DEPARTMENT OF TRANSPORTATION

FEDERAL AVIATION ADMINISTRATION

(The subcommittee's request for information follows:)

SELECT COMMITTEE ON SMALL BUSINESS,
HOUSE OF REPRESENTATIVES OF THE UNITED STATES,
Washington, D.C., October 10, 1967.

Gen. WILLIAM E. MCKEE,

Administrator, Federal Aviation Administration,
Department of Transportation, Washington, D.C.

DEAR GENERAL MCKEE: 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 administration'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 administration'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.

DEPARTMENT OF TRANSPORTATION,
FEDERAL AVIATION ADMINISTRATION,
Washington, D.C., November 1, 1967.

Chairman, Procurement Subcommittee, Select Committee on Small Business, House of Representatives, Washington, D.C.

DEAR MR. CHAIRMAN: Pursuant to the request in your letter of October 10, 1967, we are enclosing a report on procurement activity of the Federal Aviation Administration during fiscal years 1964-67. The enclosures follow the same order of precedence as the information requested in your letter.

Sincerely,

(511)

WILLIAM F. MCKEE, Administrator.

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ATTACHMENT No. 2

FEDERAL AVIATION ADMINISTRATION'S PROCUREMENTS FOR FISCAL YEAR 1964 THROUGH FISCAL YEAR 1967, BY TYPE OF REQUIREMENTS

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 Administration's procurements.

The Federal Aviation Administration has accelerated its small business program both in its internal management and in a program of counseling. In the public service area, the FAA small business assistance officer counsels representatives from small business firms regarding the processes involved in selling to the Administration. This counseling is performed at various locales, including business opportunity/federal procurement conferences, such as the ones held in Fiscal Year 1967 at Miami, Florida and at New Orleans, Louisiana.

In a recently published Federal Aviation Procurement Manual the policies and procedures fully define the responsibilities of designated small business specialists and the role they play in the Administration's small business program. The FAA is in the process of developing a more extensive program which, it is hoped, will stimulate major prime contractors to establish and maintain small business subcontracting programs.

DEPARTMENT OF TRANSPORTATION

FEDERAL HIGHWAY ADMINISTRATION

(The subcommittee's request for information follows:)
SELECT COMMITTEE ON SMALL BUSINESS,
HOUSE OF REPRESENTATIVES OF THE UNITED STATES,
Washington, D.C., October 10, 1967.

Hon. LOWELL K. BRIDWELL,
Administrator, Federal Highway Administration,
Department of Transportation, Washington, D.C.

DEAR MR. BRIDWELL: 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 advertised, negotiated and set-aside procurements by Bureau of Public Roads and its successor during fiscal years 1964-1967.

2. Statistical report for the same period showing small business participation in the Federal-aid highway construction programs.

3. Statements of policies applied and methods utilized to develop and encourage small business participation in the highway programs at prime and subcontract levels.

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

(The response follows:)

ABRAHAM J. MULTER, Chairman, Procurement Subcommittee.

U.S. DEPARTMENT OF TRANSPORTATION,
FEDERAL HIGHWAY ADMINISTRATION,
Washington, D.C., November 3, 1967.

Hon. ABRAHAM J. MULTER,
Select Committee on Small Business,

House of Representatives of the United States, Washington, D.C.

DEAR MR. MULTER: In reply to your letter dated October 10, 1967, the following information is furnished. The number of our paragraphs reply to the same numbered paragraphs in your letter. The following tabulation does not list information regarding the first half of fiscal year 1964 as these records were sent to our records holding area and were subsequently destroyed. Also, as reported in previous correspondence, we do not have a small business set-aside program.

2. We are unable to provide a statistical report for fiscal year 1964-67 showing small business participation in the Federal-aid Highway construction program because we do not have information that would permit identification of the contractors involved by volume of business. However, in 1961-62 we made a survey to determine what proportion of the Federal-aid highway construction program was being performed by small business contractors. The survey indicated that in fiscal year 1961 small business contractors received 82 percent of the number of contracts and 54 percent of the dollar value of the contracts awarded by the various State highway departments under the Federal-aid highway program. Currently a concern is considered small if its average annual receipts do not exceed $9,500,000 ($9,375,000 in Alaska), whereas at the time of our survey these figures were $5,000,000 ($6,150,000 in Alaska). Bid prices in highway contracts have only increased about 29 percent since 1961. This being the case, and since the distribution of Federal-aid contracts by dollar value has remained relatively constant, it is probable that small business, as currently defined, is now performing an even higher proportion of the Federal-aid highway construction program.

3. Our policy for developing and encouraging small business participation in the highway programs at the prime contract level is stated in paragraph 5 of our Policy and Procedure Manual 21-6-3 which reads as follows:

"Contract awards should be scheduled in a balanced program providing contracts of such size and character as to assure an opportunity for all sizes of contracting organizations to compete. In this regard, Section 304 of Title 23 reads as follows:

It is declared to be in the national interest to encourage and develop the actual and potential capacity of small business and to utilize this important segment of our economy to the fullest practicable extent in construction of Federal-aid highway systems, including the Interstate System. In order to carry out that intent and encourage full and free competition, the Secretary should assist, insofar as feasible, small business enterprises in obtaining contracts in connection with the prosecution of the highway program."

Our above policy is in accordance with the Federal-aid Highway Act of 1956, Section 116(d) and Title 23, United States Code, Section 304.

We have no similar policy statement which applies to subcontractors. However, Federal-aid highway contractors are permitted to subcontract up to 50 percent of their contract work. The nature and value of the work normally subcontracted would seem to be even more susceptible to performance by small business than would the overall contract.

We are enclosing a copy of our recent report on small business which may be of interest.

Sincerely,

LAWRENCE S. CASAZZA, (For Lowell K. Bridwell, Federal Highway Administrator).

(The report referred to follows:)

SMALL BUSINESS-CONTRACTOR SURVEY

The Federal Aid Highway Act of 1956, Section 116(d) and Title 23, United States Code, Section 304, states,

"It is declared to be in the national interest to encourage and develop the actual and potential capacity of small business and to utilize this important segment of our economy to the fullest practicable extent in construction of the Federal-aid highway systems, including the Interstate System. In order to carry out that intent and encourage full and free competition, the Secretary should assist, insofar as feasible, small business enterprises in obtaining contracts in connection with the prosecution of the highway program."

In order to provide assurance that the objective of this legislation is being achieved, a survey of the highway construction industry was undertaken in 1961 to confirm that contractors bidding upon and being awarded Federal-aid highway construction contracts are preponderantly in the small business classification. This survey was accomplished through the medium of a double perforated post card, one-half of which bore the address of the contractor on one side and the Small Business Administration's definition of a small business on the other side. The other half, which was to be torn off and returned, bore the return address of the Bureau of Public Roads on one side and spaces on the other side for the contractor to appropriately mark his classification.