         efforts     must be made to publicize
the availability        of the product       in an attempt to minimize           the extent
of possible      duplications      of effort      by other data processing          installa-
tions in obtaining         or developing       similar   capabilities.

SCERT (COMET)

      SCERT is a commercially    available      software    product   marketed
by COMRESS, Inc.    The acronym means Systems and Computers Evaluation
and Review Technique.      The original     program was a series of decision
theory techniques   which could be used to assist             in evaluating    computer
hardware/software   within    the specification        environment    of a proposed
system to be programmed.

     In July 1964, the Air Force purchased this package under the
name COMET (Computer Operated Machine Evaluation         Technique).     The
purchase price was $173,730,     and annual maintenance      was $60,000 to
$80,000 per year.    The program was designed for use on the IBM 1410
computer system and was to be used in the validation           and evaluation
of computer systems by its Electronic       Systems Division.      Use of the
product  for other Government agency's needs was not precluded           so
long as the Air Force provided      the service   and protected    the integrity
of the data processing   techniques.     Such service    was provided
by the Air Force to other Government agencies.

      In 1968, COMRESS, Inc.,       developed an advanced and updated
version     of COMET (SCERT 50/COMET 50) to operate on different            computer
configurations.        The Air Force planned to update its computer at
the Electronic      Systems Division     from an IBM 1410 to a Burroughs
B3500 third-generation        computer.     It was determined   that converting
the IBM 1410 COMET package to a package for use on the B3500 would
be too costly.       COMRESS, however, offered        its SCERT 50 software
package, designed for use on the IBM 360 computers,             at no additional
cost to the Air Force.         Maintenance     charges would approximate     $35,000
to $40,000 annually.        This offer was accepted and the Air Force
abandoned the IBM 1410 program and the Electronic             Systems Division
subsequently     rented IBM 360 computer time to use the COMET 50 package.

      The need for this package was expressed by other Government
users,    and GSA delegated   to the Department    of Defense, who in turn
delegated    to the Air Force, the authority    to enter into a contract
with COMRESS, Inc.,      for all Federal agencies'    current  and future
needs.     A contract  for fiscal   year 1970 was executed,    and, at the
date of our review,      four agencies were obtaining     the services   from
COMRESSunder the contract.
                                                                                APPENDIX IV


     It is commendable that GSA is using the expertise      in Federal
departments  and agencies for negotiating   Government-wide     contracts
for computer software.    Care should be exercised,   however, to ensure
that Government-wide   needs are considered  by the negotiating       agency
at the time that such contracts   are consummated.

AUDITAPE

      AUDITAPE is a utility        software     package marketed by Haskins
& Sells a certified        public   accounting      firm.    This software      package
was developed in 1965 and had an announced capability                    of manipulating
large data files       without    expensive     programming     and with substantial
flexibility     by individuals      having little        or no specialized      ADP exper-
ience.      The AUDITAPE was initially          developed and provided        by Haskins
& Sells as an internal         tool to be used during their           audits.      However,
the software     package was subsequently           made commercially       available
because it was noted by the vendor that its clients                   and other organi-
zations     demonstrated    a need for the AUDITAPE capabilities              in their
day-to-day     operations.       Moreover,    this technique      provided    the firm
with the opportunity        to recover      a portion     of its developmental        costs
for the software       package.

     GAO acquired     the AUDITAPE software     package in November 1967
for use in its audit activities.          The negotiated     procurement  terms
for use of AUDITAPE provided       for quarterly     rental   payments for each
program, based on the number of applications,            with a minimum and
maximum annual cost.       Although the AUDITAPE system is restricted           to
use by only GAO employees under the terms of the agreement,              such
use is not restricted      to any specific    computer system or data
processing  installation.

     GAO has found that use of AUDITAPE in the performance       of
its audits has resulted    not only in a more economical     means of
doing the work but also has provided     greater accuracy,    more in-
formation,  and experience    in using new audit techniques.

     The terms of this.contractual         arrangement     differ    from those
normally    associated    with rental    of computer software        products   in
that they provide      for a charge for each use of the product,              subject
to minimum and maximum annual charges,           rather     than for payment of a
fixed rate for a stipulated        period of time.        Use of the product
is limited     to GAO needs rather     than being restricted         to any one
central    processing    unit or data processing       installation.




