This is in response to your letter of December 21, 1979 requesting
information on the Department of Transportation (DOT) compliance
with the procurement provisions of P.L. 95-507.

1. General Services Administration (GSA) in its testimony before
the subcommittee stated that it intended all civilian agencies to
start compliance with section 211 of P.L. 95-507 as of April 10,
1978. As of what date is your agency undertaking a review of
solicitations? If not April 10, please explain why not?

Answer: The Department is using the date of the telegram from GSA
(May 22, 1979) as the date which we are requiring a review of contracts
awarded. This is consistant with the earlier request for information
from your committee. This date is earlier than our Departmental
implementation (issued June 7, 1979) and earlier than the July 2,
1979 date required by the Office of Federal Procurement Policy in
their November 21, 1979 letter to all Executive Departments.

2. Please describe the report you were requested to submit to the
Small Business Adminstration (SBA) at the conclusion of FY 1979 on the
extent of participation by small business in procurement contracts let
by your agency. If your agency has not submitted such report, when
will this be done?

Answer: There are no requirements to submit a report to SBA on the
participation of small business in procurement contracts let by the
DOT. Information on Small Business awards in FY 1979 is submitted annually
to GSA. The data in that report shows that in FY 1979 the DOT
contracted with 505 8(a) firms for slightly more than $50 million and
$21.5 million with minority firms other than those classified as 8(a).

SPEED
LIMIT

55

It's a law we can live with.

2

3. Please describe your performance in meeting your agency's
goals for participation by small business in subcontracting as re-
quired by section 211 of P.L. 95-507. Has your agency and the
SBA failed to agree on establsihed goals? If so, has this
disagreement been submitted to OFPP for final determination?

Answer: The Office of Federal Procurement Policy has requested
the Department to submit goals for FY 1980 awards to the SBA by
the end of the first quarter of FY 1980. We have submitted our
goals and are waiting for the results of the SBA review. If they
disagree, we will negotiate the differences prior to the 31st
of January.

4. Describe what studies or surveys your agency has conducted
to determine the extent of contractor's compliance with the
"best efforts" subcontracting clause. Have any guidelines been
establsihed for making this determination?

Answer: The Department has not yet conducted any surveys on the extent of contractor compliance with the "best efforts" subcontracting clause. To date, there are insufficient numbers of subcontracting plans to warrant a study. However, as more contracts are executed within the dollar threshold established by P.L. 95-507 we will incorporate contract compliance of subcontracting plans into our program evaluation design. We have not, at this time, established the necessary guidelines for evaluating contractor's compliance with the "best efforts" subcontracting clause.

5. What incentives has your agency provided to encourage maximum subcontracting opportunities as required by section 211 of the law? Answer: We have not had sufficient experience to know whether there is a need for an incentive program to encourage maximum subcontracting opportunities. We will design incentive programs to meet specific contractors needs as determined by the results of our evaluation of small business subcontracting opportunities with prime contractors. 6. As of the date of your response to this letter, describe your compliance with the subcontracting provisions mandated by section 211 of P.L. 95-507 including (a) the number of deficient solicitations and contracts you have remedied since December 4, 1979, (b) the number of solicitations issued since December 4, 1979 which are deficient, and (c) the total number and dollar amount of prime contracts awarded since December 4, 1979 which do not contain required subcontracting plans.

Answer: (a) Number of solicitations remedied since December 4,

1979:

Nineteen (19)

3

(b) Number of contracts remedied since December 4,
1979:

There were eighteen contracts valued at $155
million without subcontracting plans when we
testified to the Small Business Committee on
December 4th. Since then the status is:

(1) One contract has been completed
(2) Two contracts are with Small Business and are
excluded from the subcontracting requirement.
(3) Fifteen (15) contracts are actively being

(c) Number of solicitations issued December 4 which are deficient: None

(d) Number and dollar amount of prime awarded since December 4 which do not contain subcontracting plans:

None

Sincerely,

with

WILBERT E. CANTEY

Director, Office of Small and Disadvantaged Business Utilization

To amend the Small Business Act and the Small Business Investment Act of 1958.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

TITLE I-AMENDMENTS TO THE SMALL BUSINESS
INVESTMENT ACT OF 1958

CHAPTER 1

SEC. 101. Section 303 (c) (1) of the Small Business Investment Act of 1958 is amended to read as follows:

"(1) shares of nonvoting stock (or other corporate securities having similar characteristics), provided

"(i) dividends are preferred and cumulative to the extent of 3 per centum of par value per annum;

