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IMPLEMENTATION OF SUBCONTRACTING
PROVISIONS OF PUBLIC LAW 95-507

(Part 1)

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Printed for the use of the Committee on Small Business

U.S. GOVERNMENT PRINTING OFFICE

67-734 O

WASHINGTON : 1980

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NEAL SMITH, Iowa, Chairman
TOM STEED, Oklahoma

JOSEPH M. McDADE, Pennsylvania
JOHN D. DINGELL, Michigan

SILVIO O. CONTE, Massachusetts
JAMES C. CORMAN, California

J. WILLIAM STANTON, Ohio
JOSEPH P. ADDABBO, New York

WILLIAM S. BROOMFIELD, Michigan
FERNAND J. ST GERMAIN, Rhode Island TIM LEE CARTER, Kentucky
PARREN J. MITCHELL, Maryland

DAN QUAYLE, Indiana
HENRY B. GONZALEZ, Texas

DAN MARRIOTT, Utah
JAMES M. HANLEY, New York

TOBY ROTH, Wisconsin
JOHN J. LAFALCE, New York

LYLE WILLIAMS, Ohio
BERKLEY BEDELL, Iowa

OLYMPIA J. SNOWE, Maine
FREDERICK W. RICHMOND, New York DOUGLAS K. BEREUTER, Nebraska
ALVIN BALDUS, Wisconsin

ED BETHUNE, Arkansas
RICHARD NOLAN, Minnesota

ARLEN ERDAHL, Minnesota
RICHARD H. ICHORD, Missouri

THOMAS J. TAUKE, Iowa
HENRY J. NOWAK, New York
THOMAS A. LUKEN, Ohio
ANDY IRELAND, Florida
DALE E. KILDEE, Michigan
IKE SKELTON, Missouri
BILLY LEE EVANS, Georgia
DOUG BARNARD, Georgia
CLAUDE LEACH, Louisiana
TONY P. HALL, Ohio

THOMAS G. POWERS, General Counsel
Lois LIBERTY, Publications Specialist
RAYMOND S. WITTIG, Minority Counsel

SUBCOMMITTEE ON GENERAL OVERSIGHT AND MINORITY ENTERPRISE

JOHN J. LAFALCE, New York, Chairman
JAMES C. CORMAN, California

TIM LEE CARTER, Kentucky
JOSEPH P. ADDABBO, New York

LYLE WILLIAMS, Ohio
PARREN J. MITCHELL, Maryland

DOUGLAS K. BEREUTER, Nebraska
HENRY B. GONZALEZ, Texas
FREDERICK W. RICHMOND, New York

GEORGE NEIDICH, Subcommittee Counsel

ROBERT I. BRICKMAN, Deputy Subcommittee Counsel
Douglas L. FRANCISCO, Minority Subcommittee Professional Staff Member

الالوان و

CONTENTS

Page

1

Hearing held on December 4, 1979

Opening statements of-

Addabbo, Hon. Joseph P., a Representative in Congress from the State of

New York

Carter, Hon. Tim Lee, a Representative in Congress from the State of

Kentucky..

Corman, Hon. James C., a Representative in Congress from the State of

California

LaFalce, Hon. John J., chairman, Subcommittee on General Oversight and

Minority Enterprise

Mitchell, Hon. Parren J., a Representative in Congress from the State of

Maryland.

Testimony of,

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-

ment

Cook, Clyde C., Director, Supply Services, Veterans' Administration

Currie, James D., Acting Administrator, Office of Federal Procurement

Policy, OMB; accompanied by Thomas F. Williamson, Associate Adminis-

trator for Acquisition Law..

Kulik, Bernard, Associated Administrator, Procurement Assistance, SBA;

accompanied by William A. Clement, Jr., Associate Administrator, Mi-

nority Small Business/Capital Ownership Development

McBride, Gerald, Associate Administrator, Acquisition Policy, General

Services Administration; accompanied by Bill Madison.

Socolar, Milton J., General Counsel, GAO

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

New York:

Exhibit 1-Letter to agencies

Exhibit 2–Responses from agencies..

Exhibit 3—GA) opinion letter

Exhibit 4-OFPP memorandum

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295

80

Additional material supplied for the hearing record-Continued

Cantey, Wilbert, Director, Office of Small and Disadvantaged Business

Utilization, Department of Transportation: Prepared statement

Church, Dale, Director, Office of Small and Disadvantaged Business Utili-

zation, Office of the Secretary of Defense:

Defense acquisition circular 76-19 receipt dates by activity

Prepared statement....

Clement, William A., Jr., Associate Administrator for Minority Small

Business and Capital Ownership Development: Prepared statement and

attachment

Clinkscales, Richard, Director, Office of Small and Disadvantaged Business

Utilization, Department of Health, Education, and Welfare: Prepared

statement

Cook, Clyde C., Director, Supply Services, Veterans’ Administration: Pre-

pared statement

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

Minority Enterprise:

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

States, dated December 12, 1979

Margulis, Harold J., Director, Office of Small and Disadvantaged Business

Utilization, Department of the Army: Prepared statement...

McBride, Gerald, Associate Administrator, Acquisition Policy, General

Services Administration:

Attachments to testimony

Legal opinion re section 211 of Public Law 95-507.

Patterson, Charles T., Staff Director, Small and Disadvantaged Business

Utilization, Defense Logistics Agency: Prepared statement
Questal, Morris, Director, Small and Disadvantaged Business Utilization,

Office of the Secretary of the Navy: Prepared statement
Rellins, Donald E., Director, Small and Disadvantaged Business Utiliza-

tion, Department of the Air Force: Prepared statement
Socolar, Milton J., General Counsel, GAO: Prepared statement
Spann, Charlotte Brooks, Director, Office of Small and Disadvantaged

Business Utilization, Department of the Interior: Prepared statement ....

Trimble, Robert F., Director, Contracts and Systems Acquisition, Office of

the Under Secretary of Defense: Letter dated November 28, 1979, with

attachment

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247

IMPLEMENTATION OF SUBCONTRACTING

PROVISIONS OF PUBLIC LAW 95-507

(Part 1)

TUESDAY, DECEMBER 4, 1979

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON GENERAL OVERSIGHT

AND MINORITY ENTERPRISE OF THE
COMMITTEE ON SMALL BUSINESS,

Washington, D.C. 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

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