The third source of inefficiency is that many of the smaller agencies operate on too small a scale to make fully efficient use of modern techniques, professional specialists, and economical large-scale machines. Only further centralization, rather than better coordination, can cure this situation.

The degree of decentralization in the system, and its predominant orientation toward publication as a means of making information available, correspond to a now-obsolete technology of handling and storing information, as well as to a much lower level of demand for detailed quantitative demographic, economic, and social information by policy-making agencies of all levels of government. Our present organization and mode of operation does not take advantage of modern information processing technology, and is not capable of meeting the variety and scale of present day information needs. The deficiencies of the system, and the gap between what it can provide and what would be technically possible under appropriate organizational arrangements will grow rapidly in the near future. As we have already pointed out, the demand for detailed quantitative information will continue to increase at a high rate. Further, the nature of the demand is changing in qualitative terms in ways that are only just becoming clear. The degree of disaggregation now demanded in the data relevant to economic policy has changed greatly in the last decade, even though the policy continues to focus on objectives stated in terms of such aggregate magnitudes as employment, unemployment, output, and the general wholesale and consumer price indices. The demand for comprehensive micro-data will grow explosively as policy becomes increasingly concerned with the micro-effects of the economic system, in terms of particular localities, income, and occupational, age and ethnic groups; as policy instruments become increasingly capable of sensitive and selective application to particular needs, and include a broader range of government actions in such areas as education, research, health, housing, transportation, and resource development. Further, the need for coordination of data collected at state and local levels, in answering questions concerning specific small geographic regions, is also growing rapidly.

On the side of information processing technology, the last decade has seen great developments in machine processing, storage and transmission of information in machine-readable form. This progress is continuing both in the computing equipment itself (hardware) and in the programmed instructions for directing the machines (software). These developments place the problems of large-scale storage, integrated data files, rapid access, and confidentiality in an entirely new light. In particular, it is now possible, with sufficient effort, to create the capability for combining centralized processing and storage of large bodes of data with decentralized analytical use, subject to the restraints of a uniform system of limits on the disclosure of data on individual reporting units. In pointing to the shortcomings of the Federal Statistical System as presently organized, the Committee does not wish to suggest either that those charged with its operation are unaware of these problems, or that they are making no attempt to find remedies for them. Quite the contrary. The Committee has the highest regard for the professional competence and dedication of the senior personnel of the major statistical agencies. We can say the same of the Office of Statistical Standards in the Bureau of the Budget, which is now charged with the coordinating responsibilities for the Federal Statistical System, as adviser to the Director of the Budget. These two groups are now making serious efforts to deal with the kinds of problems we describe. Recent increases in the level of Census work performed for other agencies on a reimbursable basis is an example of one method of meeting these problems. The cooperative efforts of the IRS and the Census Bureau to use data from the income tax returns for the Economic Censuses is another. Further, the heads of the statistical agencies and the officials of the OSS have been of the greatest assistance to the Committee in making this report. However, the Committee believes both that insufficient resources are being devoted to dealing with the problem, and that the present organizational framework cannot generate improvements in the existing situation fast enough to cope with the growth of the problem. We conclude, therefore, that significant organizational change as well as increased effort are necessary conditions for a successful attack on it.

The building of an integrated body of data combining presently available sources of the appropriate kinds of data, which preserves in usable form the maximum detail of information, stored on tape or other machine-readable form, coded, organized, and indexed so as to be readily accessible, is the minimum step which must be taken to cope with problems sketched above. The existing

agencies are now approaching this task slowly, with a scale of effort too small to ensure that it can be completed, and under a variety of inhibitions and constraints. The Census has taken a commendable lead, and already has done a number of useful tasks. However, this job is viewed both by Census and the other agencies as a second-priority activity, which cannot compete for personnel, machine time, or funds with ongoing current programs. This is natural, and indeed inevitable. Simple inter-agency jealousies and rivalries have also created inhibitions on prompt and full cooperation.

