oversight

Problems in Implementing the Defense Supply Agency's Standard Automated Materiel Management System

Published by the Government Accountability Office on 1971-06-04.

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

                        I
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REPOiT ‘i’0 THE*
COMMITTEE ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES




Problems OnImplementing
The Defense Supply Agency’s
Standard Automated
Materiel Management System
                            B-163074




BY THE COMPTROLLER GENERAL
OF THE UNITED STATES


                    JUNE 4,15’-7=I
                                 COMPTROLLER     GENERAL       OF   THE      UNITED     STATES
                                               WASHlbIGS‘ON.    D.C.      20548




                B- 163074




                Dear    Mr.     Chairman:

                         In House      Report   91- 1570 your Committee             on Appropria-
                tions   requested       the General    Accounting        Office  to immediately
                commence        a comprehensive         review      of the Defense     Supply
                Agency’s      Standard     Automated       Materiel      Management      System
\               in line with the Committee’s             directive     of September      24, 1969.

                         The observations         and conclusions                     in this report     were
                discussed    with officials        of the Department                       of Defense,    but we
                did not request      formal      agency   comments                      from    the Department.

\                         As previously        agreed     with members         of your staff,     copies
                of our report       are being       sent to the Secretary         of Defense      and the
                Director,     Defense        Supply    Agency.      We plan no further        distribu-
                tion of this report         unless     copies    are specifically     requested,        and
                then we shall       distribute       copies    only after    your agreement          has
                been obtained       or public       announcement        has been made by you
                concerning      the contents        of the report.

                                                                Sincerely              yours,




                                                                Comptroller                General
                                                                of the United              States

                The Honorable        George     H. Mahon,              Chairman
                Committee       a> Appropriations
                House     of Representatives




    -   -.-,.                 5QTH ANNIVERSARY 192l-1971~-------
COMPTROLLER
          GENERAL'S
                  REPORT                                                PROBLEMS IN IMPLEMENTING THE
TO COMMITTEE
           ONAPPROPRIATIONS                                             DEFENSE SUPPLY AGENCY'S
HOUSEOF REP~SENTATIVES                                                  STANDARD AUTOMATED MATERIEL
                                                                        MANAGEMENT SYSTEM B-163074


DIGEST
-----_

WHYTHEREVIEWWASMADE
        The House Commttee               on Appropriations'           report     on the 1971 Department
        of Defense        Appropriation         Bill     (H. Report      91-1570)        contained      a re-
        quest     that    the General       Accounting       Office      (GAO) immediately            begin     a
        comprehensive          review     of the Defense        Supply       Agency's       Standard     Auto-
        mated Materiel           Management      System in line          with the Committee's              direc-
        tive   of September           24, 1969.         This directive        requested        the GAO to re-
        v-y-c%"tiiiui‘ng                  basis      the development,         installation,          and opera-
        tion   of automatic           data processing-systems.
                         ,.-_.
        Baekgromd
        The Standard          Automated     Materiel      Management       System is a uniform            data
        system      for the Agency's          five   supply     centers     which will       automate       in-
        ventory       control     point    functions      in the areas of distribution,                 re-
        quirements         and supply      control,     financial        management,      procurement         and
        production,         cataloging,       and provisioning.            The prototype         for the sys-
        tem was installed             at the Defense        Construction       Supply     Center     located
        in Columbus,          Ohio.     The system became operational                there     in September
        1969.

        One of the primary           concerns       recognized       upon the establishment             of the
        Defense      Supply    Agency in 1962 was a need to accomplish                       the uniformity
        of several       supply    systems     which      lacked     standardization          in policies
        and procedures         and types      of automatic          data processing         systems.      GAO
        recognizes       the importance         of uniformity          of policies        and procedures       and
        automatic      data processing          systems      at all supply          centers     and the cost
        savings      and other     benefits       that    generally       can be expected          from stan-
        dardization.


FINDINGSANDCONCLUSIONS
        Serious   problems   have plagued        the development       and implementation       of
        the system.      It was originally         planned    that  the system would be opera-
        tional   at the five    supply     centers      by early   1967, but as of January
        1971 the Defense     Supply    Agency could not estimate           when this      would oc-
        cur.


Tear Sheet



                                                                             JUWE           419-P
 GAO believes       that    many of the problems          associated       with the system         oc-
 curred    because,      at  key    decision    points    in   the   development     of    the    system,
 the Agency placed          greatest      emphasis     on getting     hardware    installed        and
 operating     as quickly        as possible      and was not willing          to accept       any de-
 lays in order        to correct       known problems.

Some of        the   problems      are:

    --Authority      and responsibility     for the planning      and implementation
       of the system has been fragmented.             The program    lacked  an overall
       project    manager with sufficient       authority    to make necessary       deci-
       sions    or run the program.       (See pa 7.)
    --An in-depth          study was not made of the                   Defense     Supply     Agency's        re-
       quirements        for frequency   of processing.                    (See    p. 9.)

    --Although      there was a significant        increase   in the work load at the
       supply    centers,     the  Agency  did not    make  a critical   reappraisal      of
       its original       approach   to the implementation        of the system.     (See
       p* 10.)

    --There    has been little     effort made to                    redesign     the     system even
       though   the computer    hardware  selected                    was not the         same as was con-
       sidered    when the system was originally                        designed.         (See p. 12.)

    --Significant          problems   noted   during           the     testing      of the    system were
       not resolved         prior   to implementation                of the      prototype.        (See p. 17.)

    --An in-depth          study of the estimated                costs and savings            for    the    sys-
       tem has not         been performed.    (See             p* 20.)

   --Standards         have not been developed    for                  measuring    whether   the          pro-
       totype     system has resulted    in improved                    performance     in supply
      operations.          (See p. 23.)

Although     continued     efforts     by the Agency have produced         substantial
improvements       in the system,        the prototype      still is not performing                           all
of its assigned        tasks     as frequently      as originally   planned.

Plans     to    obtain    eqtipmen~&reater        -..-.      -Impam2

 From experience           with     the prototype,          the Defense         Supply     Agency has con-
 cluded     that     the system         cannot    be extended           successfully        to all other
supply       centers      using the IBM 360/50              ::quiprilent.        Current      plans call        for
another       competition         to select       equipment        with greater          capacity,        test
the system         at one location,            extend     the system         to the other          supply      cen-
ters,      and redesign         the system         at a later         time to take advantage                of the
capabilities           of newly ar:quirpd           h,drJware      and software.            In GAO's opin-
ion,    after      the equipment           is ,elected,         the system should             be redesigned
to take advantage             of the I:,l,)abilities            of the equipment           at one location
prior     to installation             at all supply         centers.         (See pp. 12, 15, and 23.)
       Interim extension p2cm.s

       Pending    acquisition         of new equipment,     the Agency wants to extend              the
       current    system      to the Defense      General   Supply     Center      and Defense     Per-
       sonnel    Support      Center.      The Agency has concluded           that    the work loads
       at these centers         are such that      the. IBM 360/50       equipment       can do the
       job.    In GAO's opinion,           the Agency has not demonstrated               an urgent    need
       to extend     the system         or that substantial     benefits        would    accrue   by an
       interim    extension       of the IBM 360/50's       to these centers.             (See p. 21.)


