[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/
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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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    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.]

                                 
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