                                               87
APPENDIX V


                                      FACTORS TO BE CONSIDERED IN

                          MAKING SOFTWAREACQUISITION                    DECISIONS

      Throughout    this report,      we noted that only limited          guidance
had been given to Government agencies,                and we have demonstrated            a
need for OMB to issue policy           instructions       and guidance to the heads
of executive      departments    and agencies concerning            the acquisition,
management, and use of software             products.      Acquisition,    management,
and use of individual         agency's    software     products     is a complex under-
taking and the integration          of individual        agency's software       activities
into a more economical         Government-wide        system may present problems.
However, during our inquiries            at Government and private         industry         in-
stallations     which had adopted strong central             management software           policies,
we noted that the following           operational      and cost factors      were con-
sidered     in reaching   decisions      on software      needs.

     --Types       of need.

     --Methods       of satisfying          needs.

     --Characteristics              and reliability             of software       products.

     --Hardware       considerations.

     --Quality       of documentation,              training,       and maintenance.

     --Contractual           terms.

     --Financial         factors.

All of these factors    are important      and, in our opinion,   should be
considered,  among others,       in the formulation  of decisions   leading to
computer software    acquisition      and use within the Federal Government.

TYPES OF NEED

      There are many different    types of software       needs and these
various    types of needs affect    the method best suited to satisfy
such needs.      Thus, in an evaluation,    consideration     must be given
to how the necessary     software   is to be used.      Computer software   may
be needed for:

     --Unique      purposes         (applications         software).

     --General       purposes         (operating      systems       and utility        software).

     --Frequent       use.
                                                                                                   APPENDIX V


            --Use    limited         to an installation.

            --Multiaccess            use   (service       bureaus).

            --Multilocation            use within          an agency.
.           --Government-wide              use.

        METHODS OF SATISFYING NEEDS

            Software progr-ms   can be obtained                        in many different        ways and
        from many different   sources, such as:

            --Without         separate        charge      from a system         manufacturer.

            --Without    charge or at a nominal cost from
                    other units of the organization,
                    other Government agencies,
                    exchange libraries  of user groups,  and
                    other users.

            --Sharing         with    other       users    or service        bureaus.

            --Modification            of available          similar        programs.

            --In-house         development.

            --Contracting            for   in-house-developmental                support    (personnel).

            --Contracting            for   a custom-made         program        from software     vendors.

            --Acquiring     proprietary  packages                     by
                  purchase,
                   leases based on usage,
                  perpetual     leases, or
                   term leases.

            Care should be exercised    to thoroughly  evaluate the practicality
        and advantages  of using existing    software available at little     or no
        cost to satisfy  the particular   type of need under consideration.

    +   CHARACTERISTICS AND RELIABILITY                     OF SOFTWAREPRODUCTS

              When considering   the acquisition  of commercially     available pro-
        prietary    computer software  products,  it is necessary     that the potential
        user place a certain     degree of emphasis on the characteristics      and
        reliability    of the software  products  under consideration.




                                                                89
          A thorough       understanding          of the functions        and applications          for
    which the software          products       are suited is necessary             to ensure that the
    product      is capable of performing               the data processing          needs of the immediate
    user and other Government agencies.                        Other considerations          should include
    design features,         quality,       generality,         and expandability         of the program.
    Relative       to the design features,              many technical       features       should be
    evaluated        depending on the type of program involved.                       For example, an                 .
    evaluation        could consider        the language used, file             structure,       multi-
I   file    operation,      record     storage,        predetermined      formats,      levels    of hierarchy,
    availability        of background,         random access, remote teleprocessing,                                  *
    timesharing,        browsing,      retrieval,         input editing,      controls,       security
    provisions,        audit trails,        flexibility         of producing     demand reports,
    and any other feature             complementary          to the intended       application.

           Although    such considerations    may not all be necessary        for the
    fulfillment      of the immediate needs of the data processing            installations-'
    where the product       is initially    acquired   for use --we believe      that con-
    sideration      should be given to all the above factors         during the evalua-
    tion process and such data should be made readily              available     to other
    potential      users within    the Government upon request.        This would help
    reduce a substantial        amount of duplications     of technical      evaluations
    by several      Government agencies.

    HA,RDbJARECONSIDERATIONS

          There are several      commercially  available    computer software    products
    that are capable of operating         on many different    types of computer con-
    figurations:      whereas, others are limited       for use on one or two types
    of computer systems.         It should be a goal to acquire      and use computer
    software     products   that are capable of processing       data on several    different
    computer configurations.         In this manner, the potential      for greater
    Government-wide       use can be achieved.

