TESTIMONY OF BERNARD KULIK, ASSOCIATE ADMINISTRATOR, PROCUREMENT ASSISTANCE, SBA, ACCOMPANIED BY WILLIAM A. CLEMENT, JR., ASSOCIATE ADMINISTRATOR, MINORITY SMALL BUSINESS/CAPITAL OWNERSHIP DEVELOPMENT Mr. KULIK. Thank you, Mr. Chairman. Rather than read the statements, I will summarize and cover a few major points.

First, I would like to say both Mr. Clement and I have worked closely together in implementing Public Law 95-507, as have our staffs. My opening statement will cover both our offices. [Mr. Kulik's prepared statement follows:]

PREPARED Statement of Bernard Kulik, Associated ADMINISTRATOR FOR PROCUREMENT ASSISTANCE, SMALL BUSINESS ADMINISTRATION

MR. CHAIRMAN AND MEMBERS OF THE SUBCOMMITTEE:

I appreciate the opportunity to appear before you today to discuss our progress in the implementation of P.L. 95-507. Mr. Clement, the Associate Administrator for Minority Small Business and Capital Ownership Development, will be testifying on the implementation of provisions relating to the 7(j) and 8(a) programs, so my testimony will be limited to those sections of the law which pertain to the prime and subcontracting programs.

P.L. 95-507 comprises some of the most far-reaching modifications to the prime and subcontracting processes that have occurred in many years. This much needed amendment to the Small Business Act greatly increases the authority and responsibility of the Small Business Administration in both

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the prime and subcontracting fields. While we shall continue to cooperate with both the Department of Defense and the General Services Administration, we have been released from total subcontracting program coordination with those two agencies. to accompany the Defense Department personnel as they reviewed prime contractors' subcontracting programs. P.L. 95-507 provides SBA with the authority to review contractor compliance with contracts awarded by any agency as SBA determines to be

appropriate.

In the past we have been obliged, for example,

On November 13, 1978, approximately three weeks after enactment of P.L. 95-507, the Small Business Administration initiated an early start in the implementation of this law. We met with officials of the Office of Federal Procurement Policy and major acquisition agencies for the purpose of recommending actions that must be taken by all agencies to implement the provisions of P.L. 95-507. At that meeting decisions were made as to individual agencies' responsibilities and assignments were made to the various agency representatives. Work then began on a rather tedious procedure of changing

old and implementing new rules and regulations to conform with the new mandate.

In early December 1978 while conducting our planning session with major industry representatives for the Small Business Week subcontracting activities we discussed with those representatives the far-reaching ramifications that this law would have on their method of subcontracting, and to solicit their support in carrying out the provisions of this law. As was anticipated, major industry was deeply concerned about the effect this law would have on their

operations and to a large degree that same concern still exists today.

We realized that our procurement center representatives would have to be the initial point of review and coordination within the SBA for the functioning of the subcontracting process under P.L. 95-507. We also realized that we would be unable to carry out our responsibilities satisfactorily with our PCRs split between resident and liaison procurement center representatives. In December of 1978 we restructured the procurement center representative force to eliminate most of their liaison and circuit rider activities and reassigned them primarily as resident PCRS to those installations that we anticipated would be awarding contracts requiring small and small disadvantaged business subcontracting plans. reality our restructuring would take the liaison PCRs from

In

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the small post, camp and station type procuring offices

and assign them to those offices effecting system type or agency type procurements.

By February of 1979 we had progressed with the rewriting of our subcontracting regulations and standard operating procedures. Central Office a group of our field subcontract specialists to review what had been done and to make recommendations as to changes and improvements. This review continued into mid-March and resulted in a fairly significant redrafting of our proposed regulations and standard operating procedures. During the intervening period of time we worked closely with the Office of Federal Procurement Policy as it was preparing to issue the implementing subcontracting clauses for comment on January 16, 1979. We continued to work with OFPP on comments they received until the final implementing clauses were promulgated in April 1979.

We were then able to bring into the

Although we worked with the Office of Federal Procurement Policy, SBA as an agency, took exception to some of the instructions that were contained in the January 16 publication. We brought to the attention of OFPP numerous omissions from their publication. Our proposals were duly considered in the promulgation of their final regulations in April of 1979.

The Small Business Administration's complete rewrite

of its Procurement Assistance rules and regulations were released for public comment on June 13, 1979, and these regulations, after consideration of comments received, were published as final regulations on October 19 of this year.

As time continued to pass we in SBA became increasingly concerned that although clauses had been published, as well as some implementing instructions by the OFPP, in reality the mandate of P.L. 95-507 for small and small disadvantaged business was not being generally carried out by the acquisition agencies. The implementation was basically still in the planning stages in most of the procuring agencies, plus the fact that some agencies had proceeded on implementing tangents on their own and failed to coordinate their procedures with either OFPP or the SBA. On July 12, 1978, we wrote to the Director of the Office of Management and Budget and pointed out, inter alia, our concern that the continued independent and uncoordinated actions of various agencies would endanger and frustrate the small business community, contrary to the expressed intent of Congress and the Administration. The Office of Management and Budget took immediate action through the Office of Federal Procurement Policy and, in conjunction