Mr. LAFALCE. The next witness is Mr. Wilbert E. Cantey, Director of the Office of Small and Disadvantaged Business Utilization at the Department of Transportation. Mr. Cantey, you may proceed. TESTIMONY OF WILBERT E. CANTEY, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION, DEPARTMENT OF TRANSPORTATION Mr. CANTEY. Thank you, Mr. Chairman. My name is Wilbert E. Cantey, Director of the Department of Transportation's Small and Disadvantaged Business Utilization Office. The Secretary has asked me to apologize. He is out of town today. I will be very brief. The answers to the questions contained in your letter of February 7, 1980, are found as an attachment to my statement which I have submitted for the record. Mr. LAFALCE. That is fine. Without objection, your prepared statement in its entirety will be inserted in the record. Mr. CANTEY. After our December 4 hearing, I reported to the senior staff of the Department of Transportation and on a mode-bymode basis I briefed each of the administrators on the seriousness of this law and its implementation. I also spoke before the Department of Transportation's Procurement Council and interacted with them to correct deficiencies. The Procurement Council is made up of senior procurement directors of each of the modes of transportation. We dealt with the small business and minority business enter prise representatives involved in the training process for the various persons involved in the procurement process in the Department. Instead of going back to July 7, we went back to May 22 in counting our contracts. We did this first as an effort to increase the sensitivity of our Department to the importance of this law. We went back in order to pick up a contract or so and one which we picked up was $15.7 million. We sent out the word on December 21 to the rest of the Department including all of its field offices, to come into compliance with the contracts and with the solicitations which were outside of the terms of Public Law 95-507. While we have tried to be as accurate as possible in providing figures to this subcommittee, we found through this increased awareness that there were seven additional contracts which were reported by our modes totaling approximately $17.8 million. We are in the process of correcting those contracts as well as the others. So, we will have them all done within 60 days. We are working at a heightened level internally to bring about this increased awareness and to continue the pressure to implement this law. We are finding that where the solicitations and contracts were done according to the law and regulations from the beginning, no real problems occurred, and we do not anticipate any. However, we do not want to be caught unaware so we are in the process of trying to evaluate the data we are gathering to make sure we are getting the proper kind of evaluation of experience that is occurring. We are continuing in the work with the OFPP and the SBA toward the work that has to be done to get the regulations and goals into place, and we assure you that we are pursuing Public Law 95-507 diligently. I would like to thank the subcommittee for the opportunity to appear before you. I would be glad to answer any questions at this time. Mr. LAFALCE. Thank you very much, Mr. Cantey. [Mr. Cantey's prepared statement and attachment follow:] PREPARED STATEMENT OF WILBERT E. CANTEY, DIRECTOR, OFFICE OF SMALL AND DISADVANTAGED BUSINESS UTILIZATION Mr. Chairman and members of the subcommittee, I am Wilbert E. Cantey, Director of the Department of Transportation's Office of Small and Disadvantaged Business Utilization. The Department of Transportation appreciates the opportunity to appear before you today to discuss our continuing efforts under Public Law 95-507. Secretary Goldschmidt is out of town today and asked me to be here. I hope that this testimony will update our progress report at the hearings in December. Answers to the questions contained in your letter of February 7, 1980 are found as an attachment to this statement. In this statement I will discuss our efforts since December 4, 1979. Immediately following the December 4 hearing I met with the Administrators of the DOT modal administrations to explain the impact and importance of Public Law 95-507. I also met with the DOT Procurement Council to impress upon the Small and Disadvantaged Business representative from each administration the urgency of corrective action under Public Law 95–507. The Procurement Council is made up of senior procurement officials from each of the operating administrations within DOT. At this meeting and subsequent meetings we discussed the actual means to be used for correcting contracts awarded since May 22, 1979 which did not contain the required clause and subcontracting plan. We chose May 22 as our implementation date for three reasons. First, May 22 was the date of the GSA telegram advising us of the small and disadvantaged business subcontracting clause and plan requirement. Second, by going back to May 22 to correct defective contracts rather than going back to July 7 as suggested by the Office of Federal Procurement Policy (OFPP), we believed we would be graphically illustrating to our field procurement offices a high level of commitment to this program. Third, we saw that by adding the required small and disadvantaged business subcontracting clause and subcontracting plan to the contracts awarded between May 22 and July 7 as well as to those awarded after July 