Indicates supervisory responsibility for all activities involving implementation of Sections 8 and 15 of the Small Business Act. Indicates supervisory responsibility for all activities other than FEDERAL PROCUREMENT REGULATIONS TEMPORARY REGULATION 50 PRESCRIBED NEW CLAUSES AND PROCEDURES WHICH IMPLEMENT THE REQUIREMENTS OF SECTION 211 OF P.L. 95–507. EFFECTIVE 112EDIATELY, ALL OUTSTANDING UNOPENED IFES AND RFPS THAT HAVE NOT CLOSED THAT SHOULD CONTAIN, BUT DO NOT, THE SUBCONTRACTING PROVISIONS AS REQUIRKO BY TEMPORARY REGULATION 50 SHALL BE AMENDED TO INCLUDE THOSE PROVISIONS. FURTHER ALL FUTURE SOLICITATIONS SHALL INCLUDE THE SUBCONTRACTING PROVISIONS REQUIRED BY TEMPORARY REGULATION 50. THE NOVEMBER 5, 1979, ÜSTTER FROM THE OFFICK OF SMALL AND DISADVANBUSINESS UTILIZATION ENCLOSED AN OFPP SUPPLEMENT TO THE REGULATIONS IN TEMPORARY REGULATION 50. THE GUIDANCE CITED IN THIS OFPP ISSUANCE SHOULD BE USED BY GSA CONTRACTING PERSONNEL TO IMPLEMENT THE SUBCONTRACTING PROGRAM. ADDRESSIES SHOULD ENSURE ITS DISTRIBUTION TO [Mr. Cook's prepared statement follows:] PREPARED STATEMENT OF CLYDE C. COOK, DIRECTOR, SUPPLY SERVICE, VETERANS ADMINISTRATION Mr. Chairman, would like to thank you for the opportunity to discuss the implementation by the Veterans Administration of the requirements of Public Law 95-507 as it relates to procurement conducted by this agency. To aid in understanding the manner in which we have implemented this program, I would like first to briefly summarize the structure of this agency as it relates to the overall procurement process, Major construction of medical facilities in the Veterans Administration is contracted by the Office of Construction located in Washington, D、 C、 Centralized contracting for supplies and selected services is conducted at the Veterans Administration Marketing Center located in Hines, Illinois. That office generally procures those commodities which lend themselves to volume procurement and centralized distribution. Contracting activities are also located at each of 172 medical centers scattered throughout the country. These activities primarily contract for items not available from either VA central contracting or from other federal government supplies or contracts. The National Cemetery System located in Washington, D. C., contracts for markers and headstones provided for gravesites of eligible veterans. The Supply Service in Central Office is primarily a staff office for policy and procedural development for all contracting carried out by the agency. In addition, a limited number of contracts are awarded by this office, mostly for professional services. This office also reviews selected contracting operations throughout the agency. For example, all contracts including those for construction in which the award value is anticipated to exceed $200,000 are reviewed prior to award by the Supply Service or the Office of Construction as appropriate and the office of the General Counsel. It is through this review process that we exercise the first level of oversight over implementation of Public Law 95-507. In our implementation of Public Law 95-507, I would like to address first the actions taken with regard to Section 211. The Veterans Administration issued a telegraphic notice to all procurement activities on June 4, 1979, calling attention to the action of the Administrator of the Office of Federal Procurement Policy in publishing subcontract clauses and other procedures in the Federal Register on April 20, 1979. Our directive informed all of our contracting activities that they were to begin at once using the clauses where appropriate and to apply the other procedures contained in the OFPP directive. On July 10, 1979, we issued further instructions on implementing Federal Procurement Regulation, Temporary Regulation 50. At the same time, we also provided a copy of the model subcontracting plan which had been developed by the General Electric Company. Our contracting activities were given this model for their use in working with prospective contractors in developing subcontracting plans. On August 6, 1979, we notified the appropriate officials in the Small Business Administration, that, upon assignment to the VA of a full-time procurement center representative from the Small Business Administration on September 1, 1979, we had instructed our contracting offices to make available to him the opportunity to review proposed procurements, particularly those potentially susceptible to implementation of the prime and subcontracting clauses in Public Law 95-507. We notified each of our major contracting activities of this assignment and provided clerical support and offices for the procurement center representative. On September 17, 1979, in connection with an inquiry from the Office of Federal Procurement Policy on implementation of Public Law 95-507, we addressed another instruction to our major contracting activities reminding them of the statutory requirement and asking them for data regarding its implementation. On November 23, 1979, we issued a further reminder of the FPR Temporary Regulation 50 and in forceful language reminded all contracting activities that failure to include the prescribed provisions in appropriate contracts constitued a violation of the law. Beginning in May 1979, we included as a special element in our review of proposed contracts from the VA Marketing Center, VA medical centers and the National Cemetery System, a determination either that the appropriate subcontract ing clauses had been included in invitations for bid or that a documented determination was made that no subcontracting potential existed. The majority of our procurements are not subject to the subcontracting provisions of Public Law 95-507 because of their low dollar amount, Approximately 85% of all procurement actions by this agency are in amounts of less than $10,000. Since May 22, 1979, we have issued a total of 21 solicitations which contained the appropriate notice on subcontracting. One solicitation was issued which did not contain the subcontracting notice but which should have. One other solicitation was issued in which the notice was not contained and in which no prior determination was made that there were no subcontracting opportunities. To date, seven contracts have been awarded for a total value of $51,331,000, and subcontracting plans have been obtained and approved. Six contracts have been awarded without the subcontracting provision because the successful bidders in these instances were small business firms and thus exempt. Six contracts are still pending award, and unless the successful offerors are small business firms will contain subcontracting plans, The two solicitations mentioned above as not containing the notice have also been awarded. The clause was omitted from one of them because of oversight. This contract valued at $850,000 will be modified by negotiation to include a subcontracting plan, The remaining solicitation, which resulted in the award of two contracts, has been determined after the fact to offer no subcontracting opportunities. The contracts are for marble headstone markers. It has been determined that there is no subcontracting opportunity at all since each of the contractors owns its own marble quarry, does all of the mining, cutting, shaping, forming and embossing. Each subcontracts no part of its operation. Thus, the only contract that escaped our screening process is the one for $850,000, which will be amended to include the subcontracting clause as provided by the GAO legal opinion B-114835, October 1979. Regarding your inquiry concerning incentives under Public Law 95-507, I am sure you are aware that on August 1, 1979, the Office of Federal Procurement Policy proposed the waiver of incentive clauses in contracts by a class determination where insufficient experience had been gained in setting goals in subcontracting plans. This same memorandum from the Office of Federal Procurement Policy recommended that agencies whose procurement exceeded $5,000,000 use incentive clauses in at least selected negotiated contracts as a pilot program. The Office of Construction plans at the earliest opportunity |