DEPARTMENT OF THE AIR FORCE APPENDIX S (Information furnished in response to subcommittee requests at Ogden, Utah, hearing follows:) OFFICE OF THE SECRETARY, September 17, 1968. Mr. JOHN J. WILLIAMS, Minority Counsel, Select Committee on Small Business, DEAR MR. WILLIAMS: The attached information was requested during the hearing held by the Select Committee on Small Business, House of Representatives, in Ogden, Utah, on July 30, 1968. Specifically, this information covers (a) Ghetto Area Awards (Starting in November 1967 to August 1, 1968); (b) Negative Pre-Award Surveys; (c) Status of American Electric. Incorporated, La Mirada, California. If we can be of further assistance, please do not hesitate to call. Sincerely, WILLIAM P. REED, Chief, Congressional Investigations Division, a. Ghetto Area Awards (starting in November 1967 to August 1, 1968) (1) There were two awards made directly into Ghetto areas-one for $1,367.412 to a small business and one for $120,694 to a large business. There were two other awards made on Labor Set Asides that went to small business in the #7 group, which is an award made to small business when there are no qualified labor sources either large or small who could be considered. These two were for a total of $90,775. (2) We also had one award to Small Business Administration (SBA) on a requirements type contract for an estimated $1,670,000 that went to a certified small business firm in a Ghetto area. b. Negative Pre-Award Surveys (1) The attached chart shows how many negative pre-award surveys have been rendered together with their end results as pertains to the Small Business Administration. In this respect only those actions with an estimated dollar value of over $10,000 were used as per ASPR 1-705.4C and 1–904.2(i). (2) Snow Manufacturing Company: Low bidder on an IFB (100% SB setaside) for 636 each Modification Kits for TDU 14B Targets. $52,565-Negative pre-award received. Contractor requested a COC from SBA who proposed to issue COC. A meeting was held with SBA representatives in Newark, New Jersey, with PAS monitor to resolve problem. No resolution resulted. OOAMA referred the case to MCP and AFSPP. Review by USAF, SBA, AFLC and OOAMA resulted in a decision that contractor was nonresponsible due to "Lack of tenacity and perseverance." Therefore, no COC was required. Award was made to next low bidder, who was also a small business concern. c. Status of American Electric, Incorporated, La Mirada, California (1) American Electric first indicated that their size category had changed from Small Business to Large Business in September 1966. (1326) (2) Items previously procured from American Electric while they were categorized as Small Business are: (a) BLU-1B/B Fire Bombs, 750 lb, nested. (b) BLU-27/B Fire Bombs, 750 lb, welded. (d) BDU-33 Practice Bombs, 25 lb. (e) MXU-469/B Fin Assy, 750 lb Fire Bomb. (3) Reasons why some of these items were not set-aside for small business on subsequent procurements are as follows: (a) for the 1B/B Fire Bombs, a deterrent to small business participation is the extensive initial capital investment which would be required of a new producer in facilities, tooling and preproduction costs. In addition, the time required for establishing necessary capability, coupled with time required for preproduction testing and qualification of a new producer has an adverse effect for new producers. Two invitations for bids issued in FY 67 and FY 68 disclose that small business bids received were not in the competitive range with bids from our current producers (i.e., only one bid was received from a small business concern which could have been considered within reach for possible negotiation.) Future plans for procurement of this item are to effect a 50% Labor Surplus Area set-aside, which gives small business sources a preferred bidding position and an opportunity to compete for the business. (b) For the BLU-27/B Fire Bombs, experience under competitive solicitations for these items have reflected there was not a sufficient number of bids that could be obtained from responsive/responsible small business firms. Problems confronting small business concerns in the production of this item are extensive initial capital investment estimated to exceed $200,000; and time required for preproduction and testing for pre-qualification of a new producer, normally eleven (11) months prior to commencing production deliveries. Past producers of this bomb obviously have an advantage over new bidders due to gradual buildup over a period to increase their production capability to meet current requirements. Future plans for procurement of BLU-27/B Fire Bombs include advance publicising in the Commerce Business Daily, and discussion with small business concerns. In addition, future competitive procurements will be subject to Labor Surplus set-aside procedures which will give small business concerns a preferred bidding position and an ample opportunity to obtain contracts. (c) For the BLU-32/B Fire Bombs, no buys have been made subsequent to American Electric, Incorporated, changing to the large business category. (d) For the BDU-33 Practice Bombs, a 50% small business set-aside was made in FY 67 with American Electric, Incorporated, a large business, receiving the non-set-aside portion and Dell industries, a small business concern, Waycross, Georgia, receiving the set-aside portion, in the amount of $615,191.69. The FY 68 procurement was initially solicited with provisions for 50% set-aside for small business. Prior to bid opening, this was changed to a 50% set-aside for labor distressed areas due to the President's Hardcore Labor Area Program. Award of the set-aside portion was made to Steelcot Corporation, Birmingham, Alabama, a small business concern, in the amount of $1,367,412.55. Steelcot was certified eligible for the 50% labor surplus non-set-aside by virtue of their subcontractor being in a hardcore labor area. Future plans for this item: This award to Steelcot Corporation is a Multi-Year Requirements Contract and 50% of our BDU-33 Practice Bomb requirements during FY 69 and FY 70 will be ordered from this contractor. (e) For the MXU-469/B Fin Assy no follow-on procurements have been made since the contractor has become large business. Any future procurements are contemplated to be made on the basis of 50% labor surplus area set-asides. DIRECTORATE, PROCUREMENT AND PRODUCTION, OGDEN AIR MATERIEL AREA (AFLC), HILL AFB, UTAH FISCAL YEAR 1968 NEGATIVE PREAWARD SURVEYS ON SMALL BUSINESSES No. 1. Cases $16,413 Lack of integrity; awarded LB. 18, 805 Lack tenacity, poor performance, poor bidding tactics; awarded SB. О |