"(ii) on liquidation of redemption the Administration is entitled to the preferred payment of the par value of such securities; and prior to any distribution (other than to the Administration) the Administration shall be paid any amounts as may be due pursuant to subparagraph (i) of this paragraph;

"(iii) the purchase price shall be at par value and, in any one sale, $50,000 or more; and

"(iv) the amount of such securities purchased and outstanding at any one time shall not exceed

"(A) from a company licensed on or before October 13, 1971, 200 per centum of the combined private paid-in capital and paid-in surplus of such company, or

"(B) from any such company licensed after October 13, 1971, and having a combined paid-in capital and paid-in surplus of less than $500,000, 100 per centum of such capital and surplus, or

"(C) from any such company licensed after October 13, 1971, and having a combined private paid-in capital and paid-in surplus of $500,000 or more, 200 per centum of such capital and surplus.

Oct. 24, 1978

[H.R. 11318]

Small Business
Act and Small
Business
Investment Act of

1958,
amendment.

Purchase and

guarantee

operations. 15 USC 683.

"The amount of such securities purchased by the Administration in excess of 100 per centum of such capital and surplus from any company described in clause (A) or (C) may not exceed an amount equal to the amount of its funds invested in or legally committed to be invested in equity securities. For the purposes of "Equity the subsection, the term 'equity securities' means stock of any securities." class (including preferred stock) or limited partnership interests, or shares in a syndicate, business trust, joint stock company or association, mutual corporation, cooperative or other joint ventures for profit, or unsecured debt instruments which are subordinated by their terms to all other borrowings of the issuer.". SEC. 102. The last sentence of section 308(b) of the Small Business Investment Act of 1958 is amended to read as follows: "Such com- 15 USC 687.

39-081 O-79

92 STAT. 1758

Repeal.

15 USC 687i. 15 USC 681.

Capital requirements for small business investment companies.

15 USC 682.

15 USC 694a.

Surety bond
guarantees.
15 USC 694b.

PUBLIC LAW 95-507–OCT. 24, 1978

panies are authorized to invest funds not reasonably needed for their operations in direct obligations of, or obligations guaranteed as to principal and interest by, the United States, or in certificates of deposit maturing within one year or less, issued by any institution the accounts of which are insured by the Federal Deposit Insurance Corporation or the Federal Savings and Loan Insurance Corporation, or in savings accounts of such institutions.".

SEC. 103. The last sentence of section 317 of the Small Business Investment Act of 1958 is repealed.

SEC. 104. Section 301(d) of the Small Business Investment Act of 1958 is amended by inserting "or formed as a limited partnership,” immediately after "statutes,'

SEC. 105. Section 302 (a) of the Small Business Investment Act of 1958 is amended to read as follows:

"SEC. 302(a). The combined private paid-in capital and paid-in surplus of any company licensed pursuant to sections 301 (c) and (d) of this Act shall not be less than $150,000: Provided, however, That the combined private paid-in capital and paid-in surplus of any company licensed on or after October 1, 1979 pursuant to sections 301 (c) and (d) of this Act shall be not less than $500,000. In all cases, such capital and surplus shall be adequate to assure a reasonable prospect that the company will be operated soundly and profitably, and managed actively and prudently in accordance with its articles.".

CHAPTER 2

SEC. 110. Section 410(4) of the Small Business Investment Act of 1958 is amended by-

(1) deleting the word "or" after the phrase "conditions of the contract,"; and

(2) deleting the period after the phrase "fails to make prompt payment" and inserting in lieu thereof “, or (D) is an agent, independent agent, underwriter, or any other company or individual empowered to act on behalf of such person.".

SEC. 111. Section 411 of the Small Business Investment Act of 1958 is amended to read as follows:

"SEC. 411. (a) The Administration may, upon such terms and conditions as it may prescribe, guarantee and enter into commitments to guarantee any surety (the terms and conditions of said guarantees and commitments may vary from surety to surety on the basis of the Administration's experience with the particular surety) against loss, as hereinafter provided, as the result of a breach of the terms of a bid bond, payment bond, performance bond, or bonds ancillary and coterminous therewith, by a principal on any contract up to $1,000,000, subject to the following conditions:

"(1) the person who would be the principal of the bond is a small business concern;

"(2) the bond is required in order for such person to bid on a contract, or to serve as a prime contractor or subcontractor thereon;

"(3) such person is not able to obtain such bond on reasonable terms and conditions without a guarantee under this section; "(4) the Administration determines that there is a reasonable expectation that such person will perform the covenants and conditions of the contract with respect to which the bond is required; "(5) the contract meets requirements established by the Administration for feasibility of successful completion and reasonableness of cost; and