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Mr. ROBINSON. Is there brand name produce? It was called to our attention that Chiquita Banana brand was

General LEE. For commissary resale, yes, sir, it could be for commissary resale.

Mr. ROBINSON. Is there any reason why the family of a GI should pay more for a banana?

General LEE. This was established so that a person buying in a commissary can have some choice if they want it.

Mr. ROBINSON. I asked the question since obviously the small business grower does not grow Chiquita bananas.

General LEE. I see.

Mr. ROBINSON. How about apples, for example, are there any special brand name apples that are purchased?

General LEE. I think apples are purchased by nomenclature; that is, winesap and delicious.

Colonel BALDWIN. To the extent, I think to answer you honestly, to be talking, let us take apples, I am not real sure what would constitute a brand name for an apple and what is a regional name. But I know that in buying for resale for overseas occasionally we are asked to buy specific type of apples, which we do. Whether or not that could be a Washington State Winesap or something, I do not know whether it is a brand name or not. But sometimes they do use some additional adjectives to spell out the particular type they want. Mr. ROBINSON. One of the other revisions I noticed that followed our subcommittee's interest in DSA's practices in this area was a set-aside. Are you now setting aside procurements in produce?

Mr. Ross. As I indicated to you, Mr. Robinson, at another time, you happened to see the notice to the trade dated 27th or 29th of October and that had a set-aside on it, but we have been setting aside. fresh fruits and vegetables for years. That was just the one you happened to see there. We have been setting aside all but citrus, avocados, and bananas. Ninety percent goes to small business, a half of which goes by set-aside, and has been going this way for a long time.

Mr. ROBINSON. What firms were excluded from this set-aside? Are there any large firms that are excluded from bidding in this set-aside! Mr. Ross. Any large firms? Certainly there are large firms excluded. Mr. ROBINSON. What is the definition for small and large in this industry?

Mr. Ross. Five hundred.

Mr. ROBINSON. Five hundred employees?

Mr. Ross. Yes, sir.

Mr. ROBINSON. Do you know of any wholesale terminal market firms that have more than 500 employees?

Mr. Ross. I am not that well acquainted with the wholesale terminal market individual companies.

Mr. ROBINSON. Do you know of any shippers or growers who have more than 500 employees?

Mr. Ross. I could not answer that.

Mr. ROBINSON. I suggest that this is an area which requires further study. Have you made any request of the Small Business Administration for a definition in this industry before you went on the market for set-asides?

Mr. Ross. It is included

Mr. ROBINSON. Have you gone to the SBA for a ruling or determination on this question?

(Additional information follows:)

The general size standard for small business in the produce area is 500 employees. This question has been discussed with SBA. That Agency advised that action has been initiated to consider possible changes in these size standards, and that comments have been requested from the various Agencies.

Mr. Ross. They have already issued the size standard for small business on this. It is in the ASPR, if I understand you correctly.

Mr. CORMAN. Is there a dollar volume test too or is it just the 500 employees test?

Mr. Ross. Well, now there is-on wholesalers there is no dollar volume in this area standard. The standard is set forth in that notice to the trade that you have there.

Mr. ROBINSON. That is your agency's determination.

Mr. Ross. Yes.

Mr. ROBINSON. Those who are eligible are firms that have less than 500 employees. In a set-aside the bidding is restricted to small firms and large firms are excluded, but I would like to know which firms in this industry are excluded.

Mr. Ross. It will exclude large firms. There are large firms in the produce business.

Mr. ROBINSON. That is what I am trying to determine.

Mr. Ross. Yes, there are some, some listed on the New York Stock Exchange; for example, United Fruit.

Mr. ROBINSON. That is one I have. How many others are there? Mr. Ross. I do not know. I just happened to think of that one. Mr. ROBINSON. Well, I can find only three. Calpac

Mr. Ross. Calpac.

Mr. ROBINSON. Do you not feel, Mr. Ross, this is an area that requires further study before just going out on the market with a small business set-aside which might be meaningless?

Mr. Ross. Mr. Robinson, any suggestion you make for improving the small business program I consider an area for further study. [Laughter.]

Mr. CORMAN. Do you want that italicized or in caps?

Mr. ROBINSON. I have no further questions. [Laughter.]