         Among hardware        items    to be considered        are:

              --The types of computer systems and configurations                        on
                 which the software product can be operated.

              --The required     core memory and peripheral               equipment
                 necessary   for the package to operate.

              --The   rate    and accuracy      of timing      in the software        product.                    c




                                                     90
                                                                                   APPENDIX V


QUALITY OF DOCUMENTATION, TRAINING AND MAINTENANCE

      Much has been written            on the subject      of standards,      formats and
types of documentation.               Generally     documentation      is available     for
the user operations            and for the system and programming methodology.
To illustrate,          user-operations      documentation       would include      such things
as source data preparation,              system description,        run description         and
flowcharts,        setup instructions,          and description     of anticipated        actions.
System documentation            concerns itself       with the broad description            of the
system with flowcharts             and equipment needed, language used, controls,
file    structure,       etc.;   whereas, program documentation            deals with the
specific      description       of the logic tables,         programs'    conventions       used,
flowcharts,        list   of subprograms,        run times,     and other such programming
specifics.

       To protect   their    proprietary      rights,     software   vendors have a
tendency to retain        the contents       and details      of the documentation,
providing     only the bare essentials           for installing      and operating    the
packages.       Government data processing            users must, however, strive         to
acquire computer software           products     that are well documented in every
detail     to ensure that subsequent users can obtain a thorough                   under-
standing     of the programs.         Also, such a quality         of documentation    would
facilitate      the expediency      of future      modifications     in the software      pro-
duct on an as-needed basis.

     The problem of documentation,        access to the proprietary        program
logic and procedures      was discussed    at the Myrtle Beach, South Carolina
conference.      It was reported   that the Government must make sure
to obtain adequate documentation        to use the product      in the first
place,    and provisions    should be made to obtain the source language
statements    and program-maintenance      documentation   in the event that
the vendor does not maintain       its product     at some future    date.     One
suggested technique,      in the conference     report,  was to deposit       such
documentation      in a bank with some third     party who could act as a
custodian    or a trust.

      Training      for use of the software         products     by the vendors should
be provided       to the extent necessary          for immediate use of the product
upon delivery         and installation.        Some software       vendors provide    training
for use of their           products    at no additional      cost.    The extent   and
quality     of training        for use of the software        products    can be evaluated
through communication             with other users.      Whenever possible,       provisions
should be made in the acquisition               agreements for the vendor to provide
additional      training       when needed by new users of the subject            software
products     within      the Federal Government.         When costs for training          appear
to be excessive,           an attempt    should be made to provide         for in-house-
training      capabilities        for new Government users of the respective
software     products.




                                               91
APPENDIX V


        In procuring  computer software   products,    consideration     should be
given     to the type and quality   of maintenance     provided    by the vendors.
Items     to be considered   in each acquisition    are:

        --The extent of maintenance  services                provided    by the
           vendor, i.e., on-call or periodic                maintenance.

        --Means for     providing  updates and related               debugging
           processes    for the software  products.

      --The    frequency of maintenance    services               necessary
         for   use of the software  product.

CONTRACTUAL TERMS

     In executing   business   transactions       with computer software    firms
who have not as yet negotiated         Federal Supply Schedule contracts          with
the General Services Administration,            Federal agencies should,    at a
minimum, obtain contractual       terms as favorable      as those provided       by
firms that have Federal Supply Schedule contracts.              Moreover,   care
should be exercised     to avoid rental       terms for software   products     that
are not consistent     with the rental      terms of the computer systems on
which the product    is intended     for use.

       Currently,        it is the practice         of software       firms to place re-
strictions        on the use of their           software      products.       There is a great
disparity,        however, in the types of limited-use                    clauses being
offered      by various       software      vendors.      For example, some software             firms
restrict      the use of their           products    to specific        central     processing     units,
whereas, others restrict               the use of their          respective      products     to data
processing        installations,         corporate     entities,      etc.      When it is appro-
priate     to acquire a commercially               developed product,           consideration
should be given to obtaining                 the most liberal         and flexible       arrangement.
The Government should be free to use the product                           as best befits
its current         and future     requirements.

     Care should also be given with respect   to the liabilities        of
both parties   for such things  as loss of the rented software       pro-
duct, cost attributable    to malfunctions of the programs,      loss of
data, etc.

