tain the clauses on subcontracting plans which do not contain such clauses.

We have made substantial progress in negotiating amendments to contracts issued prior to December 4, 1979, and a more detailed report on those efforts will be furnished the subcommittee in the not too distant future. It is my sincere belief that we have reached a position where all solicitations now being issued contain the required clauses. We will insure that all contracts resulting from those solicitations which require subcontracting plans will contain them.

I have submitted for the record the answers to the questions contained in your letter of February 7, 1980, and I am prepared to discuss those answers or answer any other questions you may have.

Mr. LAFALCE. Without objection, a copy of those answers will be entered in the record at this point.

[The questions and answers referred to follow:]

Question 1. The number of deficit solicitations and contracts you have remedied since December 4, 1979.

Answer. a. Twenty-four solicitations. b. Forty-one contracts.

Question 2. The number of solicitations issued since December 4, 1979 which are deficient.

Question 3. The total number and dollar amount of prime contracts awarded since December 4, 1979 which do not contain required subcontracting plans. Answer. a. Sixty-six contracts. b. $538,576,725.

Question 4. The number of deficient solicitations issued prior to December 4 not remedied.

a. 171 solicitations.

Question 5. The number of deficient solicitations issued subsequent to December 4, 1979 not remedied.

Answer. a. Zero solicitations.

Question 6. The number and amount of prime contracts awarded prior to December 4, 1979 which did not contain the required subcontracting plan and which have not been amended or terminated.

From April 10, 1979-December 4, 1979.

Answer. a. 299 contracts. b. $1,009,662,406.

Question 7. The number and dollar amount of prime contracts awarded subsequent to December 4, 1979 which did not contain the required subcontracting plan and which have not been amended or terminated.

Answer. a. Forty-two contracts. b. $383,200,000.

Question 8. Copies of three representative subcontracting plans submitted, one of which was received in connection with the purchase of commercial products.

Answer. See exhibit 2, p. 263.

Mr. LAFALCE. We thank you, Mr. McBride.

[Mr. McBride's prepared statement follows:]

PREPARED STATEMENT OF GERALD MCBRIDE, ASSISTANT ADMINISTRATOR FOR ACQUISITION POLICY, GENERAL SERVICES ADMINISTRATION

Good morning, Mr. Chairman, members of the Subcommittee. My name is Gerald McBride. I am the Assistant Administrator for Acquisition Policy of the General Services Administration. I am accompanied by William F. Madison, Director of the Office of Small and Disadvantaged Business Utilization for GSA. When I first appeared before this Subcommittee on December 4, 1979, to discuss GSA's efforts to implement Public Law 95-507, I characterized our accomplishments as limited and disappointing. I can today state that GSA's accomplishments since the 4th of December are a substantial improvement. I make this statement knowing that we reported to you that 67 contracts totalling $460,706,797 had been awarded from December 4 to December 31, 1979, without

December 4, which were deficient. (These award figures were subsequently corrected to 58 contracts for $400.6 million.)

I have for the record, a copy of every instruction that GSA has issued regarding implementation of 95-507. Of particular importance is my comprehensive letter of December 26, 1979 which for the first time addressed the problem of solicitations which had been issued without the requirements for a subcontracting plan and where either bids had been opened (if formally advertised) or negotiations had proceeded to a point where failure to continue to award would be inconsistent with the best interests of the Government. In either of the above instances, our contracting activities were instructed to proceed to award, and begin immediate negotiations to include the requirement for a subcontracting plan. On February 1, 1980, we notified our contracting activities that contracts awarded since December 1, that did not contain the required clauses for subcontracting plans would be amended to include the clause and an acceptable plan obtained, or the contract would be terminated in accordance with its terms unless I directed otherwise.

With that background, let me state that of 58 contracts totalling $400.6 million reported to you on February 7, 1980, as having been awarded without the required clauses for subcontracting plans, negotiations have begun in every instance to amend the contracts. Of these, sixteen contracts totalling $117.3 million have been amended to include the required clauses. Of the remaining 42 contracts, 1 is with IBM for $142 million and 1 is with VEPCO for $70 million. Negotiations are proceeding diligently with both companies. Additionally, there are currently no outstanding solicitations which are required to contain the clauses on subcontracting plans which do not contain such clauses. We have made substantial progress in negotiating amendments to contracts issued prior to December 4, 1979 and a more detailed report on those efforts will be furnished the subcommittee in the not too distant future. It is my sincere belief that we have reached a position where all solicitations now being issued contain the required clauses. We will ensure that all contracts resulting from those solicitations which require subcontracting plans will contain them. I have attached to this statement the answers to the questions contained in your letter of February 7, 1980, and I am prepared to discuss those answers or answer any other questions you may have.

Mr. LAFALCE. Our next witness will be Mr. Richard Clinkscales, Director, Office of Small and Disadvantaged Business Utilization of the Department of Health, Education, and Welfare.

