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45–292 PDF 2008

H.R. 752, THE FEDERAL ELECTRONIC EQUIPMENT

DONATION ACT OF 2007

HEARING

BEFORE THE

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT,

ORGANIZATION, AND PROCUREMENT

OF THE

COMMITTEE ON OVERSIGHT

AND GOVERNMENT REFORM

HOUSE OF REPRESENTATIVES

ONE HUNDRED TENTH CONGRESS

SECOND SESSION

ON

H.R. 752

TO DIRECT FEDERAL AGENCIES TO DONATE EXCESS AND SURPLUS

FEDERAL ELECTRONIC EQUIPMENT, INCLUDING COMPUTERS, COMPUTER COMPONENTS, PRINTERS, AND FAX MACHINES, TO QUALIFYING SMALL TOWNS, COUNTIES, SCHOOLS, NONPROFIT ORGANIZATIONS, AND LIBRARIES

FEBRUARY 13, 2008

Serial No. 110–94

Printed for the use of the Committee on Oversight and Government Reform

(

Available via the World Wide Web: http://www.gpoaccess.gov/congress/index.html

http://www.oversight.house.gov

(II)

COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

HENRY A. WAXMAN, California, Chairman

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

JOHN F. TIERNEY, Massachusetts

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

BRIAN HIGGINS, New York

JOHN A. YARMUTH, Kentucky

BRUCE L. BRALEY, Iowa

ELEANOR HOLMES NORTON, District of

Columbia

BETTY MCCOLLUM, Minnesota

JIM COOPER, Tennessee

CHRIS VAN HOLLEN, Maryland

PAUL W. HODES, New Hampshire

CHRISTOPHER S. MURPHY, Connecticut

JOHN P. SARBANES, Maryland

PETER WELCH, Vermont

——— ———

TOM DAVIS, Virginia

DAN BURTON, Indiana

CHRISTOPHER SHAYS, Connecticut

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

MARK E. SOUDER, Indiana

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

BILL SALI, Idaho

JIM JORDAN, Ohio

PHIL SCHILIRO, Chief of Staff

PHIL BARNETT, Staff Director

EARLEY GREEN, Chief Clerk

DAVID MARIN, Minority Staff Director

SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT

EDOLPHUS TOWNS, New York, Chairman

PAUL E. KANJORSKI, Pennsylvania

CHRISTOPHER S. MURPHY, Connecticut

PETER WELCH, Vermont

CAROLYN B. MALONEY, New York

BRIAN P. BILBRAY, California

TODD RUSSELL PLATTS, Pennsylvania,

JOHN J. DUNCAN, JR., Tennessee

MICHAEL MCCARTHY, Staff Director

(III)

C O N T E N T S

Page

Hearing held on February 13, 2008 ....................................................................... 1

Text of H.R. 752 ....................................................................................................... 3

Statement of:

Rhodes, Becky, Deputy Associate Administrator, GSA Government-wide

Policy; and Bunny Sanders, mayor of Roper, NC; Shane Bailey, director

of surplus property, Division of the State of Alabama, president of

National State Agency for Surplus Property .............................................. 12

Bailey, Shane ............................................................................................. 31

Rhodes, Becky ............................................................................................ 12

Sanders, Bunny ......................................................................................... 21

Rosenthall, John A., president, Small Towns Alliance; and Thomas L.

Williams, co-founder Williams and Williams Real Estate Auctions, and

president of National Auctioneers Association ........................................... 45

Rosenthall, John A. ................................................................................... 45

Williams, Thomas L. ................................................................................. 54

Letters, statements, etc., submitted for the record by:

Bailey, Shane, director of surplus property, Division of the State of Alabama, president of National State Agency for Surplus Property, prepared statement of ........................................................................................ 33

Rhodes, Becky, Deputy Associate Administrator, GSA Government-wide

Policy, prepared statement of ...................................................................... 15

Rosenthall, John A., president, Small Towns Alliance, prepared statement

of ..................................................................................................................... 48

Sanders, Bunny, mayor of Roper, NC, prepared statement of ..................... 25

Williams, Thomas L., co-founder Williams and Williams Real Estate Auctions, and president of National Auctioneers Association, prepared

statement of ................................................................................................... 57

(1)

H.R. 752, THE FEDERAL ELECTRONIC

EQUIPMENT DONATION ACT OF 2007

WEDNESDAY, FEBRUARY 13, 2008

HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON GOVERNMENT MANAGEMENT, ORGANIZATION, AND PROCUREMENT, COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM, Washington, DC.

The subcommittee met, pursuant to notice, at 2:10 p.m., in room

2247, Rayburn House Office Building, Hon. Peter Welch presiding.

Present: Representatives Welch, Butterfield, Platts, and Bilbray.

Staff present: Michael McCarthy, staff director; William Jusino,

professional staff member; Teresa Coufal, assistant clerk; A.

Brooke Bennett, minority counsel; Janica Spector, minority professional staff member; Christopher Bright, minority senior professional staff member; Todd Greenwood, minority legislative assistant; Mark Lavin, minority Army fellow; and Jeanne Neal, minority

intern, National Security and Foreign Affairs Subcommittee.

Mr. WELCH. Thank you and welcome. The subcommittee will

come to order, and I want to welcome everybody to today’s hearing,

and it is a very important hearing about Surplus Property Donation and Sales.

The Federal Government buys enormous amounts of equipment

that could be put to very good use in our communities, and the

question is how are we going to dispose of surplus property in a

way that makes sense, that makes the most benefit.

We are also going to consider a bill introduced by my colleague,

Representative Butterfield of North Carolina, who is here with me,

H.R. 752. This bill, which Representative Butterfield will describe,

is all about improving the Computers for Learning program.

What I would like to do is just start with a brief opening statement and turn it over to Representative Butterfield. First of all, it

was mentioned Chairman Towns is ill and is in New York City and

otherwise, obviously, would be here running this important hearing.

Each year the Federal Government saves hundreds of millions of

taxpayer dollars by reusing excess equipment and supplies from

other Federal agencies. When property is no longer needed by the

Federal Government, as you all know, the surplus property is donated to State and local governments, schools, libraries, nonprofit

organizations, and other eligible recipients. It extends the life of

the property and saves additional tax dollars.

In 1996, the Clinton administration issued an Executive order establishing the Computers for Learning program. This order directs

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Federal agencies to transfer surplus computer equipment to schools

and nonprofit educational institutions. GSA administers the program. H.R. 752, the Federal Electronic Equipment Donation Act,

would make the order law and direct the GSA to prioritize recipients in enterprise communities and empowerment zones when

transferring surplus electronic equipment. Useful surplus computer

equipment from the Federal Government is a vital national resource.

The rest of the surplus Federal property is also worth hundreds

of millions of dollars and may be useful for years to come. The reason we are having a hearing today is to try to figure out how best

to make use of that and to make sure we are efficient and effective.

We want to look at how Government handles surplus property and

how it can be improved, and what we are asking our witnesses to

do is give us your input, particularly on Representative

Butterfield’s bill.

And we have representatives today, as you know, from small

towns, and I am from a small town. My town of Hartland is 1,800,

probably a lot bigger than where Representative Butterfield is

from—I do not know. We do not have a street light in the town I

am from, and we do have two stop signs. We do not have a mayor,

we have selectmen, and we got—I will tell you what we have, we

have property assessors who come out checking if you have done

any improvements. We are also going to examine the rules that

GSA has written, the standardized sales around a single Web site,

and get comments on that plan.

The goal is to look at the current structure in the new proposals

to determine what is working well and what can be improved.

I will now yield to my colleague Mr. Butterfield for his opening

statement. Mr. Butterfield.

[The text of H.R. 752 follows:]

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Mr. BUTTERFIELD. Thank you very much, Mr. Chairman, for allowing me to participate in this hearing today. I represent North

Carolina’s 1st District. We have 23 counties and, I believe, the largest city or town in my district is about 60,000 people, and so we

are from a relatively rural district. Thank you very much for allowing me to participate.

It is my understanding that my good friend, Ed Towns, is not

here today, he is back in New York recovering and will be back

with us in just a few days. But I appreciate the chairman’s willingness to hold this hearing on H.R. 752, which is the Federal Electronic Equipment Donation [FEED] Act of 2007, and I look forward

to hearing the testimony from the witnesses today, all of whom

have obviously dedicated much of their professional lives to the

issue of Federal excess and surplus property. And if there is something that I do not understand about this matter, I am sure that

one or more of the witnesses will call that to our attention.

