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Mr. COMER. Yes. We will have complete deployment of the system by 1997.

Senator DECONCINI. Can you do it for that cost figure?

Mr. COMER. We can, assuming that the Congress continues to fund the program at the levels we have requested previously. Bear in mind, Mr. Chairman, the image system is already functioning and is available to three examining groups now. The issue is the loading of the patent data into the storage data base and then providing the work stations, which we propose to do through the Casino environment.

The other parts of the system-the patent application management system, which is basically the electronic filing and internal electronic handling of the case, is a system that will find completion in the 1996 to 1997 timeframe.

Senator DECONCINI. Will you be able to do that with the estimated costs which have been submitted to us?

Mr. COMER. Yes.

Could I speak just briefly on the cost issue? We have come before the committee a couple of times with our best estimates at different times in the past. We were here in 1983 and put forward an estimate of about $341 million in 1982 dollars. But if you adjust our estimates for constant dollars, you will find that the proposed cost of the fully deployed system has actually come down.

The 1983 estimate in 1992 dollars was $1.04 billion. Today, we are proposing that the total life cycle cost of the system through 2002 will be about $972 million. This includes the money which has already been spent.

Senator DECONCINI. You said, $1.04 billion?

Mr. COMER. If you look at the 1983 estimate in constant 1992 dollars, it was $1.04 billion.

So we have received the benefit of more cost-efficient technology. There have been delays because of project reorganization and congressional funding issues, but those delays to some extent have worked to our advantage in that we have the benefit now of cheaper technology.

I could give you one example of that. The work stations we currently use for the combined image and text system cost us approximately $45,000 apiece. The next large group of those stations that we buy will cost us about $20,000 apiece. When we get into the 1994 timeframe, when we begin buying the PC's for all examiners, that PC will be an APS text and image work station as well and will only cost us $4,000 to $5,000 each.

So we are getting the benefits from some tremendous improvements in the cost-beneficial structuring of the technology. This is one reason why the costs have remained constant.

Senator DECONCINI. Could you explain to us, for the record, how this meshes with your need for additional personnel? I don't quite understand your rent growth and how you estimate that with the savings from automation that you think will be in place at the same time. It seems to me that those are cost-effective measures that should reduce personnel or reduce the historical growth of personnel, if nothing more.

Mr. COMER. We believe that over the long term it will. But remember, Mr. Chairman, the system will not be completed and fully

deployed until 1997. So the figure I gave you for our square footage was the 1997 figure.

For that next 5 years, as the system is coming online

Senator DECONCINI. That seems to me to be a phenomenal growth, but I don't have the figures here of the space. I would like to see it broken down not only as space but also as personnel.

Mr. COMER. Mr. Chairman, the PTO has been one of the fastest growing programs in the entire Federal budget for the last 20 to 30 years.

Senator DECONCINI. I would like to understand why if the growth continues historically, why you need the same historical number of square feet and the same historical number of personnel to do something that you have automated that is supposed to reduce the number of people and make it more effective.

Mr. COMER. The space projections for 1997 are assuming, of necessity, that we will be working primarily in a paper environment over the next 5 years, that we will begin to see the benefits of transitioning out of paper examination processes in that period from 1996 to 1997 and beyond.

So when you start then on the other side of that curve, the post1997 timeframe, we do anticipate that we will begin to get some cost-efficient reductions in space needs and hopefully in hiring as well.

Senator DECONCINI. But not until then?

Mr. COMER. It will be a transitioning thing, but essentially that is correct. It will be after that point in time.

Senator DECONCINI. That is confusing to me. It seems to me that as you automate, you should be achieving some efficiencies which ought to translate into less personnel and space based on a historical growth pattern. I may be all wrong. You don't need to submit it to me now, but I would like to see why it doesn't work out. Maybe it does, and maybe that's what you're saying. It just seems as if you're expecting a huge growth here in space and personnel and also a big commitment in automation; where is the efficiency brought into the system as a result of the automation of the Office? Do I make myself clear?

Mr. COMER. Yes, sir. We would be pleased to provide some details for the record.

I would just note as an example that we anticipate saving—and we have already factored this into our plans-about 130 clerical positions as a result of providing PC's to the examiners. They will be doing more work themselves at a work station.

Senator DECONCINI. Do you have the capacity of doing cost estimates like that?

Mr. COMER. Yes, we do. In fact, we have done a complete costbenefit analysis.

Senator DECONCINI. Please make them simple for some of us up here. That would be helpful so that I can try to understand it. I'm a little confused here as to your expected growth and also this big commitment we have made to automation and will continue to make, and where the payoff is. I would like to see that.

Mr. COMER. We will be pleased to provide some of the detailed information.

Senator DECONCINI. Thank you, Mr. Comer. We will submit a host of questions to you. We would appreciate you answering them for the record.

Mr. COMER. Thank you, Mr. Chairman.

Senator DECONCINI. Our next witness will be Ms. Hecker, Director, Resources, Community, and Economic Development Information Systems, General Accounting Office, Washington, DC.

Ms. Hecker, thank you for being with us. Thank you for the time you have spent on this important project. We would appreciate it if you would summarize your findings for us, please. Your full statement will appear in the record.


With me today is Dr. Rona Stillman, the Chief Scientist of the Information, Management, and Technology Division, of which I am a part as well.

Today I will summarize from my remarks in four areas: A very brief background on the APS and major systems; a summary of what we believe has been accomplished to date; what remains to be done; and finally some open issues to be examined in our ongoing evaluation.

