Mr. LAFALCE. I do not want to be unduly critical of GSA, but let me say that other agencies have done considerably better.

Let me ask this: For most of the agencies I have been concerned with the adequacy of the steps they have taken to remedy deficient solicitations or contracts prior to December 4, 1979. With yours I have had to deal with subsequent to December 4. But let me now go back and ask what is the status of the deficiencies that were issued or awarded prior to December 4, 1979?

Mr. MCBRIDE. We have reported in my statement 299 contracts from April 10 through December 4 that were issued.

We have determined that 54 of those contracts will not require modification. They have a value of approximately $100 million. The remaining 245 have negotiations underway to effect modifications to those contracts.

Mr. LAFALCE. Have you been able to effect modifications on any of the 245 thus far?

Mr. MCBRIDE. Yes.

Mr. LAFALCE. Approximately how many?

Mr. MADISON. I do not have the exact figure, but we do have a number of contracts where plans have been submitted and we are in the process of reviewing those plans with SBA.

Mr. LAFALCE. I am curious why the other agencies have been able to remedy a good many of the deficient contracts awarded prior to December 4, 1979, and present data and information to the subcommittee. Unless I missed it, I did not see anything in your prepared testimony which dealt with that issue. I am being told today that mayyou haven't even modified one that was issued or awarded prior to December.

be

Mr. MCBRIDE. Mr. LaFalce, I believe I reported to the subcommittee in January that 181 contracts had been amended that were issued prior to that date, and I believe some 95 solicitations had been amended. I do not have those exact figures before me, but, again, I think one of the problems we have had is the dates to establish a baseline. I decided in February that indeed we were going to go back to April 10, and thus the confusion of numbers, perhaps. We did report, I believe, 180 contracts with a value of $110.7 million that indeed had been modified. If I recall the numbers, 95 solicitations were there.

Mr. LAFALCE. Would you care to augment that?

Mr. MADISON. Yes. There were quite a few contracts where deliveries had either been completed or were 95 to 98 percent complete. In those cases we did not amend.

Mr. MCBRIDE. I can tell you that to date, using criteria, whether there are advantages or not, or opportunities for the small and small minority firms for subcontracting opportunities using the criteria of completion and/or percentage of completion, we have determined that 54 of the 299 contracts meet the test and will not be amended.

Mr. NEIDICH. Mr. McBride, could I call your attention to the appendix after your prepared statement-item 7-where in response to an inquiry of the number in dollar amounts of prime contracts awarded subsequent to December 4 which did not contain the required subcontracting plan and which have not been amended or terminatedyour response to the dollar amount there was $383 million. Is that amount correct?

Mr. MCBRIDE. I believe it is.

Mr. NEIDICH. I have some difficulty. In the text of your statement on page 2 in the first full paragraph you start by indicating that there are $400 million that you reported to us on February 7 without subcontracting clauses. Then you continue by saying that of these, 16 contracts totaling $117 million have been amended which would indicate that there are $283 million-not $383 million-that need to be corrected.

Is it $283 million, or is it $383 million? You have lost $100 million there, Mr. McBride.

Mr. MCBRIDE. I just don't know. These are the figures that were given to me by the staff. We will go back and check on these. I do not have an answer

that.

Mr. LAFALCE. We would like that for the record.

Without objection, the record will remain open at this point for the purpose of inserting this additional material.

[Remarks, letter, and status report follow:]

The difference between the $383.2 million and the $283.2 million is not a typographical error but is the result of a variation in reporting periods. The $283.2 million figure covers the period April 10, 1979 through December 31, 1979, whereas the $383.2 covers contracts awarded April 10, 1979 through February 7, 1980.

GENERAL SERVICES ADMINISTRATION,

OFFICE OF ACQUISITION POLICY,
Washington, D.C., May 7, 1980.

Hon. JOHN J. LAFALCE, Chairman, Subcommittee on General Oversight and Minority Enterprise, Committee on Small Business, House of Representatives, Washington, D.C. Dear Mr. ChaIRMAN: During the hearings before your Subcommittee on General Oversight and Minority Enterprise on February 19, 1980, I agreed to furnish a more detailed report on the General Services Administration's progress in negotiating amendments to contracts that required but did not contain the clauses on subcontracting plans.

Between April 10, 1979 and February 29, 1980, 518 contracts for $1,867,750,000 were awarded without the required clauses and subcontracting plans. Attached hereto is the status of these contracts as of May 2, 1980.

Since February 29, 1980, GSA contracting activities have issued 81 solicitations in the amount of $219,556,000, all of which contain the required subcontracting clauses. Also during this same period GSA awarded 98 contracts for $222,688,000 which contained acceptable subcontracting plans.

