March 18, 1988

Executive Committee of the American Institute of Physics

Minutes of Meeting

1. Convene – Roll Call
The meeting convened at 10:00 a.m. at the AIP Woodbury Office.

Members Present:
Hans Frauenfelder, Chairman of the Board
Peter B. Boyce
Kenneth W. Ford, Executive Director
Roderick M. Grant, Secretary
William W. Havens, Jr.
David Lazarus
Edward N. Sickafus
F. Dow Smith
Martin Walt
Jack M. Wilson

Non-voting Participants:
Robert T. Beyer (ASA)
William L. Duax (ACA)
James A. Purdy (AAPM)
Joseph M. Reynolds (Member-at-Large)

Staff Present:
Gerald F. Gilbert, Treasurer
Robert H. Marks, Director of Publishing
John S. Rigden, Director of Physics Programs
Timothy Ingoldsby, Director, Information Technology Branch
Lawrence T. Merrill, Assistant to the Executive Director
Nathalie D. Wagner, Assistant to the Secretary

For clarity in presentation with reference to the printed agenda, events recorded here are not necessarily in the same chronological order in which they appeared.

2. Secretary's Report

  1. Minutes of 3-4 December 1987 Meeting

    The minutes of the 3-4 December 1987 meeting were approved following discussion and minor corrections offered at the meeting.

  2. AIP Articles of Incorporation - Report of NY State Approval
    Gilbert reported that he now has received final approval from New York State for the revised AIP Articles of Incorporation.

  3. Resignation of Mark
    Frauenfelder announced that Robert H. Marks has submitted his resignation from his position as Managing Director of Publishing, effective 22 April. He wished him great success and noted that all he has done for AIP is much appreciated.

    Ford noted that Marks has been with AIP 18 years. It is clear that the financial health and excellent performance of the Publishing Branch and the reputation of AIP and its publishing operations owe a great deal to his work over this time. He deserves our congratulations.

3. Subscription Fulfillment Development - Recommended Course of Action
Ingoldsby distributed a memo giving a recommended course of action and proposed motions. The staff made an intensive study, utilizing training courses and sample applications, of alternatives (ORACLE, INGRES, and PACE) and developed an evaluation matrix (attached to handout). The consensus choice was ORACLE, on the basis of compatibility, portability, powerful database capabilities, wide range of
applications tools, active data dictionary, powerful data security facilities, wide range of program language interfaces, and extensive support services. An important factor is that the ORACLE software can be moved to other hardware systems.

Their hardware selection process was limited to IBM and WANG hardware platforms. As part of this process they took existing programs for the UNIVAC and converted them to these platforms; both were successful. Product managers using ORACLE on both IBM and Wang product lines were consulted to ensure ourselves that we had appropriately sized the hardware. The staff recommends Wang for the following reasons: superior price/performance, lower staffing costs, heightened integration potential, redundant CPU/disk configuration, and lowest risk of meeting scheduled completion. In addition, Ingoldsby is a qualified Wang systems person.

Purdy asked why Digital was not considered. They are definitely moving into business applications.

Ingoldsby said the main reason is that their architecture is different; at present it does not utilize intelligent subsystems to offload disc 10 and work station IO. Although they are excellent for scientific applications, they are not ideally suited for our applications.

The major impact on the 1988 budget is in software purchase, consulting, and training. The development will be conducted in house. Budgeted figure:  $550,833,33; required: $919,822,33; variance: $368,988,00.

He then reviewed the development schedule, which will be carried out in three phases. - The present UNIVAC system is precarious; it is outmoded and malfunctions often; it must be replaced as soon as possible.

- Phase 1: conversion of existing batch system from UNIVAC to WANG. Completion time: four months (2 people, 2 months) of staff time.

- Phase 2: ORACLE-based online system with enhanced fulfillment services, including random expiry, multi-year terms, alternate addresses, and expanded miscellaneous society information. Target date; September 1988 (operational for 1988-89 returns, but probably not for billing).

- Phase 3: loosely defined and includes additional membership services, including demographics, enhanced directory production, and ad hoc query and report. This is intended to be in place by March 1989.