In short, Mr. Chairman, in my bill H.R. 752 codifies Executive

Order 12999 making many of the provisions permanent law, but it

also adds provisions making this much-needed equipment for more

accessible to the poor and underserved regions of our country. The

FEED Act would streamline the process for donating excess and

surplus electronic equipment to small cities, and towns and countries, and schools and libraries, and community-based educational

nonprofit organizations.

The legislation gives preference to poorer communities which

often have the greatest needs and the most difficult time navigating the process and acquiring property. The act would direct Federal agencies to transfer excess equipment to the GSA for transfer

to the qualifying recipient at little or no cost.

The current system of acquiring Federal surplus equipment is

flawed. It is riddled with Government red tape. Many times it can

take months or even years or even years to receive requested

equipment. There was one such case in my district, actually the impetus for my introduction of this bill, where GSA only began working on fulfilling the request after direct congressional intervention.

Citizens in need of available technology should be able to obtain it

without bureaucratic red tape which only serves to discourage the

applicant from pursuing their goals.

Mr. Chairman, I represent a very poor district. My district is the

15th poorest district in the United States of America, the 15th from

the bottom. My constituents and other disadvantaged citizens

around the country do not have access to the technology afforded

to so many of us here today. Small counties like Washington County in my district, which is the 5th poorest in our State, are home

to towns like Roper and Plymouth, NC, with the county unemployment rate reaching nearly 8 percent.

The visionary leadership of Mayor Sanders, who is with us today,

has transformed Roper into a technology oasis and with noticed job

creation and training. Roper houses a technology center where citizens are put to work refurbishing, updating, and repairing electronic equipment acquired through the current process. They also

receive training in A+ development, server management, and computer maintenance.

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Without the necessary Federal excess and surplus electronic

equipment with which to work, the technology center and its trainees stand the risk of losing years of hard work. Mayor Sanders has

the patience and determination required to navigate the murky waters of Federal excess and surplus equipment. Most would not be

this resilient.

The Federal Government spends an enormous amount of the taxpayers’ money on technology. Last year the USDA’s budget included about $110,000,000 in technology-related costs. That figure,

extrapolated to cover all 15 executive branch departments, exposes

a daunting number. Once equipment becomes slightly outdated it

should not sit idle when there are so many needy small towns, cities, counties, schools, and libraries that can still put this technology to good use. Throughout the United States many of our

small towns lack the very basic technology that many of us take

for granted.

This important legislation grants underprivileged communities

across America, access to Federal excess and surplus computers,

printers, audiovisual and other technological equipment. The bill is

particularly important to communities in Eastern North Carolina,

and will be an important tool in building the electronic infrastructure for local government, schools, libraries, and nonprofits. Many

of the communities that I represent need every bit of help they can

get and, hopefully, this will free up some of the resources that can

be used to address other needs.

Mr. Chairman, I look forward to hearing from the witnesses

today. I respect them and thank each one for coming forward with

their viewpoints.

I would particularly like to thank Mayor Sanders for her hard

work and dedication to improving the lives of her constituents; and

Mr. Rosenthall, John Rosenthall, who has worked with my staff for

nearly 2 years in trying to move this bill forward. The current system is hurting the very people it was set up to help. This is a good

bill that will help not only the people in Roper, or in my district,

but people all across America who will derive a tremendous benefit.

I would like to thank the 61 bipartisan cosponsors currently supporting the bill. They see the value and immediate need for this

legislation to be enacted. I thank you for your time and willingness

to allow me to participate in this very important hearing.

I yield back, Mr. Chairman. Thank you.

Mr. WELCH. Thank you. Mr. Platts, do you care to make any

opening statement?

Mr. PLATTS. Thank you, Mr. Chairman, just to say I look forward

to testimony. I apologize, I will not be able to stay for the whole

hearing, probably special to the second panel, and I will look forward to the written testimony we will have, and I appreciate the

committee holding the hearing. Thank you.

Mr. WELCH. OK, thank you.

Now we will turn to our first—the panel, and why don’t the

panel members come on up. Do you know who that is? You don’t

know? We are keeping you in the dark? All right.

Becky Rhodes, and Bunny Sanders, and Shane Bailey. And it is

the—thank you and welcome—it is the custom of this committee to

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swear all witnesses, and I would like all of the witnesses to stand

as I administer the oath.

[Witnesses sworn.]

Mr. WELCH. Just a little bit of introduction here. First the record

will show the witnesses have answered in the affirmative, and

Becky Rhodes is currently the Deputy Associate Administrator

with GSA’s office of Government-wide policy, and has to develop

policy in a number of areas, including personal property management.

Bunny Sanders is the mayor of Roper, and we have been hearing

about the mayor, a small town in the northeastern part of the

State, has been a advocate for economic development and environmental protection in that community and other small towns, and

sits on the University Governance Committee for the University of

North Carolina.

Shane Bailey’s day job is director of surplus property division of

the State of Alabama, he is also president of the National Association of State Agencies for Surplus Property.

What we are going to do is ask each of the witnesses to give a

brief statement summarizing your views, and then we are going to

have an opportunity to ask each of you questions. And again, we

are really trying to get—you know the things we want to learn, so

we are trying to get the benefit of your experience, hopefully so

that we can fashion some legislation that is going to allow us to

be more effective, and the focus of attention is the suggestions

made in the legislation by Mr. Butterfield.

So, Ms. Rhodes, do you want to start?

STATEMENTS OF BECKY RHODES, DEPUTY ASSOCIATE ADMINISTRATOR, GSA GOVERNMENT-WIDE POLICY; AND BUNNY

SANDERS, MAYOR OF ROPER, NC; SHANE BAILEY, DIRECTOR

OF SURPLUS PROPERTY, DIVISION OF THE STATE OF ALABAMA, PRESIDENT OF NATIONAL STATE AGENCY FOR SURPLUS PROPERTY

STATEMENT OF BECKY RHODES

Ms. RHODES. Yes, thank you Congressman Welch, and Congressmen Platts and Butterfield. And thank you for the opportunity to

be present at this hearing today and discuss these issues.

I am the Deputy Associate Administrator of the Office of Travel,

Transportation and Asset Management within GSA’s Office of Government-wide Policy. I am responsible for the policies and regulations that govern how agencies manage seven administrative functions. Personal property is one of my areas.

You asked me to come today and speak on two topics, H.R. 752

and the amendments that GSA has proposed to the Federal Management Regulation 102–38, which governs the sale of personal

property. Before I get to the topics you asked about, I think it

might help if I outlined statutory process that Federal agencies go

through to dispose of property they no longer need.

First, an agency declares a piece of property excess to their needs

and reports it to GSA.

Second, GSA offers the excess property to the Federal agencies

using GSA excess Web site. Then, if no agency claims this within

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21 days, the property is made available to the State agencies for

surplus property. Please note that the term at this point changes

from ‘‘excess’’ to ‘‘surplus.’’ If no agency wants the surplus property,

then the Government decides whether to sell it or to declare it

scrap.

With regard to H.R. 752, the Federal Electronic Equipment Donation Act, I have been advised that GSA and the administration

are studying this bill. However, I would like to mention that GSA

is, as you mention, running the Computers for Learning program

which was established in accordance with Executive Order 12999.

The program allows Government agencies to transfer excess computer equipment to schools and educational nonprofit organizations; and I would like to mention that GSA has made a number

of improvements to this program since taking over the management in 1999.

Please note that computer equipment transfers to schools under

this Executive order is excess and not surplus.

Then you asked me to discuss the Federal Management Regulation which I will refer to as FMR and, specifically, the proposed

change to the FMR 102–38. I want to emphasize that these are

proposed provisions and have not yet been put into effect. They are

still in the regulation development process.

The proposed changes to the FMR are intended to bring the Federal regulation in line with the existing policies of the Federal

Asset Sales e-GOV initiative, which I will refer to as e-FAS. These

policies have been developed in a collaborative process with Federal

agencies as well as OMB. The e-FAS initiative seeks to provide citizens with efficient and easy-to-use method of finding and buying

assets for sale by the Government and to assist agencies in selling

their assets in an effective manner with the maximum return to

our taxpayers. GSA is the managing partner for this initiative.

GSA and its partner agencies launched GovSales.gov Web site on

October 1, 2006. If you visit this Web site you will find a searchable catalog of property available for sale by the Government which

links to the various sales sites that conduct online and offline sales

of personal property as well as real property.

Regarding private sector participation in the e-FAS initiative,

any sale of Federal surplus property must, by law, be approved by

a Federal official. However, in addition to the authorized Federal

official, a sale center may use Federal agencies as well as the private sector in their sales process. We encourage our sales centers

to seek participation and best practices from the private sector.

Currently, we have four sales centers that are approved and operational three of which are using private sector partners in their

sales processes.

