Mr. CORMAN. Mr. Howarth, it is a pleasant experience for this committee to find a happy small businessman. May I ask whether you do any business with GSA?

Mr. HOWARTH. Very little. That is our one complaint.

Mr. CORMAN. I knew we would find a common ground.

I wonder if you would tell us your experience.

Mr. HOWARTH. I shouldn't really say that. In certain lines we do little business, but we have many lines that are available to GSA. As I said, it's our own fault, and we have a selling job to do, because the Government agencies may order from Denver or somewhere else when it could be ordered locally. Our name is in the catalog.

Mr. CORMAN. Are you aware of the GSA mandatory percentage discount on their purchases?

Mr. HOWARTH. Yes.

Mr. CORMAN. What if any effect does that have on your ability to do business with the Government?

Mr. HOWARTH. Well, we don't get much of a chance to sell GSA except with machines and published GSA catalog items like Underwood Olivetti. I have a list of them here: Artmetal has certain files, plan files and things like that, posting indexes, visible record equipment, Pendoflex hanging folders, Underwood-Olivetti, Gestetner, Standard duplicators, Stenorette dictating machines, Kodak copiers, and so forth.

Mr. CORMAN. For those products that you sell to GSA, are you required to give a percentage discount?

Mr. HOWARTH. Yes. These are in the GSA catalog, and they are GSA items. The prices are already decided in Washington. We have nothing to do with the pricing.

In other words, if someone wants to buy an Olivetti item, for example, if Hill Field wishes to buy an Olivetti typewriter, they have a GSA catalog and the GSA price, and we furnish it at that price.

Mr. CORMAN. You are on the suppliers list of GSA for those items? Mr. HOWARTH. Yes, sir; for those items. On many, many other items there is no GSA price. They buy them direct from the manufacturer. I suppose. They don't buy them here.

Mr. CORMAN. Are there any other product lines that you think you are capable of supplying to GSA users in this area that you are not supplying?

Mr. HOWARTH. Well, regular standard office supplies, provided we could sell them cheap enough. They buy them very, very cheap, probably at our cost.

Mr. CORMAN. The Government users can buy these supplies at the same cost that you buy them?

Mr. HOWARTH. Yes, sir.

Mr. CORMAN. You don't know whether GSA buys them from wholesalers or not.

Mr. HOWARTH. No. They are shipped to the users.

Mr. WILLIAMS. One point I think interesting that was mentioned by Mr. Stoner before the hearing, Mr. Chairman, concerned Thiokol's business with the Weber Office Supply. It is a good point for all small businessmen. He pointed out that all small businessmen want more business, but Weber Office Supply has gotten their business because,

for example, every Tuesday morning, Mr. Howarth is at their door ready to provide good service. The reason for his success, primarily, has been his business techniques. It has been a real joy for Thiokol, a large business, to do business with the Weber Office Supply.

Mr. HOWARTH. Yes. sir. They, however, do not have GSA. They cannot buy GSA. Pencils, paper clips, and items like that they still buy on the open market, whereas the defense agencies can't do that. They have to buy from GSA.

Mr. CORMAN. Suppose you sell two Underwood-Olivetti typewriters. You sell one to Defense Supply Agency and one to Thiokol. Is there any difference in the price?

Mr. HOWARTH. I think they would be the same.

Mr. CORMAN. The same price?

Mr. HOWARTH. Yes.

Mr. CORMAN. Each of them would buy at the GSA price?

Mr. HOWARTH. Yes, because I think they get the same discount as GSA.

They would get the GSA price. They are entitled to it.

Mr. CORMAN. What about the customer who walks in off the street? Mr. HOWARTH. He doesn't.

Mr. CORMAN. What is the percentage difference?

Mr. HOWARTH. You've got me. I really don't know. There are two published price lists, and I don't have them here. I could let you know. Mr. CORMAN. It would be interesting to know. Is it cheaper to do business with the Government or with the large corporations than it is for you to do business with the customers off the street?

Mr. HOWARTH. Yes, because we have so many more calls to make, and we still have books to keep and deliveries to make. It's just as easy to deliver a $500 order as it is a $3 order in many cases.

Mr. CORMAN. The volume that you do with the Government makes up for the discount you are required to give.

Mr. HOWARTH. Yes, sir.

Mr. CORMAN. Mr. Williams?

Mr. WILLIAMS. Does GSA bidders list broaden the area geographMr. HOWARTH. We cover the State, north to Soda Springs, Idaho, and east to Evanston, Wyoming. That is generally as far as we go. Mr. WILLIAMS. I have no other questions.

Mr. CORMAN. Thank you very much, Mr. Howarth.

Mr. HOWARTH. Thank you.

Mr. CORMAN. We are pleased to have your testimony.

The next witness is Mr. Charles J. Moxley, director, Clearfield Job Corps Center. Mr. Moxley, do you have a prepared statement? Mr. MOXLEY. Yes.

Mr. CORMAN. Proceed, Mr. Moxley.