FINANCIAL FACTORS

     In addition   to the financial     aspects attributable      to the in-
house or contractual     development    of computer software      versus the
acquisition    of commercially   available    computer software      products,
consideration    should be given to all financial        factors    attributable
to the use of such software      products.     For instance,     consideration
should be given to:


                                                 92
                                                                             APPENDIX V


     --Quantity    discounts     for   multiple       procurements.

     --Costs   for maintenance,        training,       and other
        support services.

     --Costs  for modifications      that          may be necessary
        to use the software     products.

     --The costs attributable        to systems efficiency
        in using commercially      available    generalized
        computer software     products    versus custom de-
        signed software.

Moreover, the magnitude        of each procurement     should have a substantial
bearing on the cost per        software product    being acquired.

     Additionally,    care must be exercised     to ensure that the Federal
Government benefits      from any contributions    made toward the development
of the software    product   under consideration    for acquisition.



     The several   factors     discussed   above as warranting           considera-
tion in the acquisition        of computer software       products       are all
important.    Pending the issuance of more specific               central     policy
guidance and greater       central    management activity       in these matters,
we recommend that these factors          be considered     in making studies
and reaching   decisions     on the acquisition      of computer software
for use in federally       sponsored data processing         activities.




                                               93
APPEKDIX VI


                                 PLANNIKG NECESSARYFOR

                             FUTURE MANAGEMENTOF SOFTWARE

     The history  of automatic    data processing   activities     is very
short * The industry    has grown at a tremendous rate since the late
1950's.   Three generations     of computer systems have been intro-
duced to the market,    and many advancements have been made in the
state of the art for computer software.         The use of general machine
languages was introduced     with the second generation        of computer
systems, which provided     for a wider range of computer applications.
Also, higher level languages,       such as COBOL and FORTRAN, have been
developed for general use,      and  near-human English languages are
coming into use.

     These attempts      for greater    and more simple use of computers
have been performed by many groups in an independent           and uncoordinated
manner.    T‘nere is a need for planning       to guide independent  develop-
ments of computer technology         toward a common goal. Following   is a
discussion    of factors    that support the need for a mechanism for
planning   and managing such activities.

GROWTHIN NEED FOR TECHNICAL PERSONNEL

      An acute shortage of computer          programmers and system analysts
exists   within  the data processing         community.   This condition      has
resulted    from the rapid evolution         of computer systems and an in-
creasing    demand on the use of data         processing  capabilities     by many
varied types of operations.       It is       expected that additional      in-
creases in computational     needs will         also be experienced    during
the next decade.

       The Federal Government,       as well as other ADP users, has experienced
a substantial     increase    in the use of technical          personnel    in its data
processing     operations    since the mid-1950's.          The total     man-years
expended annually       has, from the mid-1950's,          gradually    increased    to a
level in excess of 136,500 man-years in fiscal                 year 1970.      Our analysis
of in-house programming efforts          in the Federal Government over a 4-
year period showed a 29.7-percent           increase     from 13,887 man-years in
fiscal    year 1966 to an estimated        18,019 man-years during fiscal            year
1970.     These statistics      excluded man-years used for control             systems
and for Systems in classified          physical    locations.

     On July 1, 1970, the Blue Ribbon Defense              Panel   reported    to the
President   and the Secretary of Defense that:
                                                                                     APPENDIX VI



     "There is no significant        software    systems design capability
     in the Department.         Such capability     as exists    is widely
     dispersed    and focused on narrow spectrums,           usually    tied
     to specific     applications.      As a consequence,       no effective
     mechanism exists       for development     of more flexible      languages,
     compilers,     ****    Current practice     makes the Department
     highly    dependent on hardware manufacturers           for design
     of systems s0ftwaxe.l'

The report     further     pointed    out   that:

     "The numbers of skilled         technical     professionals     in the
     ADP field     needed to plan,      specify    and design major
     applications      are not available        in the Department.       The
     skilled    technical     ADP professionals       available   within
     the Department       of Defense are scattered          among several
     organizations      within    the various     components of the
     Department.       There do not appear to be adequate plans
     for obtaining      or training     these professionals       in sub-
     stantial     numbers."

