:, United States General Accounting Office Report to Congressional Requesters c March 1990 INFORMATION TECHNOLOGY DOD’s Federal Logistics Data on Compact Disc Program i United States GAO General Accounting Office Washington, D.C. 20548 National Security aud International Affairs Division B-236879 March 15,199O The Honorable Constance Morella House of Representatives The Honorable Bill Green House of Representatives In response to your joint request, we have reviewed the Department of Defense (DOD) Federal Logistics Data on Compact Disc Program. DOD ini- tiated the program to publish the government’s catalog of logistics infor- mation using a relatively new technology known as Compact Disc Read Only Memory,’ instead of the current media, microfiche. The program was developed and managed by the Defense Logistics Agency and its Defense Logistics Services Center. You expressed concern that a DOD compact disc product would compete directly with Information Industry Association members’ products and that DOD’S plans to procure a compact disc-based catalog was not in con- sonance with laws favoring the use of existing commercial products over the development of new ones by the government. This report addresses (1) the appropriateness of the Services Center’s development of a prototype compact disc system; (2) the Services Center’s management of the prototype project; (3) the Defense Logistics Agency’s plans to procure the software, hardware, and/or services needed to provide a compact disc system and the potential for commer- cial involvement in the procurement; and (4) the impact of the Agency’s decision to include business or otherwise sensitive data in the product on its acquisition approach. The Services Cent,er’s initiation of the prototype development project Results in Brief was appropriate. Although DOD is required under its acquisition statutes to acquire existing commercial products to the maximum extent practi- cable rather than develop new ones, a DOD organization must define its needs before acquiring any product. The Services Center initiated the prototype project to define its needs (see app. 11). The Services Center used complex contractual arrangements in manag- ing the prototype project. Some of these arrangements did not comply ‘Readonly memorymeant t bedata are stampedon the disc and cannot be erasedor altered. Page 1 GAO/NSIAD90-101 Information Technology B-236979 This report was prepared under the direction of Donna M. Heivilin, Director, Logistics Issues (275-8412). Other major contributors are listed in appendix IV. Frank C. Conahan Assistant Comptroller General Page 3 GAO/NSL4D-90.101 Information Technology contents Abbreviations CD-ROM Compact Disc Read Only Memory DLA Defense Logistics Agency DOD Department of Defense GAO General Accounting Office Page 6 GAO/NSL4LH@lOl Information Technology Appendix1 Introduction specific needs as well as provide additional data not included in the sys- tem. For example, the Navy data identify items that require special han- dling or have a security classification. After DOD initiated the program, the Information Industry Association, representing some of the commercial CD-ROMvendors, raised concerns about DOD developing a product that would compete directly with their products. The Association believes WD'S plan to procure a CD-ROMbased catalog is not in consonance with laws favoring the use of existing com- mercial products rather than the development of new ones. CD-ROMtechnology is used to provide easy and fast retrieval of large Technology Used to amounts of catalog information to DOD users. Since each compact disc Implement the has a capacity of over 640 megabytes, one disc can hold as much infor- Program mation as about 200,000 single-spaced type-written pages or 2,700 microfiche cards. The data are easily retrieved from the disc using a personal computer connected to a compact disc drive. Figure I.1 shows the equipment (personal computer and disc drive) used to access the data on a compact disc. Figure 1.1: How a Compact Disc Product Is Use d Data are retrieved from a compact disc like music is retrieved from a phonograph record. The disc spins on a turntable inside the disc drive. However, instead of using a needle to read the disc, the disc drive uses a page7 GAO/NSIALMO-101Information Technology Appendix I Introduction Figure 1.2: How a Compact Disc Product Is Made Data Preparation Phase 4 Data Processing ’ __, Keylng + Organlring t FormattIng 7, Disc Manufacture Phase Representatives Constance Morella and Bill Green asked us to respond Objectives, Scope,and to numerous questions on DOD’S Federal Logistics Data on Compact Disc Methodology Program. After discussions with their staffs, we grouped these ques- tions into five areas: m the appropriateness of the Defense Logistics Services Center’s develop- ment of a prototype CD-ROM system to disseminate its catalog information: Page 9 GAO/NSIAD90-101 Information Technology Appendix1 Introduction Secretary of Defense and analysts at the Services Center and reviewed DLA's acquisition justifications. We also obtained information about the quantity of sensitive data to be included in the product, DOD's plans to prevent unauthorized disclosure of the data, and DLA'S justification for its acquisition strategy. We performed most of our work from November 1988 through August 1989 at the following locations in accordance with generally accepted government auditing standards: l Office of the Secretary of Defense, Washington, D.C.; l Defense Logistics Agency, Alexandria, Virginia; . Defense Logistics Services