There is much confusion about the e-FAS waiver process, and I

would like to explain. If an agency wants to take exception to anything within the entire FMR so long as it is not an exception that

would violate the law, the agency may request a deviation. This deviation process already exists within the FMR, and in the property

arena, for example, we recently granted a deviation to facilitate a

donation of flu vaccines to various State agencies.

With the e-FAS initiative has developed a separate process under

which an agency may request a waiver from the requirements or

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milestones that are part of the e-GOV process. Working with agencies, GSA has defined the waiver process and established procedures for it. The proposed regulation would incorporate those eFAS waiver processes within FMR 102–38.

In conclusion, I would like to say the e-FAS initiative have been

very dynamic. Its progress toward its goals in unifying and simplifying the sales process while being results-oriented, adopting

best practices, and maintaining its transparency are moving along.

We have learned a lot, and we have solid plans for our future.

Thank you for this opportunity to speak to the subcommittee.

[The prepared statement of Ms. Rhodes follows:]

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Mr. WELCH. Ms. Sanders.

STATEMENT OF BUNNY SANDERS

Ms. SANDERS. I am Bunny Sanders, mayor of the town of Roper,

population 625. Roper is located in Washington County, which has

a population of only 14,000. Washington County is the 5th poorest

county in the State of North Carolina.

There are an additional 16 counties in the northeast region of

which 11 are Tier 1s. This is the State’s designation for the most

depressed counties in the State. There are approximately 45 incorporated municipalities in the northeast region that have less than

1,500 people. Many of these communities do not have public access

to computers and high speed Internet, and in fact, some of them

do not even have public libraries.

Approximately 5 years ago, the town of Roper assisted with the

organization of the WOWe-Community Development Corp. It is the

only e-CDC in the State. The mission of the CDC includes the preparation of the Washington County labor force for 21st century employment and entrepreneurial opportunities, and to ensure accessibility to computers and the Internet to the citizens of the country

and to Northeastern North Carolina.

The town of Roper received Federal grants for the construction

of the Windows on the World Technology Center which is operated

by the Community Development Corp. The technology center

houses a digital library with 20 computers connected to high speed

Internet, a digital literacy classroom with an additional 25 computers, a video conference equipped classroom for distance learning,

and a 100-seat auditorium for distance learning.

WOWe-CDC also operates e-Business Incubators where workers

can maintain and upgrade computers. For more information on the

Windows on the World Technology Center, you might visit WOWeCDC.org.

Pursuant to its mission, WOWe-CDC develops and promotes a

variety of computer and Internet-related enterprises that creates

some of those 20th century employment opportunities. To date, it

has provided training for indigent residents in computer maintenance repairs, A+, the Network+ certification. It is training in electronic health records; it operates a computer repair maintenance

enterprise; it is a vendor for conversion of paper medical records

to e-HR. It develops, maintains, and hosts sites, and it has developed Web sites for 28 small towns with less than 1,500 in Eastern

North Carolina at no cost to the towns.

These Web sites would have been of no urgency for these towns,

just because they do not have the resources to do it, but what we

realize is that not having a Web site is like not having a ZIP code.

So it was important that these towns have it, and we have been

able to do that.

The North Carolina General Assembly, recognizing the necessity

to offer direct engagement for information technology in remote

rural communities, designated the WOWe-CDC as a Technical Resource Center for the Northeast. It specifically charged the CDC

with development, maintenance, and hosting of municipal Web

sites for small towns, developing computer and public access points

for these communities, and operating a wireless ISP to serve the

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more remote communities that telecommunications companies cannot profitably reach.

The CDC uses municipal and county water towers which base

stations or access points or place, and then these antennas project

the signals out to the remote communities. Incidentally, we believe

that the only way to provide affordable broadband to the more remote communities is wirelessly and through non-profit Internet

service providers.

Pursuant to its mission of ensuring access to computers and the

Internet to citizens and children in remove communities of northeastern North Carolina, WOW has requested computers. We get

them from wherever we can manage, and there are never enough.

Necessary upgrades are done by graduates of our computer maintenance repair program, thus creating technology-related employment in communities where there is no technology-related industry.

We regard information technology and computer and Internet-related enterprises as our hope for growth and development because

IT is not limited to dependence on local markets, which are always

small in small communities, but rather offers us as global market.

But we cannot achieve this goal without the infrastructure and the

tools to participate in a knowledge-based economy.

Specifically, we must have what most Americans consider basic:

computers and broadband. In both cases, State and Federal Government initiatives that should reach our communities often do

not. The reasons have to do with the lack of understanding of the

culture and how small low-wealth communities must operate. It is

very important to understand the nature of the small towns and

rural communities that these computers are intended to serve.

The day-to-day operations of many of the towns of less than

1,500 people are run by the town clerks with part-time volunteer

mayor, such as I am, I tend to be a full-time volunteer mayor, but

most of them have part-time mayors who have other employment.

The towns often do not have the human resources or funds for

shipping the computers, nor can they do the necessary upgrades.

More importantly, many towns do not even know that the program

exists. Efforts to access computers to the State are all but impossible for a small to navigate.

In North Carolina, the process will require a trip to the State

capital on Fridays. Most communities in Eastern North Carolina

are at least 2 or 3 hours from Raleigh. You would be permitted to

inspect the items on which you would bid, but computer cases may

not be opened during the inspection time, which is between 9 and

2. Item descriptions indicate internal components and what the

State knows about the item. Often the condition of the item is unknown.

The process assumes that the bidder—and in our case small

towns—has someone who would know about internal components of

a computer doing their bidding, which is highly unlikely. Small

low-wealth communities cannot afford technology-savvy staff. Unfortunately, the bidder must assume all the risk. Needless to say,

small, low-wealth communities cannot take the time nor afford the

trip, nor take the risk that the computers will require extensive upgrades.

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This process really eliminates Federal and/or State surplus as an

option for small low-wealth communities. Neither towns nor regional centers such as Windows on the World Technology Center

can afford this process. The cost of purchasing, shipping, and upgrades puts the computers out of reach of the very communities

that need them most.

When we were able to get computers from USDA in the past,

WOW distributed those computers to local schools, small towns,

and non-profits who paid only the cost of the organizational expenses related to bulk shipping and upgrading. This process did

make the computers more affordable and more accessible to lowwealth communities.

I would assume that there are other non-profit regional centers

like the Windows on the World Technology located in rural communities throughout the United States that are charged with addressing digital literacy and access to computers and the Internet. These

centers would have the documented capacity to upgrade the computers and ensure distribution to communities and low-income

families throughout rural America.

In addition, these non-profit regional centers could also use the

surplus computers to establish public access to computers and the

Internet in remote communities, thus creating a network of digital

libraries in rural America. These digital libraries could be established in churches, community centers, and other non-profit facilities which is where we are now establishing them.

Most of today’s public libraries are run by librarians whose orientation is books. That is fine, but the mistake is that, that is also

in many cases we are adding a few computers and calling it public

access. Many of our libraries in Eastern North Carolina have five

or six computers on which citizens are given maybe a half hour. We

must provide communities with digital libraries in the 21st century

for the same reason that libraries, book libraries, were provided in

the 20th century: Books were not available in private homes.

Now in rural America, computers and affordable broadband are

not available in many private homes. Here we have really an opportunity for the Federal Government to jump-start 21st century libraries throughout rural America without having to spend the

money on bricks and mortar. The point is that in rural America

where remote communities often do not have access to affordable

broadband and computers at home, public access is critical.

I serve on the Board of Governors of the UNC university system.

The system is increasingly utilizing online studies as a means of

reaching remote communities with higher education. Without access to computers and the Internet, distance from the community

college and the university will continue to be a deterrent to higher

education.

Preparation for participation on a knowledge-based global economy cannot stop at 3:30 p.m. Monday through Friday. We have an

obligation to ensure that young people all over this country have

equal access to the tools that enable and empower them to be productive citizens. For this reason I urge you not to allow Government red tape to prohibit thousands of communities throughout the

United States from accessing surplus computers that could very

well make the difference between citizens who are self-sufficient

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and those who lack the necessary skills to function in the 21st century.

The proposed bill would make Federal surplus computers directly

accessible to any entity that can document the capability of upgrading and distribution of computers to schools, non-profits, and libraries in rural low-wealth municipalities and documented low-income families, or that could establish public access points for computers and the Internet.

Because technology is not only an opportunity for growth of lowwealth communities but is central to the survival of rural America

in a knowledge-based global economy, it is imperative that Congress recognizes that there are over 25 million people living in

25,000 communities in this country whose lives could be impacted

by the digital divides simply because of where they live, and you

should pass legislation that would address the issues unique to IT

needs and be specific so as to earmark types of communities that

would be beneficiaries.