MATTERS
      FORCONSIDERATION
                    OF THE COMMITTEE
       The Committee     may wish to have the Defense      Supply     Agency prepare      a cur-
       rent cost-benefit     analysis  prior to proceeding       with   another   competition.
       The Committee     may also wish to discuss   with    officials      of the Agency

           --steps     being          taken      to     improve    management       of the     program,

            --whether      the        Agency intends              to make     a study   of   its    requirements          for
               frequency         of    processing,

           --whether     the          system      should       be redesigned        before     installation        at     all
              five   supply           centers,

            --steps    being   taken             to ensure  that   possible      future    problems    noted
                during   the testing               phase are resolved      prior     to implementation       of
                the system,

            --need    for development                    of quantitative       standards   for measuring                im-
               provements    in supply                  performance       at the prototype     to tell   if             the
               system    has improved                  supply    performance,       and

            --whether      the system                 should    be extended      to the Defense           General   Supply
               Center     and Defense                 Personnel    Support      Center with   the         IBM 360/50
               equipment.




Tear    Sheet
-~~. -.-__
                         Contents
                                                              Page

DIGEST                                                          1

CHAPTER

  1       INTRODUCTION                                          4

   2      MANAGEMENTOF ACQUISITION PROGRAM                      7
             Lack of an overall    systems manager              7
             Failure  to study requirements       for fre-
                quency of processing                           9
             Increase in work-load      requirements          10
             Change in computer hardware                      12
             Request for larger    computers                  15
             Matters  for consideration      by the Commit-
                tee                                           16

  3       SYSTEMTESTING AND COMPATIBILITY                     17
              System testing                                  17
              Compatibility                                   19
              Matters    for consideration by the Commit-
                tee                                            19

  4       COSTS, PLANS TO EXTEND, AND INABILITY TO MEA-
          SURE SYSTEM BENEFITS                                 20
             Total estimated     costs and savings             20
              Interim   plans to extend SAMMSto other
                 supply centers                                21
              Plans to obtain equipment of greater      ca-
                 pacity                                        23
              Inability    to measure benefits    of SAMMS     23
             Matters    for consideration    by the Commit-
                 tee                                           25

                          ABBREVIATIONS

DCSC      Defense Construction     Supply Center
DSA       Defense Supply Agency
GAO       General Accounting    Office
IBM       International   Business Machines
RCA       Radio Corporation    of America
SAMMS     Standard Automated Materiel     Management System
COMPTROLLERGENE-@AL'SREPORT                                          PROBLEMS IN IMPLEMENTING THE
TO COMPlITTEEON A.Z?ROPRIATIQl'S                                     DEFENSE SUPPLY AGENCY'S
HOUSEOF REPR?SFNTATII/%S                                             STANDARD AUTOMATED MATERIEL
                                                                     MANAGEMENT SYSTEM B-163074


DIGEST
------

WHY TUE RE?IEW WAS MADE

     The House Committee          on Appropriations'          report     on the 1971 Department
     of Defense    Appropriation         Bill     (H. Report     91-1570)        contained      a re-
     quest   that  the General        Accounting      Office     (GAO) immediately            begin     a
     comprehensive      review     of the Defense        Supply      Agency's       Standard     Auto-
     mated Materiel      Management       System in line with            the Committee's           direc-
     tive   of September       24, 1969.         This directive       requested        the GAO to re-
     view on a continuing          basis      the development,        installation,          and opera-
     tion   of automatic       data processing        systems.

     Background

     The Standard          Automated      Materiel      Management        System is a uniform            data
     system      for the Agency's          five    supply      centers     which will       automate       in-
     ventory       control     point    functions        in the areas of distribution,                 re-
     quirements         and supply      control,      financial         management,      procurement         and
     production,         cataloging,       and provisioning.              The prototype         for the sys-
     tem was installed             at the Defense          Construction       Supply     Center     located
     in Columbus,          Ohio.     The system became operational                  there     in September
     1969.

     One of the primary           concerns      recognized       upon the establishment            of the
     Defense      Supply    Agency in 1962 was a need to accomplish                      the uniformity
     of several       supply    systems     which     lacked     standardization         in policies
     and procedures          and types     of automatic         data processing         systems.     GAO
     recognizes       the importance        of unif0rmit.y         of policies        and procedures      and
     automatic       data processing         systems     at all supply          centers    and the cost
     savings      and other     benefits      that    generally       can be expected         from stan-
     dardization,


FINDINGS AND CONCLUSIONS

     Serious   problems    have plagued        the development       and implementation       of
     the system.      Ii; was originally         planned    that  the system would be opera-
     tional   at the five     supply     centers      by early   1967, but as of January
     1971 the Defense      Supply    Agency could not estimate           when this      would oc-
     cur.




                                                      I
 GAO believes      that many of the problems          associated     with the system oc-
 curred    because9     at key decision     points    in the development         of the system,
 the Agency placed        greatest    emphasis     on getting    hardware    installed    and
 operating     as quickly      as possible     and was not willing        to accept    any de-
 lays in order       to correct    known problems.

Some of        the   problems      are:

    --Authority      and responsibility      for the planning      and implementation
       of the system has been fragmented.              The program    lacked  an overall
       project    manager with sufficient        authority    to make necessary       deci-
       sions    or run the program.       (See p. 7.)

    --An in-depth          study was not made of the                   Defense    Supply     Agency's        re-
       quirements        for frequency   of processing.                    (See   p0 9.)

    --Although      there was a significant      increase in the work load at the
       supply    centers,     the Agency did not make a critical    reappraisal     of
       its original       approach  to the implementation   of the system.      (See
       p. 10.)

    --There    has been little     effort made to                   redesign     the     system even
       though   the computer    hardware  selected                    was not the        same as was con-
       sidered    when the system was originally                       designed.         (See p. 12.)

    --Significant         problems   noted   during           the     testing      of the    system       were
       not resolved        prior   to implementation                of the      prototype.         (See    P.      17.)

