programs and policies are complied with. Salaries for personnel for this activity for Fiscal Year 1979 amounted to approximately $148,361 and the travel amounted to approximately $15,320. In addition, a special pamphlet for the use in doing business with the Veterans Administration was procured and printed at a cost of approximately $20,000, bringing the total budget to approximately $184,000. The final program plans for the office are in the process of formulation in connection with completion of the goal-setting process for the various programs described above. In general, they include establishment of goals, regular reporting and the monitoring of progress toward these goals, corrective action where indicated, analysis of out-of-line situations to determine if the goals are not being accomplished because of lack of diligent application or because of the true lack of appropriate opportunities. Attached is an organizational chart which shows that the Assistant Deputy Administrator for Administration and Logistics reports to the Administrator.

Mr. Chairman, this completes my testimony. I will attempt to answer any additional questions that the subcommittee may have. I assure you that we are making a serious effort to increase the opportunities available to small business and to small and disadvantaged businesses. We will continue to do so.

Mr. LAFALCE. Mr. Cook.

TESTIMONY OF CLYDE C. COOK, DIRECTOR, SUPPLY

SERVICES, VETERANS' ADMINISTRATION

Mr. Cook. Mr. Chairman, I would like to thank you for the opportunity to discuss the implementation by the Veterans' Administration of the requirements of Public Law 95-507 as it relates to procurement conducted by this agency.

Mr. Chairman, the Veterans' Administration has agencies scattered throughout the United States. To aid in understanding the manner in which we have implemented this program, I would like first to briefly summarize the structure of this agency as it relates to the overall procurement process. Major construction of medical facilities in the Veterans' Administration is contracted by the Office of Construction located in Washington, D.C. Centralized contracting for supplies and selected services is conducted at the Veterans' Administration Marketing Center located in Hines, Ill. That office generally procures those commodities which lend themselves to volume procurement and centralized distribution. Contracting activities are also located at each of 172 medical centers scattered throughout the country. These activities primarily contract for items not available from either VA central contracting or from other Federal Government supplies or contracts. The National Cemetery System, located in Washington, D.C., contracts for markers and headstones provided for gravesites of eligible veterans. The Supply Service in Central Office is primarily a staff office for policy and procedural development for all contracting carried out by the agency. In addition, a limited number of contracts are awarded by this office, mostly for professional services. This office also reviews selected contracting operations throughout the agency. For example, all contracts, including those for construction, in which the award value is anticipated to exceed $200,000 are reviewed prior to award by the Supply Service or the Office of Construction as appropriate, and the office of the General Counsel. It is through this review process that we exercise the first level of oversight over implementation of Public Law 95-507.

In our implementation of Public Law 95-507, I would like to address first the actions taken with regard to section 211. The Veterans' Administration issued a telegraphic notice to all procurement activities on June 4, 1979, calling attention to the action of the Administrator of the Office of Federal Procurement Policy in publishing subcontract clauses and other procedures in the Federal Register on April 20, 1979. Our directive informed all of our contracting activities that they were to begin at once using the clauses where appropriate and to apply the other procedures contained in the OFPP directive.

On July 10, 1979, we issued further instructions on implementing Federal Procurement Regulation, Temporary Regulation 50. At the same time, we also provided to our major contracting activities a copy of the model subcontracting plan which had been developed by the General Electric Co. On August 6, we conferred with the SBA and completed the arrangements for the assignment for the first time in many years for a fulltime PCR. Prior to that we had been served by parttime PCR's.

On September 17, we again addressed our major contracting agencies, asking them to make sure they were implementing the directives and none had leaked through our review process.

On November 23, we issued a further reminder of the requirements of the regulations, and in more forceful language than used previously, called the attention of our contracting activities to the requirement of the statute.

The previous issues had been direct. This one was a little stronger in tone as to the consequences.

Beginning in May of 1979, May 22, we made certain that our review process did examine each proposed invitation for bid, or request for proposal, where appropriate, that it did contain the subcontracting clause.

The majority of the activities of the Veterans' Administration are not subject to the requirement because our actions are below $10,000 in limit.

Since May we have had a total of 21 solicitations. One of the 21 did get through in a manner which it should not have; one other got through the net but was corrected. It was determined there were in fact no subcontracting opportunities in it. The one which did get through and should have the clause will be amended to include the subcontracting clause. We have had a discussion with the contractor and anticipate no problem in including it.

We have done nothing at this time, Mr. Chairman, on the incentives clause. OFPP mentioned this morning that they had suggested a pilot program. We have decided we will pilot and we have made the decision our first pilot will be in architect-engineering contracts. The reason we have not piloted is that we have not made contracts in that field of that magnitude, but when we do, they will be piloted for that clause.

In implementing section 221, we have not yet completed the establishment of goals. We have some of our own workups at the moment which we are going to propose and which we will convey to the SBA. We have had what I would call low-level discussions on some of these goals, certainly not at the policy decision level, as to what they will be.