The Office of Statistical Standards is too remote from operating responsibility to move forward at the pace at which such integrating activities need to be carried on. Its negative powers are, at least theoretically, great, but its ability to promote new programs is limited to what it can accomplish by persuasion in the face of institutional pressures which go in the opposite direction.

Finally, none of the constituent agencies of the System has given the problems described above or the opportunities to deal with them provided by advancing technology, the importance that this committee-following in the footsteps of several predecessors-assigns them.

3. WHAT IS TO BE DONE?

Were the Committee to be designing a Federal Statistical System de novo, it would clearly recommend the creation of a single Central Statistical Agency with the following responsibilities:

a. Collecting all systematic, general-purpose, large-scale quantitative information of a demographic, economic, or social nature, insofar as it is not produced as a by-product of the administrative operations of the Government.

The qualifying adjectives are meant to preserve the freedom of operating and policy agencies to make, when necessary, occasional surveys or special-purpose studies for their own purposes when the Central Agency was unable to provide the requisite information, although the Central Agency would have the facilities and capacity to carry these out as well, on request. Further, the limitation of the Central Agency to dealing with general purpose information is made explicit in order to recognize the variety of operating needs for gathering and processing information of the several branches of Government, which they must be in a position to meet directly in order to carry out these tasks.

b. Receiving and integrating into its general information stock, data which are the by-product of administrative operations of the other Federal Agencies. In this connection, the Central Agency would, through liaison with the other agencies, help to design tax, regulatory, social insurance, and other report forms in such a way as to produce the maximum information consistent with reasonable burdens on respondents.

c. Developing and maintaining appropriate standards of confidentiality in the release of any data, as determined by law, using the basic data within the bounds of these standards so as to minimize the loss of analytically useful information, while at the same time ensuring protection to the privacy and identity of individual reporters.

d. Coordinating its activities to the greatest possible extent with those of the information collecting of states, cities, and other governmental units so as to arrange as far as possible a rational division of labor, a maximum integration of information, and a free flow of useful information in both directions.

e. Organizing and storing information in such a way as to provide maximum legitimate accessibility, for both governmental agencies and other users.

f. Providing computing, tabulating, and analytical capacity for all government users. Insofar as it proves economical, these facilities could be drawn on by other agencies for any special computations, analytical studies, etc. In other words, the Agency should maintain the central general-purpose large-scale data-processing center for general Government needs. Non-confidential data from the Center in standard documentary or machine-readable form should also be available, on a suitable compensatory basis, for the research uses of academic and other private groups, when such use serves a public purpose.

Neither this function, nor that of a. above is intended to preclude other agencies from maintaining independent computing facilities and independent analytical capabilities of an appropriate sort. In particular, it is obvious that every policy agency, as well as many administrative units, will require analytical capabilities for program planning and program evaluation. But current technologies, including distant consoles connected with a central computer facility

by telephone links, make compatible decentralized use of data for analytical purposes, with highly centralized data storage and processing.

g. Studying methods of improving the protection of individual privacy and the confidentiality of data while at the same time providing use of it for legitimate analyses. Both the screening of analyses before release, and the camouflage of the basic data itself offer promising paths for exploration.

h. Improving methods of data collection, techniques of sampling, and opportunities for maximum use of by-product information, both for economy's sake, and to minimize the burdens on respondents of increasing demands for information.

i. In cooperation with the analysts who use the data, both within and without the government, defining and refining the standards and bases on which information is collected, and determining the probable development of information needs.

j. Improving and techniques of data handling, storage, and computation in cooperation with appropriate technologically competent public and private agencies.

k. Securing the research and development contributions of university, business and other groups to the effectiveness of all these functions. This can be done both by making grants and contracts and by providing facilities and capacity which such research personnel could use on a variety of financial bases. Outside research and development assistance might usefully cover the whole range from long-term basic research to assistance in the solution of an immediate problem. The Committee is not starting with a clean slate. Realistically, the question before us is how to proceed from the present situation of too much decentralization and insufficient coordination. We have not attempted to judge either the wisdom or the feasibility of attempting to create, at one blow, the kind of Central Statistical Agency we have described above. Rather we have sought to make a step, of sufficient magnitude to inject a genuinely needed new element into the system to help it adapt more rapidly to the growing problems it faces. Following this step we envisage further adaptive evolution in the direction of a stronger and more centralized system by an experimental process.