        This condition     exists    on a Government-wide              scale in most all
of the Federal departments            and agencies.           We believe      that this un-
coordinated       and dispersed      capability       within      the Federal Government
and the individualistic            demands placed upon computer systems have
contributed       to the phenomenal enlargement               of programming        efforts
during the past 4 years.             Moreover,      little     or no effort        has been
placed on building         a software       systems design capability              or a capability
to forecast       the levels      of effort     necessary       for good computer software
management within        the Federal Government.               A question       arises     as to
the extent of man-year levels               of effort      that will       be necessary      to
fulfill      software   needs during the next decade and whether such large
numbers of qualified          people will       be available         if these uncoordinated
management techniques           are permitted       to continue.

     It is important       that plans be set to obtain          the needed personnel
resources   and/or develop alternate            plans to better      manage the soft-
ware asset we now have.           The alternate      plans should consider      standardiza-
tion of languages,        modularity     of programs,     generalization    of programs
for use on various        equipment,     the generalization       of programs
for performing      various    applications,       and other techniques     leading
to the reutilization         of software     products.

NEED FOR STANDARDIZATION AND COMPATIBILITY

    A lack of standardization   and compatibility                    exists   in soft-
ware used by the Federal users.    This problem                   exists    in the various




                                                    95
APPENDIX VI


languages used by the data processing             installations,   as well as in
data formats, techniques,  and routines             used for processing   data, etc.

      This lack of standardization             and compatibility    in software   has
resulted     from the apparent       inability       of computer manufacturers    to
agree upon standards         for computer equipment and systems software
and from the proliferation           of numerous computer systems developed
during the past decade.          Also, the Federal Government has had to
depend on the computer manufacturer                for designing   and providing    much
of its software.         This tradition        was established    by the computer
manufacturers        when they provided        equipment to customers under the
total    operational     systems concept.           (See app. I.)

      The rapid development         of computer systems and software         and
current     techniques     employed for developing       and obtaining    programs
have resulted        in programming-pollution       by the manufacturers      and
users.      There are currently        more than 125 computer software        languages
available      yet two basic languages can be used for most general-purpose
data processing        needs; namely! COBOL and FORTRAN. COBOL, an
English-like       language suitable       for most administrative-type       data
processing      problems,    is developed and maintained         by a committee
of representatives         comprised of computer manufacturers          and users.
The FORTRAN language,          the first     to be used widely for solving
numerical      problems,    has been implemented      on almost all types of
computer systems.

     Each manufacturer    and user has been custom-designing   programs
to satisfy   its immediate data processing   needs,    This approach
has resulted    in many versions  of like computer programs being
developed to satisfy    the same need.

      We believe    that it is necessary     to more effectively     use soft-
ware.      The new 370 series announced by IBM in July 1970 is ad-
mittedly     an extension    of the concepts used in the third       generation
and merely provides       for greater   speeds and capacity.       Most of the
computer programs used on the third-generation           equipment can be
used on the 370 series of equipment with little            or no modification.
Also, RCA has announced new developments           in some of its equipment.
These developments       permit the use of IBM program products        on certain
of RCA's computer systems with little          or no modification.      These
evolutionary      approaches to advancing the state of the art in com-
putational     sciences and the use of good management concepts will,
we believe,     promote greater    and more effective    use of computer re-
sources.

       The software    industry     trends indicate   that,   to further   implement
this    evolutionary     concept,     most of the fourth    generation   of programs
                                                                           APPENDIX VI


will  be developed in a modular nature,          a procedure   which will      eliminate
the necessity    of writing    complete routines      each time a new or unique
data processing     need arises.      For example, the following       graphic
presentation    depicts   one technique     set forth   in industry    literature
whereby a building-block       technique    is used to replace      the existing
hand-crafted    art for developing       computer programs:


         COMPUTERPROGRAMTO                                 . . . ..COMPUTER.....
      SATISFY A DATA PROCESSING NEED                       .        PROGRAM       .
                                                           .           .          .
         MAJOR SUBASSEMBLIES                               .                      .
      ESTABLISHED FROM OFF-THE-SHELF                    INPUT        PR&ESS ACT (OR)
              COMPONENTS                                   .           .        OUTPUT
                                                           .           .          .
                                                           .           .          .
      OFF-THE-SHELF-SOFTWARE COMPONETS                     .           .          .
      FROM VARIOUS VENDORS USED TO CON-                    .           .          .
      STRUCT THE MAJOR SUBASSEMBLIES                  INVENTORY OF SOFTWAREMODULES

      The introduction      of such techniques      for computer programming       and
the previously      discussed   announcements of two major computer manufacturers
indicate    that the time may be appropriate           for the computer industry       to
coordinate     its efforts    and establish     standards    to ensure interaction
and compatibility       in its software     products.

