oversight

Potential Problems in Developing the Air Force's Advanced Logistics System

Published by the Government Accountability Office on 1971-02-04.

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

          2       .a.,       .



REPORT TO THE COMMITTEE
ON APPROPRIATIONS
HOUSE OF REPRESENTATIVES
                                      llllillllIl~IIllllllllllll
                                            LM095726


                         .
              P




Potential Problems In
Developing The Air Force’s
   vanced Logistics System a-163o74




BY THE COMPTROLLER   GENERAL
OF THE UNITED STATES


                                 I FEB. 4,197          1
                                   COMPTROLLER     GENERAL     OF THE      UNITED    STATES
                                                 WASHINGTON.    D.C.    20348




     B- 163074




     Dear        Mr.   Chairman:

            In House Report       91-698 your Committee       on Appropriations         di-
     rected   the General    Accounting     Office to review,   in accordance       with
     prior  requests,    the need, requirements,       and implementation       features
     of the Air Force’s      Advanced     Logistics  System,,   The results     of our
     review    are summarized       in the digest.

                 Although    our observations      and conclusions  were discussed                  with
     officials        of the Department      of Defense,  we did not request  formal                 com-
     ments        from the Department.

            As agreed,      copies    of this report     are being sent to the Secretary
     of Defense     and to the Secretary          of the Air Force     for internal  use only.
     We plan to make no further            distribution     of this report    unless copies
     are specifically     requested,      and then we shall make distribution           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              on Appropriations                     --
 ’   House of Representatives
    COMPTROLLER
              GENERAL'S
                      REPORTTO                          POTENTIAL PROBLEMSIN DEVELOPING
    THECOMMITTEEONAPPROPRIATIONS                        THE: AIR FORCE'S ADVANCEDLOGISTICS
    HOUSEOF REPRESENTATIVES                             SYSTEM B-163074


    DIGEST
    ------

I   WHYTHEREVIEWWASMADE
I
           The House Committee on Appropriations         directed   the General Accounting
                                                                         implementation    of
                                                                        ~~~a*-~~'.rZ-~,=~~'~~~-~,.

           GAO was also asked to evaluate (1) the planning of the system, (2) the
           compatibility of this system with other systems, (3) the practicabil-
           ity of implementing the system, (4) the costs and personnel require-
           ments of the systems and (5) the savings to be realized by use of the
           system.
I
I          The compute*r-based logistics       management
                                  _. ---.;.~';"4'-~~~~,,~~~     system
                                                                 ,!.aemr.is intended to improve
                                                        i‘..-".&r-s.
           the ~~lg??ZX%Command                    s -ability     to perform its mission,
I          which it claims has been impaired by the limitations                 in capability
I
           of the older generation automatic data processing equipment now being
           used. The Advanced Logistics          System is estimated to cost about
           $821 million  through 1979. The Air Force estimates that the new sys-
           tem will result in net savings of $144 million                during this period.
           (See p. 22.)
            GAO did not request formal comments from the Department of Defense.
            Observations and conclusions in this report were discussed with offi-
            cials of the Department of Defense and of the Air Force.


    FINDINGSAND CONCLUSIONS
           System pZmzn.ing and eompat<b%lity
           The Air Force identified problems and potential problems in the cur-=
           rent logistics management system and planned to eliminate them in the
           design of the Advanced Logistics System. (See p. 11.)

           The system had not been developed to the point where GAO could deter-
           mine whether it would be compatible with other systems3 but adequate
           provision seemed to have been made for that purpose.     GAO believes
           that compatibility  should receive continued close management atten-
           tion, since the lack of close attention    has been a problem in other
           military  computer systems.   (See p. 10.)

    Tear Sheet
Testing   and impl.ementatCon

The new system is still  in the detail design stage; no computers have
been installed and therefore an evaluation of the system's operation
could not be made. (See P. 6.)

The Air Force plans to acquire all equipment at one time and to in-
stall and test it at the Logistics   Command, five Air Materiel Areas, and
Kelly Air Force Base, Texas> during a g-month period.     In the subsequent
4 months9 complete system testing of the hardware and software would be
performed at all locations  simultaneously.   During that phase the ex-
isting system would continue to carry the full logistics    work load.

For about 1 year the current system and the Advanced Logistics     System
will exist side by side.   The current system will perform the day-to-day
logistics  work load, while the completely installed   Advanced Logistics
System will be running test problems and programs. The Air Force esti-
mates that it will cost about $53 million    to operate the current system
during that year of dual performance.     (See pa 16.)

The plan to acquire all the equipment at one time and to test it over
a short period of time seems risky.  The tight schedule leaves almost
no margin for unforeseen problems.

GAO believes that it would be prudent to follow a conservative          implemen-
tation program 9 such as the one recommended by the Air Force Scientific
Advisory Board that calls for acquiring and installing        hardware and
software at two locations;    completing testing;    checking out and debug-
ging under operational   load at those two locations;      and adjusting the
software design and hardware configuration,       as necessary, before comput-
ers are acquired and installed    at the remaining sites.      (See pp. 12, 16
and 17.)

As of August 1970, the planned implementation of the Advanced Logistics
System had been delayed about 28 months3 to April 1973. (See p. 13.)



There are strong indications   that problems may be encountered in obtain-
ing and implementing adequate computer software.     In August 1970, the
Air Force, to mitigate   such problems 9 amended the request for proposal
to require that certain software be demonstrated by bidders in live
tests before contract award. (See pp* 18 and 19.)
The Air Force also included in the request for proposal a provision,
which it planned to make part of the contract,     that the vendor> in case
of the failure   of its hardware or software to meet agreed-upon perfor-
mance criteria   (i.e., work load requirement),   supply the necessary
equipment to make up the deficiency    at no extra cost.    In GAO's opin-
ion, that provision will help to protect the interests     of the Government
and should be retained in the contract with the successful bidder.         (See
p* 19.)


