DEPARTMENT OF THE INTERIOR

SMALL BUSINESS PROCUREMENT-STATISTICAL REPORT-FISCAL YEARS 1964-671

I Procurements under $100 and awards to educational and other nonprofit institutions excluded.

Relative to the Department's policies and methods of advancing the interests of the small business community in our procurements, we have for many years emphasized to our purchasing and procurement officials throughout the Department the importance of our small business assistance program. As the Committee has been informed by the Department's statements and representatives in past years, our Department has zealously followed the philosophy of the Small Business Act in integrating the small business program into our procurement efforts. The procedures contained in the relevant Federal Procurement Regulations (Title 41, Subtitle A, Section 1-1.702) to aid, counsel, assist, and protect, insofar

as possible, the interests of small business concerns in order to preserve free competitive enterprise; and to place with small business concerns a fair proportion of the total Government purchases and contracts for property and services. have been strictly observed. In compliance with this policy our Departmental Manual, constituting our rules of procedure for internal management, provides the guides for procurement and contracting officers and personnel, in terms consonant with the aims and purposes of the Small Business Act and the Federal Procurement Regulations.

The Department does not have a small business specialist, as such, but considers that acting pursuant to their instructions and directives the contracting and procurement officers may properly be considered to be expert in the techniques an procedures created to fortify and further small business procurements within the Department's purchases.

Under agreement between the Small Business Administration and the Department, each construction project under $500,000 in amount is automatically set aside for small business. For construction projects involving over $500,000, treatment is accorded on a case-by-case basis in full cooperation with Small Business Administration. In many instances invitations for bids are, when issued, provided the SBA. In addition, planned procurements are given wide publicity by the process of publication in the "Commerce Business Daily" and through use of comprehensive mailing lists and special bulletins containing information on future invitations for construction, equipment, and materials. Such publicity tends to channel the great majority of procurements to small business. Thus the Department's entire system of contracting is designed to permit and encourage maximum participation of small business as prime contractors, whether the particular project is classified as construction, supplies, or services. In the case of many bureaus the lists of possible bidders are composed for the most part of small business concerns.

Procedures to govern exceptions to automatic set-asides and appeals by SBA from decisions of contracting officers appear at 404 DM 6.6 and 7. It may be stated that set-aside is our practice unless in the instant case competition is absent or there is some other factor involving the interests of the Government and suggesting a set-aside not be used. Even in construction contracting the Department in many cases employs a policy of Government-furnished materials, resulting in a breakout of the supply components of construction and a lowering of the amount of investment required to bring the project or award within the reach of small business construction firms. Other criteria affecting small business set-asides are quantities, delivery time, availability of materials, and ability to obtain information from SBA.

The decision as to feasibility of a small business set-aside for a prime contract is determined mainly by the degree of available competition. In many areas and bureaus, local sources of supply are almost always small business. The number of individual procurements in this Department is within a range which permits the contracting officers to consider requisitions as presented and to determine the feasibility of small business participation.

The nature of the articles, materials, and services being procured and the amount of the resulting contract determine in many instances the feasibility of small business subcontracting. Where the prime contractor is small business, subcontracting is quite likely to be to small business. This is particularly true in areas where small business predominates. Also, the Department employs the standard prime contract clauses providing for programs for small business subcontracting. When a procurement is not appropriate for a total small business set-aside, it is our policy to enter into a partial small business set-aside whenever the procurement is severable into two or more economic production runs and one or more small business concerns are expected to have the technical competency and productive capacity to furnish a severable portion of the procurement at a reasonable price.

The availability of small business concerns is determined principally from past procurements and information currently received from the Small Business Administration. It is rare that small business is not invited to bid on all procurements. Also, there are occasions when there are no responses from small business concerns. The only instances when small business would not be invited to bid would be in cases involving sole source procurements from big business or when it is definitely known that there is no small business concern available to provide the supplies or services desired.

Failures to make awards to small business are attributable to (1) heavy construction and maintenance equipment procurements when the SBA representative and the contracting officer agree that small business cannot provide the equip ment; or (2) no small business bidder qualifies as low bidder on the advertised specifications and the invitation does not provide for 100% set-aside; or (3) the small business concern's low bid is not responsive or otherwise not acceptable.

The Department's invitations and specifications are considered to be reasonable and fully adequate to encourage small business bidding. Very few problems have been encountered in this area.

