small and independent, except that they are now a subsidiary of a larger company someplace else. Is there any difference in dealing with

them?

Mr. RACUSIN. You have immediately, Mr. Chairman, an infusion of technical know-how that may not have been there before, of financial assistance that may not have existed before. It gives them an opportunity to spread their wings, to become more diversified perhaps, undertake new projects that they wouldn't have had the ability to take on earlier or before the merger. Other than that, as far as our ability to deal with them, I don't detect any change.

General LINDBERG. I don't think there has been much change in my experience at Sacramento Air Materiel Area, in companies that have been small business and then become large, and I can think of one specifically, and I think that so far as dealing with them, you would find very little change in dealing.

Mr. CORMAN. Have you observed that they have any advantage in bidding against the small company or the relatively small-sized company that remains independent?

General LINDBERG. I would say offhand, "no."

Mr. HARRELL. Actually they become sometimes disadvantaged, as you know, because my experience has been you take a small, good, wellmanaged company with the ability to react managementwise. They can underbid a comparable segment of a large company as such. But again let's be realistic about it.

When I was Chief of Electronics Procurement, I always was happy to have here an outfit bidding that I knew was owned by somebody to bail them out if they got in trouble dollarwise. As Mr. Racusin said, this is a little satisfying on occasion.

Mr. RACUSIN. Yes.

General LINDBERG. Mr. Chairman, I am sorry that I was late this afternoon.

Mr. RACUSIN. I explained, Jim.

General LINDBERG. But I am happy to have been here for the few minutes that I was.

Mr. CORMAN. We are pleased to have you, General. On that lessthan-happy note, Mr. Harrell, we will adjourn. I am apprehensive about the success of the small company, if there is that kind of subconscious feeling of insecurity on the part of the contracting officer in viewing two companies, one owned by a large company and the other owned independently.

I can see how that is a normal human thing to do, and yet it seems to me that that is a potential source of real problem, and so that the small company may get the feeling that the way to success is to sell out, and whether we lose something in our total economy, I am not sure, but I am apprehensive about it.

Mr. HARRELL. You are no more, sir, apprehensive than I am. There is nothing that worries me more than the concern I have with the loss of our small businesses in this country. I think there is a fundamental requirement that we keep them going, that we have them.

Mr. RACUSIN. I have been reminded, Mr. Chairman, that we shouldn't forget that the Wright Brothers started as a rather small company.

Mr. CORMAN. Is there anything else, Counsel, Mr. Burton?

Mr. BURTON. No, sir.

Mr. CORMAN. We will stand adjourned, to meet at the call of the Chair. Gentlemen, thank you very much for coming back this after

noon.

Mr. RACUSIN. Thank you, Mr. Chairman.

(Whereupon, at 3:40 p.m., November 1, 1967, the subcommittee hearing was adjourned, to meet at the call of the Chair.)

THE POSITION OF SMALL BUSINESS
IN GOVERNMENT PROCUREMENT

MONDAY, DECEMBER 4, 1967

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON GOVERNMENT PROCUREMENT

AND ECONOMIC CONCENTRATION OF THE
SELECT COMMITTEE ON SMALL BUSINESS,
Washington, D.C.

The Subcommittee met, pursuant to recess, at 10:05 a.m., in room 2359 Rayburn House Office Building, Hon. James C. Corman, presiding.

Present: Representatives Corman and Burton.

Also present: Henry A. Robinson, subcommittee counsel; Myrtle Ruth Foutch, clerk; and John J. Williams, minority counsel.

Mr. CORMAN. The Subcommittee on Government Procurement and Economic Concentration of the House Small Business Committee will come to order.

Good morning, gentlemen.

Today the Subcommittee on Government Procurement and Economic Concentration of the House Small Business Committee resumes hearings to review the small business procurement practices and programs of Federal departments and agencies.

In recent sessions of these hearings we obtained testimony from representatives of the Department of Defense and the Departments of the Army, Navy and Air Force.

The schedule of witnesses for today includes representatives of the National Aeronautics and Space Administration, and the General Services Administration, who will testify regarding their agency's small business procurement programs.

In the subcommittee's letter of invitation to NASA, we requested. information regarding NASA's technology utilization program and the manner in which small business may secure some of the benefits from technological innovations developed under NASA contracts. I understand that NASA's testimony will include a presentation of this program showing how small manufacturers in various fields benefit from applications of new ideas and techniques found in NASA's procurements of aerospace research and development.

Without objection, I will place in the record at this point the subcommittee's September 26 letter of invitation to NASA's Administrator and the agency's response of October 4.

(The letter of invitation and response follows:)

Hon. JAMES E. WEBB,

SELECT COMMITTEE ON SMALL BUSINESS,
HOUSE OF REPRESENTATIVES OF THE UNITED STATES,
Washington, D.C., September 26, 1967.

Administrator, National Aeronautics and Space Administration,
Washington, D.C.

DEAR MR. ADMINISTRATOR: Subcommittee No. 2 on Government Procurement and Economic Concentration of the House Select Committee on Small Business has scheduled hearings to review small business procurement practices and programs of military and major civilian procurement agencies. In connection with these hearings, we invite you and such officials as you may designate to testify on October 18, at 10:00 a.m., in Room 2359, Rayburn House Office Building, regarding the following:

1. Prime contract awards in fiscal years 1964-1967 to all business firms for work in the United States, to small business firms in dollars and percentages and small business set-asides in dollars and percentages.

2. Research and development awards in the same period to all business firms and to small business in dollar amounts and percentages.

3. Small business subcontracting program in fiscal years 1964-1967, showing number of reporting contractors, subcontract payments in dollar amounts to small and other business concerns, and percentage of total to small business

concerns.

4. Various existing regulations and policies are designed or can be utilized to encourage and assist small business firms in receiving and performing prime awards and subcontracts. Small business participation depends largely upon the application of such regulations and policies by contracting officers and contract administration officers. Please provide actual cases in fiscal years 1966-1967 showing procedures followed, regulations utilized, procurement and contract administration offices involved, items procured, manner in which small business benefitted, and other details, including the role of the procurement and contract administration personnel and the NASA small business specialist, if any, regarding each of the following subjects and any others you deem appropriate:

(a) Class set-asides.

(b) Total set-asides.

(c) Break outs.

(d) Dividing procurements into smaller lots suitable for small business. (e) Multiyear contracts.

(f) Sole Source procurement.

(g) Elimination of restrictive specifications.

(h) Utilization of make-or-buy approval authority to increase small business subcontracting.

5. Coordination with Small Business Administration in fiscal years 1966-1967 in furtherance of small business programs.

6. Procedures followed, criteria and guidelines applied, in the same period, to determine each of the following:

(a) Goals for awards to small business.

(b) Feasibility of component break outs.

(c) Feasibility of small business set-asides.

(d) Availability of small business for bidding.

(e) Decisions not to invite small business to bid.

(f) Reasons for failure to award procurements to small business.

(g) Lack of capacity and credit.

(h) Irresponsibility other than capacity or credit.

(i) Ample time for submitting bids and proposals.

(j) Adequacy and reasonableness of specifications.

(k) Procurements from foreign sources.

(1) Effectiveness of small business subcontracting programs, including make-or-buy decisions.

(m) Profit amount or rate in negotiated contracts and utilization of weighted guidelines policy.