    --An in-depth         study of the estimated                costs      and savings       for    the    sys-
       tem has not        been performed.    (See             p. 20.)

   --Standards         have not been developed    for                measuring    whether   the           pro-
       totype     system has resulted    in improved                  performance     in supply
      operations.          (See p. 23.)

Although     continued     efforts     by the Agency have produced         substantial
improvements       in the system,        the prototype      still is not performing                          all
of its assigned        tasks     as frequently      as originally   planned.

Plans     to   obtain     equipment       of greater        capacity

From experience            with      the prototype,         the Defense        Supply Agency has con-
cluded      that     the system          cannot    be extended        successfully        to all other
supply       centers      using the IBM 360/50              equipment.         Current      plans call        for
another       competition          to select       equipment      with    greater      capacity,        test
the system          at one location,            extend    the system to the other                supply      cen-
ters,      and redesign          the system at a later              time to take advantage                of the
capabilities           of newly acquired             hardware     and software.           In GAO's opin-
ion,    after      the equipment            is selected,       the system should            be redesigned
to take advantage              of the capabilities             of the equipment           at one location
prior     to installation              at all supply        centers.        (See pp. 12, 15, and 23.)
    In.terim extension p&z8
    Pending    acquisition         of new equipment,      the Agency wants to extend              the
    current    system to the Defense           General    Supply     Center      and Defense     Per-
    sonnel    Support      Center.      Tk,e Agency has concluded           that    the work 'loads
    at these centers         are such that       the IBM 360/50        equipment       can do the
    job.    In GAO's opinion,           the Agency has not demonstrated                an urgent    need
    to extend     the system         or that  substantial     benefits        would accrue      by an
    interim    extension       of the IBM 360/50's        to these centers.             (See p. 21.)


MA!l'TERS
        FORCONSIDERATION
                      OF THE COMMITTEE
    The Committee     may wish to have the Defense      Supply     Agency prepare      a cur-
    rent cost-benefit     analysis  prior to proceeding       with   another   competition.
    The Committee     may also wish to discuss   with    officials      of the Agency

       --steps    being    taken    to improve     management      of   the     program,

       --whether    the Agency intends           to make a study        of    its    requirements          for
          frequency    of processing,

       --whether     the   system should       be redesigned       before       installation        at     all
          five   supply    centers9

       --steps    being   taken     to ensure  that possible      future    problems    noted
           during   the testing       phase are resolved    prior     to implementation       of
           the system,

       --need    for development         of quantitative        standards   for measuring                im-
          provements    in supply        performance       at the prototype     to tell   if             the
          system has improved          supply     performance9       and

       --whether      the system     should    be extended       to the Defense            General   Supply
          Center     and Defense     Personnel    Support       Center with  the           IBM 360/50
          equipment.
                                      CIIAPTER 1


                                   INTRODUCTION

         The Defense       Supply Agency        (DSA) began operations           in
January       1962 and was given the responsibili.ty                 for central-
ized management          of several      supply     systems    which had been
independently         developed.       These systems        lacked     standardiza-
tion     in policies       and procedures        and in the types of auto-
matic      data processing        equipment      in use.      Study groups re-
viewed      each of the functional           areas such as procurement              and
cataloging        and prepared      studies      in 1962 and 1963 on proce-
dures followed          at each of the supply           centers.      These studies
identified        inconsistencies       and recommended          procedures      to be
adopted.

        The next step toward achieving             uniformity     of systems
encompassing        the major   functions      associated     with materiel
management       began in April       1963, and the data system design
concept      for a Standard     Automated      Materiel     Management       Sys-
tem (SAKMS) was approved            in June 1964.         SAMMS is a uniform
data system which automates             inventory     control    point    func-
tions     for distribution,       requirements       and supply     control,
financial       management,   procurement        and production,       catalog-
ing , and provisioning.

        The stated        objectives     of SAMRIS were (1) to adopt for
all    supply     centers     the best features         from each of the sev-
eral     systems     that were inherited           by DSA, (2) to improve            ex-
isting      operating      techniques      by developing        new applications,
 (3) to improve         data processing        to take advantage         of the
capabilities         inherent      in modern data processing           equipment,
 (4) to standardize           data processing        equipment,     and (5) to
exploit      modern data processing            equipment      to provide      effec-
tive    and economical          performance      of logistics      operations        in
peacetime       and to facilitate          adjustment      to the demands of
mobilization         or war.

         The initial      plans      developed    in 1964 called          for a com-
petitive     selection        of computer      hardware,      various       tests    to
be made of the hardware               and software,      installation          of SAMMS
at a prototype         installation,         and subsequent         extension     of
the system       to DSA’s four other           supply    centers.         It was


                                           4
originally       planned   to have SAMMS installed                  and operating
at all     locations     by early 1967.

         The Radio Corporation              of America       (RCA) 3301 computer
was initially          selected      for SAMMS in May 1965.                Of the two
bids received,           the RCA bid was lower.                Before    DSA could
proceed      with    acquisition        of the computer,             RCA had to perform
a successful        benchmark        test.        The test     was to demonstrate
the ability        of the proposed            system to perform           specified
data processing            functions       within     stated     work load and time
constraints        and the availability               and operability         of the
proposed      equipment.           RCA subsequently          failed,     on two occa-
sions,     to pass the required               benchmark      test.      Negotiations
with RCA were terminated                in April       1966 and DSA began nego-
tiations      with     the International            Business       Machines      (IBM)
Corporation,         the only contractor              other    than RCA to submit
a bid for the SAMMS hardware                    procurement.

       The IBM 360/50 computer     was subsequently        selected     for
SAMMS and passed the benchmark         test    in May 1967.      The pro-
totype   was at the Defense    Construction       Supply   Center     (DCSC
in Columbus,   Ohio.     IBM equipment      was installed     at DCSC in
July and October     1968 and, after      various    tests  of the sys-
tem, SAMMS became operational        at DCSC on September         11,
1969,

        SAMMS was one of five             computerized           management       systems
discussed        in a prior      GAO report         to the Chairman,           House
Committee        on Appropriations,           entitled        “Inquiry      Into Prac-
tices     Followed       by the Department            of Defense        Components      in
Acquiring        and Installing        New Automatic            Data Processing
Equipment        for Use in Computerized               Management         Systems”
 (B-163074,        dated March 13, 1968).                This report        concluded
that    the design        and installation            of new management            systems
or major       revisions       of existing       management          systems     should    be
undertaken         only after     a thorough          evaluation        of requirements
and a thorough           study of the operating               function      involved      are
made to reassess            the basic      objectives         and to identify          known
and potential          problem    areas which should               be corrected.