Mr. Clinkscales?

TESTIMONY OF RICHARD CLINKSCALES, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE; ACCOMPANIED BY EDWARD RHODES, DEPUTY ASSISTANT SECRETARY FOR GRANTS AND PROCUREMENT

Mr. CLINKSCALFS. Thank you, Mr. Chairman.

Joining me this morning is Mr. Edward Rhodes, Deputy Assistant Secretary for Grants and Procurement. I am pleased to appear today to discuss the implementation of the subcontracting provisions of Public Law 95-507 within the Department of Health, Education, and Welfare.

I have submitted my prepared statement for the record and will just give you the highlights of my testimony.

Mr. LAFALCE. That will be fine. Without objection, your entire prepared statement will be inserted in the record.

Mr. CLINKSCALES. Since we last appeared before this subcommittee on December 4, 1979, an exhaustive review of all contracts and contract

modifications awarded subsequent to May 22, 1979, was undertaken to identify and correct all contracts which do not contain the minority subcontracting plan provisions of section 211 of Public Law 95-507.

We have also met with the senior procurement officials from each of our contracting offices and apprised them of the importance and necessity for assuring that all applicable contracts are in compliance with the provisions of section 211.

We have also developed a handbook with detailed guidelines for our contracting officers and small and disadvantaged business utilization specialists. Our small and disadvantaged business utilization specialists are presently conducting training sessions for all of our departmental contracting officials. These sessions should be completed by February 29.

We have also implemented procedures to review all solicitations and contract awards to assure compliance with the provisions of section 211. These reviews are made by the small and disadvantaged business utilization specialists and the Small Business Administration's representative.

As stated previously, we are in the process of correcting all deficient contracts awarded subsequent to May 22. However, there are 98 contracts at the present time valued at $127.4 million which have not been amended or terminated. We anticipate that each of these contracts will be corrected by April 1 and following is the status of these contracts.

The National Institute of Education which will soon become part of the Department of Education, recently identified nine contracts valued at $38.5 million, which were awarded prior to December 4, 1979. Plans from three contractors with contracts valued at $9.2 million have been received and are being reviewed. The six remaining contractors have been contacted and steps are underway to obtain their plans.

Mr. Chairman, I would also like to indicate that after this testimony had been submitted to the committee, we were informed by the National Institute of Education that eight of those nine contractors have alleged to be small businesses. We have instructed the National Institute of Education to work with the Small Business Administration to validate their status as small businesses.

There are also 16 contracts valued at $27.7 million which were awarded prior to December. Each of these contractors has also been contacted and corrective actions are underway.

The Public Health Service has 73 contracts valued at $61.2 million. which were awarded prior to December 4, 1979. Each of these contractors has been contacted. The vast majority of contracts awarded by the Public Health Service are for highly specialized biomedical research and development projects. The initial review of these contracts revealed that few subcontracting possibilities exist. However, these contractors have been contacted to determine if any requirements exist for supplies and materials which might be targeted to small and small disadvantaged businesses. Following is the status of these efforts.

Twenty-one contracts valued at $27.3 million definitely have subcontracting possibilities and negotiations are underway.

Thirty-five contracts valued at $14 million may have supply and material requirements. However, a final determination cannot be made until negotiations are completed.

Seventeen contracts valued at $19.9 million do not appear to offer subcontracting possibilities. However, in light of our expanded definition of a subcontract, which includes purchase orders of any amount, a determination cannot be made until negotiations are completed.

Mr. Chairman, no prime contracts have been awarded subsequent to December 4 which do not contain the required subcontracting plans. In conclusion, let me assure the subcommittee that the Department of Health, Education, and Welfare is committed to the development of an effective and viable program to assist small and disadvantaged businesses to participate in an equitable manner in our procurement program.

Thank you.

Mr. LAFALCE. Thank you very much, Mr. Clinkscales.

[Mr. Clinkscales' prepared statement and attachments follow:]

PREPARED STATEMENT OF RICHARD CLINKSCALES, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION

Mr. Chairman and Members of the Subcommittee, I am Richard Clinkscales, Director of the Office of Small and Disadvantaged Business Utilization; joining me is Mr. Edward Rhodes, Deputy Assistant Secretary for Grants and Procurement. I am pleased to appear today to discuss the implementation of the subcontracting provisions of Public Law 95-507 within the Department of Health, Education, and Welfare.

Since we last appeared before this subcommittee, on December 4, 1979, an exhaustive review of all contracts and contract modifications awarded subsequent to May 22, 1979 was undertaken to identify and correct all contracts which do not contain the minority subcontracting plans required by Section 211 of Public Law 95-507. We have also met with the senior procurement officials from each of our contracting offices and apprised them for the importance and necessity for assuring that all applicable contracts are in compliance with the provisions of Section 211.