If this country expects to compete in a knowledge-based global

economy, it cannot afford for any citizen to be denied access to the

tools that would empower and enable them to contribute. Therefore, the language of this bill should be clear regarding direct availability of surplus computers for non-profits whose mission is related to digital literacy, public access to computers, computers for

small towns, and IT training. This will ensure that there will not

be any misinterpretation of the intent of the legislation by those

who administer the programs.

I have brought the procedures of the North Carolina State Surplus Property Agency for your review and consideration. Thank

you.

[The prepared statement of Ms. Sanders follows:]

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Mr. WELCH. Thank you very much.

Mr. Bailey.

STATEMENT OF SHANE BAILEY

Mr. BAILEY. Mr. Chairman and honorable members of the committee, first thank you for this opportunity. This is something

NASASP has looked forward to for years, and we appreciate the opportunity.

NASASP is the National Association of State Agencies for Surplus Property. We are represented in all 50 States, various U.S.

territories, District of Columbia. We represent 67,000 organizations

across the United States. Those organizations include villages,

towns, townships, counties, 8(a) States, SBAs, public educational

institutions public health agencies, public safety to include police

and fire agencies, libraries are included.

Certain not-for-profit organizations include private schools, veterans homes, senior centers, homeless shelters, and food banks.

NASASP believes that once property has been deemed excess or

surplus to the Federal Government needs, the highest and best secondary utilization of property is by the public and private organizations of this nation dedicated to the education, the training, and

the health and civil protection and other public benefits.

NASASP supports the Donation of Information Technology.

There are some very good contents of H.R. 752. All the computers,

copiers, fax machines, we believe that these do need to be donated

to the public and private organizations qualified to assist the underserved areas of our States. These organizations are currently

served by our program.

Congress has passed several laws in the past establishing policies and procedures designed to serve the best interests of the taxpayers. These personal property management laws such as Public

Law 094–519, Public Law 105–50 require Federal agencies to

transfer excess personal property to other Federal agencies as the

highest utilization of such property. The next highest priority is to

transfer such property in the public use through the State Agency

for Surplus Property. This system has served the public well for

over 60 years and helps ensure 100 percent of the usage of taxpayer property is fulfilled.

GSA-approved donations through NASASP are only made to very

specific organizations with clear missions of public goodwill, public

service and structure to aid all the Nation’s citizens. A centralized

process such as the one overseen by GSA and managed by the

State Agency for Surplus Property ensures fair and equitable distribution. H.R. 752 will provide computers and other electronics to

organizations.

NASASP can ensure that property is placed into the hands of

those who need it the most. We have been told over the years that

we serve the neediest of the needy, and that is what we base our

program on.

Mr. Butterfield mentioned in his opening remarks, serving the

neediest of the needy. NASASP has proven track record in moving

property across the United States. Several States have to travel

100 miles to acquire Federal excess property. This is one of the constraints that we are now facing at the State level.

32

We urge the members to take steps to ensure that no personal

computer, server, external storage device, is transferred to the general public that might contain sensitive or confidential information.

We also encourage the Federal agencies to continue to provide access to grants and other funding to States across the Nation designed to support state-wide consumer-based electronic recycling

policies to decrease the potential PCs being thrown to the ground,

dumped in roadside ditches, or found in the back alleys.

There are two major issues that are depleting the amount of

property that is available through the Federal Donation Program.

The first issue is the DRMS downsizing. A–76 proposal reduced

property sites across the United States. I mentioned some States

have to travel hundreds of miles receive excess property. Nevada,

for instance, is a State that there is no DRMO within—I think

Stockton is the closest one. That is hundreds of miles to go get a

load of computers, so we share a lot of the same concerns that the

mayor has.

The second major issue that we feel is depleting the Federal program as much or more than DRMS downsizing is the GSA Exchange Sale Authority. We believe that a number of Federal agencies are selling property for pennies on the dollar when that property could be transferred to the neediest of the needy mentioned

earlier by the mayor, and NASASP has a resolution that would require a 30 percent return on property sold. If that property does

not return 30 percent, then the sale is void. This way the taxpayers

receives the full utilization possible for this Federal property.

Thank you for your time.

[The prepared statement of Mr. Bailey follows:]

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34

35

Mr. WELCH. Thank you all.

We are going to now ask questions, and what I want to do is turn

it over to Representative Bilbray, who was not here to give his

opening statement, but we will let you start the questioning, and

if you want to start out with any comments or remarks, go ahead.

Mr. BILBRAY. Thank you. First of all, as a former mayor myself,

I apologize for the fact that Honorable is not in front of your name.

Ms. SANDERS. That is quite all right.

Mr. BILBRAY. You have earned the right, and I apologize, and

staff just happens to inform me it was an oversight, so from the

committee I think all the members here would owe an apology.

Mr. WELCH. The Honorable Sanders looks like she has been able

to weather some more fierce storms than this, but——

Mr. BILBRAY. I was a mayor of 27,000. They made a lot of jokes

about a thousand for each year, but the smaller communities. So

when I ask these questions, I am coming, at least from the California point of view, from the smaller communities, and it may seem

huge to you but coming from growing up in a working-class neighborhood, this kind of hits home of the selective kind of access technology has had in our society.

I guess I have to ask both of you first of all, the ability to pool

resources. And here is one of those issues that I know the League

of California Cities, the National League of Cities, and, I assume,

you have a League of North Carolinian Cities that could possibly

discuss the issue of having a pooled access so that you, personally

or your employees, would not have to personally have to venture

off to this.

And I guess, Mr. Bailey, you should engage in this, too. What is

the ability for us to work with the local government agencies and

the State agencies at trying to get more cooperation so that the little guy does not get left out in this process?

Ms. SANDERS. Well, let me just speak to the idea of resources. It

is very difficult. One of the things that happens to small towns is

the definition. The Federal Government thinks 25,000 people is a

small town. Some people think 10,000 people is a small town, but

I am mayor of a town of 625 people. That is a small town.

Mr. BILBRAY. The difference between a small city and a small

town.

Ms. SANDERS. And it is very difficult, even when you are a part

of leagues, of municipalities, it hardly ever filters down to the point

where the uniqueness of really small communities in corporate municipalities get the kind of attention it needs.

In terms of resources, we raised the taxes in my town by 12 per- cent on $100 of evaluation, and we raised $12,000. Twelve percent.

So that just gives you an idea of how difficult it is. There is no tax

base, and this whole idea of technology gives such an opportunity

to become a part of the global economy that we just do not want

to miss this opportunity. But what we have found is that we just

don’t have the resources to go out and buy computers, and neither

do the people we serve.

We have three towns, for example, in Washington County. The

only library in that county is in the county seat. The other two

towns are ten and nine miles, respectively, from the county seat.

So, effectively, those other two towns do not have computers. What

36

we are trying to do, for example, is set up public access points in

those other two towns, and then make arrangements for the county

library to electronically browse the card catalog in the county seat

so that we can even get libraries for those towns.

So it is really, really, a very, very poor area, and it is very difficult to——

Mr. BILBRAY. I want to get back to that direct service, but let’s

talk about getting the hardware, getting the resources out to these

smaller communities.

Mr. Bailey, you would really be an essential part of that network

or some kind of coordination that there would be certain underserved communities that we recognize either by your organizational

League of Cities. What is the ability to create, basically, an agent

for these smaller communities? Because it comes down to the debate, do we break up the distributing system, federally, and try to

get it in every little neighborhood?

Because I really believe that you are going to find that we are

not going to be able—somebody is going to fall into the cracks—

that it is better to try to have a medium going both ways, somebody at the State or regional level being able to identify those communities that qualify, and then be able to move the assets into

those communities for them as their agents.

And your organization seems like it’s absolutely made in heaven

to be able at least to address the issue of creating those kind of vehicles.

Mr. BAILEY. Yes, sir. We have been in existence 60 years, and I

have been at this job for 9 years. And every week we average anywhere from five to ten new donees, recipients, in Alabama alone.

We are in all 67 counties of Alabama. We have 2,300 donees just

in Alabama.

But there are so many people that come in every day that say,

I have been mayor for 20 something years, I have never heard of

this program. We just do not have the funding, we do not have a

marketing program. I go and speak to the League of Municipalities

in Alabama. Every year I am at the County Commissioners Convention. We do the promotion as much as we can on a regular

basis, but it is one of those things.