Center, Battle Creek, Michigan; . Defense Applied Information Technology Center, Alexandria, Virginia; 0 Advanced Systems Development, Inc., Alexandria, Virginia; l Defense Supply Service, Washington, D.C.; 9 Naval Supply Systems Command, Washington, D.C.; l Navy Publishing and Printing Service offices, Mechanicsburg, Penn- sylvania, and Washington, D.C.; . Reference Technology Incorporated, Boulder, Colorado; l Library of Congress, Washington, D.C.; l CD-ROM technical seminar, sponsored by Hewlett-Packard and Phillips- DuPont Optical, held in Crystal City, Virginia; . Special Interest Group on CDKOM Applications and Technology seminar, sponsored by the 1J.S.Geological Survey, Reston, Virginia; and l Information Industry Association, Washington, D.C. page11 - Appendix Il The Prototype Development Project from the specifications, and, therefore, considered them to be nonresponsive. The Services Center found no basis for determining whether the third bidder’s price was reasonable. In July 1987, the Services Center returned to its original plan to produce a prototype of a CD-ROMsystem. The prototype included information taken from the Federal Catalog System, and the Services Center worked with the services to also include catalog data they maintained sepa- rately. According to the Services Center, the prototype project was com- pleted in January 1989. The Services Center began prototype development work in July 1987 Approach - _Used - to and distributed the first test product to 67 test sites by February 1988. L)evelop the ~‘rototype The test product, consisted of two compact discs containing Federal Cat- alog System data plus supplemental data provided by the Navy, and the software needed to retrieve and display the data. About every 3 months the Services Center distributed an updated prototype product to an expanding number of test sites that reached 250 by July 1988. Each updated disc included more data files and/or capabilities. For instance, Air Force-unique data files were added to the May 1988 product and Army-unique data files were included on the July 1988 product. The Services Center worked with the services throughout the develop- ment phase. For instance, prior to production of the July 1988 product, the Services Center and the Army worked together to develop data pre- sentation, manipulation, and retrieval capabilities for the Army field user. Similarly, the Services Center worked with the Navy and Air Force to ensure the prototype product satisfied their individual requirements. The Services Center also developed and incorporated in the prototype product enhancements that were often based on suggestions and other feedback from test site users. Table II.1 summarizes the information on when data files were added, system capability was enhanced, and the number of test sites. Page 13 GAO/NSIAD-SO-101 Information Technology Appendix II The Prototype Development Project Even though the Services Center’s decision to develop a prototype was Contractual appropriate, the contractual arrangements used to carry out the devel- Arrangements opment work were complex and not always appropriate. The Services Center obtained contractor support through the Defense Applied Infor- mation Technology Center and the Navy Publishing and Printing Ser- vice. During the life of the project, these organizations, in turn, entered into a series of complex contractual arrangements on the Services Center’s behalf. Figure II. 1 describes the key organizations involved and the primary contractual arrangements used. Page 15 GAO/NSIAD-g&101 Information Tedmology Appendix II The Prototype Development Project Network agreement This agreement enabled the Services Center to continue uninterrupted develop- ment work wrth Reference Technology ‘The Lrbrary of Congress entered Into Federal Library and lnformatron Network agreements with sev- eral contractors under a delegatron of procurement authonty from the General Serwces Admmlstratro” Federal libraries and mformatlon centers could order rnformatron retrreval servrces through InformatIon Network agreements by rssulng purchase or dellvery orders against the agreements ’ Tresp Assocrates, Inc IS a contractor at the Technology Center Its responsib!lltres were to proude mamtenance and technrcal support servwes The Technology Center used the Tresp contract to obtan prototype development support from Reference Technology when the Advanced Systems’ contract with Reference Technology ended I” March 1988 F Control Data Corporatlo” also operated a laboratory under contract to the Technology Center The Technology Center used thus contract to obtarn prototype development support from Advanced Sys~ terns’ employees while Advanced Systems’ contract was bang phased out “Reference Technology Incorporated IS a small computer support serwce company located I” Boulder, Colorado The company prwded the mqorrty of the prototype development technical support Not only were the contractual arrangements complex, but also adequate Internal Control control techniques were not followed for the prototype project. Effective WeaknessesAffected internal controls should help managers to, among other things, comply Management of with applicable laws and policies, accurately account for revenues and expenditures, and safeguard resources against waste, loss, and misuse. Prototype Effort Effective internal controls systems also provide management with assurance that program goals and objectives are met. We found that some acquisition and contracting practices were not in consonance with applicable laws and regulations, and due to