        The report      pointed      out that      from standardization        it
can generally         be expected       that    cost savings     and other     bene-
fits    will   result,       Further     , three     of the five    systems,      in-
c lud ing SAMLIS, were designed              primarily     to achieve     standard-
ization      and modernization          of existing       data processing


                                              5
systems   and equipment D However,             adequate       studies       of the
operating    function  had not been           undertaken       prior      to proceed-
ing with   these projects.

       In our current       review    of SAMM, we were concerned           with
factors   relevant     to the decision        in April   1966 to implement
SAM&K with     the IBM 360/50 computer          and subsequent     events.
We evaluated      the reasonableness        of planning    and cost and
savings   estimates      for the program,       adequacy   of the testing
of the system prior         to installation      at the first     supply
center)   and compatibility         of SAMMS with other       automatic
data processing       systems.

       During   our examination       we reviewed    pertinent             records,
correspondence,     studies,      and plans    and interviewed               offi-
cials   of the following      offices    or agencies.

       Assistant       Secretaries    of Defense         (Comptroller)       and
          (Installations         and Logistics),         The Pentagon
       Headquarters,        Defense   Supply Agency,         Cameron Station,
         Virginia
       Defense      Construction     Supply      Center,    Columbus,       Ohio
       Data Systems Automation           Office,      Columbus,        Ohio

       Fieldwork     was performed       during     the    period       September
1970   through     January  1971.
                                          CHAPTER 2
!

                        MANAGEMENT OF ACQU.ISITION              PROGRAM

            Since      its   inception,       SAMMS has been plagued            with     seri-
    ous problems.            These problems         were caused,       in part,      by the
    absence of an overall               systems     manager for the program              and
    the lack of adequate              studies     of DSA’s requirements            at the
    inception        of the program.            To a large     extent,     we believe
    that    these problems           occurred     because,     at key decision           points
    in the development             of the system,          DSA placed     the greatest
    emphasis       on getting        hardware     installed      and operating         as
    quickly      as possible         and was not willing          to accept      any de-
    lays in order          to correct        known problems.         When there        was an
    increase       in work-load         requirements,        DSA was not willing            to
    take the time necessary                to give appropriate           consideration
    to this      fact.       When there was a change in computer                   hard-
    ware,     DSA was not willing             to take the time necessary               to re-
    design     the system.

          Although    substantial      improvements      have been made by
    DSA and the installation         of a larger      computer   at the proto-
    type installation       has alleviated      some of the problems,      the
    system is still      not performing       as originally    planned.

    LACK OF AN OVERALL SYSTEMS MANAGER

           Authority      and responsibility             for the planning      and im-
    plementation        of SAMMS have been fragmented.                 No one organi-
    zation    or individual       was given         the appropriate      authority
    and responsibility          to plan,       direct,      and exercise    control.
    We believe       that  the lack       of a strong        single   manager for
    SAMMS contributed         significantly            to many of the problems
    that have been experienced               in implementing        the system.

            DSA designated         a SAMMS project  officer    in 1965 but he
    was not given          the overall   authority  of decisionmaking.        The
    project    officer’s        job was primarily   one of coordination,        and
    any problems         that arose had to be resolved       through   “persua-
    s ion” with     other     functional    levels within   DSA.

            For example,  the project     officer     informed  us that  the
    requirements     for daily processing         set by the functional   di-
    rectorates     in 1964 were too high to meet their          needs and


                                                  7
that the equipment available        at   the    time     was  not cap:~ble of
processing    these requirements.        The project         officer    tried
to "persuade"     the functional    directorates           to rzducc daily
processing    requirements    to reflect      more realistic         needs,
but he was not successful.         As a result,          the unrealistic
requirements     were incorporated     in the request for proposal.
It was not until      June 1970 that,      after      the prototype       instal-
lation   proved that these requirements              could not be met, DSA
took action to reduce them.

       In April  1970, DSA established a team to thoroughly    re-
view SAMMS. The review team recommended 85 improvements in
operations.     One recommendation was that a SAM&ISprogram di-
rector   be appointed to implement the team's recommendations.
The review team's report    summarized the effect  of the lack
of a program director    for SAM% as follows:

      "The development and installation      of SAMIIS has
      been and is plagued by conflict      of interests    at
      every turn.     A SAM% Program Director     with power
      of decision    and necessary resources    to direct    the
      developmental,    functional and operational      elements
      at all levels toward the accomplishment        of what is
      best for DSA as a whole is a must."

       As a result    of the review team's recommendation,         the
Director    of DSA, in June 1970, designated       a SAblMSprogram
director    for a period of 90 days and gave him wide author-
ity to act on behalf of the Director          of DSA. During this
period,   the program director       was to accomplish     the imple-
mentation     of the review team's recommendation        at the Proto-
type.    We  believe   that   the  SAMMS program  director    was suc-
cessful   in effecting      numerous system improvements in SAbIMS,
but we are concerned that the program director             was appointed
only for a go-day period.

      The Assistant  Secretary    of Defense (Comptroller)  also
has expressed concern over the need for a permanent SAMMS
program director.    In a letter     to DSA dated November 6,
1970, the Assistant   Secretary     remarked that a strong pro-
gram manager would provide intensified       SAMMSsystems man-
agement for the following     problems.




                                       8
       1.   Need for improved      control    of changes    to ensure            com-
            patibility   of programs,      functional    documentation,
            and employee   training.

       2.   Need for establishment            of a mechanism       at DCSC for
            the prompt      and effective        solution    of future      SAMMS
            problems,      particularly       those which cut across          sev-
            eral   functional        Headquarters,       DSA, directorates.

       3.   Need for review     and direct      control   of another hard-,
            ware competition     and installation       of SAMMS at all
            supply    centers)  as well    as the redesign     and imple-
            mentation     of an improved    SAMMS.

At the completion    of our          fieldwork,   DSA had not made any
plans   for the designation            of a permanent  SAWS program  di-
rector.

FAILURE TO STUDY REQUIREMENTS
FOR FREQUENCY OF PROCESSING

       Systems planning          should     include    sufficient       study   to
determine    optimum      frequency       for data processing.             Process-
ing too often      can be more costly             than is warranted         by the
value   of information        produced.          On the other       hand, infre-
quent processing        may result        in additional        costs    and inade-
quate supply      support      because management           decisions      will   be
made without      current      information.

        DSA did not make an in-depth              study to determine  ex-
actly    what frequency    of processing           was needed for supply
centers    to perform   their  mission           most efficiently.