                                      2
      Costs and savings
      The Advanced Logistics        System has not been separately   programmed and
      funded.    Therefore   it   is difficult  to identify  all costs of the sys-
      tem.    (See p. 22.r

      The Air Force estimates         that the Advanced Logistics         System will    result
      in net savings      of $144.1 million       over a period     of 6 years,    as a result
      of reductions     in manpower,      a reduction      in spare parts procurement,        and
      overall    management improvements.           (See p. 23.)     GAO did not verify       the
      estimate    on manpower reductions;         however,    the methodology    leading    to
      the estimate     appeared    reasonable.        (See p. 26.)




Tear
--- Sheet

                                                3
                              Contents
                                                                    Page

DIGEST                                                                1

CHAPTER

   1       INTRODUCTION                                               4

   2       EVALUATION OF SYSTEMPLANNING AND COMPATI-
           BILITY                                                     8
                Limitations    of current systems                     8
                Compatibility                                         9
                Practicability    of ALS                             11

   3       IMPLEMENTATION AND TESTING                                12
               Implementation                                        12
                    Implementation      delays                       13
               Testing                                               15
                    Live-test   demonstration                        15
                    Operational    testing                           15
               ALS and the Blue Ribbon Defense Panel
                 Report                                              17

   4       SOFTWARE                                                  18

   5       COSTS AND SAVINGS                                         21
              Development costs                                      23
              Operational   costs                                    24
              Estimated savings             and personnel    re-
                 quirements                                          26

APPENDIX

   I       Total     costs   and benefits      by fiscal    years    31

                               ABBREVIATIONS

AILS       Advanced Logistics        System

GAO        General     Accounting    Office
COMPTROLLER
          GENERAL'S
                  REPORTTO                 POTENTIAL PROBLEMSIN DEVELOPING
THECOMMITTEEONAPPROPRIATIONS               THE AIR FORCE'S ADVANCEDLOGISTICS
HOUSEOF REPRESENTATIVES                    SYSTEMB-163074


DIGEST
------

WHYTEEREVIEWWASi'&DE
    The House Committee on Appropriations  directed   the General Accounting
    Office (GAO) to review the need, requirements,    and implementation  of
    the Air Force's Advanced Logistics System.

    GAOwas also asked to evaluate (1) the planning of the system, (2) the
    compatibility of this system with other systems, (3) the practicabil-
    ity of implementing the system, (4) the costs and personnel require-
    ments of the system, and (5) the savings to be realized by use of the
    system.

    The computer-based logistics   management system is intended to improve
    the Air Force Logistics    Command's ability to perform its mission,
    which it claims has been impaired by the limitations     in capability
    of the older generation automatic data processing equipment now being
    used. The Advanced Logistics    System is estimated to cost about
    $821 million  through 1979. The Air Force estimates that the new sys-
    tem will result in net savings of $144 million    during this period.
     (See p. 22.)
    GAO did not request formal comments from the Department of Defense.
    Observations and conclusions in this report were discussed with offi-
    cials of the Department of Defense and of the Air Force.


FINDINGSANDCONCLUSIONS
    System planning and eompatZbiZitg
    The Air Force identified problems and potential problems in the cur-
    rent logistics management system and planned to eliminate  them in the
    design of the Advanced Logistics System. (See p. 11.)

    The system had not been developed to the point where GAO could deter-
    mine whether it would be compatible with other systems, but adequate
    provision seemed to have been made for that purpose.     GAO believes
    that compatibility  should receive continued close management atten-
    tion, since the lack of close attention    has been a problem in other
    military  computer systems.   (See p. 10.)
Testing    and implementation

The new system is still  in the detail design stage; no computers have
been installed and therefore an evaluation of the system's operation
could not be made. (See P- 6.)

The Air Force plans to acquire all equipment at one time and to in-
stall and test it at the Logistics  Command, five Air Materiel Areas, and
Kelly Air Force Base, Texas, during a g-month period.    In the subsequent
4 months, complete system testing of the hardware and software would be
performed at all locations simultaneously.   During that phase th,e ex-
isting system would continue to carry the full logistics   work lozd.

For about 1 year the current system and the Advanced Logistics     System
will exist side by side.   The current system will perform the day-to-day
logistics  work load, while the completely installed    Advanced Logistics
System will be running test problems and programs. The Air Force esti-
mates that it will cost about $53 million    to operate the current system
during that year of dual performance.     (See p. 16..)

The plan to acquire all the equipment at one time and to test it over
a short period of time seems risky.  The tight schedule leaves almost
no margin for unforeseen problems.

GAO believes that it would be prudent to follow a conservative           implemen-
tation program* such as the one recommended by the Air Force Scientific
Advisory Board that calls for acquiring and installing        hardware and
software at two locations;    completing testing;    checking out and debug-
ging under operational   load at those two locations;      and adjusting    the
software design and hardware configuration,       as necessary, before comput-
ers are acquired and installed    at the remaining sites.      {See pp+ 12, 16
and 17.)

As of August 1970, the planned implementation of the Advanced Logistics
System had been delayed about 28 months, to April 1973. (See p. 13.)

Softwaxe

There are strong indications   that problems may be encountered in obtain-
ing and implementing adequate computer software.    In August 1970, the
Air Force, to mitigate   such problems, amended the request for proposal
to require that certain software be demonstrated by bidders in live
tests before contract award. (See pp. 18 and 19.)
The Air Force also included in the request for proposal a provision,
which it planned to make part of the contract,     that the vendor, in case
of the failure  of its hardware or software to meet agreed-upon perfor-
mance criteria   (i.e., work load requirement),   supply the necessary
equipment to make up the deficiency    at no extra cost.    In GAO's opin-
ion, that provision will help to protect the interests     of the Government
and should be retained in the contract with the successful bidder.         (See
P. 19.)
Costs   and savings

The Advanced Logistics        System has not been separately   programmed          and
funded.     Therefore  it   is difficult  to identify  all costs of the           sys-
tem.    (See p. 22.r

The Air Force estimates        that the Advanced Logistics        System will    result
in net savings      of $744.7 million      over a period    of 6 years,    as a result
of reductions     in manpower,     a reduction     in spare parts procurement,        and
overall    management improvements.          (See p. 23.r     GAO did not verify      the
estimate    on manpower reductions;        however,   the methodology    leading    to
the estimate     appeared   reasonable.        (See p. 26.)