inadequate management controls over funding and costs, the Services Center spent about $145,000 inappropriately. Improper Acquisition and The contracting practices of federal agencies are governed by the provi- Contracting Practices sions of the Competition in Contracting Act, which is implemented in the Federal Acquisition Regulation. The regulation, for instance, requires that exceptions to the statutory requirements for competition stated in the act be justified and approved at a level above the contracting officer;and specifically precludes the acquisition of supplies or services from another agency for the purpose of avoiding the regulation’s requirements for competition. In addition, the regulation requires that Small Business Administration 8(a) contracts require that the contractor obtain contracting officer and Small Business Administration approval of subcontracts. Page 17 GAO/NSlAD40-101 Information Technology Appendix II The Prototype Development Pn+ct effort to continue uninterrupted. The multilevel contractual arrange- ments used to facilitate the mission of the Technology Center were dis- established with the closing of the Center in September 1989. DLA has since justified, in accordance with the Federal Acquisition Regulations, a sole-source acquisition for interim prototype support until the competi- tive acquisition can be completed. DOD further stated that the Library of Congress Federal Library and Information Network agreement was utilized by the Printing Service to pursue the required services for DLA. The Library of Congress encouraged the use of this umbrella-type agreement by federal activities to obtain compact disc read-only-memory library services. The Printing Service believed that these services were available under a Library of Congress contractual arrangement that was competitively awarded to contractors providing information-handling services. The Printing Ser- vice, therefore, believed that any sole-source justifications or any other necessary contracting requirements were handled by the contracting officer at the Library of Congress. The Printing Service believed that they were within the regulations and when they learned that the arrangement appeared t,o be questionable, the Printing Service ceased using the Network agreement. Inadequate Management The Services Center did not properly employ internal control procedures to ensure that prototype development project funding and costs were Controls Over Funding and r-l--L- LAJSLS properly accounted for and resources were used in an efficient and effective manner. We found that the Services Center expended about $145,000 inappropriately as follows: l The Services Center did not reconcile all of the funds authorized with actual project expenditures. It did not know how the Technology Center spent funding authority used between July 1987 and October 1988. In addition, the Services Center was unaware that in August 1988 the Technology Center used $43,000 of funding authority intended for the prototype project for other unrelated Control Data Corporation work. . The Services Center paid about $77,000 in overhead charges to the Printing Service and the Library of Congress to obtain prototype and interim product development services from Reference Technology. These charges could have been avoided if the Services Center had gone directly to Reference Technology by justifying a sole-source arrange- ment when Advanced Systems subcontract with Reference Technology ended. IIowever, using a sole-source arrangement would have inter- rupted development work with Reference Technology. The charges the Page 19 GAO/NSlAD90-101 Information Technology Appendix III Planned Competitive Acquisition 1. What is DLA'S current acquisition strategy‘? What is the extent of pos- Questions sible commercial involvement in DLA'S acquisition of a CD-ROM based cata- log system? What alternatives did DLA consider? 2. What is the current status of the acquisition? 3. How much business or otherwise sensitive data is included in the Fed- eral Logistics Data on Compact Disc system? What impact does this have on DLA'S acquisition strategy? The Government Printing Office, on behalf of DLA, recently issued a DLA’s Acquisition request for proposals for acquiring a CD-ROM based catalog system. DLA Approach, Extent of officials indicated this acquisition approach would provide for full and Commercial open competition and the maximum extent of commercial involvement. This could include data preparation, disc manufacturing, and software Involvement, and production. Alternatives Over an 18-month period, DLA considered three alternative approaches Considered for acquiring a CD-ROM based catalog system. One approach involved allowing users to obtain existing commercial products. Another approach involved acquiring commercially developed software to enable the Services Center to prepare the data for inclusion on the compact discs, after which a commercial contractor would manufacture the discs. The third approach involved contracting with a single commercial source for the software and services needed to prepare the data, manu- facture the disc, and use the CD-ROM based catalog system. DLA decided not to pursue the first approach for several reasons. According to DLA, commercial products do not contain sensitive data needed by government users. The products could accommodate sensitive data. However, the use of multiple commercial products would not pro- vide DOD users with the assurance of a standardized system, consistency of logistics data, or compatibility of hardware and software. DLA