You testified that as of June 14 the instructions went out to your procurement officers and yet we don't have one solicitation with the requisite notice, we don't have one contract with the requisite plan. Is it then correct to characterize the situation by saying despite the fact that your procurement officers had a directive to implement they in fact did not implement? Mr. CLINKSCALES. That is correct and we are in the process of trying to correct that. We have directed all of our contracting officers to take a look at all contracts that have been awarded subsequent to May 22 to determine those that should have included the solicitation clause and those that do have subcontracting opportunities we have also directed them to renegotiate the contracts. Mr. TRIMBOLI. Let me follow that up with this question and I don't mean this to sound punitive in any sense, but if one of your procurement officers in this case received a directive to do something, and he, through his own fault, did not do that thing which he was directed to do, is that person subject to an adverse personnel action under the Civil Service Act? Mr. CLINKSCALES. I don't know. Mr. TRIMBOLI. If you come across a situation where your procurement officers willfully and deliberately chose not to implement this June 14 directive, would HEW consider any adverse personnel actions against those individuals? Mr. CLINKSCALES. May I defer that question to Mr. Rhodes who is the Deputy Secretary? He is cognizant of that area. Mr. RHODES. Yes, sir. We will review all of the contracts that were awarded improperly, and if there is any indication of the contracting officer deliberately avoided placing the proper clauses in negotiating the subcontract program we will certainly recommend disciplinary action. Mr. TRIMBOLI. Without reporting specific names to the subcommittee, could you report to us in narrative form the results of that review? Mr. CLINKSCALES. Yes, we will. Mr. TRIMBOLI. Let me ask you a hypothetical because I am still confused about this remedial action you plan to take. Let's say HEW had a solicitation for a negotiated contract with an anticipated value of a few million dollars. Let's say this was advertised in the Commerce Business Daily on June 1. Let's say the closing date for this particular solicitation was July 1. Let's say the solicitation does not have the requisite notice in it. Let us say a contract is subsequently awarded at the end of July without the requisite section 211 plan. Given that hypothetical, what remedial action would you take with respect to that contract? Mr. CLINKSCALES. That contract would be subject to renegotiation to include the Small and Disadvantaged Business Contracting clauses unless the contracting officers could give us ample reasons, justifiable reasons that there were no subcontracting opportunities. Mr. TRIMBOLI. In the event there are no subcontracting possibilities, of course section 211 is not applicable. Those circumstances we would hope would be verifiable and reduced to writing so some objective person could review that and review the decision made by the contracting officer. Mr. CLINKSCALES. That is true but with our internal guidelines we have required our contracting officers to include the solicitation clause in all requirements meeting thresholds. Mr. TRIMBOLI. The statute, I believe, requires that the clause be included in the solicitations for all negotiated contracts over the threshold amounts. That is mandatory whether or not there are subcontracting possibilities. That notice has to be in the solicitation for a negotiated contract. The only time there is any discretion whether or not to put the notice is with the formally advertised contracts. And there it must be determined whether there are subcontracting possibilities? Are you aware of that? Mr. CLINKSCALES. No, I thought the contracting officer had discretion in both cases. Mr. TRIMBOLI. No, he does not. I would suggest you reviewMr. CLINKSCALES. We reviewed that. We made the appropriate changes internally so the solicitation clauses will be included in all solicitations. Mr. TRIMBOLI. I hope I am not rehashing but every solicitation that is on the street right now that was advertised since May 22 you have to go back and amend. Mr. CLINKSCALES. That is our intent, to look at all the contracts that have been awarded as a result of those solicitations Mr. TRIMBOLI. I am talking about those solicitations on the street where nothing was awarded. Those solicitations on the street, no contracts awarded yet, will be amended to include the section 211 notice where section 211 requires notice. Mr. CLINKSCALES. Yes. Mr. TRIMBOLI. As to contracts awarded, you will go back and review those contracts on a case-by-case basis to determine whether it would be necessary to modify or terminate those contracts? That is correct and you will do that review for contracts awarded from May 22 on. Mr. CLINKSCALES. That is correct. Mr. TRIMBOLI. Thank you. No further questions, Mr. Chairman. Mr. LAFALCE. I am a little confused, Mr. Clinkscales. I think I know the answer to the question I am about to ask but I would like to hear your answer. Would you explain to the subcommittee the difference between a solicitation and a contract? Mr. CLINKSCALES. A solicitation is a request for a proposal or an invitation for bid that is advertised in the Commerce Business Daily. A contract is the document that results from those procedures. The contract is an agreement between our agency and any organization to provide a product or service that results from responding to an invitation for bid or responding to a request for proposal. Mr. LAFALCE. Why was it so difficult to put the notice in the solicitation as opposed to the contract itself? Mr. CLINKSCALES. Sir, we were