                                         3
                            CHAPTERI

                          INTRODUCTION

       The Chairman, Committee on Appropriations,      House of
Representatives,    in a letter   dated September 24, 1969, re-
quested the General Accounting Office to review continually
the Department of Defense's development, installation,           and
operation of automatic data processing systems and to re-
port periodically     the results of these reviews.      The Chair-
man stated that GAO reports,      such as those entitled    "Inquiry
into Practices    Followed by the Department of Defense Compo-
nents in Acquiring and Installing      New Automatic Data Pro-
cessing Equipment for Use in Computerized Management Sys-
tems" (~-163074, March 13, 1968) and "Centralization          of
Supply Management Operations (COSMOS>System in the Depart-
ment of the Army" (B-163074, January 16, 1969); were reports
of the type in which the Committee was interested.          The
Committee's report on the 1970 Department of Defense Appro-
priations   Bill (H. Rept.s91-698) directed GAO to review the
need for, requirement     for, and implementation    features of
specific   systems, including the Air Force's Advanced Logis-
tics System (ALS).

        In making our review of ALS, we were guided by the
Chairman's request that we determine whether the system had
been properly planned and was meeting the general planning
criteria    set forth in our report to the Committee dated
March 13, 1968. We were also asked to evaluate,      in general,
the (1) compatibility     of this system with other systems,
(2) practicability    of implementing the system, (3) costs and
personnel requirements of the system, and (4) savings to be
realized by use of the system.

     Our fieldwork    was conducted at the Air Force Logistics
Command, Wright-Patterson    Air Force Base, Ohio, and was'
completed in September 1970.

      The Air Force is designing ALS (1) to forecast logis-
tics support requirements    in advance of actual needs and to
automatically   provide selected items to the customer, (2)
to provide a high degree of product reliability,     and (3) to
respond effectively    in support of normal Air Force


                                 4
  operations and to various operational  contingencies.    Ac-
cording to the Air Force, many of the concepts which under-
lie ALS are new but their implementation   is now feasible
because of advances made in computer and management sci-
ences.

       The Air Force stated that AI?3 would provide,        through a
unified   data bank, the capability     for the Air Force to make
all operational   and management decisions from a current,
common set of data.    According to the Air Force, ALS will be
designed to provide managers with ready access to all avail-
able data in time to influence      in-process    logistics    actions
and to reduce the need for printouts        of voluminous reports.

      The Air Force indicated that the principal       factors
underlying the decision to initiate*ALS   were:

      -- That the new weapon systems and equipment being in-
         troduced into inventory were more complex and more
         costly than their predecessors and that more prompt
         and effective  controls over them were needed.

      -- That operational units     must respond effectively  to
         any degree of conflict     at any location  in the world.

     --   That superimposed upon the above requirements
          were the ever-present   budgetary constraints within
          which the logistics   system must operate.

        The Air Force officials   believe that the present logis-
tics systems will not achieve the increased overall effec-
tiveness demanded in the future.        They contend that system
improvements are limited Q existing        computers which are
saturated by current work load volume.         The Air Force of-
ficials    believe also that improved management techniques,
coupled with the potentialities       of advanced computers, have
outmoded the present data systems.        They believe further
that the need for increased logistics       flexibility  and respon-
siveness dictates     that the present systems be redesigned on
a total single-system      basis and be modernized with advanced
data processing equipment and new management techniques,,

     The Air Force expects a number of benefits   from full
implementation of ALS. Included in these benefits     are:

                                   5
     --   Improved visibility  and control over centrally pro-
          cured Air Force items that are repaired at base or
          depot levels.

     --   Increased distribution of on-hand assets              to users
          having the greatest need.

     --   Faster   processing   of more current,      accurate     logistics
          data.

     -- Improved requirements       computations resulting          from
        accurate failure  rate      and asset analyses.

     --   Reduction in resupply time and in the quantity               of
          assets required to fill  the supply pipeline.

     -- Improved capability       to allocate      resources.

     --   Reduction in the need to update numerous data files
          for the same data through the use of a single, uni-
          fied data bank.
     -a   Reduction in the number of inconsistencies    now
          caused by updating separate data files    at different
          times.

      ALS will consist of six computer complexes which are
to be located at the Logistics   Command and at five Air Mate-
riel Areas, located at Tinker Air Force Base, Oklahoma;
Hill Air Force Base, Utah; Kelly Air Force Base, Texas;
McClellan Air Force Base, California;   and Robins Air Force
Base, Georgia.   A Nuclear Ordnance Logistics  Support System
computer to be located at Kelly Air Force Base, also is
planned.

      Our review was limited because no vendor had been
selected and no computers had been installed.      Consequently,
we were not able to obtain data from actual operating expe-
rience by the Air Force.    We did, however, identify    poten-
tial problems that may affect   the implementation    and costs
of ALS. (See pp. 18 and 19.)

     The Air Force Scientific Advisory Board Information
Processing Panel reviewed ALS. We reviewed the Panel's

                                    6
rep&t   dated August 20, 1970, and noted that   the conclusions
and recommendations included in it coincided,     in general,
with our observations  and conclusions.




                               7
                               CHAPTER2

       EVALUATIONOF SYSTEMPLANNING AND COMPATIBILITY

      The Air Force seems to have considered its management
needs by identifying     existing and potential problems in the
current logistics    management system and planning to eliminate
them in ALS. It seems also to have made adequate prqvision
for interface    with other systems.   ALS, however, had not
been developed to the point where we could determine whether
it would interface    and be compatible with other systems.

LIMITATIONS OF CURRENTSYSTEMS

      The Logistics    Commandhas stated that it is restricted
in its ability    to improve its logistics   management because
of (1) the limitations     and work load saturation  of the Logis-
tics Command's second-generation      equipment, (2) the diver-
sity of systems currently     in existence,  and (3) the duplica-
tion of data required under the current systems.

     As of Januczry31, 1970, the Logistics Command had 430 different
data systems and 133 computers of 21 different modeZs manufactired by
seven d-if feren t vendors, About 120 of these computers tlere utCZized in
support of the Logistics Command’s logistics   operations.   ALS will re-
place 91 of these computers.