The Governor had no idea that we existed until Hurricane

Katrina hit. We are now his new best friend. We have been able

to move trailers, we have been able to move bottled water, things

like that, that come from FEMA or other agencies that he had no

idea that we had access to. It is a shame that it took a disaster

like that to get the program to where it needs to be, but it is an

every-day challenge, not only in my State but all the 56 States and

U.S. territories that I am representing today.

We just had our convention here last week in D.C. only 15 States

showed up. They do not even have the money to come and network

us together. So to go back and carry a marketing program back to

the State and be sure that every town gets a letter from Alabama

Surplus Property, or NASASP, or whoever, is extremely difficult.

Mr. BILBRAY. And I will say this. I know that, as a former chairman of a county, too, after I left the city, ma’am, was the fact of

trying to get a good manageable size that is not—our county was

37

3,000,000, bigger than 20 States of the Union. Obviously, there are

some manageable sizes there.

Mayor, I have a question. In your State or in Alabama, is the use

of Internet cafes, they are called, really they are just small, little

operations where public has access to it, do they exist at all in the

rural areas that you know of?

Ms. SANDERS. They do not exist, but—they do not exist because

most areas—many of the areas, the more remote communities do

not even have broadband. So it is very difficult.

I mean, the WOWe-CDC that we operated, a wireless ISP that

tries to reach them, but to the point of how to possibly break this

down, there are seven regions in the State of North Carolina, and

we are a regional organization that has been designated by the

State of North Carolina to address issues of public access.

And so we could conceivably, regional organizations like ours,

State organizations, could—I mean, we don’t have a problem, for

example, with coming directly to Washington and picking up loads

of computers and then going back and using our trainees to upgrade those computers, and then we are responsible for the distribution. I mean, the State has funded us for the operation, but

what we don’t have is the access to the computers to set up the

public access points.

And the truth is that we really do need to be considering digital

libraries, and this is an opportunity to jump start the idea of digital libraries throughout rural America, because you do not need—

we are using churches and community centers, and whatever building we can find to set up 10, 12 computers. And all of a sudden

you have a digital library in a community that otherwise would

have never had it.

Mr. BILBRAY. Well, Mr. Chairman, I just want to say I represent

a very prosperous area, and the concept of the Internet cafe in the

United States tends to be the Starbucks with upper class, very

wealthy, very high educated. It may shock somebody, but I spent

a lot of time in Latin America, and that shocks me that when I go

out to rural America, you do not see access for the general public

into the computer.

But I can go to a small village on an isolated coastline in Baha,

CA, with no running water, no municipal electricity, but I can go

into an establishment with 10 computers that is hooked up to the

international system, and I can email my staff back and get my

stuff off. That kind of technology exists in the Third World.

And it is shocking to me as I go round the rural parts of my families from Monroeville, AL, and it shocks me that certain parts of

our country does not have half of the Internet connections that you

can find in Third World countries like El Salvador, Costa Rica,

Nicaragua, Mexico. And I would really kind of say that it shocks

me that they figured out how to put the Internet, using a lot of private sector involvement, but that has become part of their culture,

and it has not become a part of our rural culture yet.

Ms. SANDERS. Well, the telecoms will run lines to areas as long

as they are densely populated and they are not poor. But that is

where the line stopped in North Carolina.

Mr. BILBRAY. Well, Mayor, I am telling you that the technology—

I worked on the Telecommunication Bill 96 over at Energy and

38

Commerce, and I can tell you from personal experience in other

countries they do not use hard lines; they are using satellite connections. And it is sad that we still have communities like yours

that do not have access to the network that a city like Turtle Bay,

Baha, CA, would have with their little bit.

And, frankly, they are responding to an opportunity, and it just

shocks me that we still have not. So I just want to raise that. I

think it is something just to sort of question ourselves over why we

are doing that.

Mr. Chairman, I appreciate the chance to be able to ask questions, and I yield back.

Mr. WELCH. OK, Mr. Platts—thank you, Mr. Bilbray.

Mr. PLATTS. Thank you, Mr. Chairman, and my thanks again to

all of our witnesses.

I have just two questions before I have to run, and, Ms. Rhodes,

could you walk me how you see what you do today under the Computers for Learning program? And in your testimony talking about

giving special consideration to those with the greatest need, and

how your understanding of the legislation that is part of the hearings today would impact that application of who you give computers to, to the bill which says, or gives highest preference to EZ and

EC communities when transferring—you know—how is that going

to play out and impact what you do?

Ms. RHODES. The way the Computers for Learning program

works today is a supply and demand. The schools actually register

on the Computers for Program Web site their needs, and then the

agencies as they have computers that are excess, they then match

those computers that they have that are available up with the

needs of the school.

In terms of the bill, GSA has not commented on the bill yet, so

I really cannot say anything about that at this time, but we can

certainly give you comments.

Mr. PLATTS. Well, on the current process with Computers for

Learning, so the need you are talking about is what they say they

need in computers, not necessarily the financial ability of the community. But is there an assessment of the poverty level of the community or the school asking for the equipment, or is it just what

they are saying, ‘‘Hey, we need these type of computers,’’ but no accounting for whether it is a wealthy district looking just to get

them for free, or if it is a very poor——

Mr. BILBRAY. No litmus test.

Mr. PLATTS. Yes.

Ms. RHODES. Not to my knowledge, but I would like to clarify

that in writing.

Mr. PLATTS. OK. Yes, because I think that is one of the keys here

is trying to target where there is not the tax base, perhaps that is

as great to be able to purchase versus——

Ms. RHODES. Can I ask a question back there?

Mr. PLATTS. Sure.

Ms. RHODES. Dave, is there any——

Mr. ROBBINS. Excuse me, is there any school registration where

they have information if there are income empowerments on that

in place, medium empowerment zones, number of students receivVerDate 11-MAY-2000 12:31 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00042 Fmt 6633 Sfmt 6633 C:\DOCS\45292.TXT KATIE PsN: KATIE
39

ing federally assisted lunches, some general information on how

many ensured per student the school currently has?

Mr. PLATTS. Ms. Rhodes, you might just want to repeat that so

we have it in the record, the answer. Do you get it?

Mr. BAILEY. Dave Robbins spoke. He is with Federal Acquisition

Service, and his answer was within the system, within the Computers for Learning system, there are some questions that schools respond to relative to whether they are in the EZ zone, number

of——

Mr. PLATTS. Free or subsidized lunches.

Ms. RHODES. Subsidizes lunches—and I forget what the

other——

Mr. ROBBINS. Number of computers versus [remarks off microphone].

Ms. RHODES. Number of computers versus——

Mr. PLATTS. So there is some review of that, maybe not—it

doesn’t appear as substantive as what the bill proposes as far as

trying a better target.

Ms. RHODES. That is true.

Mr. PLATTS. OK. The other—and this is really to all, any of the

three witnesses—in the bill the requirement of mandating the use

of nonprofit reuse or recycling programs to make sure the equipment is kind of up to speed and really usable, do you have any

worry that part of the bill could have a negative impact in what

is made available to begin with? And that in the intent of making

it more usable, less is made available because of that being a mandate?

Ms. SANDERS. Well, what we have done is where the computers

need upgrading, we have used the opportunity to operate a training

program. And we train young people to upgrade computers and

maintain them, maintain them and repair them.

And so very often, I mean what we find that we have to do is

train people for jobs that do not exist. And this kind of helps us

create a job because what we can do is give those kids who are now

graduates of our training program an opportunity to upgrade these

computers that we then put out into communities for public access.

Mr. PLATTS. I am not sure—and I guess it is something to be

looked at—whether what you are doing, which sounds like a good

approach, would qualify under the bill’s language of the mandate.

Ms. SANDERS. Well, if we are given, as a regional technology center, were given direct access to the computers from GSA, and we

were able to come up and pick them up, we would bring them to

our community which is a very poor area, and we would upgrade

those computers, and then we would make them available to

schools, nonprofits, small municipalities, people who are engaged in

setting up public access and so forth.

So you eliminate the need. There is not a need for us to have a

perfect computer, because we will use it for training.

Mr. PLATTS. Mr. Bailey.

Mr. BAILEY. If I could go back on the CFL issue for just a second,

Executive Order 12999 when it was initially introduced, it is my

understanding that it provided transportation.

Some of the mayor’s concerns that she has mentioned as having

to drive two to 3 hours to pick up computers that may or may not

40

have hard drives, that may or may not just be nothing but a shell,

so it is our concern, and the Congressman from California mentioned, that having one central location to work this through. I

rarely take computers on the Federal side. I also run the State/Federal Surplus Property program, and I will get all the State surplus.

The only reasons I do not take them from the Federal side is because you never know what you are getting. If we could institute

something to where the hard drives remain in, they are just

cleaned over and over, whatever it takes to get the sensitive data

removed, then that would be beneficial for everyone.