The first issue is APS background-as you know, it began in 1983. On page 4 of our prepared statement and on the chart before you, we provide an overview of the major components of the system. As you see, we have broken it into application, examination, and dissemination stages of the patent process.

The application management system that has been described is for electronic filing and would replace the paper application folder. The image search system replicates the manual search process of going through the shoe boxes to examine images. The classification system is basically an indexing of all the patents. The text search system provides text search by individual words into all U.S. patents and selected foreign patents. Then there is the patent sales system which provides prints or copies of both patents and trademarks.

I think it is important to begin with a review of the objectives of the APS. They have been and remain to automate the paper files and the paper handling operations; to have automatic communications with applicants and other constituents; and finally to automate the application, examination, classification, and dissemination process.

Looking at the progress to date, it is useful to remember that PTO has been working on the system for 10 years, about $416 million has been spent to date, and about $555 million is projected to be spent over the next 10 years until the year 2002.

Again, looking at the chart, the text system is the only one of the five systems that is fully operational. Basically, all 1,800 examiners

have access to automated text search of all patents issued since 1971. In addition, the image system has been partially implemented. It is in 22 of the 17 examiner groups. Those groups can access the images for the classification areas within which they work. So they don't have all the images, just the ones in their areas. Image search is available at this point to about 270 examiners or about 15 percent of all examiners in the work force. Finally, there is an initial capability of the sales and classification system that is somewhat operational.

The chart also shows what remains to be done and that is really important. You can see this by the overview. Clearly, the major system that hasn't even been started is the application system. This system is projected to be awarded in 1995 and to be deployed in 1999. These are the latest figures we got from PTO, however I'm afraid they differ from what you heard from Mr. Comer this morning.

Also, the image system needs to be extended to the 85 percent of the remaining examiners in the other 15 groups. While the image system is projected to be made available to all the examiners by 1996, it won't include the foreign patent images which aren't projected to be included until after the year 2002.

Finally, the classification system-which is an important system that would allow automated reclassification of patents, which occurs very frequently-has been deferred and is not now in the scheduled plan that we have from the Patent Office. Clearly, a lot remains to be done; a major portion of the system has yet to be built and even designed.

While our work is preliminary, we have some issues that we have identified which we would like to share with you today. These are issues that affect the future development and success of the APS.

One is about the problems we have experienced in getting consistent cost and schedule estimates from PTO. The second is the congruence, or complementarity, of the APS with PTO's newly issued long-range plan. The third issue is the implication and implementation of a new system development methodology being used to manage the development effort. And finally, PTO's progress in addressing user concerns and tracking the actual impact of APS automation.

I will briefly discuss each of these and then will welcome any questions you may have.

The cost and development estimates have been a real problem in the course of our review. Basically, until this very moment, we have been getting new numbers from PTO on both the cost and schedule. We were told at one meeting that the Patent Application Management System couldn't even be afforded within the current budget. We were told at another meeting that it would be done in 1999. You have heard today that it would be done in 1997. These estimates are inconsistent.

We have a schedule of the APS. It is based on the assumption that PTO has made that it will have a straight line availability of funding for APS of $55 million per year, and that has been very carefully stretched out and budgeted. All the financing shown on that schedule for PAM is primarily in the 1997-99 timeframe.

So there have been real problems in getting a consistent story within the organization. From the automation group, the budget group, and even from the Commissioner, we get different stories. We got a written response to a facts paper that we shared with PTO, that was withdrawn because there were inconsistencies in it. I think the reference you made to wanting some clear numbers, wanting them to be very simple and easy to understand, is a reasonable request. In the course of our review, we will closely examine PTO's numbers and give you our judgment about their reasonability and what is behind some of the volatility in the numbers reported to us to date.

The second issue is about the long-range plan. In March of this year, PTO issued its long-range plan for the 1993-97 period. In that plan, PTO identified several important trends or new directions affecting the future of PTO, such as moving to full user fee funding. Other significant issues are the recognition of the increased importance of dissemination and the potential move to a first-to-file system.

These kinds of trends and directions and possible shifts in the PTO environment clearly require that a consistency be assured with the current APS modernization plan. So we will be looking to see if the APS is compatible with these important new directions for PTO.

The third issue is about the unique methodology PTO is using unique methodology to oversee the APS. It is important to note that there are no Federal standards to guide PTO in this approach. There have been historic problems with the traditional waterfall approach, which we recognize and understand. However, it is important that there still be controls and good management. We will focus on understanding how PTO's methodology will affect the development, operations, and maintenance of the APS.

Our final issue is about the persistence of user concerns and the limited information available on the impact of APS. You will be hearing today from users who question the value of APS. The AIPLA has surveyed 1,000 of its members and over 65 percent of them said that they don't believe automation should continue unless the benefits to the users are really made clearer.

We were disappointed to find that there was only one rigorous and documented study evaluating the impact of APS on patent operations. That was done in 1988 and its results were inconclusive. We have not found any other studies. There are reports and there are tracking systems that identify that there are improvements in some areas of patent quality, but none of it is systematically attributed to the APS, or more importantly to the imagebased system, which is the lion's share of the system development effort.

This concerns us and we will explore the impact of APS with PTO and with users and try to get a better understanding of what PTO knows about the impact the system has had on operations and how PTO used the information to perhaps improve the design and implementation strategy for the future.

That covers the summary of my remarks. I will be pleased to answer any questions you may have.

[Ms. Hecker submitted the following material:]

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