offi- cials also said that it would be difficult to monitor the quality of the data and the unauthorized disclosure of sensitive data in multiple com- mercial products. On the other hand, DLA actively pursued the other two approaches. Both approaches included opportunities for commercial involvement. DLA'S initial approach, beginning in February 1988, was to provide the Ser- vices Center with an in-house production capability. It involved acquir- ing commercially developed software to be used by the Services Center Page21 GAO/NSIAD-90-101lnfo~ationTechnology Appendix III Planned Competitive Acquisition publication services for the government. The Office’s acquisition respon- sibilities included reviewing industry comments on product specifica- tions, revising them as necessary, and preparing a request for proposals for the commercial service contract. The request for proposals was issued on November 3. 1989.l According to DLA officials, the decision to include business or otherwise Sensitive Data and sensitive data has had no impact on the acquisition strategy. DLA plans Impact on Acquisition to include sensitive data, which are not releasable to the public, in the Strategy CD-ROMbased catalog system. Sensitive data refer to information that is proprietary to a manufacturer or supplier and data which are not con- sidered sensitive alone but sensitive when combined. The Federal Logis- tics Data on Compact Disc Program product will include the following data considered sensitive: l approximately 250,000 proprietary item descriptions; l North Atlantic Treaty Organization items; and . 50,000 Navy-coded items that are considered sensitive when combined. Commercial CD-ROMbased catalog products do not include this type of sensitive data. For this and several other reasons previously discussed, LLA did not consider the use of more than one commercial product to be a viable alternative for meeting its requirements. DLA currently controls sensitive data in microfiche products by restrict- ing the use, release, transfer, sale, and distribution of the products to authorized users. A I)I.A official said it would be more difficult and costly to monitor compliance with these controls when more than one commercial vendor of (‘I)-ROM products has access to sensitive data. For example, DI,A would need to monitor multiple vendors to ensure that the CD-ROM discs were dist,ributed only to authorized users, and that the master discs were protected and destroyed. According to a DLA official, the costs associated with this additional monitoring have not been determined. ‘The GovwmnentPrintmg Office ha?hmceissuedan amendmentsuspendingthe requestfor propos- als indefinitrly. This action was taken after the Industry Associationfiled two protestsat the General SerwresBoardof ContractAppwls agamstthe prototype developmentand the requestfor proposals. Both protestshave beendlsmlswd, although the protest againstthe requestfor proposalscould be remstated As of Febnwy 7. 1QHO. DIh had a requestfor a delegationof procurementauthority under section 111of the Fvdcral I’ropwty and Administrative ServicesAct, 40 U.S.C.759, pendingat the GeneralServicesAdmimhtwmn. This scchon,popularly known asthe BrooksAct, providesthe Admmistrator of GeneralS~~nvcsthe authonty to overseethe acquisition of automateddata process- mg?qnipmtw by federal ag,‘mKY Pagr 23 GAO/NSIAD-SO-101 Information Technology Appendix IV Major Contributors to This Report George A. Jahnigen, Assistant Director, (202) 275-8412 National Security and International Affairs Division, Washington, D.C. Sharon E. O’Neil, Evaluator-in-Charge Detroit Re@onal Office GeorgeW.Moore,Evaluator Dea i% Crittenden, Evaluator Myron M. Stupsker, Evaluator - John A. Carter, Senior Attorney Office of the General Counsel (391622) Page 24 GAO/NSL4B!W-101 Information Technology Appendix III Planned Competitive Acquisition to complete the data preparation phase at its facilities. Under this approach the Services Center would contract for services to carry out the disc manufacture phase. According to DLA, they discontinued this effort due to the Services Center’s limited experience with CD-ROM technology. In April 1989, DLA began pursuing its second approach-contracting with a single commercial vendor for the software and services needed to make and use a CD-ROMbased catalog system. Essentially, this approach involved contracting out both the data preparation and disc manufac- ture phases. DLA officials stated that this approach would enable them to benefit from commercial industry’s knowledge of CD-ROMtechnology and its applications, and it satisfied DLA'S objective of establishing a CD ROM system with the least amount of risk to the government. In addition, this approach provided maximum opportunities for commercial involve- ment in the final acquisition. - DLA's procurement procedures describe the actions which must be taken Acquisition Status to support a competitive procurement. Among other things, the proce- dures require that DLA (1) develop a specific project plan, including mile- stones, for key events, (2) evaluate available alternatives for obtaining the required services, and (3) establish specifications or performance standards for the services to be acquired. DLA prepared studies, analy- ses, and plans required by the procedures. Specifically, DLA has l prepared documents (Le., a project plan, a requirements analysis, a com- parative cost and economic analysis, and a market survey) which pro- vide information on the strategy, approach, and milestones for acquiring the CD-ROMbased catalog