As of February 1, 1980, all major departments and agencies have established an Office of Small and Disadvantaged Business Utilization (OSDBU) and have either designated a director or designated an OSDBU contact person. There are indications, however, of less than timely implementation of the spirit of the requirement in Public Law 95-507. We have expressed this concern to OFPP. SBA has continued in its efforts to make aware, inform and educate interested individuals who would benefit from the law or those individuals who have responsibility for administering Public Law 95–507. SBA, the Directors of OSDBU and procurement officials representing 28 agencies held their Second Quarterly Meeting on December 5-7, 1979. The meeting was principally devoted to presentations and open discussions in furtherance of Public Law 95-507's implementation. The Agency is also developing an outreach conference program for sponsorship by the Federal Executive Boards and EMBOC's. It is intended that such conferences will be limited to areas having major procuring activities. In addition to the SBA actions cited earlier, the Agency has also engaged in educational efforts to promote a better understanding of the new statute among those concerned with its day-to-day workings. Much of this activity has centered around a collaborative effort with the National Contract Management Association aimed at holding seminars for contracting personnel of both industry and Government in 26 different locations around the country. The heavy emphasis given Public Law 95-507 by SBA, the White House, the White House Conference on Small Business, and in no small measure by this Subcommittee, has proven productive, and reports on solicitation and award activity forwarded to this Agency have increased since our last meeting. SBA has taken the initiative to systematically improve the capability, service and the assistance to the 1,860 (a) portfolio firms. The business plan is the cornerstone and the building block for participation in the 8(a) Program. The plan must address the basic needs of the company including its management, financial, technical assistance and long-range business planning for the individual firm. SBA has redefined the responsibilities of two important interfacing components, the Minority Small Business, Business Development Specialists (BDS) and the Procurement Assistance, Procurement Center Representatives (PCR). The objective is to effectuate closer coordination, technical assistance, monitoring and procurement match buys for the participating firm. Parallel and collaborative training sessions were held for all ten regional BDS and PCR personnel during the Fall of 1979. SBA Handbook 80-05 was developed and has been operational since September 1979. The Handbook systematically explains action procedures and guidelines from precertification to the termination of a firm from the 8(a) Program. The BDS must now make annual visits to each firm, and they must annually review a firm's Business Plan for upgrading and modification relative to the economic conditions and the business environment of the company's industry. The 7(j) Assistance Program including the Call Contract System of support to 8(a) firms has been improved and diversified. It now encompasses expanded training and more specific task order assistance. The SBA reviewed its figures for fiscal year 1978 and fiscal year 1979 and they clearly indicated SBA and the MSB Program have maintained or have increased and diversified their direct and indirect support to the 8(a) portfolio firms. The number of support contracts in fiscal year 1978 were 95. In fiscal year 1979, there were 120. The number of service contacts in fiscal year 1978 were 5,700. In fiscal year 1979, 6,300 service contacts were performed. The dollar volume for assistance in fiscal year 1978 was $7.5 million and during fiscal year 1979 it was increased to $10.8 million. The Army Pilot Program as an experimental program grants SBA broad authority to unilaterally identify and select for the 8(a) program, procurement opportunities not normally offered by the U.S. Army. In recognition of the magnitude of this responsibility, the SBA has developed and tested coordinated procedures for implementation of the Pilot Program on a broad scale. The follow Fourteen projects totalling $122.3 million have either been awarded, fully reserved, or are under review for reservation for the Army Pilot Program by the SBA. The process of requirement identification, firm matching and reservation will continue for the duration of the Pilot Program. Qualified consultants for the programs have been hired to (a) assess suitability of identified projects for the Pilot Program, (b) assist 8(a) firms in contract negotiations, (c) provide management and technical assistance. BDE funds have been earmarked to assist Pilot Program firms to acquire capital equipment and to cover price differential as provided in SBA Handbook 80-05 and related regulations. On February 11, 1980, all SBA Procurement Center Representatives (PCR), at major Army installations, key Army and SBA personnel met in Washington to accelerate nationwide implementation of the Army Pilot