PROGRAMS OF PROCUREMENT AND TECHNICAL ASSISTANCE TO SMALL BUSINESS

(March 1958)

I. INTRODUCTORY BEMARKS

Positive measures to provide managerial and technical aids to small business and to assure that small firms have equal opportunities to participate in Government contracts for supplies and services, are the broad objectives of the Small Business Administration's programs of procurement and technical assistance for small business. This summary statement will highlight the activities undertaken in connection with these programs. Also highlighted are specific accomplishments. Basic statistics covering the procurement and technical assistance programs are included in the exhibits to this statement.

The Small Business Act of 1953, as amended, provides the foundation of a national program for small business concerns, based on a policy enunciated by Congress. The stated objective of this policy of Congress is the preservation of free, competitive, small business enterprise, and insuring that a fair proportion of Government purchases of supplies and services is placed with small business, and that the Government will aid, counsel, and assist and protect, insofar as possible, the interest of small business.

The Small Business Administration is primarily a service organization, providing financial, procurement, managerial, and technical assistance to individual small businesses requesting such aid.

In setting forth that the Small Business Administration was established to carry out the policy of Congress in order that "* * * the interest of smallbusiness enterprises may be recognized, protected, and preserved * * *" it was indicated that the Small Business Administration should consult and cooperate with other Government departments and agencies. The act, and hearings and reports preceding this legislation, clearly indicate that the intent of Congress is to make the Small Business Administration the spokesman for small business in the establishment of policy and an advocate in the correction of particular problems of small business.

To carry out this policy, Congress provided specifically for certain programs wherein the SBA exercised complete control. In other instances, the agency is not given complete jurisdiction but is directed to cooperate and consult with other agencies of the Government.

The Small Business Act of 1953, as amended, gives the Small Business Administration, itself, the authority, in addition to making business and disaster loans, to (1) determine and cooperatively set aside for award to small firms, all or any part of a proposed procurement; (2) provide technical and managerial aids to small firms; (3) enter into contracts with Government procurement agencies; (4) make an inventory of all production facilities of small firms; (5) certify as to capacity and credit to perform a specific Government procurement contract; and (6) certify as to size of business concerns.

The SBA is directed to consult and cooperate with other agencies and to recommend policies which would be beneficial to small firms; to consult and cooperate with officers of the Government having procurement powers; to encourage the letting of subcontracts by prime contractors; to make studies and recommendations to appropriate agencies to insure that a fair proportion of total purchases and contracts be placed with small business enterprises; to consult and cooperate with all Government agencies for the purpose of insuring that small business concerns receive fair and reasonable treatment; and to make recommendations concerning the effect of price, credit, and other controls imposed on small business under war or defense programs.

By drawing on the technical staff and research facilities of other Government departments, the SBA is placed in the position to render an effective job of helping small business without duplication of efforts on the part of either the SBA or other Government departments.

Furthermore, this cooperative undertaking with respect to various Government departments and agencies-and particularly with reference to activities of procurement and managerial and technical aids-provides tangible evidence that the Small Business Administration is directing its program activities to bring about close and cooperative work relationships in recognition of the intent of Congress.

II. PROCUREMENT AND TECHNICAL ASSISTANCE ACTIVITIES

Exhibit A provides a summary of progress and accomplishments of the Small Business Administration. This summary shows the results of programs for calendar year 1957 and the cumulative results since the agency started operations in August 1953. The details relative to programs are discussed in a later part of this report.

In brief, exhibit A indicates the following accomplishments during calendar year 1957:

(a) 12,866 procurements valued at $777,631,385 were jointly set aside for competitive award to small-business firms.

(b) Small firms were notified of 38,595 opportunities to bid on procurements selected as suitable to their industrial facilities.

(c) 3,926 calls and visits were made to prime contractors to develop subcontract opportunities for small-business firms.

(d) As the result of these visits, 4,978 subcontract opportunities were referred to small-business firms.

(e) 23,583 cases of procurement assistance counseling and representation to procurement agencies in behalf of small firms were handled by agency field offices.