      As originally       planned,     frequency     of processing       appar-
ently  was based on what the DSA functional                 directorates
would have liked      to get from the system.             It was not until
it became evident       that    these plans      were unrealistic        that
DSA took action     to reduce       them.

       The planned     frequencies      of processing      established      for
each SAMMS subsystem         in 1964 were the objectives            for the
system until      August    1968.    From August      1968 through      Decem-
ber 1970 numerous        changes were made to the frequency              of
processing.        A comparison    of   the original      and  revised
weekly    processing     schedule    as of December 1970 is shown
below.

                                           9
                                                  Frequency     of
                                             weekly    processing
                                                            Approved
                                         Original            schedule
            Subsystem                    schedule       December 1970

         Distribution:
                Multidaily                   42                 14
                Daily                         7                  7
         Requirements                         7                  2
         Procurement                          7                  3
         Financial                            7                  3
         Cataloging                           7                  2
         Provisioning                         7                   2

      The actual  frequency      of processing      at the prototype
has never equaled    that   originally     planned.      For the months
of November and December 1970, however,             the actual   fre-
quency was very close     to the approved        frequency.

      We discussed     the frequency   of subsystem       processing
with  DSA personnel      to determine  what effect      the reduction
in frequency    had on the accomplishment        of their     mission.
We were advised     that   the current  frequency     at the proto-
type was adequate      and that higher    frequency    would not be
economical.

        In view of the numerous         changes that      have been made to
the approved      processing     frequency,      we believe    that an in-
depth study      should    be made to determine        exactly    what fre-
quency of processing         is needed for the supply          centers   to
perform    their   mission     most effectively.

INCREASE     IN WORK-LOAD REQUIREMENTS

       Analyses   were made in June 1964 by DSA of current
work loads at the supply         centers.       Anticipated        increases   in
work load were projected         over a S-year         period    when SAMMS’
was scheduled     for implementation         in 1967.        This work load
was then included       in the request       for proposal,         and vendors
were required     to demonstrate       the ability        of their      equip-
ment to process      the projected       work load for a peak day
within   10 hours.




                                       10
        When IBfiZ was selected           in May 1967, the actual            volumes
of work load at the supply                centers    had increased         an average
of 62 percent         over the work load projected                 in the request
for proposal,         largely   due to the buildup              in Southeast     Asia.
However,       DSA did not give appropriate                consideration       to the
fact    that    the original       projected      volumes      of work load were
no longer       valid    and that,      if its    original        approach   was con-
tinued,      it was likely      that a capacity            problem     would be en-
countered.

         We discussed     the increased         work load with    DSA offi-
cials.       They felt    that,      if additional       capacity was needed,
they would merely         upgrade       the system to a larger        computer
 ( i.e.,   IBlrl 360/65).       DSA officials       also stated   that   to have
given recognition         to the increased          work load would have
meant that DSA would have to revise                   the request   for proposal
which,     in turn,     would mean another          competition   for the SAMMS
procurement.         This alternative          was not acceptable      to DSA
because      of the delay       that    it would have caused to the im-
plementation        of SAMMS.




                                           11
CJIAN'X    IK COFfPUTER I~lARDWARE

       After       selection     of thz RCA 3301 computer     in May 1965,
DSA began designing            SAMMS around the RCA equipment.          By the
time it was decided,             in April 1966, that    the RCA equipment
was not acceptable           p DSA had already   expended   substantial
design      effort     on the system.     When the decision      was made
to switch        from RCA to the IBM 360/50 computer,           DSA directed
that redesign          of the system be held to a minimum to keep
costs     down.       We believe    that many of the problems      experi-
enced with         SAMMS can be attributed,      in part,   to the fact
that   little       effort    was made to redesign    tI,e system even
though there          was a change in equipment.

        SAMMS is designed          as a sequential     system which pro-
cesses     only one functional          program    at a time.       In general,
each process         is dependent      upon an action     or process      that
immediately        precedes     it in the processing        system.     OSD of-
ficials     told us that,         because SAMMS had been designed             as a
sequential       system,     the amount of multiprogramming            possible
was limited        and thus precluded         the full  exploitation        of the
computer      capabilities.         They said that     SAM;hllSwould have to
be redesigned          to remove the constraints        of the present         se-
quential      system.

       Multiprogramming           is a capability          which allows       several
programs      to be run concurrently             on the same computer.              DSA
uses the term “multi-batch              processing”         to define     this    type
of operation.         The use of multiprogramming                 greatly     improves
computer     productivity        because      it reduces       the amount of time
that   the central        processing      unit     is idle     while    awaiting      an
input    or output.        The currently         installed       SAMNS operates        in
a very limited        multiprogramming          mode.       Because the system,
as initially       designed,        is essentially         sequential     and pro-
cess dependent,         extensive      use of multiprogramming              is virtu-
ally   impossible.

        DSA recognized        potential        increased     use of multiprogram-
ming in 1966 but believed               that     the state     of the art at the
time was limited.           Therefore        DSA proceeded       with    its
sequential-processing            design.         This decision      was based also
on considerations         that     (1) inventory         control    point    process-
ing was primarily         sequential         in nature      and (2) DSA did not
have in-house       expertise       to design        and run a multiprogrammed
system.


                                           12
        A DSA Analysis       of ADP Requirements             for SAMMS, dated
.June 12 9 1969, pointed           out that     increased       use of multipro-
gramming     was more feasible;           but,    to use this       capability,
the current      system would have to be redesigned.                     An analy-
sis of the increased           productivity         that would result           from
this    approach    was never made.            DSA estimated        that    it would
take from l-l/‘2       to 2 years       to redesign        the system.          Since
its   goal was to extend           SAM&IS to all       centers     as quickly        as
possible,      DSA concluded        that system        redesign     would not of-
fer a short-term         solution.        Moreover,       DSA believes        that    the
current     system as designed          can meet its needs.

        The significance   of the system design  problem was
brought    out in a report   dated May 26, 1970, by a DSA System
Review Team.

       “We believe      that     the major       cause of the current
       problems    with    SAME extends            back to the beginning
       of the *** project.              A major     error    occurred     when
       equipment    was selected           using    specifications        which
       were drastically          different       from those which were
       used to program         the current         system.       Once the
       equipment    was selected,           requirements         should   have
       been developed        in accordance          with    the capability
       of the selected         equipment        or new equipment        should
       have been selected            based on the new requirements.
       It appears      that no effort          was made to do either.”