On the question of the Office of Small and Disadvantaged Business, the activity was established by a letter from the Administrator of Veterans' Affairs, March 2, 1979. He designated Mr. Robert D. Vaughn, his assistant, as that individual, and the statement contains statistics about that.

We have not yet completed our program plans until we complete our goalsetting process. However, we have plans for monitoring for progress, regular monitoring of progress and analysis of situations. We do require each of our activities, each of 170-plus activities with responsibility for contracting to establish their own goals. We do not necessarily accept them, we may modify them; this includes goals for small business, labor surplus, small and disadvantaged business, and now for women. We make certain they are in line with the overall goals to be approved.

Mr. Chairman, this is the summary of my statement.

Mr. LAFALCE. Your agency comes out fairly well as compared to other agencies. There are a few difficulties; we will get into those later.

All right, Mrs. Spann, your agency, too, appears to have been in better compliance than other agencies. I now call upon you. [Ms. Spann's prepared statement and attachments follow:]

PREPARED STATEMENT OF CHARLOTTE BROOKS SPANN

Mr. Chairman, members of the committee, I welcome this opportunity to appear before you today to discuss how the Department of the Interior is responding to the subcontracting and other provisions of Public Law 95-507.

I am Charlotte Brooks Spann, Acting Director, Office of Small and Disadvantaged Business Utilization. I have with me Mr. Robert Saldivar who is Chief of the Department's Division of Procurement and Grants. Mr. Saldivar has the policymaking responsibility for Interior's procurement and Federal assistance programs. Before going into a discussion of the Department of the Interior's implementation of Section 211 of Public Law 95-507, I would like to briefly describe for you some ways in which we have implemented that section of the law which requires establishment of an Office of Small and Disadvantaged Business Utilization (OSDBU). On June 28, 1979, Under Secretary James Joseph testified before the Task Force on Minority Enterprise of this Committee. At that time, Under Secretary Joseph informed the Task Force that the Office of Small and Disadvantaged Business Utilization would be established; that the office would report directly to him; and that the responsibilities given to the Director would include all of those required by the Act, as well as those specified by the Office of Federal Procurement Policy letter of March 7, 1979. The Under Secretary also stated that Interior would organize the OSDBU so as to emphasize the equal importance of small business and disadvantaged business. These tasks have been accomplished.

On July 20, 1979, Secretarial Order No. 3041 was issued, establishing Interior's Office of Small and Disadvantaged Business Utilization. The attached Secretarial Order is submitted for the record. On that same date, I was appointed Acting Director of the newly established office. On November 29, my name was submitted to the Office of Personnel Management to fill the permanent position. I report directly to the Under Secretary, as indicated on the attached Departmental Organizational Chart, which is submitted for the record.

Since the Department of the Interior has no residence SBA Procurement Center Representative (PCR) assigned to any of its activities, we have not appointed a Small Business Technical Representative. Currently, there is only one liaison PCR assigned to cover four of our bureaus in Denver, Colorado. However, there is now in fourteen locations, including each of our six (6) bureaus having major procurement activities in Denver, one person with full-time responsibilities for implementing Sections 8 and 15 of Public Law 95-507.

Although the responsibility for direct supervision of these persons resides in the bureaus, the Director of OSDBU exercises functional oversight of all such persons, and, in addition, provides advice and recommendations with respect to their appointment, retention, and release.

[The Secretarial Order which delineated the overall functions of the OSDBU, as required by law, has recently been superseded by Departmental Manual Issuance No. 111 DM 8.1, dated November 6, 1979. The Departmental Manual includes the detailed description of the organizational structure, functions, and responsibilities of the OSDBU, which currently comprises a Division of Small Business Útilization and a Division of Disadvantaged Business Utilization.] The attached Part 111, Chapter 8, Section 8.3 of the Departmental Manual is submitted for the record.

The Special Projects Staff shown on the OSDBU organization chart is proposed, but will not be operational until additional resources can be obtained. It is planned that the Special Projects Staff would be primarily responsible for ensuring that small and disadvantaged businesses are given the maximum opportunity for participation in non-procurement Departmental activities such as the Outer Continental Shelf Program, the Alaska Natural Gas Transportation System, the Coal Leasing Program, concessions, and any other programs which may have subcontract and subgrant opportunities through grantees, leasees, and permittees utilizing Federal

resources.

The final approved Fiscal Year 1980 budget for OSDBU has not yet been received, inasmuch as Interior's appropriations were just signed by President Carter on November 27. However, the $359,500 requested when the office was established reflected only the combined prorated Fiscal Year 1930 budgets of two former units which became the nucleus of the OSDBU. That budget does not reflect the resources needed to support the added responsibilities of OSDBU, as mandated by Public Law