(f) 8,184 small business firms were helped to bid on specific procurements. (g) 10,676 calls or visits were made to small-business firms to notify them of items or services being purchased for which additional small-business competition was needed.

(h) 103 certificates of competency were issued to small-business firms enabling them to receive awards totaling $12,754,000 on procurements for which their production capacity or credit had been questioned by procurement officials.

(i) 731 visits were made to small-business plants by production engineers of the agency to assist in the progress of completing contracts on which certificates of competency had been issued.

(j) 4,421 engineering surveys of small-business plants were made in connection with loans, certificates of competency, and preaward surveys.

(k) 4,009 cases of production and management assistance, including materials and equipment assistance, were given to small-business firms.

(7) 8,492 requests for products assistance were handled.

(m) 1,399 inventions were listed in the agency's products list circular to bring to the attention of the small-business man new merchantable ideas.

(n) 3,357 requests were received for information and data on inventions listed in the Products List Circular.

(0) 121 administrative management courses to assist small-business owners were conducted by 71 leading educational institutions in cooperation with the SBA. They were attended by more than 4,000 small-business executives.

(p) 435,480 management aids, 205,500 technical aids, and 403,175 small marketers aids were distributed free to small-business executives, trade associations, educational institutions, and professional organizations, highlighting effective policies and procedures for small-business owners and managers.

(q) 101,454 copies of the small-business management series were sold or distributed free to businessmen, educators, professional experts, Government specialists, and others. (r) Sales of management and technical aids annuals totaled 21.023.

III. PROCUREMENT ASSISTANCE TO SMALL BUSINESS

Progress has been made by the agency to strengthen and expand the programs of aiding, counseling, and assisting small-business concerns to participate in purchases and contracts for supplies and services for the Government. The SBA recognizes fully, however, that the optimum results with respect to assistance to small business in achieving a fair proportion of Government contracts and in participation in subcontracting opportunities still remains to be obtained (exhibit A).

The most persistent problem continues to be how best to divide the available manpower in order to meet all of the many requests arising throughout the country for this assistance and to fulfill the various functions required in extending procurement assistance to small firms.

A. Joint set-asides for small business concerns

The

It is recognized that this program has not reached its full potential. basic problem is that of coordinating small-business programs with the primary responsibility of the purchasing offices Therefore, the problem is one of continued education.

During 1957, the program had many deterring factors such as cutbacks in military spending during the last half of the year; a change in small-business size standards which precluded tabulating awards previously credited to small business dealers that can no longer be classed as small business; and insufficient time to educate small firms on the potential in the guided missile programs and other highly technical developments of defense needs. Nevertheless, the program made considerable progress. In calendar year 1957, 12,866 procurements valued at $777,631,385 were jointly set aside for small business as compared to 8,693 valued at $650,139,014 in 1956.

The joint set-aside program is carried out by the SBA in cooperation with those Government agencies which account dollarwise for most of the Federal Government's purchases. Section 214, Public Law 163, as amended, empowers the SBA and Government contracting officers to set aside proposed procurements for competition among small businesss concerns when such action is in the interest of maintaining or mobilizing the Nation's full productive capacity, or is in the interest of war or national-defense programs.

The program is directed toward the discharge of their common responsibilities that a fair proportion of total purchases and contracts for supplies and services of the Government shall be placed with small business concerns.

To carry out the joint set-aside program, the Small Business Administration has assigned representatives to the major Government purchasing offices. There, in cooperation with procurement officials, the jointly screen proposed purchases, determine whether small firms can supply the items or services, and evaluate the small business competition. When the Small Business Administration representative determines that sufficient small business competition can be obtained, he recommends that the procurement be totally or partially set aside for competitive award to small business concerns. If this request is denied, he has the right to formally appeal the decision to the highest procurement official at the installation.