      According to the Logistics    Command, the output of
second-generation    computers often contains conflicting    and
outdated data.     The Command stated that this was caused by
the need to arrange data in sequence before it could be pro-
cessed.   Currently,   obtaining data for one-time management
reports is costly and results     in the production  of volumi-
nous data and thus reduces effectiveness.

      For example, a recent one-time requirement was to ob-
tain data to make a cost evaluation concerning the Vietnami-
zation program.     This was estimated to require about
3,000 hours of programming effort     and 150 hours of computer
time.   The Logistics   Command stated that under ALS no pro-
gramming effort   would have been necessary and only 5 hours
of computer time would have been required.


                                    8
       In June 1966, the Logistics    Commandrecognized what it
considered to be a pending crisis       in that work load demands
would soon exceed the processing capability       of the existing
second-generation   computers.     To resolve this problem on an
interim basis, the Logistics     Commandleased four third-
generation computers.    Logistics    Commandofficials   stated
that without ALS another crisis      undoubtedly would occur in
the future.

      The Logistics    Commandbelieves that the limitations             of-
second-generation     computers place it in the position           of re-
acting to known problem areas rather than predicting               and
taking corrective     action before the problem gets out of con-
trol.    According to the Logistics       Command, the system con-
cepts and requirements       included in ALS can be realized         only
through the use of advanced third-generation             data processing
equipment.     The Logistics     Commandbelieves that this equip-
ment can meet requirements        by (1) providing the rapid re-
sponse necessary to influence        in-process    logistics   actions,
(2) providing a variety       of configurations      to meet the de-
mands of separate locations        and conditions,     (3) allowing two
or more operations to be processed simultaneously,             and
(4) providing direct access to data from remote stations.
We were informed by a leading computer manufacturer              that the
capabilities    of third-generation      computers include all the
foregoing attributes.

COMPATIBILITY

      We noted that the Logistics     Commandhad made consider-
able effort   in its planning and actions to date in identify-
ing ALS compatibility1    requirements   and had established  pro-
cedures for controlling     design changes to other Air Force
systems resulting    from those compatibility   requirements.
Although it appears that ALS can be developed into a


1Compatibility  may be viewed from the standpoint     of concepts
 and mechanics.   In terms of concepts, compatibility     refers
 to one system's being complementary to, or-integrated       with,
 another system.   Mechanics would include such items as pro-
 gramming languages, data elements and codes, and hardware
 configuration.


                                     9
conceptually   and mechanically    compatible Air Force computer
system, we believe that this area should receive continued
close management attention     since it has been a problem in
other military   computer systems.

       ALS is a Logistics   Command internal   system which will
replace many existing     systems.    It must accommodate Depart-
ment of Defense military      standard input and output and must
directly   interface,   and be compatible with, certain areas of
four systems external to the Logistics       Command. These sys-
tems are:

     1. The Standard Base Level Automated Inventory  Control
        System which uses the UNIVAC 1050-11 computer.   This
        is the most widely used base system.

     2. The Base Level Supply System, a punched card system,
        used at smaller bases.

     3. The Accounting and Finance System for Operations      as
        it pertains  to Logistics Commandoperations.

     4. The Defense Logistics   Services   Center   system.

      The base supply systems and the Defense Logistics Ser-
vices Center system are operational.   The Accounting and Fi-
nance System for Operations is not expected to be fully op-
erational  within the Logistics  Commanduntil about February
1971.

      The base supply systems and the Accounting and Finance
System for Operations are Air Force standard systems under
the design cognizance of the Air Force Data System Design
Center.   This Center and the Logistics Commandhave estab-
lished procedures for ensuring the cooperation   and coordina-
tion necessary for interfacing  the ALS and Air Force standard
systems.

      Until April 1970, Logistics CommandALS development ef-
forts had been directed toward interfacing  ALS with the De-
fense Integrated  Data System, which is a new materiel man-
agement system under development by the Defense Logistics
Services Center at Battle Creek, Michigan.   In April 1970,
the Department of Defense approved an extension of the


                                10
Defense Integrated    Data System implementation    to May 1973.
ALS is now being designed to interface      with the current De-
fense Logistics    Services Center system and will later be re-
designed to interface     with the new system when it becomes
operational.

PRACTICABILITY OF ALS

      The initial   concept for ALS was developed by Logistics
Commandpersonnel late in 1966 and early in 1967. During
the ALS concept development phase, Logistics     Commandperson-
nel visited    computer vendors and other firms that were de-
signing and implementing major third-generation     systems.
These visits    were made to ascertain whether the Logistics
Commandss conceptual approach was practicable.

      The Logistics   Command also used the services of sev-
eral commercial consulting     firms in developing ALS. Through
June 30, 1970, about $800,000 was spent for such services.
In September 1967, the Logistics       Commandhired COMRESS,Inc.,
to assist in performing computer simulations          of the concepts
envisioned for ALS. The RAND Corporation,         which also has
been retained on a consulting      basis, has provided the Logis-
tics Commandwith general guidance on the design of ALS and
has made specific    design studies.     In 1968, the Logistics
Commandcontracted with Computer Sciences Corporation             to ob-
tain assistance in confirming      its approach in such areas as
system and equipment specifications,       software,l    operational
concepts, functional    design, and computer-selection       tech-
niques.
      The Air Force has considered most of the system weak-
nesses discussed in prior GAO and Air Force audit reports
in the design of ALS as being part of the Air Force's effort
to ensure that known deficiencies    in the current systems are
not carried over to ALS. The Air Force Auditor General is
evaluating ALS on a continuing    basis and is providing  assis-
tance to ALS development personnel to inform them of system
problems.

1
 Software in ALS consists of those computer programs, rou-
  tines, compilers, assemblies, and narrators   which control
 the computer complex and provide the interface    between the
 user and the equipment.
                                 C?UPIER3

                     IMPLFZENTATION AND TESTING

       The Logistics    Command plans to make a series of exten-
sive tests prior to actual acquisition           of ALS. These live-
test demonstrations      will provide information      on which to
base key decisions      that might affect     the timing and cost of
implementation.      It appears that adequate plans for testing
have been made. Program-logic        testing,     as well as software
testing,   are planned before delivery        of the first  ALS com-
puter.