        In a memorandum dated July              10, 1969, the Assistant               Sec-
retary      of Defense      (Comptroller)        instructed       DSA to immedi-
ately     initiate     plans    to redesign        SAMVS to take full           advan-
tage of available          hardware       and software        capabilities        and
start     another    competition        for SAMMS when the design               was com-
pleted.         The Assistant      Secretary       subsequently         agreed with
DSA’s approach         of deferring        system redesign         until     after    new
hardware        was selected      and the system was extended                to all
supply      centers s The rationale            given     for agreeing        with
DSA’s approach         at that      time was that        this    approach      was the
quickest        and most practical         means of getting            SAMI% installed
at all      DSA supply      centers.

       DSA offici::ls    told   us that,            even if the system was re-
designed,    the present      equipment           could not accommodate    the
work load at all      centers.      They          informed  us that,  because  of



                                             13
t-he increase    in work load and anti.cipatyd   increases                      in   the
future,    an upgrade   in equipment was needed.

       Although         the above approach           may be the quickest           means
of installing           SAMMS at all        supply      centers,    we are not con-
vinced     that     this    is the best day to proceed.                  In our opin-
ion,   after      the     equipment      is   selected,       SAMMS should       be rede-
signed     to take advantage             of the capabilities           of the equip-
ment at one location               prior    to extending         the system to all
supply     centers.         Although       we recognize        that  this   will    re-
quire    considerable           effort     on the part       of DSA and will        delay
extension       of the system,           DSA has not demonstrated            a critical
need to extend           the system as quickly              as possible     and its
approach      is the most cost beneficial.

Benchmark
-              test

        IBM successfully      passed        the    benchmark  test  by using
multiprogramming         even though        this    feature  was not included
in the actual      system software            of   SAMMS.

         The benchmark      test was made to demonstrate                 (1) the
ability     of the proposed         system     to perform      specified      data
processing       functions     within     stated   work load and time con-
straints      and (2) the availability            and operability           of the
vendor’s      proposed     equipment.        The test was conducted            using
actual     data and performing          functions      typical     of center’s
day-to-day       needs within       a prescribed      amount of time.

       One of the mandatory       requirements     established       by DSA
to evaluate     the benchmark      test  results  was that computer
processing     hours be equal to, or less than,            10 hours.     Using
the multiprogramming      feature,      IEV completed      processing    in
about 9 hours and thus passed the benchmark                test.

       1Zt our request,    a DSA official  prepared   an analysis     of
what the timings      would have been had IBM not used the multi-
programming    feature.     This analysis   showed that    the timing
would have been at least        12 hours and, consequently,      IBM
would not have passed the test.

       We asked DSA officials      why IBM was allowed       to use multi-
programming    if this  feature    was not to be included       in their
actual   system design.       We were told that  specifications



                                            14
included   in the request      for proposal     provided    guidance    as
to overall     system requirements      and the integrated       manner
in which the system was to operate.             Within   these guide-
lines p vendors     were not restricted     as to the method they
proposed   to process     the work load.      Since    IBM’s proposal
met the requirements        of the request    for proposal,      DSA was
obligated    to test    what was proposed.

        Although       the IBM proposal            may have met requirements
stated      in the request           for proposal,       we believe      DSA should
have recognized            that    the multiprogramming          capability       was
not applicable           since     this    capability      was not included         in
the SAMMS system design.                   In our opinion,       the benchmark
test was not a true measurement                      of the system timings          that
could be expected             when SAMMS was implemented.                DSA  officials
informed       us that,       if IBM had not passed the benchmark                   test,
another       competition        for the SAWS hardware             selection      would
have been necessary.                 This would have delayed            the implemen-
tation      of the system.             Again,   DSA’s desire       to proceed       as
quickly       as possible        seems to have been the governing                 factor.

REQUEST FOR LARGER COMPUTERS

       As early       as June 1969, DSA recognized                 that  the planned
computer       configuration        would be inadequate            to support      cur-
rent and future           work-load      requirements        at the supply       cen-
ters,      In a memorandum to the Assistant                    Secretary    of Defense
 (Comptroller)        dated June 13, 1969, DSA requested                   approval
to extend        SAMMS on a sole-source             basis    by replacing      six
IBM 360/50 computers             with    the larger       IBM 360/65 computers.
DSA felt       that   the larger        computers      were necessary       to effec-
tively     implement        the system.        DSA’s request         was denied     on
the basis        that   (1) the system could be redesigned                  to take
full   advantage        of IBM 360/50 hardware              and software      capabil-
ities   and (2) if greater              capacity      proved    to be essential
after    redesign,        competitive       selection       of equipment      1~0~14 be
more economical           to the Government.             DSA was directed        to rc-
design     the system and prepare               a new request        for proposal
for another         competition       to select       hardware.

       In a subset-uent        memorandum to the Assistant           Secretary
of Defense       (Comptroller)     dated January        28, 1970, DSA stated
that   its   efforts     to improve      efficiency     at the first     instal-
lation     (DCSC) had not resulted             in enough additional      computer
time to do all       the tasks      intended.       DSA requested     permission


                                             15
to install one IBM 360/65 at DCSC, on an interim      basis,   to
obtain the needed additional  computer capacity.      This re-
quest was approved on the basis that additional      capacity
was needed for DCSC to perform its mission.

      In March 1970 an IBM 360/65 was installed      at DCSC and
one of the IBM 360/50's was removed.        Although the larger
computer has provided some relief      in computer processing
time, SAMMSis still     not performing   all tasks as frequently
as originally  planned.

MATTERSFOR CONSIDERATION BY THE COMMITTEE

      DSA is in the process of another competition      for the
SAMMShardware.      Plans call for redesign of the system at a
later  date to take advantage of the capabilities      of hard-
ware and software      selected. Whether DSA should install
SAMMSat all five supply centers prior      to redesigning   the
system is a matter that the Committee may wish to discuss
with agency officials.

      The Committee also may wish to discuss what actions
have been taken to improve the systems management of SAMMS
and whether DSA intends to make a study of its requirements
for frequency  of processing.




                               16
                                          CHAPTER 3


                    SYSTEM TESTING           AND COMPATIBILITY

SYSTEM TESTING

         One of the most important                phases in the development               of
any system       is complete         testing      required      prior    to implemen-
tation.      Sound management             dictates       the resolution         of sig-
nificant     problems        arising      during      the testing      phase of a
system before         it becomes operational.                  SAMMS was placed         in
operation      at DCSC in September               1969, even though           the sys-
tem testing        objectives        were never fully           achieved.         In our
opinion,     failure       to ensure        that    test    objectives      were ac-
complished       contributed         to many of the problems               encountered
after     the system was implemented.

        DSA instructions      required             threemajor     tests    of SWIMS
prior    to system implementation--the                 controlled       functional
test,    the volume test,       and the         environmental        test.      Each of
these    tests   is discussed      below.