     In the past, the computer industry             has been unable or not inclined
to coordinate     its efforts      toward standardization       and compatability.
If such a condition       persists     in the future,     we believe     that the Federal
Government-- as the largest          user and the one most affected--must          take
steps to plan for acceptable           standards     for languages and techniques
which will    allow compatibility         in the equipment and software         it
acquires.     Also, efforts       must immediately      be made by the Government
to establish     standards    for software       documentation.      Standardized
documentation     would facilitate        interagency    exchange of computer
programs or modules.

     At the Myrtle Beach conference,     previously    mentioned,   considera-
tion was given to the proposition     that software     packages acquired
for Government use ought to be supplied        in standard   languages to
promote their    utility and reduce their     cost to the Government.       It
was pointed   out that the Government's     interests   argue for the use
of standard   languages to facilitate    the use of the product      across
a wide range of equipment models.

USE OF COMPUTATIONAL RESEARCH

    Many man-years of effort   are expended annually  by the Federal
Government and industry  to research   and develop the advancement of


                                              97
APPENDIX VI


the state of the art in data processing          technology.    The Federal
Government has been a recognized        leader in sponsoring      computational
research.    Such research    efforts,   however, have been independently
sponsored by the various      Federal departments       and agencies with little
or no coordinating    efforts    Government-wide.

       There is no mechanism within           management operations        for identi-
fying and managing the areas or extent of computational                      research
sponsored by the Federal Government.               When computational          capabilities
are researched       and developed within        an overall       developmental       project--
such as those in a weapons system --they               are not specifically
identified      and are generally        buried within      the overall    research
and development       effort.       It is recognized      that many of these
efforts     are directed      toward dedicated     computational        capabilities.
However, the knowledge gained in satisfying                   the immediate needs
of the research       efforts     is sometimes later        used in developing
computer software         for general-purpose      use.        (See app. I.)

       The lack of procedures    to manage the computation research
efforts    was discussed  in the July 1, 1970, Blue Ribbon Defense Panel
Report to the President       and the Secretary of Defense as follows:

      "NO office      is charged with the responsibility     to insure
      that research      and development   on ADP done by the Military
      Services   or Defense Agencies,      or under contract   with them,
      is beneficially      utilized  Department-wide."

      Much has been done to date to make computers reactive                       to man's
needs.    As   discussed       in  appendix   I,   the   capability      of  computers      has
increased    from hard-wired         computational      machines dedicated          to mathema-
tical   analyses to the ability           for man to verbally           communicate with the
machine.     Although program languages of this nature have been developed,
a need still      exists     for converting      man's communication           to machine-readable
form.    Currently,      this technique       requires     the use of compilers,            converters,
etc.,   and  of   manpower      to  use them    at   each  data     processing    installation.

    We believe    that there is a need for the Federal                    Government to
immediately   plan and manage future    research    efforts               for computer software.
Some of these efforts     should be directed    toward:

     --Development    of a more natural      language for computers
        in an attempt to eliminate      intermediary    devices, such
        as compilers,   converters,  etc.,      in man-machine communi-
        cations.

     --Incorporation      of a better    mix of stored and machine
        programs,    so that repetitious     tasks could be machine-
         controlled   rather  than having to be written    and in-
         corporated   into each stored program.
                                                                                      APPENDIX VI


         --Development   and constant   improvement  in logic,   design,
            algorithms  and other disciplines    used in developing
            computer programs.

    Such research        activities     should be coordinated         with those of
    computer manufacturers            in an effort     to ensure effective        results.
    Additionally,        management of the Federal research              efforts    should
    provide     for a central       clearance    organization       to minimize    duplication,
    coordinate      joint    ventures     and interests,      catalog    on-going    research
    and results,       and establish       Government rights        in results    of the re-
    search and the communication              of such results       to the user community.

    NEED FOR IMPROVEMENTS IN COMPUTERAPPLICATIONS

           Historically,       computer manufacturers      have been unable to provide
    applications         programs to satisfy     the needs of their      customers and yet
    obtain maximum use of this machinery.                Many of the programs offered
    with new equipment were originally              custom designed for older equipment
    models and then "patched"           so that they could be used on newly developed
    equipment.         Also, manufacturers     provided    equipment so that existing
    programs could be used on such newly developed equipment in an emula-
    tion mode. Generally,            new equipment developments       provide   for greater
    speed and capacity.           Operating   in an emulation     mode reduces the speed
    of processing         in the new machinery      to a point where it can accommodate
    the speed capacity          of the program being used thus decreasing           the overall
    efficiency        of newly acquired     equipment.     Such techniques     were employed
    during the past decade due to the development                of computer hardware
    at a faster         pace than the development       of the software.

