The Privacy Act of 1974: An Assessment. APPENDIX 4 TO The Report of The Privacy Protection Study Commission.. The Cost of Implementing the Act


In March 1977, the FBI announced that it had a backlog of 7,500 unanswered requests for access to records involving the review of some 10 million pages, and that it was planning to spend $6.5 million to bring 400 agents to Washington for six months to eliminate it. The Bureau also said that its processing of access requests so far had required a staff of 53 agents and 322 support personnel at an estimated annual cost of $6.5 million per year.77 The FBI experience, however, is not typical. Cost figures recently released by the Office of Management and Budget (OMB) show Privacy Act expenditures to be much lower than originally assessed. In 1974, OMB had assessed that implementing the Act would cost $200-$300 million per year over the first four to five years and require an additional one time start-up cost of $100 million, which would be expended in the first two years. In 1977, however, OMB estimated that start-up costs in the nine months between the Act's passage and the date it took effect were $29,459,000, and that an additional $36,599,000 was spent for first-year operating expenses.78 These costs have been broken down as shown in Figure 2.

The Act's publication requirements clearly accounted for the largest portion of the start-up cost (46 percent or an average of $2,000 per system). They account, however, for only 12 percent of the first-year operating expenses. Training was the second most costly start-up item. The $6.8-million figure includes both agency course development and employee time away from work. Implementation of the Act's security requirement was the third largest item in the start-up column, but also the lowest-cost item on the operating side. OMB speculates that this is due to a combination of minimal effort by some agencies to enforce subsection the 3(e)(10), on the one hand, and the fact that some agencies already had adequate safeguards in force, on the other. The cost of accounting for disclosures, however, was considerably higher than expected.

OMB's analysis of the $914,000 cost of establishing access procedures, and of the $10,670,000 cost of implementing them during the first year, shows that six agencies-the Treasury and Defense Departments, the Justice Department, the Department of Health, Education, and Welfare, the Veterans Administration, and the CIA-accounted for 93 percent of the expenditures. By itself, the Department of Defense, which maintains one-third of all declared systems of records, accounted for 48 percent.78 According to OMB, the six agencies' disproportionate share of access costs can only partially be explained by the number of records the six agencies maintain. Public interest in their records and, in some cases, the costly and time-consuming screening necessary before their records can be released account for the unusually high cost. In the DOD case, in particular, OMB attributes its large share to the considerable number of DOD employees who have been made aware of their rights under the Act, coupled with the wide dispersion of the Department's records. 79

Figure 2
Cost of Implementing the Privacy Act of 1974

  Summary - All agencies
(Outlays in Thousands of Dollars)
  Start Up1 Operations2
Publication Requirements $13,549 46.0% $ 4,405 12.0%
Training 6,825 23.2 3,282 9.0
Granting Access 914 3.1 10,670 29.2
Correcting Records 483 1.6 2,116 5.8
Security and Control 2,175 7.4 l,345 3.7
Accounting for Disclosures 667 2.3 9,415 25.7
New Data Collection Procedures l,164 4.0 l,507 4.l
All Other Costs 3,728 12.7 4,012 11.0
Reductions from Records/Systems Eliminated -45 -0.2 -62 -0.2
Collections - 2   -91 -0.2
Total3  $29,459  100.0%  $36,599  100.0% 

1 Start up costs include any one-time costs incurred from January 1, 1975 through September 30, 1976.
2 Operating costs cover the period September 27, 1975 through September 30, 1976.
3 Totals may not add due to rounding.

Source: Federal Personal Data Systems Subject to the Privacy Act of 1974, Second Annual Report of the President, Calendar Year 1976, p. 23.