Mr. JARRARD. Yes. Mr. CORMAN. How many of those people have you questioned in the last year? Mr. JARRARD. On the negative preaward survey? Is this what you are talking about, sir? Mr. CORMAN. Yes. Mr. JARRARD. I think about five. Mr. CORMAN. Among those five, how many went to SBA to get a certificate? you. Mr. JARRARD. I think three, but I'll check. Colonel BAREFOOT. We'll research that for Mr. CORMAN. I would like to know your experience. Since it is a relatively small number, will you give us the total picture as to each one? I would like to know how many were disqualified on that basis, how many went to SBA for a COC, and whether or not those who were given a COC did perform. Of course, we are most eager for SBA to continue their interest in that small business. Colonel BAREFOOT. My experience with the SBA is that, when they give a COC, they have their men in those shops, and those guys produce because the SBA's reputation is involved in this thing. Mr. CORMAN. How many low bidders have you rejected because of lack of perseverence and tenacity in the past year? Colonel BAREFOOT. One in the past year, and that was just about this time last year. It was a firm called Snow Manufacturing Co. in Woodridge, N..J. Mr. CORMAN. Was that based on prior experience the Air Force had with the bidder? Colonel BAREFOOT. Yes, sir. They went and asked for a COC, and in line with Secretary McNamara's policy we resisted, and we went and talked to SBA. We went through the regular channel that we are allowed to use. The company, at the time that the SBA was considering them for a certificate of competency, was delinquent on eight of nine contracts. They had a history of delinquency that was utterly impossible. Mr. CORMAN. What was SBA's reaction to this? Colonel BAREFOOT. SBA, when it finally came down to saying yes or no, had us go back and change it to tenacity and perseverence, and then they did not have to rule on it. Mr. CORMAN. Which SBA office was this, the Washington office? Colonel BAREFOOT. Yes. Mr. CORMAN. Let's check that out. Mr. WILLIAMS. You relied upon lack of tenacity and perseverence. Colonel BAREFOOT. Yes, that's right. Mr. WILLIAMS. There was then no appeal. Colonel BAREFOOT. Yes. Mr. WILLIAMS. Perhaps SBA wanted you to take that route to take them off the hook. Colonel BAREFOOT. That's the way it finally wound up. We lost weeks in the process, of course. It was in June last year. It was a little over a year ago. Wasn't it about that time, General? I ran into you in the Pentagon at that time. It was before you were assigned here. Major General MCCUTCHEON. That was before I was assigned here. Mr. WILLIAMS. This is a loophole in the regulation that is being clarified. The question is whether or not competency should include tenacity and perseverence. Colonel BAREFOOT. We took the attitude that, not only was the company delinquent, but they weren't doing anything to correct it. The funny part of it, though I didn't realize it at the time that I went down to Washington to work with the Small Business Administration, was that the owner of the company, an ex-Air Force officer, was a good friend of mine. Mr. CORMAN. It's to your credit that that didn't change the situation, Colonel. Anything else, gentlemen? Major General MCCUTCHEON. No, sir. Mr. WILLIAMS. I just want to comment for General McCutcheon's information that, when Deputy Assistant Secretary for Procurement Racusin appeared before our subcommittee in Washington, he did cite this installation as one of their best procuring areas. Mr. Burton was very quick to note with pride that comment. This is one of the principal reasons that we are here. Colonel BAREFOOT. Since that, sir, we have won the Talbot Award which we are very proud of. It's the top procurement award in the Air Force. Major General MCCUTCHEON. I've been in this procurement business since about 1950, including an assignment at the OSD level for 5 years working for Mr. Bannerman. The last assignment was at WrightPatterson as director of procurement and production overseeing five AMAS, but I didn't have much to do with creating this shop. I think it's a pretty good procurement shop. I hope it's that way a year from now. Mr. CORMAN. You'll be in real trouble for that third star if it goes down. Major General MCCUTCHEON. If it does, I won't be here. Mr. CORMAN. Thank you very much. We appreciate the overall briefing and your analysis of your relationship with small business. Major General MCCUTCHEON. Thank you, sir.1 Mr. CORMAN. Our next witness is Capt. R. H. Haslett, deputy commander. Defense Depot Ogden. He has with him Maj. Sherman Katz, U.S. Air Force, chief, Operating Materiel Division, Defense Depot Ogden; A. J. Bybee, procurement officer, Defense Depot Ogden; Julius L. Pretti, small business specialist, Defense Depot Ogden; and Jack Fairclough, counsel, Defense Depot Ogden. Captain Haslett, do you have a prepared statement? Mr. CORMAN. Proceed with your statement. TESTIMONY OF CAPT. ROBERT H. HASLETT, U.S. NAVY, DEPUTY COMMANDER OF DEFENSE DEPOT OGDEN Captain HASLETT. Mr. Chairman, I am Capt. Robert H. Haslett. deputy commander of Defense Depot Ogden, a storage and distribution depot of the Defense Supply Agency. I am representing Col. Robert B. Ladd, U.S. Air Force, the commander at Defense Depot Ogden, who is attending General Hedlund's Commanders' Conference in Mechanicsburg, Pa., today and tomorrow and therefore could 1 See appendix S at p. 1326 for information furnished the subcommittee