Mr. CORMAN. Mr. Burton, do you have any questions? Mr. Williams? Do you have any other questions?

Mr. ROBINSON. No, sir.

Mr. CORMAN. I take it what you want me to say is that this hearing stands adjourned. [Laughter.]

Mr. CORMAN. Well, General Lee, and the other witnesses, we sincerely thank you for appearing before us. Your testimony has been comprehensive and lucid, and we appreciate your coming back to spend the afternoon with us.

General LEE. Thank you, sir.

Mr. CORMAN. The hearing stands adjourned, subject to the call of the Chair.

(Whereupon, at 3:10 p.m., December 5, 1967, the subcommittee adjourned, subject to the call of the Chair.)

THE POSITION OF SMALL BUSINESS

IN GOVERNMENT PROCUREMENT

Part II.-GOVERNMENT AGENCIES REPORTING
AGENCY FOR INTERNATIONAL DEVELOPMENT

(The subcommittee's request for information follows:)

SELECT COMMITTEE ON SMALL BUSINESS, HOUSE OF REPRESENTATIVES OF THE UNITED STATES, Washington, D.C., October 16, 1967.

Hon. WILLIAM S. GAUD,

Administrator, Agency for International Development,
Department of State, Washington, D.C.

DEAR MR. GAUD: 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 information.

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

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

3. Policies applied and methods utilized to develop and encourage small business participation in the agency's own procurements.

4. Statistical reports showing small business participation by dollars or equivalent value and percent, and U.S. small business firms and countries involved in the agency's loan, investment survey, and investment guarantee programs.

5. Policies applied and methods utilized to develop opportunities and increase small business participation in the furnishing of goods and services financed with AID funds.

A response and your comments in twelve copies by November 3, 1967 will be appreciated.

Sincerely yours,

ABRAHAM J. MULTER, Chairman, Procurement Subcommittee.

(The agency's response follows:)

DEPARTMENT OF STATE,

AGENCY FOR INTERNATIONAL DEVELOPMENT,

Washington, D.C., November 17, 1967.

Hon. ABRAHAM J. MULTER,

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

House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: Thank you for your letter of October 16 concerning the study of small business procurement policies, practices and programs of Federal departments and agencies which your Procurement Subcommittee is conducting.

The Agency for International Development is not a procurement agency in the sense that the Department of Defense and the General Services Administration are. The role of A.I.D. is essentially that of a financing institution, similar to that of the World Bank. Most A.I.D. financed procurement is made by foreign governments or private importers. Some is handled by the General Services Administration which applies its regular rules on small business. Our A.I.D. Missions overseas do only a small amount of direct buying.

A.I.D. and its predecessor agencies have a long history of service to American small business, going back to the time of the Marshall Plan. Through the serv

ices we provide, many small business firms have been able to participate in furnishing the goods and services financed by A.I.D. to meet overseas needs. In our role of financing, rather than procuring, these commodities, we do not have all information available in the statistical form requested. Nevertheless, I hope the attachment will meet your needs.

If I can provide you with further information, please let me know.

Sincerely yours,

(Attachment 1 follows:)

ATTACHMENT 1

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INFORMATION ON A.I.D. SMALL BUSINESS POLICIES, PRACTICES AND PROGRAMS

1. Statistical report showing small business participation by dollars and percent in the agency's advertised, negotiated and set-aside procurements over $100 during fiscal years 1964-1967.1

The following data reflect information on the limited procurements which were made by A.I.D. directly during the requested periods.

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1 Figures reported to GSA on standard form 37 indicating AID purchases of supplies and equipment for administrative purposes only.

2 Estimate based on figures reported to GSA on standard form 37 indicating both AID purchases of supplies and equipment for administrative purposes and AID contracts for equipment and project services in cases where the foreign government lacked the necessary procurement expertise or where special circumstances existed.

Estimate represents the figures reported for the 6-month period from Jan. 1-June 30, 1966, and estimated identical amounts for the preceding 6 months.

Figures reported to GSA on standard form 37 indicating AID procurement of both supplies and equipment for administrative purposes and contracts for equipment and project services in cases where the foreign government lacked the necessary procurement expertise or where special circumstances existed.