sort of appalled also when we determined that the notices were not being used. We had no reason to believe that the notices were not included in solicitations be cause we instructed all of our contracting officers on June 14 to include them. So when we determined they were not included, we were surprised. Mr. LAFALCE. When did you determine that your own solicitations did not contain those notices? Mr. CLINKSCALES. We determined that in early November or late October as a result of responding to Congressman Addabbo's inquiry. Mr. LAFALCE. In a memo dated September 25, 1979, to OFPP responding to their September 7 request, you indicated that no solicitations or contracts were in compliance with the law. Why didn't you take action to correct this between then and now? Mr. CLINKSCALES. What is the date of that, sir? Mr. LAFALCE. September 25, 1979. Mr. CLINKSCALES. I am not familiar with this memo at this point. Mr. NEIDICH. It is a letter that went out over your signature. Mr. LAFALCE. It is to Mr. Williamson, Associate Administrator for Acquisition, Executive Office of the President. It has your name typed on the bottom. It was signed by somebody else, W. E. Lloyd or, something for you. At the least, as of that date, you were aware that the solicitations did not contain adequate notices. Do solicitations that are now going out have the notices within them? Mr. CLINKSCALES. As far as we know they do. Mr. LAFALCE. When did you take remedial action? Mr. CLINKSCALES. On November 14. Mr. LAFALCE. The problem is it did take quite a bit of time from your letter of September 25, 1979, to November 14 to put the notices in the solicitation. Mr. CLINKSCALES. No, sir. Actually, we had, as I indicated earlier, instructed our contracting officers on June 14 to include the notices. We were not aware of the fact that notices were not being included. In response to the memorandum you are referring to there, I don't know what the inquiry was, I don't know the nature of the request that came in. Mr. LAFALCE. It would appear as if there is at least a month and a half gap between the written admission of knowledge and any remedial action regarding as simple a matter as notification within solicitations. Please continue. Mr. NEIDICH. I just want to comment, Mr. Chairman, on the letter that they reported to OFPP dated September 25. The letter indicates at that date 38 contracts, solicitations, requiring notice for which there is no notice today and in response to Mr. Addabbo's question, there were 85 such solicitations that went out without notice, an increment of 47 which apparently someone was aware in your office of that dereliction and yet there appears to be no correction for something as basic as putting the notice in the solicitation. It doesn't seem like a Herculean task. Mr. LAFALCE. Mr. Trimboli, do you have further questions? Mr. LAFALCE. Mr. Francisco. Mr. FRANCISCO. No. Mr. LAFALCE. I have about 50 more questions but I am not going to ask them at this time. I am going to submit a certain select number of them and you may respond to them in writing. Needless to say, the performance of the agencies has been grossly inadequate. I am sure that you are aware of this, too, and I am sure all of you wish you did not go through today, so be it. Unfortunately, today existed because of what hasn't transpired over the past year or so. Rather than beating a dead horse let me simply say that we will have another hearing on this issue in January. I hope it will be a much more positive one. I find hearings such as this very distasteful personally. I do not enjoy them and I am sure you don't enjoy them. But it is necessary for you people to get your act together. It is necessary to meet internally in your own agencies and to meet in a group, GSA, OFPP, and decide what you are going to do about the future and what you are going to do to remedy the legal deficiencies of the past. For the future you should be in total and full compliance with the law. It seems to me there can be no excuse for not doing that. So far as remedying the mistakes of the past, it seems to me that you should make a yeoman's effort to do all that you can, considering the legal suggestions of GAO, and it seems to me to a total extent practicable you would want to go back as far as you can as far as an effective date is concerned. Admittedly, there can be some question about it. Since there can be legal question about it, I would play it safe and go back as far as you can. With that I am going to bring to a close for today the hearings on what has been a sad day insofar as the small and minority businesses of America are concerned with the hopes and aspirations they had when Public Law 95-507 was enacted into law. You gentlemen are the ones charged with the responsibility of fulfilling the hopes and expectations that were created by Public Law 95-507 and thus far we have let the small and minority businesses of America down. I hope that our future actions can make up for that. I will see you gentlemen sometime in January. The hearings are adjourned. [Whereupon, at 2:45 p.m., the subcommittee adjourned, to reconvene subject to call of the Chair.] APPENDICES FURTHER QUESTIONS TO WITNESS AGENCIES FROM CHAIRMAN LAFALCE WITH AGENCY RESPONSES EXHIBIT A.-OFFICE OF FEDERAL PROCUREMENT POLICY, OMB At the close of my oversight subcommittee hearing held on December 4, 1979 on government agency compliance with the procurement provisions of P.L. 95-507, I indicated that I would be submitting further questions to each of the witnesses. Kindly provide attached questions by to the Subcommittee responses to the If you have any questions concerning this request, please contact Mr. George Neidich of my subcommittee staff at (202) 225-9321. 57-734 080 - 21 Sincerely, JOHN J. LaFALCE |