Mr. PLATTS. So the mandate from your perspective would be a

positive one to make sure you are getting something usable, workable.

Mr. BAILEY. Yes.

Mr. BILBRAY. Can I followup on a question you just asked?

Mr. PLATTS. Yes.

Mr. BILBRAY. The gentleman yields. When they are doing this

closed-box auctioning to the nonprofits and the public agencies, do

they do the same closed-box auctioning with, once it has been reviewed, when it goes out to bid for private disposal?

Mr. BAILEY. I am not sure I understand the question.

Mr. BILBRAY. The question is this: It is right now, when the nonprofits in the cities, and the schools want to go after—it is a closed

box basically, take it or leave it.

Mr. BAILEY. That’s right.

Mr. BILBRAY. My question is, let’s just say it gets left, and then

it goes over for disposal under the fair market value to the general

public. Is it still a closed-box auction at that time?

Mr. BAILEY. Yes.

Mr. BILBRAY. OK, so, Mr. Chairman—and I will just say this. I

have to think that assets and resources are being lost to the taxpayer one way or the other by having the closed-box process; that

you will get more getting to the right place of the private sector

and to the public sector and the non-profit with an open-box system. And what is sold and put on the open market you will get a

higher price for that.

And then a lot of this like the RTC, I find the procedure does not

lend itself to the consumer or the taxpayer getting their fair share

out of it just because, bureaucratically, it is easier just to keep it

locked up and just take it or leave it. And I yield back.

Mr. PLATTS. Thank you, Mr. Chairman, and I yield back as well

and thank the witnesses again for their testimony.

Mr. WELCH. I will ask a few questions. Thank you.

Ms. Rhodes, on the GSA rules for how Federal agencies sell their

surplus, it looks like everyone has to go through GSA unless they

get a waiver. In a letter that GSA wrote to the chairman, GSA

made it clear that waivers would be routine, but other Federal

agencies and private auctioneers seemed to be getting a different

message. It may be, from your perspective, it is routine; from theirs

it is kind of a big deal.

Is GSA sending a strong message to Federal agencies that they

cannot and should not seek private sector alternatives?

41

Ms. RHODES. No, actually, we are sending the opposite. We are

encouraging agencies to find best practices whether that be with

private sector or their internal processes.

Mr. WELCH. Are you seeing agencies take advantage of the waiver process?

Ms. RHODES. We currently have 13 agencies requesting waivers,

and—we have 10 agencies, I think, requesting 13 waivers, I said

that wrong, incorrectly, I am sorry—that we are currently reviewing. And I do not see that we are sending any message that this

is something they should not be doing.

Mr. WELCH. What are your thoughts about providing incentives

to agencies to find the most efficient solution by allowing them to

keep the proceeds of their auctions. And, as you know, that option

is being considered for real property sales. In fact, there is a bill

by Mr. Duncan on that very topic. Is this an option that, in your

judgment, would make any sense for personal property as well?

Ms. RHODES. I think the only way an agency would, certainly, be

interested in being a sale center would be if they could keep their

profits.

Mr. BILBRAY. So what do you think of that?

Ms. RHODES. Personally, I think it is a good idea.

Mr. BILBRAY. OK. Mayor, it is amazing what you have done I

mean you created jobs and everything with all this. When every

other community that I know of does not even know these opportunities exist, how did you figure it out?

Ms. SANDERS. Well, matter of necessity. We managed to get, we

managed to build with the grant the Technology Center, but what

we did not have was operating capital because we didn’t have a

source of that. So we had to become very entrepreneurial in how

we dealt with this, and plus that, we had to create jobs that did

not exist in our community. Nobody is rushing to small-town America to set up businesses. So if our people are going to work in this

field—and they need to—then we had to entrepreneurial in our approach.

Mr. WELCH. I want to talk about—you are probably the best person to talk to about this—some of the practical issues that you face.

You had mentioned local schools in small towns and nonprofits

were able to pay for the organizational expenses of shipment and

upgrades.

What do you mean by organizational expenses and who paid the

remainder of those costs, because those can run into some real

money?

Ms. SANDERS. I could give an example. We have a Work Force

Development Board that pays for us to train students in upgrading

computers. Well, part of the income from that then will go to coming up here, for example, to get a shipment of computers.

We will come back to our community with those, and those students can now work, be paid for the upgrades and the shipping,

and we might charge a school or non-profit less than $200 for a

computer, the mouse, the keyboard, everything. And that makes it

affordable.

And when we go in to set up the public access points, there is

no cost to them relative to the networking because the State has

given us some operating capital. Now, since they made us the reVerDate 11-MAY-2000 12:31 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00045 Fmt 6633 Sfmt 6633 C:\DOCS\45292.TXT KATIE PsN: KATIE
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gional technology resource, so they gave us money for the operation. What they didn’t give us money for was the computers.

So we need free computers. We do not need to have to buy them

from anybody.

Mr. WELCH. You were talking about this tremendous program,

the WOW program. Where do you get your funding for that?

Ms. SANDERS. Well, the building itself came from a USDA root

of community facilities grant, and the operating capital for the first

4 years came from about four different foundations, grants, wherever we could find money. But we recently got put into the State

budget on a pilot project which says the State wants to test the efficacy of having regional technology centers that can become resources for 15, 16 counties each.

Mr. WELCH. Yes.

Ms. SANDERS. And that is what we have become as a kind of

pilot program for the States.

Mr. WELCH. Well, thank you, and congratulations on all your

success.

Ms. SANDERS. Thank you.

Mr. WELCH. Mr. Bailey, Mayor Sanders has been telling us that

it is next to impossible for small towns far from their State capitals

to acquire surplus Federal property through State agencies. And I

come from a small town, as I mentioned early on, and I don’t know

that anybody in the small towns I represent as aware that this is

a potential possibility.

What mechanisms do States have in place, if any, to get this

property to these areas?

Mr. BAILEY. We institute a donee screening procedure in Alabama where the donees, the recipients, the mayors of towns, municipalities that I mentioned earlier can actually go on GSA excess,

just like I do and my guys that work for me to everyday, and look

for property anywhere in the world.

We have a minimal service charge. We do not turn a profit in

Alabama; we lose money every year administering this program, as

do most States in our Association.

The donees can get on GSA excess, they can screen property and

access it through there just like we do. When a donee does that,

then Alabama—I can only speak on Alabama, I cannot speak for

North Carolina—in Alabama when a donee does that, we transfer

that property at the very minimal cost, which is usually 1 percent

of the original acquisition, to handle paperwork, overhead things,

overhead expenses that occur from day-to-day business.

Mr. WELCH. Yes.

Ms. SANDERS. Please, just let me ask you this. The problem we

have is digital literacy. As I told you, these towns are run by

clerks, and they do not have the digital literacy to even go to that

site and even find out what is available. And that would be a problem for us in that respect.

Mr. BAILEY. I understand. Mr. McCarthy mentioned last week,

we cannot sent them an e-mail notice because they do not have the

computers to receive the e-mail there to work the programs.

Ms. SANDERS. Right.

Mr. BAILEY. So we are with you on this. We would be glad for

a resolution some way, one way or another.

43

Mr. WELCH. Yes. Mr. Rhodes had pointed out that the Computers

for Learning in H.R. 752 deal with computers at the point when

they are still considered excess property; not the surplus property

that the State agencies handle. Does that create a redundant process?

Mr. BAILEY. No, it is Federal statute that Federal agencies have

first access to it.

Mr. WELCH. Yes.

Mr. BAILEY. And we are fine with that.

Mr. WELCH. Right.

Mr. BAILEY. The best utilization possible is for it to stay within

the Federal Government. After that is when it trickles down to the

State surplus.

Mr. WELCH. So you think we need State agencies to help distribute the property?

Mr. BAILEY. Yes, sir, most definitely. If nothing else, we provide

accountability. We have proven over the years that we have the

network in place.

Mr. WELCH. Yes.

Mr. BAILEY. We are already serving these people. Obviously, we

are not serving all of them. That would be a great goal to set. But

we are making strides in those efforts.

Mr. WELCH. Great. Do you believe that all Government surplus

property is being made available to State agencies before being offered for auction?

Mr. BAILEY. Most definitely not.

Mr. WELCH. It is not. What can we do to change that?

Mr. BAILEY. I mentioned the Exchange Sale Authority that GSA

has in place. We feel like that a lot of properties being sold for pennies on the dollar with no parameters set or not accountability—

FEMA trailers are a real good example. We petitioned to get those

brought out of the Exchange Sale to where we could run them

through the donation program. That allowed other Federal agencies to receive trailers as well that would not have if they would

have all stayed to be sold.

