IMPLEMENTATION OF SUBCONTRACTING (Part 1) Printed for the use of the Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE 67-734 O WASHINGTON : 1980 NEAL SMITH, Iowa, Chairman JOSEPH M. McDADE, Pennsylvania SILVIO O. CONTE, Massachusetts J. WILLIAM STANTON, Ohio WILLIAM S. BROOMFIELD, Michigan DAN QUAYLE, Indiana DAN MARRIOTT, Utah TOBY ROTH, Wisconsin LYLE WILLIAMS, Ohio OLYMPIA J. SNOWE, Maine ED BETHUNE, Arkansas ARLEN ERDAHL, Minnesota THOMAS J. TAUKE, Iowa THOMAS G. POWERS, General Counsel SUBCOMMITTEE ON GENERAL OVERSIGHT AND MINORITY ENTERPRISE JOHN J. LAFALCE, New York, Chairman TIM LEE CARTER, Kentucky LYLE WILLIAMS, Ohio DOUGLAS K. BEREUTER, Nebraska GEORGE NEIDICH, Subcommittee Counsel ROBERT I. BRICKMAN, Deputy Subcommittee Counsel الالوان و CONTENTS Page Hearing held on December 4, 1979 Addabbo, Hon. Joseph P., a Representative in Congress from the State of Carter, Hon. Tim Lee, a Representative in Congress from the State of Corman, Hon. James C., a Representative in Congress from the State of LaFalce, Hon. John J., chairman, Subcommittee on General Oversight and Mitchell, Hon. Parren J., a Representative in Congress from the State 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- 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- 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 Page 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 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 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 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 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 Office of the Secretary of the Navy: Prepared statement tion, Department of the Air Force: Prepared statement 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 165 158 130 247 Appendix 1–Further questions to witness agencies from Chairman LaFalce Exhibit A-Office of Federal Procurement Policy, OMB Exhibit B-Small Business Administration Exhibit C-General Services Administration Exhibit D-Veterans' Administration Exhibit E-Department of the Interior Exhibit F-Department of Health, Education, and Welfare IMPLEMENTATION OF SUBCONTRACTING PROVISIONS OF PUBLIC LAW 95-507 (Part 1) TUESDAY, DECEMBER 4, 1979 HOUSE OF REPRESENTATIVES, AND MINORITY ENTERPRISE OF THE 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 (1) |