       Once these live-test       demonstrations    have been completed,
the Air Force plan calls for acquisition            of the equipment
and its installation      at the Logistics       Command, five Air Ma-
teriel   Areas, and Kelly Air Force Base during a g-month
period of operational       testing   of the complete system.      The
Air Force Scientific      Advisory Board recommends acquisition
and pilot   testing  of hardware and software at two locations
before equipment is acquired for all locations.

IMPLEMENTATION

     The Air Force issued a request for proposal in                 October
1969, which proposal was subsequently   amended. Bids                are due
in April 1971.   It is expected that, after a 4-month                period
for evaluation,  a contract  will be awarded in August               1971,

       The first       delivery     of an ALS computer, which will be to
the Logistics        Command, is scheduled for March 1972. The
Logistics      Command stated that the first            key-decision   point
would be reached during the testing                at the Logistics    Com-
mand and that the date for delivery                of the ALS computer to
the first,      or pilot,       Air Materiel     Area would be decided on
the basis of the testing             at the Logistics     Command. The im-
plementation        milestones      (see p. 13) indicate      that the com-
puter is planned for installation                at the pilot    site 5 months
after    installation       at the Logistics       Command. The Logistics
Command and the pilot            Air Materiel     Area plan to conduct in-
dividual     and dual production          tests.




                                     12
      The Logistics      Command plans to recommend the delivery
dates for the remaining ALS computers on the basis of the
checking out and debugging of the basic- ALS hardware and
software at the pilot        site and at the Logistics    Command.
The implementation       milestones  indicate  that installation    of
the computers at the second and third         sites and at the
fourth and fifth      sites are now planned f-or 3 and 4 months,
respectively,    after the computer is installed       at the pilot
site.

Implementation             delays

      ALS was programmed for phased implementation      over the
4-l/2  to 5 ye&s-following      the issuance of the request for
proposal in October 1969. A comparison of the originally
planned implementation     dates with the most recently   revised
dates follows.

                     Air     Force   Implementation        Estimates   for    ALS

           Dates estimates                      March 1,          May 26,       April 30,      August 7,
               were made                          1968             1969           1970           1970

ALS key milestones:
    Release of request for proposal               2-17-69         7-16-69       10-27-69s      10-27-69
    Announcement of selected vendor               8-14-69         3- l-70       12-24-70        8-24-71
    Installation      of computers:
          At Logistic      Command                2-28-70         9-   l-70      7- l-71         3-   2-72
          At pilot    site                        g-17-70         2-   1-71     11-24-71         8-   2-72
          At second and third sites              12-31-70         5-   l-71      2-24-72       ll-    2-72
          At fourth     and fifth   sites        12-31-70         6-   1-71      3-24-72       12-    2-72
    Implementation       of system:
           First-step    testing                 12-31-70         7- 1-71           7-24-72     4- 2-73
           Second-step      testing              12-31-71         7- l-72           7-24-73     4- 2-74
           Third-step     testing                12-31-72         7- l-73           7-24-74     4- 2-75

aActual   date.


     As shown above, there has been an overall   delay of
over 2 years in the planned implementation  dates.    Accord-
ing to the Logistics Command, this delay has been caused by:

          1. Additional   time needed for                       the development               of equip-
             ment specifications.




                                                      13
2. Late issuance   of the request   for   proposal.

3. Additional  time allowed for vendor evaluation           of,
   and response to, the request.

4. Additional time allowed for testing,        converting         the
   old system to the new, and training.




                           14
TESTING

Live-test     demonstration

        The Air Force has planned live-test          demonstrations    by
interested     bidders prior to the final        selection   of a vendor,
The request for proposal requires that each bidder demon-
strate,    in a live-test    environment,     the capabilities      of its
proposed system using only hardware and software components
proposed for the total       system.   The test is to be a timed
demonstration      and is to contain system performance specifica-
tions embodied in four specially         designed problems which are
representative      of the total work load requirements          of AU.
This test will provide a basis for determining whether the
proposed system will meet the work load requirements                speci-
fied in the request for proposal.           -For a bidder to be eli-
gible for further      consideration,    its system must satisfac-
torily    pass the test.

Operational   Testing

       The Logistics  Comand has stated that ALS cannot be pilot  tested
or implemented at only one site, because it would not be iiz an environ-
ment representative    of actua2 operating conditions. The portion of ALS
Zocated at each of six sites is interdependent on the portions of the
system at aZZ the other sites, and therefore a meaningful test should
inehde    the system's operating  at all sick sites.

      In its report on ALS, the Air Force Scientific    Advisory
Board Information    Processing Panel did not agree that the
test should include the system's operating at all six sites.
Rather, the Panel concluded that the hardware and software
should be pilot    tested at two sites before they are acquired
and gradually   installed   at other sites.

      The ALS master plan envisages the conversion from the
present automated logistics    management    system    to ALS taking
place in two major steps.     The first   step, beginning 6 months
after the award of contract,    and estimated to last about
I year, consists of installing     and testing      of hardware and
software at the Logistics    Command, five Air Materiel        Areas,
and Kelly Air Force Base. During this first           step of testing,
the existing   system will continue to carry the full logistics
work load.    For 1 year the current system and ALS will exist
side-by-side;   the current system will be carrying out the
day-to-day logistics       work load while the ALS, although com-
pletely   installed,    will be running only testing problems
and programs.       The Air Force estimates that it will cost
about $53 million      in phase out costs for the current system
during that year of dual performance.

      The first     step of testing  is estimated to incorporate
about 60 percent of the total ALS program logic and about
75 percent of the first      year's ALS work load.    Successful
completion of the first       step of testing would result in the
simultaneous and instantaneous       cutover of ALS at all loca-
tions --at which point in time the ALS would become the sole
operational     logistics  system.   The Logistics Commandpre-
sently plans this for April 1973. In the second step, ALS
will take on the remaining programs and processes gradually
over a Z-year period.