So not all Federal agencies would be against some parameters

set on Exchange Sale.

Mr. WELCH. Yes.

Mr. BAILEY. The State agencies, this is our No. 1 congressional

concern, has been since I became president 18 months ago, we are

up here every two or 3 months meeting with organizations and national associations trying to pursue this to get some congressional

help, to set some parameters set on that. There is no doubt in our

mind, and we have requested reports to see how much of this property is going out the door that nobody knows, and we have yet to

receive any of those.

Mr. WELCH. Well.

Mr. BAILEY. And I think that would be something this committee

needs to look at.

Mr. WELCH. Thank you.

Ms. Rhodes, so you have any followup comments on that, that

might be helpful to us?

Ms. RHODES. We actually do have an Exchange Sale Report, and

if I am correct, I believe we are compiling that now that we cerVerDate 11-MAY-2000 12:31 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00047 Fmt 6633 Sfmt 6633 C:\DOCS\45292.TXT KATIE PsN: KATIE
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tainly could provide to you. I am not aware of any exchange sale

that goes for pennies on the dollar.

Exchange Sale was actually not a disposal tool, it is an acquisition tool. The agencies have not determined their items to be excess; they are determined that they still need these items, so they

are still in use needed by the Federal agencies.

A good example of an exchange sale would be equipment that,

say, NASA would have that they would turn back to their OEM;

the OEM would give them money, then, toward an update of that

particular item or piece of equipment. So it really has not reached

the disposal arena yet. It is still an in-use item, it is an acquisition

tool.

Mr. WELCH. OK, thank you.

Ms. RHODES. But we would be more than glad to share the reports that we have.

Mr. WELCH. Thank you. Mr. Bilbray, do you have any other questions?

Mr. BILBRAY. Ms. Rhodes, I have a question. I am looking at the

different type of property to dispose of. How do you know when to

sell surplus and when to scrap it?

Ms. RHODES. That is a decision that is made by the agency at

the time. I do not know that I could answer that generally at this

time.

Mr. BILBRAY. Which agency? Do you mean the agency that is

using the equipment?

Ms. RHODES. The selling agency.

Mr. BILBRAY. Is there any in our procedures, is there any decommissioning inventory done for our equipment when we take it off

line where the user basically fills out an inventory of the condition

of the equipment? Because I know, like in law enforcement, when

you decommission a cruiser, they will get the mileage, they will get

basic condition, any references to any problems, and that document

is there.

Do we do any such thing, let’s say, with computers when they

are decommissioned?

Ms. RHODES. I cannot specifically say for computers. I do know

that we have condition codes that are assigned to every item that

goes to GSA excess, whether it is in a good condition. Each of the

codes have a description, and I am sure that applies to computers

as well.

Mr. BILBRAY. I would turn it around, Mr. Bailey, if we had a decommission inventory basically on the box so that there was some,

at least some review of what was there, what was the deal, what

was the general condition of it. Would that not at least be a step

out of the black box?

Mr. BAILEY. That would be a huge step. There is a warehouse

within 20 miles of this building that has more computers than anyone can ever imagine. I go there once a month, and I cannot take

them because I do not know what is in them. They are shrinkwrapped on a pallet. We have no idea.

Mr. BILBRAY. Mr. Rhodes, much like we do with decommissioning

our squad cars, the best people to really do the inventory are the

people who have been using it and now are basically taking on new

equipment. And I sure hope we can take a look at, at least a proceVerDate 11-MAY-2000 12:31 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00048 Fmt 6633 Sfmt 6633 C:\DOCS\45292.TXT KATIE PsN: KATIE
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dure that does not seem like a big deal at the time to the user, but

means a huge deal later down.

And I have to, Mr. Chairman, almost—when you talk, Mr. Bailey, I almost can picture the last scene in Raiders of the Lost Ark,

and the warehouse after warehouse of how the hell we are ever

going to find the right computer in this group. And I would it at

least show the common decency that before you close the box up

and sent it to the warehouse, somebody puts on two angels carrying in a case and give some idea what is inside that box.

Thank you very much. I yield back, Mr. Chairman.

Mr. WELCH. Thank you.

Well, on behalf of the committee I want to thank you for your

very, very helpful testimony. Ms. Rhodes, thank you. Mayor Sanders, thank you, it sounds like a great community. And Mr. Bailey,

thank you very much for your leadership. This panel is now completed.

Now I would like to welcome our second panel, and the panel

members are John Rosenthall—come on up. Thomas Williams, Mr.

Williams. And as with the first panel it is the custom of this committee to swear in the witnesses, and I would ask you to stand.

[Witnesses sworn.]

Mr. WELCH. The record will reflect that the witnesses answered

in the affirmative and welcome.

Mr. Rosenthall, I understand you are the president of Small

Towns Alliance where you advocate for economic development opportunities for small towns. A lot of us in Congress find that work

the Lord’s work.

And Mr. Williams, co-founder of Williams and Williams Real Estate Auctions, and the president of National Auctioneers Association. Do not talk so fast, OK? And we are delighted to have you

here.

And we are going to be going in to vote, so what I would like to

do is have you give a summary of your statements, and then we

will be able to followup with some questions and get the benefit of

your experience. Thank you.

Mr. Rosenthall, do you want to start?

STATEMENTS OF JOHN A. ROSENTHALL, PRESIDENT, SMALL

TOWNS ALLIANCE; AND THOMAS L. WILLIAMS, CO-FOUNDER

WILLIAMS AND WILLIAMS REAL ESTATE AUCTIONS, AND

PRESIDENT OF NATIONAL AUCTIONEERS ASSOCIATION

STATEMENT OF JOHN A. ROSENTHALL

Mr. ROSENTHALL. Thank you, Mr. Welch.

My name is John Rosenthall. I am president of the National

Small Towns Alliance, and we are pleased that one of our members, Mayor Bunny Sanders, is here today.

For the last 10 years, I have been working to get excess surplus

Government computers to small towns just like Roper, NC. In my

statement that I have submitted, there is a newspaper article from

Augusta, GA. Augusta is not a small town, but Augusta has 15 elementary schools that have computer lists, computer labs. And a

computer list/computer lab is not a lab at all.

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Now, what we have been advocating is taking the excess and surplus Government computers and distributing them through these

centers such as the one that’s in Roper, NC. The Executive Order

12999 is working, and it is working well. It is working very well,

but the question becomes, who is it working well for, and from

whose perspective?

From the Government’s perspective, it works well because it gets

computers out there. For the small schools that come to D.C. or to

a Federal facility and pick up a computer, it works well for them.

But for a school that cannot afford the transportation cost, it does

not work for them at all. And the value of the program should be

measured, not necessarily by how many people it serves, but it

should be measured to some degree by the number of people that

it fails to serve, the people who cannot participate at all.

I have seen estimates that the Government disposes off nearly

500,000 computers a year. If we could take some of those computers and set up the regional center such as the one that Mayor

Sanders was, that would be a very effective way of disposing of

those computers and making sure they get to the people who need

them more so than anybody else.

Now,I have taken a look at the Executive Order 12999, and,

frankly, it appears to me that the Government has the authority

right now to distribute computers to non-profit organization that

can establish these refurbishing and distribution centers. The literal verbiage or language of 12999 states that the Government can

deliver these computers to schools, non-profits, and educational

non-profits.

Now, the Department of Agriculture has taken the position that,

yes, our policy limits the distribution to schools and educational

nonprofits. They have taken the position that their policy is not inconsistent with the Executive order, but it does not exercise the full

authority of the Executive order. And I find it a little bit ironic that

the Department of Agriculture would also agree that distribution

of computers to small towns and rural areas wold be beneficial to

those small towns and rural areas, yet and still they will not extend their policy to the point that makes that particular distribution possible.

Now, students. Let’s go back to the 15 schools in Augusta, Georgia. If you talk about a student having access to a computer at

school, that is one thing. If you can have it at home, that is a whole

different ball game. If you have access to a computer at the library,

that is another. I am familiar with some of Congressman

Butterfield’s district, and there is a small town called Ahoskie, NC,

I have been to, occasionally, and Ahoskie has five computers in the

library. The library is open some days from 10 to 6; other days

from 2 to 6.

Kids get out of school at 4 o’clock, 3:30 to 4 o’clock. If you are

waiting to use the library, if you are on the way up and somebody

is waiting, you have 20 minutes. And it is closed on Sundays. So

the library option is not available to most kids, and then if you

have transportation, and you can get to the library, our you can

walk to the library, it is available. But if you do not have transportation to get to the library, that is not even an option.