If I may be of further assistance please do not hesitate to contact me.
Sincerely,

Enclosure.

GERALD MCBRIDE, Assistant Administrator for Acquisition Policy.

STATUS REPORT AS OF MAY 2, 1980 OF GENERAL SERVICES ADMINISTRATION CONTRACTS AWARDED BETWEEN APR. 10, 1979 AND FEB. 29, 1980 THAT MET THE THRESHOLD FOR REQUIRING CLAUSES ON SUBCONTRACTING PLANS UNDER SEC. 211 OF PUBLIC LAW 95-507, BUT WHEN AWARDED DID NOT CONTAIN THE CLAUSES

Data element

Number

Amount (thousands)

1. Contracts awarded between Apr. 10, 1979 and Feb. 29, 1980 with the required clauses and acceptable plan........

2. Contracts under 1 above no longer active.

3. Contracts under 1 amended to include applicable subcontracting clauses.
4. Contracts under 3 where acceptable subcontracting plans have been received.
5. Contracts under 1 where negotiations to include the subcontracting clauses are ongoing.
6. Contracts under 1 terminated for failure to agree to a contract amendment and submit
an acceptable plan..

7. Contracts awarded since Feb. 29, 1980 not containing the subcontracting clauses and/or an acceptable plan....

1 Solicitations for both of these contracts were issued in October 1979. The contracts have been amended to include the applicable subcontracting clauses and we are actively negotiating an acceptable subcontracting plan.

Mr. NEIDICH. That is all, Mr. Chairman.

Mr. MCBRIDE. May I, Mr. Neidich, just point out that regarding question 7 that all 42 contracts have negotiations underway to amend them. Modifications have either been furnished to the prime contractor or in the process of being furnished.

Mr. LAFALCE. Mr. Trimboli?

Mr. TRIMBOLI. Thank you, Mr. Chairman.

Mr. McBride, to follow up a little bit in order to get the sequence of events that took place, did you tell the subcommittee in succinct form everything that you personally did since December 4, the last hearing, to insure for the prospective implementation of section 211? Mr. MCBRIDE. Yes. I believe we sent a wire out right after the hearings notifying all of the field activities that indeed they were to look at their prime contracts to determine whether or not they could be amended and should be amended.

Mr. TRIMBOLI. Excuse me, my question was directed toward prospective implementation, not remedying the deficient contracts that existed as of that point in time, but making sure that the new contracts coming through the pipeline that section 211 would be followed.

Mr. MCBRIDE. On December 26, I sent a detailed instruction and order out to all field activities telling them that every solicitation and every contract issued subsequent to this date should now contain the clause.

Mr. TRIMBOLI. That was over 3 weeks since the hearing. Why did it take 3 weeks to send it out?

Mr. MCBRIDE. By time we got it drafted and it took its normal course, I guess, through the system and was cleared, 3 weeks had elapsed. There were discussions that, very frankly, were also going on with me on effective dates, for example, as to whether we should include what to do prospectively and retroactively. We made the decision that we would talk-it took 3 weeks.

Mr. LAFALCE. I would point out, Mr. McBride, that admittedly it is with hindsight now, but I do not think that it required too much foresight at the time to see that the best thing to do would be to get something out immediately that was prospective in nature and then perhaps take a week or two, if required, to determine what you should do to deal with the retroactive problems. Had that been done, you would not then have more retroactive problems to deal with, and I think this is the approach that most of the other agencies did take. Mr. TRIMBOLI. Thank you, Mr. Chairman.

What, if anything, did you do after December 26 ?

Mr. MCBRIDE. On February 1, I sent a wire again to each of the services and each one of the field activities and told them that if negotiations had not been begun by this date, to begin immediately with such negotiations to add the clauses to the contracts.

Mr. TRIMBOLI. Is that prospective or remedial?

Mr. MCBRIDE. Prospective from December 4, or since my wire of December 1. I sent a wire out on December 1——

Mr. TRIMBOLI. Which is remedial in nature. It is talking about curing legally deficient contracts and solicitations.

Mr. MCBRIDE. It also included prospective.

Mr. MCBRIDE. I believe it did.

Mr. TRIMBOLI. Could you submit for the record a copy of the December 1 wire, the December 26 wire, and the February 1 wire?

Mr. MCBRIDE. They are in the package already, I believe.

Mr. TRIMBOLI. That is in the package already?

Mr. MCBRIDE, Yes. It includes all wires and all correspondence.
Mr. TRIMBOLI. Was anything done after February 1?