         These types of activities      and the rapid announcements of new
    computer equipment demonstrate       a need to coordinate       and manage the
    developments   of computer programs so that an effective           and efficient
    use of equipment on a Government-wide         basis can be achieved.        Some tools,
    such as commercially    available    computer software     products,   are available
    and can be efficiently     used on computer systems in the Federal Government.
    Also, many applications      are common to many users.        In such cases, ex-
    pending the needed resources      to centrally     develop these application
    programs would be more beneficial       than having each installation          apply
    its limited   resources  on the same problems.

          We believe     that other areas of concentration         by the Federal Govern-
c
    ment-- such as effective         planning   of data processing    workflow,      further
    development     of systems software,        and full use of real-time       computer
    applications    --are necessary        for obtaining maximum efficiency        from
    computer systems.          These efforts    should be centrally     coordinated       and
    managed by the Federal Government to ensure that all data processing
    installations      benefit    from new developments     and techniques,      which pro-
    vide improvements        in computer applications.




                                                    99
APPENDIX VI


NEED FOR PLANNING MECHANISMS

      An estimated   annual ADP expenditure         of $4.4 billion     requires
sound management from top officials           within   the Federal entity.
Limited    management policies  exist      for use of computers in the
Federal Government with little        or no coordination        of activities
in the acquisition     and use of computer hardware and software               for
individual    data processing  activities.

      Although    central  policy   guidance for determining   the best
means for acquiring       computer hardware has been issued to agencies,
no such action has been taken for computer software           acquisition     and
management.       Such central    agency activity is necessary    for effective
future    planning    mechanisms in ADP management.

      It is recognized      that each Federal department       and agency has
a separate mission to accomplish           and must not be hindered       in achieving
its goals.      Sound Government policies        and practices   dictate,      however,
that direction       for management guidance must be centrally           provided   by
experts.      We believe    that such planning     can best be performed by a
central    executive     agency especially    organized    to manage and administer
ADP activities.



      The data processing          activities    of the Federal Government cost
several      billion    dollars    a year.     There is little    reason to expect much
leveling-off         of activities      in the Federal ADP programs in the near
future.       On the contrary,       indications    are that greater      use of ADP
will    be required      in the years to come for Government purposes.
Because of this huge and growing expenditure,                  we believe   that
stronger      central    guidance is essential        for economical     and efficient
management of computer systems.

    We believe   that OMB, under        its authority     assigned by Public
Law 89-306, should sponsor the          formulation     of a master plan for
the Government's    ADP activities.




                                            100
                                                                                  APPENDIX VII


                                    MANAGEMENTCONTROL

     Over the years8 GAO has issued a number of overall                ADP
management reports      to stress    the need for a strong organization
to plan, coordinate,       and control     ADP activities.        (See app. IX.)
These reports,     generally,    were directed        at the management of
computer hardware and much has been done by the executive                  agencies
and by legislation      to provide     better   control     over ADP equipment.
Software  represents      an estimated      $2 billion     annual Federal expendi-
ture and it too needs top-level-management               control.

NEED FOR SOFTWAREHANAGEMENT

      In the past, software     was provided      as part of the equipment
and, as such8 software-management          problems were not highlighted.
Software     now consists   of a substantial     part of the total    ADP expendi-
ture and usually      can be separated.       The need for management attention
to software      as a separate  entity   is now moxe pressing.       The reconunen-
dations    included   in prior  GAO reports,      although primarily   addressed
to the management of ADP equipment,           apply equally   well to the manage-
ment of software.