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What I would recommend to the Congress is that to get surplus

and excess computers to the most needy communities, the most feasible way of doing it is through these regional technology centers.

In addition to getting the technology out there, there is a possibility of creating an entire information technology industry in small

towns. The Government spends a tremendous amount of money

every year on information technology. Some of that work can be

done here, some can be done anywhere.

The type work that can be done in these technology centers could

create an infinite information technology in rural America and

transfer some of the jobs from the Washington, DC, Metropolitan

Area to rural America. That would be what we would recommend.

And thank you so much for this opportunity today, and I look forward to any questions you may have.

Mr. WELCH. Thank you very much, and I am thinking about my

own library in Hartland, and this is exactly right, you know. It is

a great place, kids use it, but the usable hours for them,when you

can factor in school is pretty limited. And we do have a few areas

where we have these regional technology centers, so that is very

practical, helpful advice. Thank you.

[The prepared statement of Mr. Rosenthall follows:]

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Mr. WELCH. Mr. Williams.

STATEMENT OF THOMAS L. WILLIAMS

Mr. WILLIAMS. Mr. Chairman, I am going to speak on a little different issue than what we have been talking about on the computers.

Mr. Chairman, members of the committee, my name is Tommy

Williams. I am president of the National Auctioneers Association

and co-founder of Williams and Williams Real Estate Auction Co.

in Tulsa, OK. I appreciate the opportunity to speak before you

today, in opposition to GSA’s proposal, proposed rule governing

Federal asset sales.

The National Auctioneers Association represents the interest of

approximately 6,000 professional auctioneers who conduct online

and in-person auctions throughout the United States and around

the world If GSA’s proposed rule is enacted, agencies will no longer

be able to choose the best option for their individual needs, thereby

eliminating the beneficial role of many experienced, knowledgeable,

private auctioneers.

Let me first provide you with an example from our nationwide

NAA membership to show how the Federal Government, small

business customers around the country, and Federal taxpayers

have been well served by our auctioneers. Before the GSA told the

U.S. Forest Service that private auctioneering auctions were no

longer allowed, Jerry King of Fletcher, NC, and his family business

managed the sales of heavy equipment for the agency. Prior to Jerry’s work for the Forest Service, the agency’s returns on their sales

of surplus property were only a fraction of the property’s value.

Thanks to Jerry’s expertise selling vehicles and equipment, Jerry

was able to double and even triple the returns for the agency.

Jerry like to tell the story of his first auction for the Forest Service. When he was interrupted midway through the auction by the

agency’s property manager, who enthusiastically insisted that

Jerry sign on as a permanent auctioneer, Jerry and his employees

had already doubled the returns of any previous sale held by the

agency.

Unfortunately, agencies will no longer be allowed to simply

choose Jerry and other private auctioneers across the country if the

proposed rule is enacted as it currently reads. Let me briefly describe how that is so.

The GSA’s proposed rule requires all Federal agencies to conduct

their surplus sales through a GSA-approved Government Sales

Center whether those agencies wish to use a Sale Center or not.

Private businesses such as auctioneers would be excluded from continuing to service this market under their current arrangements

for the overwhelming bulk of Federal surplus sales. In fact, the

chilling of the marketplace has already started.

As GSA representatives have told agency officials for 2 years,

that the pending rule change is imminent, and agencies have shied

away from contracting with a private sector. As written, agencies

would have to cease managing their own personal property sales or

apply to become a Sale Center. A GSA-chaired panel has sole discretion to decide whether an agency can become a Sale Center.

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The rule grants a GSA-effective monopoly rights to sell the vast

majority of Federal surplus personal property as GSA currently operates the only full-service Sale Center. That is the only Sale Center that the sales that sells all Government surplus. The other Sale

Centers GSA likes to talk about are extremely limited in scope,

ironically by the GSA itself, to a tiny segment of Government surplus.

The NAA firmly believes this is a clear conflict of interest. Many

executive agencies have developed private partnerships and solutions to serve their agencies’ personal property disposal requirements. The NAA and others have requested that a provision be

added to the rule allowing agencies to opt out of the requirement

of using an FAS Sale Center and instead select the best option for

their needs. The GSA should make this change.

Let me also briefly rebut some of the arguments that the GSA

likes to make in support of its proposal: First, the GSA says that

only specially trained Federal agencies like the GSA itself can handle the complex sales of selling Government surplus. The GSA sold

$130 million in goods and services in 2007, but the live auction industry sold $270.7 billion over 2,000 times that amount.

Second—and I think this is very important—the GSA says that

they do not run the only surplus Sale Center; however, GSA’s operations is the only full-service Sale Center. GSA’s $130 million in

sales in 2007 represented some 90 percent of all Federal civilian

surplus sales. Moreover, 99 percent of all civilian Federal property

managers are now forced to use GSAauctions.gov as part of the

Federal asset sales initiative. That sounds pretty close to a monopoly to me.

Third, the GSA will say that a Federal agency can waive out of

the Sale Center requirement in order to use a private sector option;

however, the devil is in the details as a so-called waiver requirements are both temporary and unrealistic.

Let me quote from the letter received from GSA yesterday. They

did reply to a letter I wrote in November: ‘‘Waivers are expected

to be of a limited duration such that the waive sale solution either

becomes a Sale Center or the agency identifies and migrates to a

better sale solution, which is an approved Sale Center.’’

Very few property managers will even attempt to jump through

the bureaucratic hoops needed to apply for a waiver. That is especially true since the GSA, with a vested financial interest in limiting competition, has a sole authority to approve or reject the waiver request in the end.

Fourth, the GSA will tell you that consolidating all auctions into

one Web site is good for the public, but couldn’t GSA’s Web site

just be a portal listing all private and public sector Web sites selling Federal surplus?

Fifth, the GSA will claim that its prices are competitive. GSA

charges a minimum commission of 20 to 25 percent for all sales.

The vast majority of private sector auctioneers selling Government

surplus charge just 5 to 10 percent for the exact same service and

realize better returns for their customers as well.

Finally, I want to add that the NAA would strongly support a

policy change enabling individual agencies to keep the Government’s share of the surplus sales proceeds instead of that share reVerDate 11-MAY-2000 12:31 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00059 Fmt 6633 Sfmt 6633 C:\DOCS\45292.TXT KATIE PsN: KATIE
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turning to the general U.S. Treasury. This change would encourage

agencies to choose the surplus sale solution that best maximized

their return.

Mr. Chairman, we do not oppose the GSA’s overall goals for eGovernment; what we oppose is taking the sale of surplus property

completely away from the private sector and make it solely a Government function. There is no justification for this. All we ask is

for the committee to ensure that each Federal agency has the opportunity to choose a sale solution for their private or GSA run

that provides the best, most cost-effective approach in their individual case. Without this committee’s intervention, the GSA will succeed in squeezing out small businesses across the country.

Thank you for the opportunity to testify, and, of course, I would

be happy to answer any questions.

Mr. WELCH. Well, thank you very much for your clear point of

view. We appreciate it.

[The prepared statement of Mr. Williams follows:]

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Mr. WELCH. I do not have questions at this point. I have to go

to another committee hearing, but I just want to thank you. One

of the things that we are doing here and have the benefit of you

all coming, both panels of witnesses, is focusing the attention of

Congress on what is a problem. And we have Roger Clemens downstairs, but I actually think if we can make progress on this issue

of how do we utilize this surplus property, how do we get it to people who need it, who can use it and make it practical for some of

these kids, do it in ways that are fair to the taxpayers will maybe

accomplish more than what we will if we each come out with our

own opinions about did he, or didn’t he?

Mr. WILLIAMS. I certainly agree.

Mr. WELCH. So I just want to thank you. Congressman

Butterfield has been providing tremendous leadership here, and

what is interesting to me as I listened to each of you testify is how

this does cut across Small Town America. I mean it is an issue that

is important to taxpayers; it is an issue, obviously, that is important to our own sensibility about using things before their useful

life is ended. And what it requires us to do is find practical ways

to get that piece of equipment that has gone beyond its useful life

in the original home into the hands of one of those young kids, to

do it in a way that is going to be most beneficial to the taxpayers

and most beneficial to our future.

So this is very, very important, and you all are at Ground Zero

on address this, and I want to say on behalf of Chairman Towns

I appreciate his leadership on using his position as chair of this

subcommittee to give you an opportunity to educate us. And our obligation to you is that we followup.

So I want to thank each and every one of you for being here.

Thank you.

Mr. WILLIAMS. And thank you very much.

Mr. WELCH. This hearing will now come to close, without objection.

[Whereupon, at 3:35 p.m., the committee was adjourned.]

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