      The report dated August 20, 1970, of the Air Force
Scientific  Advisory Board Information  Processing Panel on
its review of the Advanced Logistics   System stated, in part,
that:

           '@Webelieve that the nominal ALS schedules
     are very stringent.   Our concern about the ALS
     phasing, however, is more fundamental than the
     length of the schedules:   the content of the ALS
     Testing Program appears to the Panel to have been
     planned on the assumption that the selected ALS
     design will perform as desired.   *** The evidence
     accumulated for the past fifteen  years of computer
     systems development is too well known and over-
     whelmingly one-sided against such an expectation.

            "It would be more realistic     to assume that
     the LTD [live-test    demonstration]     cannot be a con-
     clusive test, and that the initial         system design
     will require considerable      refinement,     and possibly
     some modifications,    which will become known only
     when the system is subjected to actual,          full load
     conditions.     We must emphasize that we are not
     talking about checkout and debugging, but a=st-
     ments in the hardware ** and software to make the
     system meet the workload, availability,          and other
     performance criteria    stipulated    by the RFP [re-
     quest for proposal]."

                                 16
      The Air Force Scientific           Advisory Board recommended a
modified ALS testing program schedule, which we endorse, of
 (1) acquisition      and installation      of hardware and software
at two sites    --the   Logistics     Command   and a pilot Air Materiel
Area--as fast as possible,           (2) completion of testing,     check-
ing *out and debugging under operational             load at those two
sites and adjustment,        as necessary, of the software design
and equipment configuration,            to be followed by (3) acquisi-
tion and installation        of the hardware configuration        as de-
termined by the testing         in step (2) at the remaining Air
Materiel   Areas and at Kelly Air Force Base and continuation
of ALS testing program at those sites.

      Air Force officials     believe that the modified testing
schedule recommended by the Air Force Scientific        Advisory
Board is worthwhile     and is similar.to   their own plan,    The
Air Force, intends to acquire all the systems needed at one
time, rather than delay acquisition       of five systems until
the first  two have been tested and proven, as the Board sug-
gested.

ALS AND THE BLUE RIBBON DEFEMSEPANEL REPORT

      The report to the President and to the Secretary of De-
fense on the Department of Defense by the Blue Ribbon De-
fense Panel, chaired by Mr. G.W, Fitzhugh, recommended,
among other things,   that a Logistics   Commandat the Office
of Secretary of Defense level be directed to develop, under
the policy guidance of the Assistant     Secretary of Defense
(Telecommunications),    an automatic data processing logistics
system to encompass supply distribution       elements that can
be shared among the military    services and that all develop-
ment and procurement activity    toward separate automatic data
processing logistics    systems not essential    to support im-
pending operations be suspended.

      We discussed this matter with Air Force and Office of
the Secretary of Defense officials      and inquired whether they
felt that ALS was one of the automatic data processing logis-
tics systems that should be stopped.       It was their opinion
that ALS would not be affected     by the Panel's recommendation
(1) because ALS was needed to support impending operations
and (2) because, before a single automatic data processing
system could be developed, the logistics      organizations  of
the military   departments would have to be changed,

                                    17
                                CHAPTER4

                                 SOFTWARE

      There are strong indications that problems may be en-
countered in obtaining and implementing adequate computer
software,

       Conferences were held with vendor representatives         in
April and June 1969 to discuss their questions on software
requirements.      During these conferences one vendor indicated
that the software requirements might be beyond the state of
the art.     Another said that, even if the hardware could be
assembled, there was a serious question on the availability
of adequate software,        Still  another vendor stated that one
part of the software was not available        off the shelf, would
take at least 1 year to design, and would be costly.           This
vendor asked for a change in the proposal to extend to
1 year after the contract award the delivery         date for this
part of the software.        The request for proposal originally
specified    delivery   of this part of the software about
2 months after the contract        award. Another vendor stated
that the ALS software requirements were a phenomenal step
forward in software design but nevertheless        were feasible.

      The ALS specifications           required that the vendors pro-
pose a single,       totally     integrated   processing system in which
the functions      accomplished at each site, with one exception,
would be identical          and that the systems proposed consist of
components --both hardware and software--selected             from off-
the-shelf     systems.       Regarding the apparent inconsistency       be-
tween the vendor response indicated above and the off-the-
shelf requirements          in the AL'S specifications,   the Logistics
Command stated that it was not intended that "off the shelf"
be interpreted       literally.       Some software development was ex-
pected.     The Logistics        Command intended that adequate soft-
ware be available         within a reasonable time after the award
of the contract and that adequate software be made available
in sufficient      time to avoid serious delays in proceeding
with the implementation           of ALS.

     Although the Air Force has stated that adequate soft-
ware could be made available, we believe that the matter of
adequate software may present serious problems,  We believe

                                   18
also that our view is -strengthened by the recent experience
of a major airline   company  in its procurement of advanced
computer equipment.     This company canceled a $56 million
contract with a major vendor for a large-scale,     multifunc-
tion data processing system in the wake of recurrent       delays,
principally  in software implementation    and data security
provisions.

      We believe that the matter of adequate software poses
a potential    problem.    During discussions with the Logistics
Command, we raised a question concerning the reasonableness
of delivering    the first    ALS computer prior to fully testing
the vendor software.       Initially,   the Logistics     Command
planned that the vendor-developed         software would be avail-
able for testing at the vendor's facility           2 months after the
contract award. When the request for proposal was released,
the vendor's software delivery        date was changed to 6 months
after the contract award. As a result,           the availability  of
this software would coincide with the first           installation of
computer equipment at the Logistics         Command. Consequently,
the first   full testing    of the vendor's software was sched-
uled to be done at that site.

       After our inquiry the Air Force advised the competing
vendors of a proposed revision     in the vendor"s software de-
livery date to be incorporated     in the request for proposal.
This revision would require that the vendores software be
demonstrated before the contract       is awarded.  This demon-
stration    would become an important factor    in selecting a
vendor for the contract    award,    In August 1970, the request
for proposal was amended to include this requirement.

      We believe that the adequacy of the ALS software will
be a critical     factor in the overall success of the system.
The Air Force's action to advance the availability     and dem-
onstration    of the vendor's software prior to the award of
the contract    is desirable.