Ford reviewed the three proposed motions. He noted that IBM has just taken 17% off their price, but the staff still recommends Wang. The first motion is for capital expenditure of up to $610,000 to purchase a Wang system (for 2 Wang processors, 7 IBM PS/2 computers, and the portion of the operating system that can be treated as capital). The second motion is for operating expense related to the development of the new subscription fulfillment and member record system as recommended by Ingoldsby and the development team, at an additional budget cost of $370,000. The third motion requests management to present a revised 1988 budget to the Executive Committee, as these are substantial changes which would result in a decreased net for 1988 from $750,000 to $400,000. Staff would have to look for modest reductions in the overall budget.

Frauenfelder asked: if IBM and Wang were exactly identical in price, which would the staff select?

Ingoldsby said he had asked the staff what they would choose. Wang proposed two processors. This provides reassuring backup capability. It is definitely easier to use than the IBM. However, IBM's leadership in the field is unquestioned. IBM states that they will not let you fail. His staff is divided on this question.

Lazarus said he would like to approve the project but not to specify the hardware. Unforeseen factors could come up following this meeting.

Havens agrees with this approach. In the history of AIP, we have been bitten by economics. He noted the savings that had been projected with the AZTECH system, but we have lost an enormous sum. He would not like to consider the difference in price as a major factor, rather to choose the better system. He thinks the Executive Committee cannot make the equipment decision.

Wilson said he would like to present an argument in favor of the Wang. The Data General and the Wang are similar. This is an ambitious program to convert so quickly. He thinks it is important to select on the basis of ease of accomplishment and handling the foreseeable needs.

Frauenfelder said it appears that either solution is a good one. He agrees with the suggestion to give management the choice.

Havens made the following motion, as revised from the management recommendation following the above discussion and following further discussion, as reported below. This was seconded by Sickafus and unanimously CARRIED.

MOVED that it be recommended to the Governing Board that a capital expenditure of up to $750,000 be authorized for purchase of hardware and operating system software for a Subscription Fulfillment and Member Records system, as recommended by Ingoldsby and the Subscription Fulfillment team and endorsed by the Management Committee.

Gilbert, with the agreement of other AIP management, said the second proposed motion is not now needed as it is incorporated in the revised first motion.

Grant noted that the original approval for the subscription fulfillment system was made by the Governing Board. Havens agreed that this should have Governing Board approval, and agreed to add to his original motion that it be recommended to the Governing Board. Sickafus agreed.

Wilson made the following motion, which was seconded by Boyce and unanimously CARRIED.

MOVED that AIP management be instructed to present a revised 1988 budget to the Executive Committee for approval on 25 April 1988.

4. Review of Governing Board Agenda

  1. Financial Handling Charge
    Gilbert reported that Article X of the Constitution provides that each Member Society shall pay a financial handling charge based on the monetary value of business done on behalf of the Society, as defined in the contract, multiplied by a factor, not to exceed one percent. This is to be determined annually by the Governing Board.
    Havens made the following motion, which was seconded by Walt, and unanimously CARRIED.

    MOVED that the Executive Committee recommend to the Governing Board that the financial handling charge for 1989 again be set at 5/8 of 1% of business done on behalf of Member Societies.

  2. 1987 Financial Statement
    Gilbert distributed and reviewed the financial statement for 1987 which will be reported to the Governing Board (and attached to the Governing Board minutes).

    The Statement of Revenue and Expense excludes activities for Member Societies.

    The balance sheet shows total assets of about $43 million. The equity in our Total Assets is in two parties: first, outside creditors, represented by Total Liabilities totaling $21,499,319; second, Total Fund Balances totaling $22,490,491. Restricted Fund balances amount to $1,566,231 and are comprised of nine special purpose funds.

    AIP investments before 19 October had a market value of $17.8 million and after 19 October the market value was $15.9 million. We are now back to a market value of $17 million.

    He noted the transfer of 25% of the annual net revenue to each of the four Designated Funds and the rationale for these. In accordance with the goals set for these funds, the total goals are $27.5 million. As of 31 December 1987 the Designated Funds balances total $17 million.

5. Status of Capital Expenditures
For information only, a regular updating of capital expenditures.

6. Report on Faxon Company Collections
Gilbert noted the report of Faxon's payment of 1988 nonmember renewal subscriptions, as of 1 March 1988. The total collected to date is $7,215,237, including payment of 6.4% for 73 days. He recently received a message from IOP, indicating that they were pleased with the interest received from this arrangement.

7. Rent for New York and Woodbury Resident Member Societies
Gilbert said at the last Executive Committee meeting it had been agreed that the Institute should charge the Societies occupying apace in AIP buildings the local rental value rather than the actual cost, the reason being that actual coat could be deemed by a non-resident Society to represent a subsidized cost. This is important as it is the first time we will deviate from the contract by charging something other than actual cost. The question to be determined is how to determine fair rental value.

