    [House Hearing, 110 Congress]
    [From the U.S. Government Publishing Office]

        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

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                  COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                     HENRY A. WAXMAN, California, Chairman
    EDOLPHUS TOWNS, New York             TOM DAVIS, Virginia
    PAUL E. KANJORSKI, Pennsylvania      DAN BURTON, Indiana
    CAROLYN B. MALONEY, New York         CHRISTOPHER SHAYS, Connecticut
    ELIJAH E. CUMMINGS, Maryland         JOHN M. McHUGH, New York
    DENNIS J. KUCINICH, Ohio             JOHN L. MICA, Florida
    DANNY K. DAVIS, Illinois             MARK E. SOUDER, Indiana
    JOHN F. TIERNEY, Massachusetts       TODD RUSSELL PLATTS, Pennsylvania
    WM. LACY CLAY, Missouri              CHRIS CANNON, Utah
    DIANE E. WATSON, California          JOHN J. DUNCAN, Jr., Tennessee
    STEPHEN F. LYNCH, Massachusetts      MICHAEL R. TURNER, Ohio
    BRIAN HIGGINS, New York              DARRELL E. ISSA, California
    JOHN A. YARMUTH, Kentucky            KENNY MARCHANT, Texas
    BRUCE L. BRALEY, Iowa                LYNN A. WESTMORELAND, Georgia
    ELEANOR HOLMES NORTON, District of   PATRICK T. McHENRY, North Carolina
        Columbia                         VIRGINIA FOXX, North Carolina
    BETTY McCOLLUM, Minnesota            BRIAN P. BILBRAY, California
    JIM COOPER, Tennessee                BILL SALI, Idaho
    CHRIS VAN HOLLEN, Maryland           JIM JORDAN, Ohio
    PAUL W. HODES, New Hampshire
    CHRISTOPHER S. MURPHY, Connecticut
    JOHN P. SARBANES, Maryland
    PETER WELCH, Vermont
    ------ ------

                         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      BRIAN P. BILBRAY, California
    CHRISTOPHER S. MURPHY, Connecticut   TODD RUSSELL PLATTS, Pennsylvania,
    PETER WELCH, Vermont                 JOHN J. DUNCAN, Jr., Tennessee
    CAROLYN B. MALONEY, New York
                        Michael McCarthy, Staff Director

                                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

       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 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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        [GRAPHIC] [TIFF OMITTED] T5292.034

        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.
        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 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 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 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 e-FAS 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 WOWe-
    CDC.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 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.
        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
    low-wealth 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 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
    low-wealth 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.
        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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        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
    percent 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 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 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 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
    receiving 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 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 non-profits 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?
        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 regional 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.
        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 certainly 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
    shrink-wrapped 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 procedure 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.
        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.
        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.
        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 returning 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
    e-Government; 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.]