Program and to formulate plans to accelerate program development. PCR's are being furnished with the names and capabilities of all 8(a) firms nominated for Pilot Program participation. Our PCR's will screen procurement program planning and budgetary data at their installations to identify suitable procurement opportunities for these firms. The SBA has drafted proposed regulations to waive the bond requirements for 8(a) firms not withstanding the provisions of the Miller Act under the discretionary authority, Section 202, of Public Law 95–507. The proposed regulations are being circulated for comment prior to their publication in the Federal Register. We are pleased to inform you that President Carter has appointed 10 individuals to serve on the Presidential Advisory Committee on Small and Minority Business Development which is composed of five high-level officers from businesses and five representatives of minority small businesses. The purpose of the Committee is to monitor and encourage the placement of subcontracts by the private sector with eligible small businesses, and the Committee can propose incentives and assistance which may be needed by the private sector to help in the training, development, and upgrading of such businesses. The Committee will make periodic reports and recommendations to the President through the Administrator of the Small Business Administration and will offer such other advice and at such times as the President through the Administrator may request. The Committee, through its Chairman, will report annually to the President and to the Congress on the activities of the Committee during the preceding calendar year. As I mentioned in my opening remarks, SBA values the authority of Public Law 95-507 and the challenges which confront the Agency. Like most challenges, implementation and execution of Public Law 95-507 contains many elements. One of the more important elements and a condition precedent to the effectiveness and success of SBA is the cooperation and coordination or our sister Federal agencies. Implementation, execution and monitoring are the collateral objectives of SBA and the entire Federal establishment. Together we will make the law a good one and one of economic and social benefit to the entire small business community. Mr. Chairman, that concludes my statement. We will be glad to answer any questions you may have. ATTACHMENTS 1. December 7, 1979-Memorandum from Administrator Weaver to all SBA Regional Administrators. 2. December 11, 1979-Memorandum from Administrator Weaver to Heads of all Executive Departments and Agencies. 3. December 18, 1979-Memorandum from Associate Administrator for Procurement Assistance, Bernard Kulik to Directors, Office of Small and Disadvantaged Business Utilization. 4. January 13, 1980-Memorandum for the Heads of Departments and Agencies-President Carter. 5. January 24, 1980-Policy Letter 80-1 to the Heads of Executive Departments and Establishments-Acting Administrator OFPP, James D. Currie. 6. Presidential Advisory Committee on Small and Minority Business Development. U.S. SMALL BUSINESS ADMINISTRATION, Washington, D.C., December 7, 1979. Subject: Subcontracting Provisions of Public Law 95-507. To: All Regional Administrators. Many times over the past year I have expressed my concern to you as to the need for forceful implementation of the subcontracting provisions of Public Law 95-507 by SBA and the procuring agencies. My concern is shared by the President who has, through his staff, forcefully informed the Executive Branch of their obligations under the Law and the President's intent to see that these obligations are fulfilled in every respect. This concern is also shared by Congress as is evident by recent House Small Business Subcommittee hearings and inquiries by interested congressmen. SBA's role in connection with subcontracting is clearly laid out by the statute and our internal documents. Over the past months SOPS and instructions have been issued and there should be no doubt in anyone's mind as to what their responsibility is in connection with implementing this Law. The PA and MSB training sessions completed last month were held to ensure that there was no misunderstanding at the regional and district levels. I expect that each of your offices and employees is now performing his appropriate function. Specifically, PCRS should be reassigned as agreed to and should be reviewing all solicitations to determine that appropriate clauses are contained therein and reviewing all proposed subcontracting pians to determine their acceptability. Subcontracting specialists should be reviewing specific 95-507 subcontracting plans as well as prime contractor performance in other 95-507 areas to determine the extent of implementation of the appropriate plan and other subcontracting efforts required. PCRs, subcontracting specialists and other knowledgeable personnel should be assisting procuring agencies and prime contractors in fulfilling their requirements under Public Law 95-507 in the development of subcontracting plans and elsewhere as appropriate. It is obvious that the implementation of this Law has gotten off to a slow start. However, there