      An August 1970 amendment to the request for proposal,
which the Air Force plans to make part of the contract,
provided that,   in the case of failure  of vendor's hardware
or software to meet agreed-upon criteria    of performance
(work load requirement),   the vendor supply, at no extra
cost, the necessary equipment to make up the deficiency.


                                 19
We believe that this provision will help to protect the in-
terests  of the Government and should be included in the
contract with the successful bidder,




                            20
                            CHAPTER5

                       COSTSAND SAVINGS

      ALS has not been separately programmed and funded
since its inception    in fiscal  year 1967, and therefore   it
is difficult  to identify    all costs of the project.    Past
funding for ALS has been largely from operation and mainte-
nance appropriations.

      The estimated costs to develop, implement, and operate
ALS were furnished to us by the Air Force in a cost-benefit
study, dated September 30, 1970, and supplemented
December 3, 1970. This study included data on the number
of personnel required to operate A&S and on the expected
savings.

       The Air Force cost-benefit    study compared the cost of
operating ALS with the cost of continuing      the present sys-
tems augmented by additional      computers and personnel at ap-
propriate   points in time.    Costs shown in the study were
based on current prices and were not adjusted for antici-
pated price-level    changes.

      The cost study showed that, in a project of the magni-
tude of AILS, which has a lengthy period of implementation,
there would be changes which would affect        data in the study
and that revisions   to the study would be necessary.        A sum-
mary of the cost-study    results,   which covers fiscal    years
1967-79, is presented below.       (Only a limited verification
of this cost data was made.)




                                21
             Estimated ALS Cost,         Current System Cost, and
                  ALS Savings for        Fiscal Years 1967-79 (note a>

                                                                   Amount

                                                                 (millions)

Cost to implement ALS:
    Development cost                                                     $125.9
    Operational    cost                                        $571.1
    Current-system     cost during              phaseout        124.4

              Total     operational     cost                              695.5

              Total     ALS cost                                          821.4b

Less cost          to remain on the current         system
     (note    c>                                                          708.5b

              Net cost to implement ALS                                   112.9

Estimated savings to result from ALS:
     Elimination  of 3,007 functional   per-
        sonnel spaces                                           125.1
     Reduction in spare-parts   procurements                     91.9
     Overall management improvement                              40.0

              Total     estimated     ALS savings                         257.0

              Net savings       to be realized      from implement-
                ing ALS                                                  $144.1

aIncludes          only first    8 months of F'Y 1979.
b
    Includes about $425 million     of current-system  costs, con-
    sisting   primarily of current-system    personnel costs which
    will be incurred whether the current system is continued
    or AL'S is implemented.

'Based on augmenting current system to absorb estimated
  6.2-percent work load increase each year.
Note:        A time-phased       schedule by fiscal        year is included
             as app. I.


                                           22
DEVELOPMENTCOSTS

      A detailed summary of the estimated   development costs
included in the cost-benefit   study for fiscal   years 1967-75
is as follows:

                                                               Amount
                                                             (millions)

        Automatic data processing      personnel               $ 88.4
        Mission personnel                                        19.4
        Training   (note a>                                       9.6
        Automatic data processing      equipment                  1.9
        Travel                                                    2.5
        Facilities                                                2.3
        Contract services     (note b)                            1.2
        Communications                                            0.5
        Miscellaneous    support                                  0.3

            Total   estimated         development    costs     $126.1'

aIncludes     $0.7 million      for     facilities    and equipment.
b
    Includes about $0.8 million    through June 30, 1970, for
    contracts  with COMPRESS, Inc., Computer Sciences Corpora-
    tion,   Computer Command and Control Company, and RAND Cpr-
    poration.

'Due to rounding,      this amount is $200,000 more than that
  shown in the Air     Force study and on p. 22.

      The Air Force stated that about $92 million         of the
above development costs would be incurred,        regardless    of
ALS. For example, the total     estimated    development costs
include about $69 million   for automatic     data processing
personnel who would normally be working on the current            sys-
tem, to improve and maintain it, but who are now working on
the development of ALS. The Logistics        Command believed
that it could maintain the current      system without     serious
problems until  ALS was implemented,     even though the planned
personnel use will have some adverse effect        on the current
system.



                                         23
     The Air Force estimate of actual costs expended as of
June 30, 1970, in developing ALS is as follows:

                                                                Amount
                                                              (millions)

     Personnel                                                   $29.4
     Travel                                                        0.8
     Computer usage                                                0.5
     Contract    services                                          0.8
     Facilities,     printing,       and other      costs          1.6

            Total estimated      actual      develop-
              ment costs                                         $33.1

OPERATIONAL COSTS

       The Air Force estimate         of ALS operating   costs was
based on a 7-year system life            covering the period March 1,
1972, to February 28, 1979,           and on implementation    for the
first   phase in April 1973,          A summary of the Air Force es-
timated ALS operating    costs        for the 7-year system life     is
as follows:
                                                                      Amount
                                                                    (millions)
Automatic data processing         personnel                           $275.0
Automatic data processing         equipment        rental               271.9
Automatic data processing         equipment        supplies               16.6
Communications                                                             4.6
Travel                                                                     2.2
Facilities                                                                 0.4
Contract   services                                                        0.2
Miscellaneous     support                                                  0.2
Phaseout cost of current         system (note        a>                 124.4
    Total    estimated   operating         costs                      $695.5

aCost of operating     those computers to be replaced by ALS
 during the period March 2, 1972, to June 30, 1975. About
 $53 million  pertains     to the period of about 1 year during
 which ALS computers will be installed       but will not be
 processing  any current-system     work load.



                                      24
      The estimated automatic     data processing   personnel cost
of $275 million    includes $26,6 million    for the cost of 425
personnel estimated by the Logistics       Command to be needed
for operating   the AL'S computers.    The balance of this cost,
or $248.4 million,     represents  the cost of programmers,     sys-
tem analysts,   and others who will be required      for operating
and maintaining    ALS during fiscal   years 1973-79.