system; . released draft specifications on the proposed commercial service con- tract for comment by industry; and . defined responsibility for managing the acquisition within the agency and established milestones for completing the acquisition. DIA did not complete some of these documents until after we completed our field work. Therefore, we did not evaluate their quality and completeness. In July 1989, DLA transferred the acquisition responsibility to the Gov- ernment Printing Office, which is responsible for procuring printing and page22 GAO/NSIAD-SO-101 Information Teclmo~ogy Appendix II The Prototype Development Project Services Center paid to the Printing Service and the Library were for administrative services, such as providing the form to periodically transfer funding authority to the Library and paying Reference Technol- ogy invoices. l The Services Center, through the Printing Service, paid Reference Tech- nology about $25,000 to purchase items not authorized under the com- pany’s Information Network agreement. This included payments for travel expenses, computer software, and CD-ROM disc drives for the com- pany’s own use. According to a Printing Service representative, neither the Printing Service nor the Library of Congress reviewed the invoices, but relied on the Services Center to review them. A Services Center offi- cial said the Services Center’s review of invoices did not include verify- ing whether payments were for items authorized under the Information Network agreement. DOD acknowledged that some problems did exist in management controls over funding and costs. According to DOD, the Services Center did not perform a full reconciliation of funds as the project progressed, but added it was now planning to do so. DOD also said the $77,000 overhead change was paid to the Printing Service and the Library of Congress to proceed in the most expedient and economical manner. DOD believed that the $77,000 included the cost of other services, such as wrapping, pack- aging, labeling, and distributing the data discs. However, our analysis showed that these services were not included in the overhead charges and were billed separately. On the purchase of unauthorized items, DOD believed that the goods and services were within the scope of the Information Network agreement and the Library of Congress was responsible to review the appropriate- ness of the purchases. Page 20 GAO/NSIAD-90.101 Information Technology Appendix II The Prototype Developmrnt Project We found the following: . Advanced Systems’ contract required written approval of any subcon- tracts by the contracting officer and the Small Business Administration. Advanced Systems never obtained these approvals for its subcontract to Reference Technology. . When the Advanced Systems contract was being phased out, the Tech- nology Center continued some of the prototype development effort by ordering Tresp Associates to award a subcontract to Reference Technol- ogy, and issuing an order to Control Data Corporation, which awarded a subcontract to Advanced Systems. A Technology Center official said the subcontracts were awarded only when Tresp Associates and Control Data Corporation determined that they did not have the needed soft- ware or sufficient technical expertise among their staffs to continue work on the project themselves. However, DOD records indicate that these actions were taken in the expectation that the subcontracts to Ref- erence Technology and Advanced Systems would be awarded. For instance, a record of a Services Center employee’s trip to Reference Technology showed that the work covered by the Tresp Associates sub- contract had already been completed by Reference Technology at least a week before the subcontract was awarded. The Technology Center order to Control Data Corporation specifically stated that prototype work con- tained in the order would be accomplished by the same laboratory oper- ated by Advanced Systems that performed the previous work. Subcontracting efforts like these are, in essence, sole-source acquisitions and should have been considered and justified as exceptions to the stat- utory requirements for competition. . The Printing Service obtained services from Reference Technology through an Information h’etwork agreement without either justifying the noncompetitive acquisition of the services or conducting a competition? DOD concurred with our finding that some of the acquisition and con- tracting practices used were not in consonance with applicable laws and regulations. It noted that closer oversight by the contracting officer could have resulted in better compliance. DOD commented that the Technology Center was established to expedite new development efforts, such as the compact disc program. The availa- bility and use of subcontracting arrangements allowed the prototype Page 18 GAO/NSL4D-90.101 Information Technolo~ Appendix II The Prototype Development Project Figure 11.1:Contractual Arrangements Used to Support the Prototype Development Project AThe Defense Applied lnformatlon Technology Center housed several laboratotles It was establlshed by DLA, the Offlce of the Secretary of Defense, and the Jotnt Chiefs of Staff as a joint cooperatwe actiwty to (1) provide an environment to explore the appllcatlon of new InformatIon technologies of ben eflt to DOD and (2) establish arrangements under which technologies can be economically developed, prototyped introduced. and deployed The Serwxs Center requested the Technology Center to develop the prototype software and produce the first prototype product to be dlstrlbuted to