The bulk of A.I.D.-financed procurement was by private foreign importers and foreign government agencies dealing directly with U.S. exporters which is not reflected in the foregoing figures because statistical data on purchases from small businesses are not available. Based on a previous review of invoices, it is our judgment that here, too, participation by small business firms has been favorable. The increasing volume of A.I.D.-financed procurement which has been confined to U.S. sources may be of interest to the Subcommittee, as representing an increasingly larger share available for participation by small business. These figures

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Note: Extracted from the Agency for International Development, fiscal year 1967 operations report data as of June 30, 1964, 1965, 1966, and 1967.

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

The purchases which A.I.D. itself made generally were confined to supplies and equipment required for its own administrative purposes and for use in supervision of projects.

1 Corresponding to item 1 of the subcommittee's request for information, p. 450.

The purchases made by foreign government purchasing agencies and private importers in various commodity categories are reported in table headed "A.I.D.financed Commodity Expenditures" enclosed as Attachment 2 to this letter.

3. Policies applied and methods utilized to develop and encourage small business participation in the agency's own procurements.

A.I.D. direct procurement is conducted in full compliance with the small business provisions of Federal Procurement Regulations, as stipulated in Subpart 1-1.7, and such procurement generally is for commodities which lend themselves particularly to small business participation.

In addition, the same services which The A.I.D. Office of Small Business performs in connection with A.I.D.-financed transactions between foreign importers and U.S. suppliers are extended when A.I.D. buys directly. These services are explained in response to enumerated paragraph 5.

4. Statistical reports showing small business participation by dollars or equivalent value and percent, and U.S. small business firms and countries involved in the agency's loan, investment survey, and investment guarantee programs.

A.I.D. administers a wide range of programs specifically designed to encourage direct investment by U.S. businesses in less-developed countries. While these programs are available to U.S. firms regardless of size, and while no records are kept on the basis of firms' size, the programs are by their very nature particularly suited to the needs of small and medium-sized businesses.

Information on investment opportunities and conditions in developing countries, for example, is available in over 1300 reports in AID's Catalog of Investment Information and Opportunities. The Index to the Catalog is available free of charge. The full studies, as well as abstracts, can be purchased at nominal cost. Complete sets of abstract cards are maintained in each Department of Commerce Field Office.

The Inter-American Investment Development Center, which AID is helping to finance, is a private, non-profit corporation designed to act as a clearinghouse to help investment development consultants link a selected investment opportunity in Latin America with a receptive investor, through face-to-face meetings with U.S. firms. As described in the enclosed article, (Attachment 3) it is felt that this service will be particularly helpful to the U.S. firms which do not have the resources to handle their own investment activities from beginning to end.

Through its investment survey program, A.I.D. can share the cost of a firms' pre-investment survey. If no investment results from this survey, A.I.D. reimburses 50 percent of the costs incurred in making the study. The study in that event becomes A.I.D. property, and can be made available to other interested investors. If an investment is made as a result of the survey, the U.S. firm bears the full cost and retains full rights to all information developed in the course of the survey.

When a U.S. firm decides to invest in a developing country, A.I.D. can insure that investment against the risks of inconvertibility, expropriation, and war, revolution or insurrection. Under its extended risk guaranty program A.I.D. can also insure up to 75 percent of the investment against all risks except fraud or misconduct. A list of the countries where these guarantees are offered is inclosed as Attachment 4 of this letter. Dollar and local currency loans may also be available for private projects in less developed countries.

As stated earlier, we do not maintain records by size of firm, but it is evident that smaller and medium size firms are using our assistance programs. For example, only 21 percent of U.S. firms using the protection of our specifie- or political-risk insurance programs appear in "Fortune" magazine's annual list of the 500 largest corporations in the United States. Of significance, too, is the fact that 75 percent of the applications are for projects of less than $1 million.

To the extent that the smaller firms can be interested in considering investment in productive enterprises in the friendly, less-developed countries, the full range of A.I.D.'s investment incentive programs are available to assist them. These services are made known to the business community through trade journals and other publications, through meetings and conferences, and through contacts with organized business groups, including the National Association of Small Business.

5. Policies applied and methods utilized to develop opportunities and increase small business participation in the furnishing of goods and services financed with A.I.D. funds.

In recognition of the fact that A.I.D. does not routinely participate in, and therefore has no direct control over, individual procurement transactions, A.I.D.

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