      The automatic   data processing   equipment rental   cost of
$271.9 million   was estimated by the Air Force.      It used sys-
tem and computer evaluation     and review technique    simulations,
which technique is a special-purpose      computer program for
evaluating   computer hardware,

      According to the Air Force, the equipment rental      cost
was used in computing the estimated     operating costs for the
ALS equipment because the best method of financing      cannot
be determined until   the bidder proposals are received     in
April 1971. Bidders will furnish     data on the cost of rent-
ing the equipment versus the cost of purchasing     the equip-
ment.   The Air Force will have the option of either     renting
or purchasing the equipment proposed by the bidders,

      Our review revealed that the rental prices used for
the computer configuration     included in the simulations   were
based on the prices shown in the latest       available General
Services Administration     supply schedule.    We did not review
the validity   of the configuration    or other data used in the
simulation,




                                 25
ESTIMATEESAVINGSAND PERSONNELREQUIREMENTS

       As shown in the Air Force cost study, the cost to de-
velop and operate the ALS will exceed the cost to operate an
augmented current     system over the same period by $112.9 mil-
lion.    The additional    cost of $112.9 million to acquire ALS
is expected by the Air Force to be offset by about $257 mil-
lion in savings (see p* 221, which will result      in net savings
of $144.1 million.      According to the Air Force, these sav-
ings consist    of net budget savings of $104.1 million     and in-
direct   savings of $40 million    from improved operation.

      Potential    personnel reductions    shown in the Air Force
cost study were based on a percentage of the Logistics          Com-
mand's 1968 mission manpower authorization         levels.   Accord-
ing to the Air Force, personnel reductions         subsequent to
1968 were not considered      in the cost study.      The Air Force
noted that reductions      of 1968 manpower levels may result      in
a reduction     in savings actually   achieved.

          The Air Force estimates    that,with   the implementation
of ALS,4,330 authorized        spaces will be eliminated       and 1,323
new remote-operator      positions     for new functions   will be
added, which will result        in a net reduction     of 3,007 func-
 tional     personnel spaces at savings of $125.1 million.          The
Government's contribution         to civilian  employee benefitsze
not     included.

      The Air Force determined impact of the personnel reduc-
tion by comparing the current     logistics    system with that pro-
posed under MS.     Although we did not verify       the validity  of
the estimated  personnel reduction,       the methodology followed
by the Air Force in arriving    at this estimate appeared
reasonable,

      Although the study supporting   the estimated reduction
was made late in 1968, we were advised by the Comptroller
of the Logistics    Command that the base period was consid-
ered still   valid.   We were told by the Commanding General
of the Logistics    Command that he was firmly  committed to
the personnel reduction.

     The estimated reduction  of $91.9 million in the pro-
curement of spare parts under ALS is based on a l-percent


                                   26
reduction in the 1975 budget and a 3-percent reduction in
the annual budget request for spare parts during the period
1976-79. According to the Logistics        Command, the 3-percent
reduction in funding requirements represents the budgetary
 impact of more timely and accurate data on such areas as
available  inventory,   usage information,     maintenance factors,
shop-flow times,    and improved failure    data.    Although the
3-percent reduction in spare-parts       requirements is based on
judgment, it appears reasonable to expect some reduction          in
material requirements    if the stated objectives       of AU are
achieved,

       The estimated savings of $40 million         for overall man-
agement improvement represents the Air Force estimate of re-
duced inventory requirements over the life of AL!Z due to im-
proved responsiveness,       control,  accountability,     overhaul
projection,    and redistribution     capability.      These factors
cannot be accurately      appraised as budget reductions        in ad-
vance of AU implementation.




                                  27
APPENDIX
---




   29
                        TOTAT.,COSTSAND BENEFITS BY FISCAL YEARS



                                                Before           1971            1972
                  Cost category                  1971          (note a>        (note b)       1973      1974
                                                                            (000 omitted)
Total ALS one-time             and develop-
  ment costs                                    $33,119        $20,976         $24,851      $ 24,270 $ 12,648
Total     ALS operations         costs                    82          224        2,002        31,864    64,540
Total costs of operations of cur-
  rent systems during phaseout                        -        [64,262]         19,436        51,080    31,196
        Total     new system cost                33,201         21,200          46,289      107,214    108,384
Total operations          costs of aug-
  mented current          systems                20,765         14,728          40,806        87,289    89,672
        Net cost of new system                   12,436             6,472        5,483        19,925    18,712
Total     tangible      benefits                 -              -                                       10,038
Net tangible         benefits                   -12,436        -6,472           -5,483      -19,925    -8,674
Management Improvement (note d>                                 -               -
Overall         net benefits                   -$12,436
                                                  F            S-6,472
                                                                -              S-5,483
                                                                                ___         $-19,925 $ -8,674

aFiscal year 1971 total costs of operations of current system during phaseout
 ($64,262,000) is not included in the total cost of ALS, as it accrues before
 the '/-year economic life (May 1, 1972, to Feb. 28, 1979). If it were included,
 an identical  amount would need to be added to the fiscal year 1971 total op-
 erations costs of augmented current systems.

bIncludes last 4 months of fiscal year 1972 only for total costs of current sys-
 tems during phaseout and total operations costs of augmented current systems.

'Includes         only first     8 months of fiscal       year 1979.
d Includes reduction of spare-parts inventory over the ALS life.  The $40 million
 was not time phased by the Air Force and is included under fiscal year 1979.
                                                                                          APPENDIXI




                                                                      1979
  1975                1976
                      ___               -1977       1978
                                                    ___            (note
                                                                    -     c)    Total
                                                                                -
                                            (000 omitted)

$ 10,041                                                                       $125,905
  76,964         $107,345              $106,566    $108,575        $72,956      571,118

  22,731                                                                        124,443
 109,736              107,345           106,566     108,575         72,956      821,466

  94,087              98,833             96,149      98,489         67,748      708,566
  15,649                8,512            10,417      10,086          5,208      112,900
  30,389               47,640            48,347      48,347         32,214      216,975
  14,740               39,128            37,930      38,261         27,006      104,075
                                                                    40,000       40,000
$ 14,740         $ 39,128              $--37,930   $ 38,261        $67,006     $144,075




         U.S.   GAO    Weah.,   D.C.

                                                              31