On October 29, 1979 the Office of Federal Procurement Policy published, in the Federal Register, additional guidelines for the implementation of Section 211 of Public Law 95-507 to assure consistent and uniform implementation of these procurement regulations throughout Government. These guidelines clarified the original regulations which were vague and difficult for operating coutracting offices to follow. As a result of these revised guidelines we developed a handbook with detailed guidelines for our contracting offices and Small and Disadvantaged Business Utilization Specialists which has been distributed to all departmental contracting officials. Moreover our Small and Disadvantaged Business Utilization Specialists are presently conducting training sessions for all departmental contracting officials. These sessions should be completed by February 29.

We have also implemented procedures to review all solicitations and contract awards to assure compliance with the provisions of Section 211 of Public Law 95-507. These reviews are made by the Small and Disadvantaged Business Utilization Specialists and the Small Business Administration's representative. And, on Wednesday, February 20, Secretary Harris will hold the Department's Annual Procurement Conference for senior departmental procurement officials. Included in the Conference Agenda is a discussion of the importance of the programs covered by Public Law 95-507.

In response to the eight specific questions listed in your letter of invitation to Secretary Harris, the following information is provided:

1. There have been no deficient solicitations issued since December 4. The 85 deficient solicitations outstanding as of December 4 were awarded as contracts prior to that date. Actions to rectify these discrepancies are in progress. It has been determined that no action can be taken on 8 of the contracts because all of the requirements have been delivered.

2. There are no solicitations which have been issued subsequent to December 4, 1979 which are deficient.

3. No prime contracts have been awarded subsequent to December 4, 1979 which do not contain subcontracting plans.

4. The 85 deficient solicitations issued prior to December 4, 1979 resulted in contracts which were awarded prior to that date. We are in the process of correcting each of these contracts.

5. There were no solicitations issued subsequent to December 4, 1979 which were deficient.

6. As stated previously we are in the process of correcting all deficient contracts awarded subsequent to May 22, 1979. However, at the present time there are 98 contracts valued at $127.4 million which have not been amended or terminated. We anticipate that each of these contracts will be corrected by April 1. 1980. Following is the status of these contracts:

The National Institute of Education recently identified nine (9) contracts valued at $38.5 million, which were awarded prior to December 4, 1979. Plans from three contractors with contracts valued at $9.2 million have been received and are being reviewed. The six remaining contractors have been contacted and steps are underway to obtain their plans.

There are 16 contracts valued at $27.7 million which were awarded prior to December 4, 1979. Each of these contractors has been contacted and corrective actions are underway.

The Public Health Service has 73 contracts valued at $61.2 million, which were awarded prior to December 4, 1979. Each of these contractors has been contacted. The vast majority of contracts awarded by the Public Health Service are for highly specialized bio-medical research and development projects. The initial review of these contracts revealed that few subcontracting possibilities exist. However, these contractors have been contacted to determine if any requirements exist for supplies and materials which might be targeted to Small and Small Disadvantaged Businesses. Following is a status of these efforts:

Twenty-one contracts valued at $27.3 million definitely have subcontracting possibilities and negotiations are underway.

Thirty-five contracts valued at $14.0 million may have supply and material requirements, however, a final determination can not be made until negotiations are completed.

Seventeen contracts valued at $19.9 million do not appear to offer subcontracting possibilities. However, in light of our expanded definition of a subcontract, which includes purchase orders of any amount, a determination can not be made until negotiations are completed.

7. No prime contracts have been awarded subsequent to December 4, 1979 which do not contain the required subcontracting plans.

8. To date, one subcontracting plan has been negotiated and we have attached a copy of that plan for your review. Negotiations are now underway for approximately 20 plans. We will provide this Committee with two additional plans when negotiations have been completed. We have not awarded a contract for a commercial product which required a subcontracting plan.

In conclusion let me assure the Subcommittee that the Department of Health, Education, and Welfare is committed to the development of an effective and viable program to assist small businesses, especially small businesses owned by socially and economically disadvantaged individuals, in equitably participating in our procurement programs.

I will be pleased to respond to any further questions that you or the Members of the Subcommittee may have at this time.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE,

PUBLIC HEALTH SERVICE, NATIONAL INSTITUTE OF HEALTH, Bethesda, Md., January 4, 1980.

Subject: Contract No. NO1-AM-0 2216.
THE BROOKDALE HOSPITAL MEDICAL CENTER,
Linden Boulevard at Brookdale Plaza,
Brooklyn, N.Y.

Attention: Selwyn Berkowitz, Assistant Vice President for Financial Planning. DEAR MR. BERKOWITZ: We are enclosing an executed copy of the subject agreement for your retention. If you have any questions regarding its administration call this office (301-496-7111) or write to: Contracting Officer, National Institute of Arthritis Metabolism, and Digestive Diseases, National Institutes of