test s&s The Technology Center then assigned the prototype development protect to a laboratory operated by Advanced Systems Development, Inc h Advanced Systems Development Inc operated laboratories under contract to the Technology Center This contract was awarded under the Small Bwness Admlmstratlon s Sectton 8(a) program for socially and economlcatly disadvantaged businesses Advanced Systems performed work on a number of tasks under Its contract to the Technology Center, lncludmg the prototype protect It subcontracted most of the prototype development work to Reference Technology Incorporated because It did not have the software necessary to carry out the data prepara- tlon phase or a capabIlIty for the disc manufacture phase of the prototype project Advanced Systems’ work primarily involved managing the prototype protect, determlmng product requirements, and prepare mg spewI studies Advanced Systems’ contract wtth the Technology Center was gradually phased out between April 1988 and January 1989 for several reasons lncludlng Its InabMty to attract a sufflclent number of protects from DOD organlratlons ‘The Navy Publlshlng and Printlrlg Sewce IS the central publlshlng and pnntlng organlratlon serwng the Navy From the begInnIng of the prototype development project, the Services Center had requested the Prlntlng Service to procure services for productton of the second and subsequent prototype updates When the Technology Center could no longer prowde software development support, the Ser- vices Center requested the Prmtlng Service to expand Its role to procure this support The Prlntlng Service obtaned both productlon and software development services from Reference Technology by issuing an order to Reference Technology under a Library of Congress Federal Library and lnformatlon Page 16 GAO/NSIAD-SO-101 Information Technology Appendix Il The Pmmtype Development Project Table 11.1:Information on Prototype Data Files, Capabilities, and Test Sites Number of Date Data~.files included -__-~ Enhancements test sites ieb.1988 -._ Federal Catalog and Navy Not applicable 67 May 1988 Federal Catalog, Navy, and None Air Force 183 July 1988 Federal Catalog, Navy, Air Improved data manrpulation ..~.Force, and-- Army ~-.__~- and presentatron 250 Oct. 1988 Federal Catalog, rncluding Improved and expanded characteristics data, Navy, processing capabrlity and Air Force, and Army Increased retrieval speed 250 Jan. 1989 Same as Oct. 1988 None 250 According to the Services Center, it finished some additional work sub- sequent to the project’s completion date, including work on the capabil- ity to transfer data to other media, such as on-line systems and computer floppy discs. The Services Center planned to provide quarterly “interim product” updates to the 250 test sites beginning in April 1989 until the competi- tively acquired product becomes available. As of February 1990, three updates have been provided. The cost to develop the prototype was $1.74 million. About $0.96 million was for development, manufacture, and distribution of the prototype system to test sites. The remaining $0.78 million was for equipping test sites with CDROM disc drives and software licenses. The Services Center’s initiation of the prototype development project Appropriateness of was appropriate and consistent with its responsibility to publish the the Prototype federal catalog. Two statutes2 require DOD to ensure that it will use Development Project existing commercial products to fulfill its needs instead of developing new ones to the maximum extent practicable. These statutes presume that a DOD organization’s needs are known. The Services Center initiated the prototype project to identify its requirements. The requirements to be determined included which data files should be incorporated into the product and the best ways in which this data should be manipulated, retrieved, and presented to users. ‘The statutes cited are 10 1I.S.C.2301and 2325 Page 14 GAO/NSIAD-ml01 Information Technology Appendix II The Prototype Development Project 1. What events preceded the Services Center’s development of the Questions prototype? 2. What approach did the Services Center use to develop the prototype? What was the cost of the project? 3. Was the Services Center’s initiation of the prototype development project consistent with laws governing the use of existing commercial products? 4. What contracts were used to develop the prototype? 5. How well was the contracting effort managed? --. The Defense Logistics Services Center began researching optical disc Events Leading to the technology, which is the parent of CD-ROMtechnology, to store catalog Development of a information in 1981. In September 1985, the Services Center was Prototype requested to investigate using the technology to store and disseminate its catalog of logistics information. In January 1986, as part of its investigation, the Services Center released a request for information to industry for information on the development of software and hardware to produce an optical disc prod- uct, from which it received eight responses. The Services Center decided the development of a prototype would enable it to demonstrate the anticipated benefits of the technology. Benefits of implementing optical disc technology included increased productivity for an estimated 30,000 users and reduced user error rat.es. In August 1986, DLA gave the Services Center the authority to proceed with a prototype project of the Federal Catalog System by working with the Advanced Concepts Laboratory at Mather Air Force Base. About 4 months