7, we would be increasing DOT's utilization of small and disadvantaged businesses. A contract worth $15.7 million and which has substantial subcontracting opportunities was picked up by going back to May 22. On December 21, 1979, we issued a DOT Procurement Bulletin that directed procurement offices to modify defective contracts awarded and defective solicitations issued since May 22. This Bulletin directed the procurement offices to terminate the contracts and resolicit them if the required modifications were not possible. By mid-December all contracts having defective contracts had been contacted concerning the addition of the required subcontracting plan and by January 9, 1980, we had corrected all defective solicitations. To date we have corrected five contracts and all will be resolved within 60 days. Since the December 4 hearing-in fact, since October 19, 1979-no defective solicitations have been issued within DOT. One defective contract was awarded since December 4 but it has been corrected. While we have tried to be as accurate as possible in providing figures for this Subcommittee two of our modal administrations have advised us of a total of seven additional defective contracts issued between May 22 and December 4, 1979, totaling $17.8 million. We regret this inaccuracy and have adjusted the figures in the attachment to reflect this omission. As I mentioned we are requiring corrective We are now beginning a process of review which will include a certain number or percentage of contracts from each procurement office in the DOT operating administrations to ensure that all procurement offices have the high level of commitment and performance prescribed by Public Law 95-507 and required by the Secretary. Our specific goal in this is to make certain that the subcontracting plans accepted by our procurement offices will meet high standards. We are finding that where the solicitations and contracts were done according to law and regulation from the beginning, no problems of any substance have arisen nor do we foresee any. We have spent considerable time participating in the development and review of the proposed OFPP regulations implementing Public Law 95-507. We believe the time we spend on these regulations now will pay dividends later in terms of a workable, successful program. We look forward to continuing our participation in this effort. On January 3, 1980, we submitted our small and disadvantaged business contracting goals to SBA. On February 7 we were advised by SBA that the goals should be increased and we are now working internally and with SBA to arrive at mutually agreeable goals. In closing I would like to reiterate that DOT remains committed to the maximum utilization of small and disadvantaged businesses in our contracting program. This completes my prepared testimony. Again, I appreciate the opportunity to discuss this matter with you today on behalf of the Department. I would be happy to answer any questions you may have. Attachment. DEPARTMENT OF TRANSPORTATION ANSWERS TO SPECIFIC QUESTIONS 1. Number of deficit solicitations and contracts remedied since December 4, 1979: Solicitations-19, contracts-5. 2. Number of solicitations issued since December 4, 1979, which are deficient: None. 3. Total number and dollar amount of prime contracts awarded since December 4, 1979 which do not contain required subcontracting plans: One which has been modified to contain the required plan; $4 million. 4. Number of deficient solicitations issued prior to December 4, 1979, not remedied: None. 5. Number of deficient solicitations issued subsequent to December 4, 1979, not remedied: None. 6. 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: Twenty contracts for a total of $155 million are in the process of being modified. 7. 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: None. 8. Copies of three representative subcontracting plans submitted, one of which was received in connection with the purchase of commercial products: Copies of the plans have been submitted to the Subcommittee staff. Mr. LAFALCE. Mr. McBride, there at least appears to me to be some inconsistencies between your statement and the answers you have appended thereto. For example, your statement on page 1 indicates that there were 93 deficient solicitations issued since December 4, but when I look to your response to question No. 2, that is the number of solicitations issued since December 4, 1979, which are deficient; your answer is five. My question is this. Is it 93 or is it 5, or am I missing something? Mr. MCBRIDE. Mr. LaFalce, I suppose I would answer that the question that was asked was about those that are deficient that were issued since December 4 and are deficient as of the date of your letter-I don't recall the exact date-but there were five. We had modified, I believe, 88 of those solicitations. They have subsequently been modified. The first question that was asked was about those that are deficient since December 4. This question was raised again in January. Mr. LaFalce, if I may for one moment, and if you will bear with me, I would say this. Mr. LAFALCE. Certainly. Mr. MCBRIDE. One of the problems that I think we have had at GSA is trying to reconcile some of our answers. As I appeared before this committee back on December 4, I said we would go back and use as a date April 10, which I did. I have a baseline now that starts there and some of the answers that you see in here pick up those dates. I believe answer 