When an entire procurement is restricted to small business firms, that is, set aside for exclusive award to small business, any bids received from large business concerns are considered as nonresponsive. Where only part of a proposed purchase is set aside for small business, small firms compete with all other businesses that bid on the contract, large and small, for the non-set-aside portion of the procurement in order to be considered for negotiation of the set-aside portion. To qualify for negotiation of the set-aside portion, the bid entered by a small business firm must be within 120 percent of the highest unit price at which the award is made for the non-set-aside portion. Negotiation is then conducted with the small business firms which are determined to be responsive and which qualify under the 120 percent rule, beginning with the firm which submitted the lowest bid on the non-set-aside portion. When only one award is made on the non-set-aside portion, the set-aside portion must be awarded at the same unit price. When the non-set-aside portion results in multiple awards, the set-aside portion is awarded at a unit price equal to that of the highest price awarded on the unrestricted portion.

The SBA set-aside program assures that small firms will be awarded contracts on those procurements earmarked for exclusive award to small business. Furthermore, when a proposed procurement is set aside on a partial basis, the opportunity for awards is, in fact, double; one with respect to the set-aside part, and one with respect to the non-set-aside portion. It further gives small business the opportunity to bid or quote on smaller quantities, since the partial setaside action has the effect of dividing the procurement into at least two parts. This program serves to strengthen the national economy inasmuch as it broadens the procurement base for the Government by encouraging small business participation in Government contracts.

Since the beginning of the SBA joint set-aside program in August 1953, 29,275 procurements value at $2,235,699,214 have been earmarked for competitive award to small business concerns.

The progress made in the joint set-aside program in 1957 is illustrated in exhibit B by the increase in the numbers and amounts of set-asides initiated and agreed to by procuring officials.

There has been a steady increase in both the number and amount of the procurements restricted to small business since the inception of the program. In 1957, 12,866 procurements were set aside for small business as compared to 2,588 for 1954, an increase of 398 percent. The value of the set-asides for small business increased from $290,840,594 to 1954 to $777,631,385 in 1957, an increase of 167 percent.

Accomplishments under the point set-aside program are dependent upon the number of purchasing offices which can be covered by SBA representatives. During the last half of calendar year 1957, 37 SBA representatives have carried on the program regularly in 27 Army purchasing offices, 21 Navy installations, 18 Air Force establishments, 27 Federal civilian agency purchasing offices, and with the Military Petroleum Supply Agency. In addition to these 94 installations at which the program was carried out on a regular basis, liaison was maintained with 74-other procurement installations, and occasional set-asides made.

In order to provide the greatest assistance to small firms within the limitations of available personnel, the agency's main effort is directed at the larger procurement installations.

During 1957, purchases set aside for small business firms amounted to $777,631,385. These set-asides were made in cooperation with the following agencies in the amounts indicated: Army, $329,456,657; Navy, $190,644,772; Air Force, $143,346,380; Military Petroleum Supply Agency, $66,672,246; Department of Commerce, $22,857,401; General Services Administration, $12,831,564; Veterans' Administration, $7,207,307; Department of the Interior, $2,297,233; and Department of Agriculture, -2,297,825. The purchasing offices of the latter two Departments are so widely decentralized that SBA representatives are only able to screen a minor portion of the procurements placed.

A small-business set-aside program has not been established with the Atomic Energy Commission because AEC purchases suitable for small business are made by their prime contractors. However, the Atomic Energy Commission and Small Business Administration have a program to assist small subcontractors.

In addition to carrying on the set-aside program, SBA representatives at the procurement centers counsel owners and officers of small concerns in selling to all Government agencies. They also assist specific small-business concerns to obtain an opportuinty to bid on various procurements of which they otherwise would be unaware.

B. Guiding small firms to areas where competition is needed

A program which supplements that of restricting procurements for award to small-business concern is that of locating competent small-business suppliers for those items or services for which small-business competition has been inadequate or lacking. When SBA representatives at purchasing offices screen procurements for possible set-aside action, all possible information is obtained concerning past procurement history and the prospects for small-business competion on each procurement being examined. When the SBA representatives learn that an item or service can be supplied by small-business firms, but that there has been little or no competition from them, arrangements are made for SBA field offices to locate competent suppliers for the particular item or service and purchasing office. All essential data and information concerning the item or service, including drawings and specifications, are forwarded to the agency's field offices in order that SBA engineers and industrial specialists match this basic information with the agency's facilities register of small firms which are competent to supply the item or service and which wish to bid.