Controlled       functional        test

        The primary    objectives     of this     test    were to assure     the
DSA headquarters       functional     managers      that    (1) the data sys-
tem would perform        according     to logic     contained     in the sys-
tem’s    requirements,      (2) the sequence        of processing     was as
prescribed      by the requirements,        (3) the data system would
produce     the required     outputs     and (4) the functional         operat-
ing manuals      were fully     compatible     with    th% data system de-
sign.

        The test     provided    machine        output    which Gould be mea-
sured against        predetermined        results.         If program    errors
were identified,          the program        could     be corrected     and then
retested     before     proceeding      with     testing       of the next segment.
In the case of SAMMS, all             program         segments    were not tested
and problems       resolved     before       proceeding        to the next segment.
In some cases,         program    segments        failed     to pass the test       two
or three     times     and problems        that were categorized           as re-
solved    were subjected        to little,          if any, retesting.          In
other    cases,    program     segments       were not tested         at all    before
proceeding      to the next segment.


                                              17
          Al though a M&INS pal i cy axi yy1id? r7i:e uiemorandum stip-
ulated       that      the controll.ed    fur :ctional    iezct must be corn-
pleted       prior       to moving into     the environmental       test 9 these
two tests          in fact    overlapped.        This resulted    in pushing     de-
ficiencies           forward    and the problems       became more complex       and
difficult          to solve.

Volume
--         test

        The volume     test. originally       was scheduled       to follow   the
controlled     functional     test;      however,      the entire   volume  test
was completed      on February        18, 1969, whereas the controlled
functional     test was not completed            until    June 1969.

     The purpose    of the volume       test was to satisfy     DSA that
the programs    and hardware    could handle      a normal  work load
and an overload    within   established      time frames.

         A final   report  on the volume test  pointed  out that                ac-
tual     timings   did not meet objectives,   and recommendations
were     made to   improve  the timing.

Environmental       test

       The primary   objectives      of the environmental             test were
to validate    the total      system and enable    operating            personnel
to become familiar       with    it.

         A midpoint      evaluation     of the environmental         test     showed
that machine        time was about 18 hours & day, whereas                  the re-
vised     objective      was 12 to 14 hours.        In addition,         in his
final     progress     report     on the environmental      test,      the Com-
mander at the prototype             expressed   his concern       about the ca-
pability      to process       the procurement,     requirements,          catalog-
ing 9 and financial           segments   of the system only once a week;
wherea.s the original           plans   called  for running       these seg-
ments daily.

         Although    the Director     of DSA called   for efforts       to re-
solve     these problems,      SAMMS was implemented      prior     to their
resolution.         As late  as Cctober    1970, a review       team set up
by the Office        of the Assistant     Secretary   of Defense       (Comp-
troller)       noted that a large      number of errors    could be at-
tributed       to a lack of system testing.



                                         BW
COMPATIBILITY

      We were informed     that    SAMMSwould have to be compat-
ible to and interface      with    the following major computer sys-
tems.

     1. The Defense Automatic         Addressing       System.

      2. Mechanization     of Contract       Administration       Services
         System.

      3. Mechanization     of Warehouse and Shipping             Procedures
         System.

      4. Defense   Logistics      Services    Center    System.

      DSA stated that compatibility   requirements     between
SAMMSand the first    three systems listed    above were pro-
vided for through Department of Defense military        standards
which prescribed   the method of communication     between the
systems.

       With respect to the fourth       system, compatibility      re-
quirements    are prescribed     in publications    (cataloging    man-
uals) which dictate      how to do business with the Defense
Logistics   Services Center.        DSA has stated that this system
will be replaced at some time in the future           by the Defense
Integrated    Data System and that,       when this new system be-
comes operational,     SAMMSwill have to be redesigned          to
achieve the required      interface    with the system.

MATTERSFOR CONSIDERATION BY THE COMMITTEE

     Since DSA is in the process of another competition     for
the SAMMShardware,     the Committee may wish to discuss with
DSA officials  their   plans for testing  of the system and
what steps will be taken to ensure that test objectives     are
accomplished prior   to implementation   of the system.




                                      19
                                       CHAPTER 4


                           COSTS,   PLANS TO EXTEND,      AND

                    INABILITY     TO MEASURE SYSTEM BENEFITS

           Through   fiscal    year 1971, DSA estimates         that     $28.8 mil-
     lion  will  have been expended      for the rental       oi equipment
     and the development,       testing,   and implementation          of SAMMS.
     No procurement      funds have been expended,      although         in fiscal
     year 1970 $5 million       in funds were appropriated           for pro-
     curement   of equipment a Due to the delay         in implementing
     SAMMS, these funds were reprogrammed          to other      projects       as
     shown below s

                                                               Amount
                                                             (millions)

              Mechanization       of Contract
                Administration         Services
                 Sys tern                                        $2.8
              Other    (for   the purchase      of
                computers       and/or    components
                for ADP systems         at various
                DSA locations)                                    2.2

                   Total                                         $5.
     TOT_4L ESTIMATED      COSTS
                               -- AI’JD SAVINGS
                                           --
             DSA prepared    an analysis      of total    SAMMS costs  and sav-
     ings in #July 1966.       The estimates       in this   analysis  were ex-
     tensively    qualified,     as indicated      by the following    quote
 H   from the analysis       concerning     the validity     of the estimated
     savings,

           “I must stress    again    the dangers     in use of these
           estimates   in any Headquarters       consolidation      of                .
           projected   SAMhIS savings    developed      in this manner.
           C)nly if used in the broadest        ‘order    of magnitude’
           sense should   such estimates      be considered.”

           The 1966 analysis        pointed    out that the estimates       should
..   be used as ball-park        figures    only and that an in-depth        study


                                            20
of SAMMScosts should be undertaken.    We were told that this
study was never made.   As of January 1971,  no further stud-
ies concerning  total SAm4S costs and savings have been pre-
pared.

      The Office     of the Assistant     Secretary     of Defense
(Comptroller)      has requested updated estimates         of total
SAMEIScosts but DSA has not provided any additional                 infor-
mation.     During   the  course of   our  review,    we  were  informed
that a new analysis       was in process and would be completed
in December 1970.        We were subsequently       advised that this
analysis   would not be completed until          late spring of 1971.