is no reason why SBA's function should not be carried out to its fullest extent. I expect each of you and your staffs are doing and will continue to do whatever is needed to fulfill this Agency's responsibility under the Law. If there are still any unresolved questions in this area, please raise them with Mr. Kulik at once so that we will be able to use our full authority in this very necessary endeavor. A. VERNON WEAVER, U.S. SMALL BUSINESS ADMINISTRATION, From: A. Vernon Weaver, Administrator. More than a year ago, President Carter signed Public Law 95-507, one of the most significant pieces of legislation with respect to small business to be signed in many years. This Act directs many benefits for both disadvantaged and majority small businesses and places substantial requirements on the procuring agencies of the Federal Government. In my view, the Executive Branch's implementation of the subcontracting provisions of Public Law 95-507 has been unsatisfactory. The purpose of this letter is to request that you direct your personal attention to the implementation of this Law within your organization. A recent opinion of the General Accounting Office brings into question the status of solicitations and contracts let during the latter part of fiscal year 1979. The GAO suggested three possible alternatives to redress the situation where appropriate. A. Terminate and resolicit in compliance with the law. B. Modify the deficient contracts in order to bring them in compliance with the law, or C. Take no action in those few cases where it is not feasible to remedy the situation. It is my duty as Administrator of the Small Business Administration to monitor Agency performance with respect to the subcontracting provisions of Public Law 95-507 and to provide an annual report to the Congress indicating how the Executive Branch is performing thereunder. The report for fiscal year 1979 will In the near future, my staff will request from the director of your Office of Small and Disadvantaged Business Utilization the information which is needed in order to determine the extent of implementation (or nonimplementation) of the subcontracting provisions of Public Law 95-507. We will inform them of the reporting and review that the Small Business Administration will make to ensure that appropriate corrective action is taken. If you are unable to take immediate action to redress noncompliance in fiscal year 1979, please let me know, directly. I regret having to make this request in this manner, but I am sure you will agree that the urgency of the situation requires special action on my part as well as your immediate attention to assure that the Executive Branch is implementing the Law. Additionally, Public Law 95-507 provides that each agency must establish procurement and subcontracting goals for small businesses and small businesses owned by disadvantaged individuals. The procedures to be followed are set forth in Office of Federal Procurement Policy letter 79-3. The proposed goals are to be submitted to me by December 31, 1979. Although amendments to the requirements as stated in OFPP letter 79-3 will be forthcoming, the submission of goals by your organization should not be deferred. I am certain that you understand my concern and the concern of the President that Public Law 95-507 be fully implemented and that appropriate action be taken to redress noncompliance in fiscal year 1979. This memorandum has been coordinated with the Office of Federal Procurement Policy. A. VERNON WEAVER, SMALL BUSINESS ADMINISTRATION, From: Bernard Kulik, Associate Administrator for Procurement Assistance. To: Directors, Office of Small and Disadvantaged Business Utilization. Reference is made to the Office of Federal Procurement Policy (OFPP), OMB memorandum under date of November 21, 1979, addressed to Heads of All Executive Departments and Establishments. This communication makes further reference to implementation of Public Law 95-507 and the Comptroller General's opinion referred to therein. As you will recall, the Comptroller General's response to Congressional inquiry brought into question the legal sufficiency of contracts let during the latter part of fiscal year 1979 wherein solicitations and subsequent contracts failed to conform to the provisions of Section 211, Public Law 95-507. The Comptroller General suggested three possible alternatives to redress the situation where appropriate. The OFPP memorandum referenced above required submission by January 15, 1980, from each of the addresses of the number and dollar amount of contracts and solicitations requiring the subcontracting provisions of Section 221 (above) which were issued without the provisions and the number and dollar amount of those subsequently modified to include those provisions. This memorandum does not alter or modify the requests made in the OFPP memorandum. However, to permit this Agency to discharge our responsibilities as (1) advocate for small business including small businesses owned and controlled by socially and economically disadvantaged individuals and (2) as evaluators of compliance with the subcontracting provisions of the law, this memorandum sets forth our