TESTIMONY OF CHARLES J. MOXLEY, THIOKOL CHEMICAL CORP., DIRECTOR, CLEARFIELD JOB CORPS CENTER

Mr. MOXLEY. Mr. Chairman and counsel, my name is Charles J. Moxley, I have been employed by Thiokol Chemical Corp. for 10 years, the first 8 years in the corporate office as director of contracts, legal, and materiel activities, the last year as center director and general

84-790-68 -75

manager of the Clearfield division and, prior to that, as director of administration.

In the various positions which I have held I have had an opportunity to see the interest and thoroughness with which Thiokol has participated in the Small Business Administration program. There is no question but that the corporation is fully in sympathy with this program. The corporate management has directed all of the divisions to observe, not only the letter, but the spirit of the Small Business Administration Act.

I certainly concur in the thoughts which have been expressed by Mr. Lyle Stoner, general purchasing agent of Thiokol's Wasatch division. As you will observe from Mr. Stoner's comments and those of Mr. Page, who is the manager of materiel and contracts administrator at our Clearfield division, the procurement activities at Wasatch and Clearfield are entirely different.

The Wasatch division in the defense industry has to procure items which are qualified and which are frequently high-dollar items limited as to source. At the Clearfield division, on the other hand, we are essentially operating an educational and vocational institution, and our procurement is for items such as would be used by a school or vocational institution.

I am pleased to introduce Mr. A. C. Page, who has been with Thiokol for 8 years in procurement activities, and who has personal knowledge and has had detailed experience with the administration of the small business program at the Clearfield division.

Thank you for this opportunity to participate.

TESTIMONY OF A. CURTIS PAGE, JR., THIOKOL CHEMICAL CORP.. MANAGER, SUBCONTRACTING, CLEARFIELD JOB CORPS CENTER

Mr. PAGE. Mr. Corman, counsel for the subcommittee, ladies and gentlemen, my name is A. Curtis Page, Jr. I am manager of materiel and contract administrator for Thiokol Chemical Corp., Clearfield Division. This division of Thiokol operates and manages an urban men's center at Clearfield, Utah, for the educational and vocational training of approximately 1,300 socially deprived young men drawn existing warehouse space for vocational training use, hiring and training center is operated under the auspices of the Office of Economic Opportunity (OEO) with headquarters in Washington, D.C.

Our division of Thiokol is relatively new. Our initial contract with OEO was issued April 1, 1966, and called for the establishment of a fully operational center within a period of 6 months from the contract award date. This included the design and complete modification of existing warehouse space for vocational training use, hiring, and training of staff, preparation and organization of course media, and the establishment of all the necessary support functions required to oper ate a training center.

In the accomplishment of this task Thiokol made use of the background and experience of many Thiokol-trained administrative personnel, among whom were several who had received valuable years of experience in aerospace work under Air Force Procurement Instructions (AFPI) and Armed Services Procurement Regulations (ASPR) guidelines, including the requirements of the Small Business Administration. Thiokol, as a corporation, and the Utah divisions

which operate under the corporate charter have conscientiously, and I believe efficiently, prosecuted the interests of small businessmen as set out in the act.

At our division, during the 15-month duration of our initial operation, 71.1 percent of total purchase commitments were made to small business, with an additional 11.7 percent of total purchases awarded to nonprofit agencies; that is, Defense Personnel Support Center, U.S. Public Health Service, General Services Administration, schools and universities, and so forth.

Our experience to date under our present contract, and under what might be called a "steady state" operation of our center, indicates a respectable 67.8 percent of our commitments have been with small businesses, and 4.5 percent to nonprofit institutions.

The questions, "How is participation with small business achieved?" and "How can it be improved?" naturally arises. Obviously the answers do not lie entirely in the personality or experience of those who commit the contract funds. We believe that such participation is primarily a function of the requirements of the contract, the procurement authority, responsibility, and philosophy established by the corporate and division management, and by the nature of the work or product involved.

This authority, responsibility, and philosophy, as pertain to our center operations, are clearly established and presented to us in the form of corporate and division policies and procedures. We are careful to explain our procedures and requirements to our suppliers, telling them what is expected of them by way of contract compliance and the alternatives if they fail to comply.

Our greatest problem with the small businessman is the lack of understanding on their part as to exactly what we require of them. We counsel the supplier who begins to show a history of noncompliance with contract terms and, through a mechanized computer rating system which assigns demerits for late or incomplete deliveries, errors in shipment, or unauthorized substitutions, we monitor the cumulative performance of our new vendors and are able to identify problem areas which may indicate a lack of understanding of our requirements. We usually find that the small businesses are competent and anxious to serve us when our requirements are understood.

We feel that we have a special interest in the small businessman. He is an important member of our community. Without the community support we have little chance to succeed in the training of these socially deprived youths.

We assure you, Mr. Chairman, that we at Thiokol have an interest in the needs and aspirations of the small businessman, particularly those in the surrounding Utah communities, and will be receptive to suggestions the committee may offer which will improve our relationship with this segment of the Utah economy.

We have enclosed charts showing monthly and quarterly purchase commitments since the inception of our division by contract. They show some interesting points we would like to call to the attention of the committee.

Mr. CORMAN. Without objection, we will include the charts in the record.

(The documents referred to follow :)