What first step is sufficiently large so as to promise a good prospect of further development? The Federal Statistical System has three basic functions; namely, (1) collection, (2) integration and storage in accessible form, and (3) analysis, tabulation, and publication. It is reorganizing the second that offers the most promise. This function is now the least well-performed of the three, and it is the one which is most easily separated out from the present organizational structure. However, it must be done on a substantial scale, and in such a way as to recognize the interaction of this function with the other two. Further, the new organization must not be confined to a merely archival function. If it is defined along the lines suggested below, it offers the best promise, in the judgment of the Committee, for starting the development of the Federal Statistical System toward a more integrated and efficient form.

Accordingly, the Committee proposes the creation of a National Data Center.— This Center would be given the responsibility for: (1) assembling in a single facility all large-scale systematic bodies of demographic, economic, and social data generated by the present data-collection or administrative processes of the Federal Government, (2) integrating the data to the miximum feasible extent, and in such a way as to preserve as much as possible of the original information content of the whole body of records, and (3) providing ready access to the information, within the laws governing disclosure, to all users in the Government and, where appropriate, to qualified users outside the Government on suitably compensatory terms. The Center would be further charged with cooperation with state and local government agencies to assist in providing uniformity in their data bases, and to receive from them, integrated into the federally generated data stock, store, and make accessible, the further information these agencies generate. The funding and staffing of the Center should recognize both these functions.

In more detail, the functions of the Center would be:

(1) To establish and maintain an inventory of all available data in the relevant categories in the Federal System.

(2) To set and enforce uniform disclosure standards so that the legal requireIment of confidentiality can be met with no unnecesary sacrifice of analytically useful information.

(3) Similiarly, in cooperation with the state and local government units, to perform similar tasks for information generated at those levels of government. (4) To assemble centrally the data from all these sources, integrate it to the maximum feasible extent, and preserve it in usable and accessible form. This "will involve:

The maximum ability to exhibit the interrelations of various kinds of data.

The preservation of detail in basic records, and the avoidance of the loss of information in the storage, manipulation, and retrieval of information.

The ability to produce the full measure of inherent information which is computable from the basic records.

(5) In cooperation with users in and out of government and collection agencies, to set the standards for further collection efforts, so as to make maximum use of administrative information and provide maximum cross-linking of different bodies of data.

(6) To provide facilities-from working space to linked input-output consoles for major users within government to facilitate their access to the data and improve their ability to work with it.

(7) To develop software and hardware, especially input and output devices. (8) To define the regulations and compensation arrangements under which non-government users would have access to data in the Center. In general, subject to disclosure restrictions, standard tabulations and tapes could be made available at cost to private users for research and analytical purposes. However, the Center should not become a service bureau or data-processing agency selling special order analyses to private users in competition with firms and individuals in the information processing industry.

In full operation, the National Data Center would provide the following benefits:

(1) Reduce the collection effort and particularly the burden on respondents required to secure a given amount of information.

(2) Improve the protection of individual privacy by developing standards of disclosure, techniques of preserving confidentiality and supervision of enforcement of disclosure rules.

(3) Preserve for continued use all or nearly all the relevant detailed information contained in the original data, as compared with the present situation in which much of the detailed information is irretrievably lost, or becomes retrievable only at prohibitive cost.

(4) Reduce the processing costs associated with the use of a given amount of information.

(5) Store information in more accessible forms at lower per unit costs, and with a comprehensive index or bibliography.