needs for additional information and the procedures SBA will follow in connection with the necessary remedial action. Please furnish the SBA: (1) a listing of the solicitation identification numbers by procuring installations of those solicitations issued which should have conformed to the pertinent provisions of Section 211 (above) but, when issued, did not do so; (2) a listing of the contract identification numbers by procuring installation with appropriate dollar values by contract of those contracts, and all appropriate modifications, which should have conformed to the pertinent provisions of Section 211 (above) but, when awarded, did not do so. The foregoing (1) and (2) should be furnished at the installation level to the SBA Procurement Center Representative (PCR) where there is such a person assigned as a resident by the SBA. Where there is no resident PCR assigned to the installation, the referenced documents (1) and (2) should be forwarded to the SBA Regional Administrator (attention ARA/RP) in the geographical area of the installation concerned. For civilian agencies, this will include contractual instruments issued from July 2, 1979 on, and for DOD the starting date will be from time of receipt of DAC 76-19 or September 1, 1979, whichever is earlier. Where remedial action consists of contract termination and resolicitation or where existing contracts are modified to include subcontracting plans required by Section 211 (above), SBA involvement in processing will be as in the case of new procurement actions. In the few cases where a determination is made that no remedial action should be taken, such determination should be in writing and signed by an appropriate official with a copy to the SBA PCR or Regional Administrator as in submitting (1) and (2) above. We recommend that the approving official be the head of the Acquisition Activity. By January 15, 1980, please furnish this office, on a total agency basis, a report indicating the number of items submitted in (1) and (2) above, the number and the total dollar amount remedied by category of remedy used and the number of cases remaining where action as yet has not been taken. Additional reports to SBA should be made on the 15th of each succeeding month until the action "as yet to be taken" figure is zero. Your cooperation in and understanding of the necessity for these unusual actions is appreciated. We feel that they serve our mutual mandate to maximize procurement opportunities for small business and small businesses owned and controlled by socially and economically disadvantaged individuals. This memorandum has been coordinated with OFPP. BERNARD KULIK, Associate Administrator for Procurement Assistance. THE WHITE HOUSE, Washington, January 13, 1980. MEMORANDUM FOR THE HEADS OF DEPARTMENTS AND AGENCIES When I announced my Urban Policy in March 1978, I set certain goals for the federal procurement system. Specifically, I pledged to triple the amount of business the Federal Government does with minority businesses, increasing those contracts from the $1.1 billion level of 1977 to $3.3 billion by the end of fiscal year 1979. I also signed an Executive Order to increase substantially the amount of federal procurement in areas of high unemployment (labor surplus areas). In both instances, although the government's performance improved significantly over previous years, the goals I set were not achieved. We are in the process of establishing higher goals in minority and LSA procurement for 1980, which I am confident we can achieve. I would like each of you to take the following specific actions to ensure that your agency is doing its best to meet those goals: Familiarize yourself with your agency goals and ensure that adequate plans have been developed to reach these goals. Instruct each of your procurement officials that these goals are a high priority with me and that I expect each of them to take every necessary and appropriate step to reach these goals. Public Law 95-507 requires that each agency establish an Office of Small and Disadvantaged Business Utilization (OSDBU) with a full-time director who reports to the agency head or deputy. It also requires subcontracting plans for utilization of small and minority firms for most federal contracts over $500,000. Please take the following actions regarding Public Law 95-507: (1) review your OSDBU to see that it has the necessary resources and full-time staff to carry out the responsibilities mandated by this law; and (2) review the performance of your agency with regard to the subcontracting provision of the law, and take every action required to ensure that, henceforth, no contract covered by the provisions of this law is let by your agency which does not have a subcontracting plan. You should already have established with the Department of Commerce your annual minority contracting goals and with SBA your subcontracting goals under Public Law 95-507; if not, do so immediately. Cooperate fully with GSA in establishing LSA goals. Personally review the 1979 performance of your agency in the minority and LSA procurement areas, and if you did not meet your goals. develop a plan by January 30 to meet 1980 goals, |