IMPLEMENTATION OF SUBCONTRACTING (Part 1) HEARING BEFORE THE SUBCOMMITTEE ON GENERAL OVERSIGHT OF THE COMMITTEE ON SMALL BUSINESS NINETY-SIXTH CONGRESS FIRST SESSION 87-734 O WASHINGTON, D.C., DECEMBER 4, 1979 Printed for the use of the Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE WASHINGTON : 1980 TOM STEED, Oklahoma COMMITTEE ON SMALL BUSINESS NEAL SMITH, Iowa, Chairman JOHN D. DINGELL, Michigan FERNAND J. ST GERMAIN, Rhode Island FREDERICK W. RICHMOND, New York ALVIN BALDUS, Wisconsin JOSEPH M. McDADE, Pennsylvania LYLE WILLIAMS, Ohio OLYMPIA J. SNOWE, Maine DOUGLAS K. BEREUTER, Nebraska GEORGE NEIDICH, Subcommittee Counsel ROBERT I. BRICKMAN, Deputy Subcommittee Counsel DOUGLAS L. FRANCISCO, Minority Subcommittee Professional Staff Member (II) CONTENTS Page Cantley, Wilbert E., Director, Office of Small and Disadvantaged Business Utilization, Department of Transportation; accompanied by Roger Mar- tino, Office of Installation and Logistics Church, Dale W., Deputy Under Secretary of Defense, Research and Engineering (Acquisition Policy) and Director, Office of Small and Disad- vantaged Business Utilization, Office of the Secretary of Defense; accom- panied by Harold J. Margulis, Director, Office of Small and Disadvantaged Business Utilization, Department of the Army; Donald E. Rellins, Director, Office of Small and Disadvantaged Business Utiliza- tion, Department of the Air Force; Morris Questal, Director, Office of Small and Disadvantaged Business Utilization, Department of the Navy; and Charles T. Patterson, Director, Office of Small and Disadvantaged Business Utilization, Defense Logistics Agency. Clinkscales, Richard, Director, Office of Small and Disadvantaged Business Utilization, Department of Health, Education, and Welfare; accompanied by Edward Rhodes, Deputy Assistant Secretary for Grants and Procure- Cook, Clyde C., Director, Supply Services, Veterans' Administration Kulik, Bernard, Associated Administrator, Procurement Assistance, SBA; 303 Spann, Charlotte B., Director, Office of Small and Disadvantaged Business Utilization, Department of the Interior; accompanied by Robert Saldivar, Chief, Division of Procurement and Grants, and Justin Patterson Additional material supplied for the hearing record— Addabbo, Hon. Joseph P., a Representative in Congress from the State of Additional material supplied for the hearing record-Continued Page Cantey, Wilbert, Director, Office of Small and Disadvantaged Business Church, Dale, Director, Office of Small and Disadvantaged Business Utili- 295 Clement, William A., Jr., Associate Administrator for Minority Small Business and Capital Ownership Development: Prepared statement and Clinkscales, Richard, Director, Office of Small and Disadvantaged Business Utilization, Department of Health, Education, and Welfare: Prepared Cook, Clyde C., Director, Supply Services, Veterans' Administration: Pre- Currie, James D., Acting Administrator, Office of Federal Procurement Policy, Office of Management and Budget: Prepared statement Kulik, Bernard, Associated Administrator for Procurement Assistance, Small Business Administration: Prepared statement LaFalce, Hon. John J., chairman, Subcommittee on General Oversight and Memorandum from Robert F. Trimble, Director, Contracts and Sys- tems Acquisition, re DAC 76-19 subcontracting clauses...... Letter from Milton J. Socolar, Comptroller General of the United Margulis, Harold J., Director, Office of Small and Disadvantaged Business Utilization, Department of the Army: Prepared statement..... McBride, Gerald, Associate Administrator, Acquisition Policy, General Patterson, Charles T., Staff Director, Small and Disadvantaged Business 165 Questal, Morris, Director, Small and Disadvantaged Business Utilization, 158 130 93 247 207 IMPLEMENTATION OF SUBCONTRACTING (Part 1) TUESDAY, DECEMBER 4, 1979 HOUSE OF REPRESENTATIVES, AND MINORITY ENTERPRISE OF THE The subcommittee met, pursuant to notice, at 9 a.m., in room 2359A, Rayburn House Office Building, Hon. John J. LaFalce (chairman of the subcommittee) presiding. OPENING STATEMENT OF CHAIRMAN LaFALCE Mr. LAFALCE. The Subcommittee on General Oversight and Minority Enterprise will come to order. This morning, the subcommittee will commence a series of hearings investigating small business opportunities for participation in Federal procurement. Federal agencies and departments annually let approximately $100 billion in contracts and all too often, small business does not get its fair share of the Federal procurement dollar. Today's hearing will focus on the subcontracting provisions of Public Law 95-507 which provide considerable opportunities for small and minority business and the apparent recalcitrance in the Federal Government's implementation of that law. Public Law 95–507, signed into law on October 24, 1978, has been hailed as landmark legislation to increase the small and minority business share of the Federal procurement dollar. Prior to the passage of this law, the small business subcontracting program lacked statutory authority to require prime contractors to subcontract to small business. The program paid lipservice to these concerns, in that prime contractors merely agreed to use their best efforts to promote subcontracting: However, there were no mechanisms to review a prime contractor's compliance with his agreement, nor was there any manner to compel his adherence to his promise. The new authority provided by Public Law 95-507 is an attempt to remedy this past situation by significantly improving the position of both small and minority business as subcontractors to the major prime contractors. Congress affirmatively committed itself to improving the procurement climate for small business as evidenced by the following language from the statute: "It is the policy of the United States that small business concerns, and small business (1) |