Mr. MCBRIDE. No; other than some phone calls accumulating the data that has been submitted to the subcommittee.

Mr. TRIMBOLI. All right. I have just two more questions.

The SBA does have stationed at GSA's central office a procurement center representative [PCR]. That is correct, is it not?

Mr. MADISON. That is correct. I think there are six or seven PCR's throughout the country.

Mr. TRIMBOLI. Six or seven throughout the country and one here in Washington.

Mr. MADISON. There are two in Washington.

Mr. TRIMBOLI. A number of the contracts let subsequent to December 4 that should have plans in effect do not and were let by central GSA. Is that not correct?

Mr. MADISON. That is correct.

Mr. TRIMBOLI. Is the SBA PCR in any way organizationally stationed so that these requirements pass over his or her desk before they are eventually advertised?

Mr. MADISON. Yes. We have two PCR's. One is physically located— both of them are located in Crystal City Building 4. We have procurement activities for our Federal supply service also located in that building.

Mr. TRIMBOLI. Then are you telling the subcommittee that deficient solicitations and contracts awarded without plans-deficient contracts. therefore-that is, that the SBA PCR had full knowledge that that was going on?

Mr. MADISON. I am not saying that at all. I am just saying that we do have procurement center representatives assigned at the locations where the contracts are awarded.

Mr. TRIMBOLI. You did also state that organizationally they are positioned in such a way to see these solicitations and contracts as they come through. So if the contracts and solicitations were deficient, the PCR should have noted that. Is that not correct?

Mr. MADISON. I would say so.

Mr. TRIMBOLI. Then you are saying that the PCR evidently did not pick this up either.

Let me go with one last question. If in your analysis of what went wrong, you come across a situation where one of your procurement officers in fact have the December 1 wire; had in fact knowledge of the December 1 wire or an actual copy; had either a copy or knowledge of the December 26 wire; had actual knowledge of the February 1 wire; and yet awarded contracts in contravention of the statute in the Federal procurement regulations, what, if anything, would be done in that situation with respect to the personnel status of that individual? Mr. MCBRIDE. It would be willful misconduct, so I suppose we would take disciplinary action. Mr. Trimboli, I must state that in those wires

we gave some discretion to the contracting officers on when modifications should be made and when solicitations should be amended.

Mr. TRIMBOLI. You did not give any discretion with respect to prospective implementation of the law, did you? That was mandatory. Mr. MCBRIDE. No. There were many solicitations. Again, if I may, when I left this committee hearing I went back and personally got deeply involved. There were two solicitations that were issued. One was issued in May 1979 and one issued, I believe, in June 1979. It was certainly before the publication of the temporary regulations. They did not, until December, result in contract awards. From those two solicitations came some 17 awards valued at approximately $317 million.

Mr. TRIMBOLI. They were awarded in December?

Mr. MCBRIDE. They were awarded in December.

Mr. TRIMBOLI. Did your contracting officer have any discretion at that point in time whether or not a plan was to be included in those contracts?

Mr. MCBRIDE. He did on the basis that the solicitations were again issued some 6 or 7 months prior to the actual award dates. We allowed him to make a determination that if the award of that contract would unduly delay the performance or the delivery of services, then he was to proceed with the modifications or the award of the contracts and enter immediately into negotiations to put into the contract the subcontracting provisions. I believe all of those are now being done.

Mr. TRIMBOLI. What about solicitations advertised after December 4?

Mr. MCBRIDE. They were to be amended, and they are indeed.
Mr. TRIMBOLI. You are misunderstanding my question.
Mr. MCBRIDE. I may be.

Mr. TRIMBOLI. It was mandatory upon all your contracting officers that any solicitation advertised after the date of your first telegram of December 1, had to, in fact, have that section 211 notice. It was mandatory. There is no discretion there. It was also mandatory as of that point in time that contracts awarded should have had the plan in them. Statutorily the plan was required.

My question to you is this: If your contracting officers had had those telegrams or knowledge of those telegrams as of that point in time, and did something in contravention to what he was mandated to do, would any adverse personnel action lie against that procurement officer?

Mr. MCBRIDE. I cannot answer that question. I would have to look into it and determine the facts. Then I would have to answer it eventually, yes.

Mr. TRIMBOLI. Are you looking into it now?

Mr. MCBRIDE. I am not aware of anything that is going on now since I have gotten the report that all solicitations have indeed been amended and all contracts are in the process of negotiations to effect an amendment or the files will be adequately documented to show why an amendment is not feasible.

Mr. LAFALCE. I think we are going to have to conclude today's hearings. I suppose if I were to sum up my own thoughts, I would say