Information Concerning the 'Sole Brand and Model' Acquisition by the Veterans Administration of an IBM 370-168 Computer for the VA Data Processing Center at Hines, Illinois

The Veterans Administration (VA) intends to lease an IBM 370-168 computer for 36 months at a cost of about $3.8 million, exclusive of certain peripheral equipment. VA plans to use the computer to assist in processing veterans' compensation, pension, and education claims until the proposed TARGET system, an advanced communications-based system currently being developed to replace the existing payment systems, has been fully implemented.

The VA decision to consider only an IBM-brand computer was reasonable. Transition to the interim system, which is intended to serve VA needs only until the summer of 1978 when the TARGET system is planned to be fully implemented, would be facilitated by avoiding the potentially difficult and time-consuming effort of converting existing IBM-oriented programs to non-IBM equipment. However, VA has not adequately justified its specific need for an IBM 370-168 computer. Over the past several months, changes have been made in current and planned computer processing at the Hines center; however, VA has not reassessed its needs to determine whether a less costly model would have fulfilled its requirements and has continued to rely on a November 1974 study by a private consultant to justify the acquisition. In the opinion of GAO, the revision of the planned requirements alter the computer processing environment anticipated at the time of the private consultant's study. It would be difficult to quantify the effects of the recent changes as VA has not determined the specific performance characteristics required to support the increased workload. GAO was advised that VA was acquiring such a large machine in order to provide for all eventualities. The lease provides for replacing the computer with a less costly model at any time during the term of the contract. Such a downgrade would decrease the monthly lease charge, although VA would incur an initial charge for the replacement action.

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