INTERIM PLANS TO EXTEND SAIWS
TO OTHER SUPPLY CENTERS

       The Office     of the Assistant    Secretary  of Defense
 (Comptroller)     stipulated   that DSA could extend SAMMSto ad-
ditional     supply centers only if it was able to use the IBM
360/50 computer.         DSA concluded that the work load at the
Defense General Supply Center and Defense Personnel Support
Center was such that the 360/50 could do the job.             An eco-
nomic analysis      of extending    the system to the Defense Gen-
eral Supply Center showed total          estimated  costs of $1.5 mil-
lion offset     by estimated    benefits    of $2.4 million  for a net
savings of about $900,000.

       In reviewing    this analysis,  the Office    of the Assis-
tant   Secretary    of Defense (Comptroller)    concluded,  in part:

       "The analysis     does not adequately      demonstrate       that
       SAMI%, based on prototype       experience    will    result
       in improved functional      performance     at DGSC [Defense
       General Supply Center].        Broad claims of improve-
       ments are made but they are not substantiated                by
       actual achievements      at DCSC extrapolated        to DGSC.
       DSA has made no statement        to the effect     that SAMMS
       extension    is urgently   required    for mission perfor-
       mance at DGSC, Other problems with the analysis
       are that alternatives      to the proposed action are
       neither    defined nor evaluated;      some benefits      that
       are claimed are not acceptable         while others are
       doubtful."

In a memorandum dated January          29, 1971,    the Assistant     Sec-
retary of Defense (Comptroller)          advised    the Director,     DSA,

                                       21
that the eCtiIlcJmic      analysis    did not proliide   a strong   basis
far exporting        S4:\MS to the Defense     General   Supply   Center
and that a decision         would be deferred      until  he had an oppor-
tunity    to review      GAO’s report     on SAM&IS to the House Appro-
priations    Commll ttee a

        DS4 officials     told     us that,     in the fiscal     year 1972
budget 5 they included          about $1.4 million        for extension     of
SAMMS on IBM 360/50 computers               to the Defense     General    Supply
Center     and the Defense Personnel            Support   Center.     DSA’s
reasons     for extension       are to reduce      the lead time essential
for file      conversion,     training      of personnel,     and testing    and
to achieve       benefits   of having       a standard    system at three
locations.

       Since DSA has decided            that   SAWS cannot        be fully    ex-
tended with       this    equipment     and since     plans    are to replace
this   equipment       as soon as the new competition               is completed,
we do not believe           that  it is appropriate         to install      addi-
tional    interim      systems    at the supply       centers     in the absence
of an urgent        need or demonstration          of significant        cost re-
ductions     and improved        supply    responsiveness       to be achieved
at the centers.




                                       22
PLANS TO OBTAIN EQUIPMENT
OF GREATER CAPACITY

       As of January    1, 1971, DSA.was in the process             of pre-
paring    a new request     for proposal      for another    competition
for the SAMMS hardware.          We were told      that   the key mile-
stone dates for future         implementation      of SAMMS would vary
according     to which manufacturer         won the competition.         DSA’s
target    dates for installing       SAMMS are represented        as fol-
lows :

                                                         Milestone      dates
                                                If IBM is          If other    vendor
              Event                             selected              is selected

Release      of request
   for proposal                             Mar.     1971           Mar.    1971
Deadline       for submitting
   proposal                                 June       ”            June     ”
Selection        of vendor                  Oct.       ”            Oct.     ”
Installation           of equipment
   at prototype           and testing       July     1972           Aug.    1973a
Final      approval       of system at
   prototype         installation           Jan. 1973                Feb. 1974
Completion         of installation          No estimate              No estimate
   at DSA supply            centers            available               available

aIf a vendor        other     than IBM     is selected,    additional      time
 will      be required      to modify      the software    which has been
  tailored      to IBM equipment         to that    of another     vendor    and
  train     personnel     in the use       of another   vendor’s      equipment.

INABILITY     TO MEASURE
BENEFITS     OF SAMMS

      Before    undertaking      the      installation      of a new system,
it is essential       to establish          criteria    against   which to mea-
sure results.        Some yardsticks            are needed to be able to tell
if the system      is doing what          it was acquired       to do.

        DSA personnel       expressed     the opinion  that  SAMMS had im-
proved     supply   operations      at DCSC, but they were unable       to
provide     us with    any quantitative       evidence   to show what bene-
fits    had been realized.          Further,   DSA was unable   to identify



                                           23
any criteria  for measurement of the success                        or failure   of
SAmS relative    to the mission of DCSC.

        We compared various      statistics     showing supply perfor-
mance at DCSC before the installation             of SAMMSwith like
statistics    after    SAMMSwas implemented.          Although we noted
significant    differences     in some of these statistics,       we
were advised by DSA personnel            that these differences   could
not be attributed       solely   to SAMMS. Two examples follow.

      Stock     availability           rate

      A report   prepared by the SAMMSprogram director            pointed
      out that the stock availability        rate at DCSC had im-
      proved since the implementation        of SAMMS. The rate of
      stock availability     increased   from 79.2 percent in Au-
      gust 1969 to an average of 82.3 percent          for fiscal     year
      1970.    We were informed,     however, that the increase in
      the stock availability      rate could not be attributed         to
      SAMMSbut was a result       of DSA's increasing     DCSC's stock
      fund by about $20 million.        The additional    money was
      put into the fund in April       1969; but the first     effects
      did not begin to show up until        November 1969, after
      implementation     of SAMMS.

      Rates for         requisitions          filled    on time

      Statistics         for rates of requisitions filled  on time
      for fiscal         years 1969 and 1970 are shown below.

          Requisition                       Percent filled
                                         _--__----                 on time
        issue priority                   Fiscal year              Fiscal year
             group                            --1969                   1970

                    I                            54.4                 31.7
                   II                            70.0                 57.3
          All      groups                        63.7                 55.9

     We could not determine                   if the reduction    in the number
     of requisitions  filled                  on time was attributable    to
     SAMMS.

       As shown by the above examples, it was not possible     to
idcbntify  any qilantitative  improvements or degradation   in
the prototype   operations   as a result  of SAMMS. We believe


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that DSA should establish  standards        for     measuring the bene-
fits in supply performance  to tell    if         the system is doing
what it was acquired to do.

MATTERS FOR CONSIDERATION
BY THE COMMITTEE

       The Committee may wish to have DSA prepare a current
cost-benefit  study for SAMMSprior    to proceeding with an-
other planned competition    of the SAMMShardware.

      The Committee also may wish to discuss DSA's plans to
extend SAMMSto the Defense General Supply Center and the
Defense Personnel Support Center.

      Further, the Committee may wish to discuss with DSA
the development of quantitative    standards  for measuring
improvements in supply performance     at DCSC to tell if
SAMMShas resulted   in improvements.




U.S. GAO Wash.. me.

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