Havens questioned what would be charged if a Society is renting space in space that AIP is renting. Gilbert said the Society would pay what the Institute pays. This is done currently in the Washington rented space.

Wilson made the following motion, which was seconded by Havens and unanimously CARRIED.

MOVED that AIP Management make a study of rental costs for comparable space in the vicinity of the AIP-owned building at 335 East 45th Street and use these data to recommend to the Executive Committee a policy for setting rents for space within that building.

8. Contract with VCH Publishers for Handbook of Applied Physics
Marks reviewed the modifications he had negotiated with VCH per the discussion in the February 1988 Executive Committee meeting. The Editorial Board will be comprised of American and foreign members, up to nine to be from and paid by the U. S. and Canada. VCH will pay the remuneration and possible expenses for up to six from outside these areas. Royalty payments to AIP will be 6% of the VHS net sales income in the U. S. and Canada. Net sales is now defined in the contract as the total dollar receipts of all sales of the work, after discounts, in the U. S. and Canada. The editorial board is being named.

9. Discussion of Space Issues
Ford said all Member Societies had given this matter their consideration and had sent letters, which were distributed with the Governing Board agenda. Five Societies wish to have a major presence retained in New York; five Societies would like to see at least some of the programs move to Washington. Management has discussed whether to bring a recommendation to the Governing Board but is not prepared to do this as there is not a sufficient consensus.

Frauenfelder said he has given this considerable thought. In his opinion, the focus of the problem has shifted to Woodbury, where we earn AIP income. It is not clear whether we can get a variance on the property there. He thinks the goal should be to pull back from five locations to three and to leave the decision for moving to Washington open. We could move enough to Long Island so that we could get rid of the rental space at 140 E. 45th when the lease is up. Management should find a solution for Long Island. He sees two alternatives:

1) The variance. This question should be settled as soon as possible.
2) Buy and build a new space. Rental is always more expensive in the long run.
We should keep the location open, but it would be better to move nearby.

Management should treat this as a first priority, and not treat the other problems as a high priority. With a somewhat larger presence in DC and moving some offices to LI, we could deal with NY vs DC later.

After discussion concerning the options at Woodbury, Wilson said he thought the discussion had not been a productive use of time; Management can deal with the strategy issues. He disagrees with the implication that we ignore the NY situation.

Frauenfelder replied that he does not want to give AIP management too many problems to solve at once.

Wilson proposed looking at specific programs to see what can be moved to Washington.

Frauenfelder said we cannot discuss this at this meeting.

10. Other Business

  1. AIP Policy on Grants and Contracts
    Frauenfelder said that Havens had sent a 16 March 1988 telemail memo on this subject to him, Grant, Ford, and Lazarus. He asked Havens to address the matter.

    Havens gave a history of the development of government contracts on the basis of his experience with them. There is no clear procedure in AIP for delineating the responsibilities of the Executive Committee and of AIP management. We need clearly defined guidelines and operating procedures. He is more concerned about an accumulation of small projects, as the big projects will get adequate attention. His memo suggests appointment of a small subcommittee of the Executive Committee to prepare a suitable set of policy guidelines.

    Frauenfelder said it is an important problem and should be on the agenda for the next regular meeting.

11. Future Meetings
Ford said that the intent for the 25 April meeting is that the Long Range Planning Committee meet with the Executive Committee, in addition to the discussion concerning budget revisions agree to earlier.

Schedule of future meetings:
25 Apr (10 a.m. - 4 p.m. Mon) New York, NY
9-10 Jun (5 p.m. Thurs - 4 p.m. Fri) Washington, DC
8-10 Sep (9 a.m. Thurs - 12N Sat) Woods Hole, MA
23 Oct (12N - 5 p.m. Sun) Executive Committee**
23-24 Oct (6 p.m. Sun - 4 p.m. Mon) Governing Board**
**Westchester Marriott Hotel, Tarrytown, NY
25-26 Oct Corporate Associates, IBM Watson Labs, Yorktown Heights, NY
30-31 Mar 1989 Assembly of Society Officers
31 Mar-1 Apr 1989 Governing Board

12. Executive Session
The staff was excused at 11:50 a.m. for the executive session.

13. Adjournment
The meeting was adjourned at 12 noon.