In the case of heavy construction, the Department employs a practice of so contracting for the many component parts of the entire project as to avoid permitting any prime contractor to determine the proportion of the project to go to small susiness. Our procedure is to award separate contracts to available small business firms to the greatest extent possible. This restricts the ability of a large business prime contractor to determine the amount of subcontracting to be awarded small business. To this extent the Department controls its contractors' make-or-buy decisions.

The Committee will be interested to learn of another step taken in the Department in 1965 which will have the effect of advancing the interests of the small businessman. The Secretary directed that in all bids for building construction and alteration contracts of an estimated value in excess of $150,000 the bidder shall identify the subcontractor selected to do any of the principal subcontracting activities and no substitution shall be allowed unless proper cause is shown to the contracting officer.

The procedure is intended to thwart the efforts of certain prime construction contractors to indulge in the practice of "bid shopping." It is expected that enforcement of this new procedure, which is in effect throughout the United States, will be very much in the interests of the small business community in that it will require the successful prime construction bidder to adhere to the subcontractors he has identified and thus their quoted prices will be protected.

As explained above, the Department's procurement personnel follow the procedures set forth in the Federal Procurement Regulations and the Departmental Manual. The techniques and devices presently being employed seem to be adequate for small business purposes and need only to be implemented by continuing instructions to procurement personnel on procedures to be followed to make the program more effective and by providing information needed to accomplish the purpose of the program. When other or different techniques and devices are required to promote the program, they will be developed in the light of the circumstances and needs. Our intent and purpose are to obtain the maximum small business participation consistent with adequate competition to insure fair prices.

We propose to continue the techniques and devices utilized in the past to encourage and promote small business participation in the Department's procurements. The bulk of our procurements is such as stimulate interest by small business concerns. Full cooperation with SBA representatives will continue, as will reporting and posting proposed procurements, extending invitations and proposals to small business concerns, and similar practices.

Sincerely yours,

Assistant Secretary for Administration.

DEPARTMENT OF JUSTICE

(The subcommittee's request for information follows:)

SELECT COMMITTEE ON SMALL BUSINESS,
HOUSE OF REPRESENTATIVES OF THE UNITED STATES,
Washington, D.C., October 9, 1967.

Hon. RAMSEY CLARK,
Attorney General,

Department of Justice, Washington, D.C.

DEAR MR. ATTORNEY GENERAL: The Procurement Subcommittee of the House Select Committee on Small Business is conducting a study of the small business procurement policies, practices and programs of Federal departments and agencies. In connection with this study, it will be appreciated if you would furnish the following:

1. Statistical report showing small business participation by dollars and percent in the department's advertised, negotiated and set-aside procurements over $100 during fiscal years 1964-1967.

2. Description by type of requirements procured and the relative dollar value of each category.

3. Statements of policies applied and methods utilized to develop and encourage small business participation in the department's procurements.

A response and your comments in 12 copies by October 31 will be appreciated. Sincerely yours,

(The response follows:)

Hon. ABRAHAM J. MULTER,

ABRAHAM J. MULTER,

Chairman, Procurement Subcommittee.

U.S. DEPARTMENT OF JUSTICE,
Washington, D.C., October 30, 1967.

Chairman, Procurement Subcommittee, Select Committee on Small Business, House

of Representatives, Washington, D.C.

DEAR MR. MULTER: Your letter of October 9, 1967, addressed to the Attorney General, was referred to this office for reply.

In compliance with your request the following information is submitted:

The Department purchases arms and ammunition; automotive equipment; office equipment and supplies; laboratory equipment; communication equipment; subsistence items; raw materials for fabrication within the Federal prisons; many types of services such as repair, rental; and transportation services such as air lift and bus services for Mexican aliens; printing; publications and law books; and reporting services and many varied maintenance services. We do not, however, maintain records showing the actual dollar values of procurements in each of these categories.

3. DEPARTMENT POLICY ON SMALL BUSINESS PARTICIPATION

In conducting the Department's procurement program it is the established policy to follow the regulations and guidelines as set forth in the Federal Procurement Regulations and Federal Property and Administrative Services Act of 1949, as amended to date. We therefore have adopted the policy of encouraging small business participation in all transactions.

Sincerely,

ERNEST C. FRIESEN, Jr., Assistant Attorney General for Administration.