later, however, the Laboratory withdrew from the project when neither it nor the Services Center could agree on the amount of work the Laboratory would perform. In May 1987, the Services Center requested competitive bids for an off- the-shelf’ product containing data from the Federal Catalog System. Although three bids were received, no contract was awarded. The con- tracting officer determined that two of the three bids had deviations ‘Off-the-shelf meansa produc’r pnxlured and/or sttrked by a <antractoror distributor. Page 12 GAO/NSIAtHM-101 Information Technology Appendix1 Introduction l the Services Center’s management of the prototype project; . DLA'S plans to procure the software, hardware, and/or services needed to provide a CDROM system; . the potential for commercial involvement in DLA'S procurement of a CD- ROM system; and l the impact of DLA'S decision to include business or otherwise sensitive data in the product on its acquisition approach. To determine whether DoD'S initiation of the program was appropriate, we reviewed the Services Center’s compliance with federal laws and reg- ulations and DOD policies pertaining to DOD's development of new prod- ucts instead of using existing commercial products. In addition, we obtained the Services Center’s justification for initiating the program. As part of our review of the Services Center’s management of the proto- type program, we assessed the actions taken by the Services Center and the organizations through which it obtained prototype development sup- port, the estimated cost of the prototype, and compliance with federal laws and regulations. To do this, we analyzed the contractual instru- ments, funding authorizations, invoice charges, and other information relating to prototype development. In addition, we interviewed officials at the Services Center, at the organizations that provided prototype sup- port, at a contracting office, and at contractor facilities. To evaluate the approach the Services Center used to develop the proto- type, we analyzed contractor invoices and prototype development plan- ning documents, statements of work, correspondence and visit reports prepared by the Services Center, DLA, and the military services. We also interviewed project officers at the Services Center. We reviewed past and current DLA plans and actions to procure the soft- ware, hardware and/or services needed to provide logistics data on the CDROM media. We interviewed DOD and DLA officials and reviewed and analyzed correspondence and acquisition documents including specifica- tions and option studies, and other information. To determine the potential for commercial involvement in each step of the production process of a CD-ROM based catalog system, we reviewed and analyzed CD-ROM industry trade publications, interviewed industry representatives, and attended CD-ROM technical seminars. In assessing the impact of including business or otherwise sensitive data in the CD-ROM product, we interviewed officials from the Office of the page10 GAO/NSIAD9o-1O1Info~tionTefhnology Appendix I Introduction laser beam. The laser beam shines on the revolving disc resulting in reflections of light. These reflections are detected by the disc drive as light bursts, which are transmitted by electrical impulses to the personal computer. With the assistance of computer software, the computer transforms the impulses into detectable images. Making a compact disc product usually involves two processing phases: data preparation and disc manufacture. Data preparation is the process used to prepare the data for inclusion on the compact disc. In this phase, data are collected in one central location and, generally, entered into a computer databank for storage on magnetic tape. Depending on the type of computer the data are stored in, the data on tape may need to be changed to another format before further processing can continue. With the use of special software, the programmer places instructions, called keys, in the data and organizes it for fast retrieval by the computer. Next, before the data are manufactured into a compact disc, they are formatted using a standardized process so the final compact disc may be used in any compact disc drive. Disc manufacture (i.e., making the actual compact disc) is simply a man- ufacturing process. A compact disc mold, or master disc, is made by engraving pits in the surface of a 4-S/4 inch glass disc using a laser light beam. The master disc is then used to stamp replica discs from hard plastic, and is later covered with a reflective coating. Finally, the replica discs are packaged in flat plastic boxes and distributed to users. Figure I.2 shows the individual steps included in the data preparation and disc manufacture phases of making a compact disc product. Page 8 GAO/NSlAD!IO-101 hfbrmation Technology Appendix I Introduction The Defense Cataloging and Standardization Act of 1952 requires the Background Department of Defense (DOD) to operate a single catalog system for sup- ply data. The system, known as the Federal Catalog System, falls under the direction of the Office of the Assistant Secretary of Defense for Pro- duction and Logistics. IJnder the assistant secretary, the Defense Logis- tics Agency (DLA) is responsible for the administration of cataloging policies and overall control of cataloging for the federal government. The Defense Logistics Services Center, a DLA field activity, is responsible for preparing cataloging publications and for processing data for inclu- sion in the catalog system. The Federal Logistics Data on Compact Disc program was