2 was responsive in the sense that it was since December 4 which are still deficient. That is the way we read that question. There were five as of the date of your letter. Those have subsequently been modified. There are no outstanding solicitations as of February 8, I believe. Am I confusing the ponit? Mr. LAFALCE. Yes. Mr. MCBRIDE. The 93, I believe, was responsive to an inquiry made through December 31. The inquiry that we have subsequently had, dated February 1 or thereabouts-I'm sorry, it is February 7-those have been subsequently modified. Mr. LAFALCE. I see. I was very concerned that apparently a considerable number of solicitations had been issued after December 4 which did not contain the required notice. What was the reason for that? Mr. MCBRIDE. I suppose some of it was that we are dealing with our supply schedules-multiple award schedules. The solicitations had been out for quite some time. We had extended those through modification and just through oversight they were not amended to include the clause. Mr. LAFALCE. I see. Your answer to me is that the difference between the 93 deficient solicitations and your answer to point No. 2 is 5 because 88 have been remedied and 5 remain deficient. Mr. MCBRIDE. That is right. Mr. LAFALCE. But now in response to question No. 5, you say the number of deficient solicitations issued subsequent to December 4, 1979, not remedied are zero. I assume you prepared this addendum at the same time. The answers to two and to five would therefore appear inconsistent. I am having trouble understanding your use of data. Mr. MADISON. Let me try to answer that. The first situation in item 2 dealt with those solicitations which had been issued which were deficient between the period December 4 through the day the information came in on February 7. What we are saying in item 5 is that they have been remedied and there are no deficient solicitations out. there now. Mr. LAFALCE. Are you saying that question No. 2 was answered as of February 7 and question No. 5 was answered as of a later date? Mr. MADISON. I would say yes. As of December 4, we had issued five solicitations that should have but did not include the clause. We have since remedied those five. As a result of that, the way we read the question, item 5, is now zero. Mr. LAFALCE. I guess the important point is the bottom line. The bottom line and correct me if I am wrong-is that any solicitation that went out subsequent to December 4 that was deficient has now Mr. MCBRIDE. That is correct. Mr. LAFALCE. And no more deficient solicitations are going out? Mr. MCBRIDE. That is right. Mr. LAFALCE. All right. We are not even talking about going back and remedying before December 4. We have been worried about what you have been doing after December 4. Let us talk about contracts now. Your statement indicates 58 deficient contracts for $400.6 million. Is that right? Mr. MCBRIDE. Yes, sir. Mr. LAFALCE. Yet your answer to question No. 3 is 66 contracts. What is the reconciliation of those two different figures? Mr. MCBRIDE. Again, I think it is the point in time. On 58 contracts I was trying at that point and time to again reconcile the figures that were given to you and your staff back in early January or the January timeframe that talked to the 67 contracts that were at that point being reported as being deficient. They were issued without the subcontracting plan. In the meantime, about January 26 or thereabouts, there had been an additional eight contracts that had been awarded that did not contain the subcontracting plans. I can report that of those 66, I believe 14-16 of those contracts have subsequently been amended and negotiations are underway with modifications having been furnished to the companies for modification of all existing contracts. Mr. LAFALCE. Of the 58, 16 have been amended. Mr. MCBRIDE. Yes. Mr. LAFALCE. It is my understanding that the two are being negotiated. What is the status of the remaining 40? Mr. MADISON. They are all being negotiated. Those two were pinpointed because they had significant dollars. Mr. LAFALCE. So you are negotiating all 42 contracts? Mr. MCBRIDE. Yes. Mr. LAFALCE. Again my question is this. Why did you actually let contracts subsequent to December 4 illegally? Mr. MCBRIDE. Mr. LaFalce, I guess I would have to answer—and I have looked into this in great detail Mr. LAFALCE. It is over one-half of a billion dollars. Mr. MCBRIDE. Many of yesterday's solicitations become today or tomorrow's contracts. We have had a great time turning this around, getting the solicitations squared away. This involved taking the contracts in existence and modifying those contracts. From the time I left here on December 4 until I got an order out, that is, instructions out on December 26, I can only say that there were additional solicitations that had now become contracts. My order, on December 26, was to the effect that you continue negotiations, where you have opened up the request for proposals and there were competitive negotiations-you continue with those awards if it is in the Government's best interest to continue the award, and subsequently enter into negotiations to effect modifications to those contracts. That is exactly what is being done. I might point out that there is a requirement that whatever information is obtained must be kept confidential. The only release that could be made is a compilation of information but not the kind of release that would identify the source of information. |