(6) Make much information accessible to non-Government users which now is too expensive or too cumbersome for them to use, even though it is legally available and its use would benefit the general public. This is especially relevant to users in state and local governments, academic and other non-profit research users, and business users. In this connection, the Center should develop extensive working relations with academic users, of the sort which the Census has done to a much greater extent than other agencies. Even these are limited and currently are handicapped by lack of physical facilities, programming capacity, and organizational capacity for dealing with them. As the working relations of the physical science establishments of the Federal Government with the academic and industrial scientific communities demonstrate, such cooperation is of great benefit to the Government in performing its tasks effectively.

(7) Provide improved analyses of existing data for all users. The facilities for cooperative efforts are highly relevant to this point as well.

(8) Facilitate greatly improved coordination of statistical data between the Federal Government and the states and localities, and internationally as well. (9) Create a repository of technical competence in statistical services, and computer software and hardware, that would be available to the whole Government establishment.

4. PROPOSED ORGANIZATION

In order for the National Data Center to function properly, it must be given a proper position in the Federal Statistical System, and sufficient authority, leadership, trained personnel, and funds to perform its mission. The Committee has

given special attention to the problem of finding the organizational arrangement most conducive to the successful functioning of the Center, and attaches great weight to its organizational recommendations. We recommend the creation of a new position, Director of the Federal Statistical System, in the Executive Office, and the placement of the Census Bureau and the National Data Center as coordinate units under his direction.

The Bureau of the Census is the largest, most widely experienced, most professionally competent, and broadest in scope of all the present statistical agencies. To the extent that any agency in the System attempts to perform the functions described above, it is the Census. The data Center will require close cooperation and support for the Census in order to function effectively. For all these reasons, it appears desirable to put the Center in close organizational and physical proximity to the Census. On the other hand, the Center's tasks are not the present tasks of the Census; the Center will be a new organization with the difficult problem of establishing itself as a going concern and making its way in the complex of agencies producing and using large bodies of quantitative information-its suppliers and customers, so to speak. Thus it does not appear appropriate to subordinate the new agency to the existing Census organization. Further, the establishment of smooth working relations between the Center and the other elements of the Federal Statistical System might well be easier if the Center is a new, coordinate agency rather than a part of the Census Bureau.

If the new data Center is to have specially close but coordinate relations with the Census and similar, if organizationally less intimate, relations with other data collecting and using agencies, some method must exist to regulate and oversee these relations. This coordination function is now assigned to the Office of Statistical Standards, but in the Committee's judgment, that Office is not placed so as to be able to carry it out effectively. We propose that a new position be created with this function, entitled Director of the Federal Statistical System, to be filled by presidential appointment. The new Director would exercise, by delegation or new legislation, as seemed appropriate, the coordinating powers over Federal statistical programs provided for in Sec. 103 of the Budget and Accounting Procedures Act of 1950 (P.L. 784, 81st Congress). The Office of Statistical Standards would accordingly be transferred from the Bureau of the Budget to become a staff office of the new Director, to assist him in carrying out these responsibilities. The Census Bureau and the National Data Center, each under its own director, would report to the Director of the Federal Statistical System.

In addition, we propose two councils advisory to the director. The first is a Federal Statistical Council, representing the major data producing and using agencies in the System and reporting directly to the Director. Thus, the Commerce Department might be represented by the Assistant Secretary for Economic Affairs, the Council of Economic Advisers by one of its members, etc. The second would be a public advisory council, with members from outside the Federal government representing both the public in general and particular users of information such as business, labor, state and local governments, and the academic community. This council would advise the Director particularly on such matters as the burden on respondents, the protection of confidentiality, and the satisfaction of user needs. The uses and possible abuses of information collected by the government are so important in our society that continuous public scrutiny of these problems at a high level in the Federal System is desirable.

The proposed new office, with its two operating elements and its governmentwide coordinating functions could not readily fit into any of the existing Cabinet departments. Rather, its natural home would be the Executive Office of the President, and the Committee recommends that it be placed there.

The organizational relations of these elements are shown in the chart below.