developed by DLA and the services to put DOD's catalog of logistics information on com- pact disc. The data are used by about 49,000 customers to provide infor- mation on equipment, parts, and supplies used by DoD and other government agencies for various purposes such as requisitioning and purchasing items. Logistics data included in the catalog for an individual item include the item name, a government-assigned national stock number, manufacturer names and part numbers, and such characteristic data as physical and performance information. Over the years, the Services Center has published such information in a variety of forms, including paper, microfilm, and microfiche. Some com- mercial vendors have also published DOD'S catalog and supplied it to the government and other users through various media, including on-line computer access services. In November 1986, a new means of providing this data to users was marketed by a commercial vendor using Compact Disc Read Only Memory (CD-ROM) technology. Since that time, at least four other commercial vendors have marketed similar products. Prior to the introduction of the first commercial product, DOD initiated the Federal Logistics Data on Compact Disc program to replace its cur- rent publications on microfiche. DIA delegated the responsibility for managing the development of a prototype of the CD-ROM based catalog to the Services Center, and DL4 retained responsibility for procuring the production version of the CDROM product through the Government Print- ing Office, which is generally responsible for processing publication ser- vices for the government. The majority of information included on the prototype was taken from the Federal Catalog System. The balance of the data was provided by the services to tailor some of the Federal Catalog System data to their Page6 GAO/NSIAD90-101InformationTechnology Contents Letter - Appendix I Introduction Background Technology Used to Implement the Program Objectives, Scope, and Methodology - Appendix II 12 The Prototype Questions 12 Events Leading to the Development of a Prototype 12 Development Project Approach Used to Develop the Prototype 13 Appropriateness of the Prototype Development Project 14 Contractual Arrangements 15 Internal Control Weaknesses Affected Management of 17 Prototype Effort - Appendix III 21 Planned Competitive Questions 21 DLA’s Acquisition Approach, Extent of Commercial 21 Acquisition Involvement, and Alternatives Considered Acquisition Status 22 Sensitive Data and Impact on Acquisition Strategy 23 Appendix IV 24 Major Contributors to This Report Table Table II. 1: Information on Prototype Data Files, 14 Capabilities, and Test Sites Figures Figure I. 1: How a Compact Disc Product Is Used 7 Figure 1.2: How a Compact Disc Product Is Made 9 Figure 11.1:Contractual Arrangements Used to Support 16 the Prototype Development Project Page 4 GAO/NSIALMO-101 Information Technology E-236879 with existing laws and regulations, and the Services Center did not fol- low commonly accepted internal control procedures in managing these arrangements. In addition, the Services Center did not adequately moni- tor DOD organizations acting on its behalf to ensure that they properly administered the contracting efforts. As a result, the Services Center inappropriately expended about $145,000. The prototype project was completed in January 1989 (see app. II). With regard to Defense Logistics Agency plans to procure a production version of the prototype disc system, the Agency has adopted a competi- tive acquisition strategy. The Agency is acquiring a logistics data system through the Government Printing Office, which issued a request for pro- posals on November 3, 1989. Agency officials indicate the request pro- vides for full and open competition and the maximum extent of commercial involvement that is possible (see app. III). According to Agency officials, the decision to include business or other- wise sensitive data has had no impact on the acquisition strategy, but was one of several reasons for ruling out the use of existing commercial products. The Agency did not consider this a viable option because the government would not be able to effectively control the quality and dis- tribution of the sensitive information in multiple vendor products, and use of multiple products would not meet its requirement for standardi- zation (see app. III). Our objectives, scope, and met,hodology are described in appendix I. DODprovided official oral comments on the draft report. It generally Agency Comments concurred with our findings, stating most of the problems we had identi- fied were caused by DOD'S desire to field a uniform, DOD-wide compact disc capability as rapidly as possible. We have incorporated specific comments where appropriate. Unless you publicly announce its contents earlier, we plan no further distribution of this report until 5 days from the date of this letter. At that time, we will send copies to the Chairmen, House and Senate Com- mittees on Appropriations and on Armed Services; the Chairman, Senate Committee on Governmental Affairs; the Chairman, House Committee on Government Operations; the Secretary of Defense; the Director, Defense Logistics Agency; and the Director, Office of Management and Budget. We will also make copies available to others upon request. Page2 GAO/NSIAD-90.101Info~tionTechnolo~
Information Technology: DOD's Federal Logistics Data on Compact Disc Program
Published by the Government Accountability Office on 1990-03-15.
Below is a raw (and likely hideous) rendition of the original report. (PDF)