      Throughout     this report,        we have discussed        problems associated
with the acquisition           of software     and the need to apply sound manage-
ment principles         to control     this vast asset.          We endorse the purposes
of Public Law 89-306 for coordinating                  the purchasing        function
of ADP equipment into the GSA. The single-purchaser                          concept,
if properly      implemented,       is a desirable        feature    of sound manage-
ment.      GSA, however has not been given absolute                  powers in acquiring
ADP products,       much less in managing the use of such products.                        NBS
has played only a small role in the management leadership                           needed
over software.          Individual     users have concerned themselves                with the
satisfaction      of their       own immediate needs, and such emphasis resulted
in greater      overall     cost to the Government through              inefficiencies
characterized       by duplications        of efforts,       misuse of resources,          and
failure      to capitalize       on the purchasing        power of the total          Federal
Government.
             APPENDIX VIII


                      RESUME OF PRIOR GAO GOVERNMENT-WIDE ADP MANAGEMENTREPORTS

                     The General Accounting       Office has issued several    overall    ADP
            reports  to the Congress dealing with various        management aspects of
            computer operations   in the Federal Government.        Generally,   it was
            concluded in these reports       that the vast Government investment       in
        !   ADP resources   needs high-level      management.

                      Following   are the Government-wide      ADP management   reports
            issued   by GAO:

            Survey of Progress   and Trend of Development
            and Use of Automatic   Data Processing    in
            Business and Manauement Control     Svstems of
            the Federal Government as of December 1957
    I        (B-1153691, dated June 27, 1958       .

                       This report    placed stress     on the need for the Federal Government
            to establish     a program that would provide         a mechanism for central
            coordination     for the development      of ADP technology.       GAO also placed
            emphasis on the need for individual           agencies to undertake     master
            planning     for development    of integrated     agency systems, and it
            commented on numerous problems that required             attention   in individual
            agency electronic      systems programs.

            Review of Automatic  Data Processing
            Developments  in the Federal Government
            (B-115369),  dated December 30, 1960

                     In t'?is report,      GAO again emphasized the need for more positive
            central  planning    of a long-range      nature within    the executive    branch
            of the Government,      in an effort    to improve the overall      management of
            ADP equipment on a Government-wide           basis.   GAO also suggested that
            Government agencies should give more consideration              to purchasing
            ADP equipment,    particularly     in those instances      where savings could
            be demonstrated    over a period     of several     years.

             Study of Financial    Advantages of Purchasing
            over Leasing of Electronic       Data Processing
            Equipment in the Federal Government
            ; (B-1153691, , dated March 6. 1963

i                    This report again expressed the opinion   that basic changes were
            needed in the Government's   overall management system in order to
            realize  substantial savings in the acquisition  and use of computer




                                                     102
                                                                                  APPENDIX VIII


systems by the Federal Government.      GAO reiterated   that the only
practicable  way in which coordinated     management could be practiced
to achieve these savings was through the establishment        of a small,
highly placed central   management office    in the executive   branch of
the Government.

Review of PC
Administration of Electronic  Data Processing_
Systems in the Federal Government (B-115369) I
dated April 30, 1964

            This report         reviewed some of the important            Government-wide
problems relating           to the management and administration               of electronic
data processing          facilities      obtained     and used by Federal agencies and
their     contractors.          The review of these problems and the manner in
which they could be resolved                to the maximum financial          advantage of
the Federal Government reinforced                   an earlier     GAO conclusion    that an
effective       centralized         management organization         with appropriate     authority
and responsibility            was needed to exercise           control   over procurement
and use of data processing               facilities     and the related       costs incurred
by the Government.

Management of Automatic   Data Processing
Facilities  in the Federal Government
(B-115369),   dated August 31, 1965

           In this report,     GAO expressed its views 8n the conclusions
reached by OMB in its report         to the Congress regarding      the management
of ADP activities      in the Federal Government.        GAO again reiterated
that the cost factors       for Federal ADP activities       were so significant
in themselves     as to warrant    the establishment     of a central    office
which would have appropriate         authority   and responsibility     for pro-
viding management coordination         of ADP matters with the objective         of
minimizing    costs.

Maintenance of Au t@matic Data Processing
Equipment in the Federal Government
(B-115369), dated April 3, 1968

          This report emphasized the need for the Federal Government to
consider   in-house maintenance     of Government-owned      ADP equipment in
an effort    to realize potential     cost savings as well as other benefits
derived from internally     performing     these activities.




                                               103
APPENDIX VIII


study of the Acquisition   of Peripheral
Equipment for Use with Automatic    Data
Processing  Systems (B-115369),
dated June 24, 1969

           In this report,   GAO emphasized the need for the Federal Government
to capitalize     on the substantial  savings that could result by acquiring
computer components from sources other than the computer system manufacturers.




                                                            U.S   GAO.   Wash., D.C.


                                     104