This systematic action not only increases small-business competition and broadens the industrial base, but also has the effect of assuring a better price to the Government because of greater competition. The primary aim of the program, however, is to increase the number and variety of items and services on which joint set-asides for small-business firms may be made. This objective is gradually being accomplished. As an example, some of the items on which the agency was able to obtain joint set-asides during the past 6 months because action had been taken to find competent small-business firms desirous of bidding in the areas in which competition was needed are: Generator sets, compressors, surgeons' gloves, scouring sponges, mobile field laboratory trailers, metal fabrication, tension guys, boats, protectors (splice), services, lubricating systems, protractors, dairy products, chute tape, ice cream, jack assembly, metal chairs, adapters, steel tables, food carts, sherbet dishes, medicine cabinets, hand tools, targets, rotary bullet pull parts, steel antenna shelter mounting fixtures, gal

vanized steel towers, radar support towers, antenna shelter supports, adhesive aluminum dipole, and 36-foot landing crafts.

Even though the potential source action does not always result in set-asides for small-business concerns, it does serve the primary objective of getting smallbusiness firms on the proper bidders' lists so that they provide increased competition on future procurements.

C. Inventory of small-plant facilities

An inventory of small business productive facilities is maintained on a decentralized basis in the field offices. Small companies interested in registration are furnished a questionnaire on which they list facilities and other pertinent information. On receipt of a questionnaire by the field office, it is filed alphabetically by company name. The most important data are reviewed and the company classified by major product or capabilities. The company is then coded for quick identification in accordance with the standard industrial classification. The purpose of the facilities inventory is to insure that a record is provided for quickly ascertaining the productive capacity of small plants in a given area. The data furnished by the company are carefully classified as to capacity, machine tools, number of employees, types of products, and other essential production factors. This information can then be evaluated to determine a manufacturer's industrial potential, including the kinds of production for which his facilities are now suited, and the types to which the facilities can be converted in case of full mobilization for defense. Many small firms now engaged in producing a peacetime, civilian item, can, when the need arises, produce a wide variety of defense items which have no civilian counterpart.

A partly mechanized operation has been accomplished by the utilization of stencil plates which contain a minimum of identification and descriptive data on the company, and can be used for addressing correspondence to them. From such records, the field staff can readily obtain skeleton information on individual concerns, without going to the main alphabetical files. These condensed records are maintained in SIC code numerical order for rapid reference.

The inventory is now used principally in assisting the registered companies in their afforts to obtain prime and subcontracts, in locating new sources for the military services, in aiding the ODM-sponsored damage assessment program, and in locating scarce or specialized machine tools and equipment when calls for them are received.

SBA field offices are authorized to cooperate with State and local governments, chambers of commerce, and trade associations in the collection of facility information to expand the facilities inventory and so increase its coverage.

About 36,000 small plants are registered with SBA. A program is now under way to enlarge this total. The increasing importance of the mobilization aspects of the inventory points up the clear need for registering more small firms that are removed from urban centers, and this is now receiving emphasis.

An intense program is underway to register qualified small business concerns for research and development work. This will be a special inventory group which will receive constant attention so that defense and civilian agencies engaged in this work can be made aware of these facilities during peacetime or mobilization periods, and a fair share of this work channeled to small business. D. Procurement assistance counseling

In its counseling program, the Small Business Administration helps small firms determine which items or services they can supply to the Government, and assists them in being included on the appropriate bidders lists. In addition, the agency assists small business concern in obtaining bid sets for any purchase which is suitable for them to supply.

One of the aims of SBA's counseling program is to make available to small firms the fullest possible information concerning Government purchasing by providing detailed information on who buys what and where in the Federal Gov-ernment, where Government specifications may be seen, and how to go about obtaining prime contracts and subcontracts.

Many agency field offices also obtain bid sets from purchasing offices in their areas and display them for information purposes. The offices inform interested firms as to how the bid sets and specifications and drawings relating to them may be obtained, or where they are available for inspection. In this connection, each agency field office maintains a set of Government packing and packaging specifications especially selected to fill the needs of small firms. These sets are available to small business owners for reference use.