by the Department of the Air Force at a later date. not be here for this hearing. Accompanying me are Maj. Sherman Katz, chief of the Operating Materiel Division, Installation Services Directorate; Mr. A. J. Bybee, contracting officer; Mr. Julius L. Pretti, small business specialist; and Mr. Jack Fairclough, counsel. It is a pleasure for me to have the opportunity of presenting to you some of the highlights of our small business program. I will discuss in my statement certain information on several different areas of interest. I have included as attachments part of the information which is largely statistical, rather than take up the time of this subcommittee to read it. Defense Depot Ogden is a major field activity under the Director, Defense Supply Agency, and is responsible for the storage and distribution of the Defense Supply Agency-DSA-military services equipment and supplies. As one of the seven principal DSA storage sites, this depot is responsible for the recipt, storage, and issue of centrally managed items. Upon direction of the Defense Supply Centers these items are issued to Department of Defense activities and other Federal agencies as prescribed in DSA regulations. These commodities are categorized as follows: (1) Electronics, (2) construction, (3) industrial, (4) general, (5) subsistence, and (6) clothing and textiles. In addition, the depot receives, stores, and ships designated items for the Department of the Army, performs preventive maintenance and repair of assigned vehicles and operating equipment, and accomplishes maintenance on DSA-owned mission stocks and items authorized for return to DSA from users as prescribed in DSA Program Guidance. Captain HASLETT. Tab A portrays mission workload data and other activity indicators for fiscal years 1966, 1967, and 1968. As I have stated, Defense Depot Ogden is one of several locations within the Defense Supply Agency which receives, stores, and issues supplies as directed by the Defense Supply Centers. None of the sup plies being received, stored, and issued are actually purchased by Defense Depot Ogden. The supplies and equipment purchased by this installation represent the direct requirements for the accomplishment of our assigned mission and for the maintenance of the facility and its equipment. TAB B.-Defense Depot Ogden, types of items purchased 1. Cleated plywood boxes 2. Nailed wood boxes 3. Crates, wood 4. Box pallets, wood 5. Boxes, fiberboard 6. Packing materials (cushioning materials, banding) 7. Repair parts and supplies (vehicular) S. Builders supplies 9. Station housekeeping items 10. Construction (maintenance on buildings, grounds and utilities) 12. Miscellaneous machinery and equipment Captain HASLETT. Tab B lists, in broad categories, the type of items purchased. The total volume of purchases at Defense Depot Ogden for fiscal years 1966, 1967, and 1968 was $6.863, $9.698, and $7,606 million. respectively. Although this represents less than 1 percent of the overall Defense Supply Agency annual expenditure, it does amount to an average annual output of $8.1 million, which is by all standards a significant amount. The substantial increase in fiscal 1967 is attributed to the buildup in Southeast Asia and the increased mission assignments levied on this depot. The bulk of procurement actions completed are small purchases, under $2,500. All available small-purchase methods, including purchase orders, blanket purchase agreements, and imprest funds are utilized in these actions. These purchases account for the majority of our actions but represent a smaller percentage of our total dollar volume. For other than small purchases, with few exceptions, the formal advertising procurement method is employed. In fiscal year 1966, we procured a mechanized material-handling system with a value of $1.739 million, utilizing the two-step formal advertising method. It should be noted that this very large procurement was a 100-percent small business set-aside. TAB C.-Defense Depot Ogden, methods of procurement utilized Captain HASLETT. Tab C shows a breakdown of our purchases by procurement method. Small business set-asides are used extensively at Defense Depot Ogden. In the aggregate, during the period of fiscal years 1966, 1967, and 1968, 77.5 percent of all invitations for bids and requests for proposals were set aside for small business. TAB D.-Defense Depot Ogden, use of small business set-asides Captain HASLETT. Tab D furnishes the statistics and shows the participation by small business in the case of unrestricted advertising. The small business specialist reviews all procurements estimated to exceed $2,500 for possible set-aside. Class set-asides, wherein all procurements in a class will be set aside for small business, are also used. The small business specialist has recommended and the contracting officer has approved class set-asides for the following: (1) Pallets, softwood. (2) Crates and boxes, wood and/or plywood. (3) Boxes, fiberboard. (4) Maps, lithographic. (5) Construction (including maintenance and repair). Other items are continually under review for possible set-aside. TAB E.-Defense Depot Ogden, proportion of volume of business done with small business concerns Captain HASLETT. Tab E shows the volume of purchases made from small business, as compared to purchases from large business and total purchases; 77.1 percent, 75.5 percent, and 86 percent of the total dollar value of U.S. purchases were made from small business in fiscal years |