inception, the first of these being a multicontract multiple access study. Can you tell me what that is?

Mr. MEYER. Yes, sir; multiple access is where more than one ground station can communicate through a satellite.

Mr. ROBISON. Is this work that only, by its nature, could be performed by big business?

Mr. MEYER. Yes, sir; by its nature several corporations who had been doing satellite work, who had flown satellites either for the Government or for themselves, had done certain technical work in the area of multiple access. We in this procurement asked them to extend this work for our specific problems to put commercial traffic through a satellite, and in order to really do any further work on the contract the company would have had to have a lot of laboratory hours, many studies, and we wanted them to extend these studies to come up with a definite answer as to how this problem can be solved in a specified period.

Mr. ROBISON. In view of the nature of your corporation, would there be a pattern of this sort of work that will probably come up again in the future?

Mr. MEYER. I couldn't say definitely. There will be this kind of a pattern because satellites are rather new.

Mr. ROBISON. They are also pretty technical.

Mr. MEYER. They are pretty technical, but there will be associated services for the corporation as a common carrier as well as a satellite development agency, and component parts will be of a different nature than having to

Mr. ROBISON. In those different areas it would be your hope and your aim, as I understand your statement, to see that small business had a proper opportunity to engage therein, is that right?

Mr. MEYER. Yes, sir.

Mr.. ROBISON. Now, skipping down to your second procurement, this involves a contract for computer services.

You do state that, through publication of the opportunity for bid, some 16 firms responded and, of those, 7 were small business firms, but you don't tell us who got the bid. Was it big business or small business in this instance?

Mr. MEYER. Big business got the bid, sir. The procurement was an advertised procument. The bids were publicly opened, and in this case big business was the low bidder and small business was the second low bidder.

In this case, the difference in bids between the winning company and the second low bidder were substantial.

Mr. ROBISON. I see. Thank you, sir.

Mr. BELLER. I addressed this question to the previous witness, which I properly should have asked you. Are you able to make an estimate of the yearly expenditures for the next several years by the Communications Satellite Corp. and the communications common carrier in connection with this program?

Mr. MEYER. At this time we are presently in the process of firming up our programs. There are many derivatives of programs which we may go forward with. By this, I mean the type of satellite which we might select as being the initial system to pass commercial traffic,

followed by an eventual system which would be acceptable to our foreign partners as well as the common carriers of this country.

I would estimate that, again pending certain decisions, we could spend up to $5 million in 1964. It could be more if certain early programs are accepted. It could be less if we don't make certain decisions.

But we will continue to carry on small contracting for specific technical areas of interest until such time as our program is selected.

The program selection will probably be a function naturally of the board of directors elected by the voting stock and this will come some time during 1964.

Mr. BELLER. Has the corporation set a percentage target, tentative or otherwise, of the amount of business it hopes to award to small business?

Mr. MEYER. No. We really wouldn't have that capability at this time. We are proceeding, though, with a completely competitive program on all procurements, and until we specifically know what system we will go on procurement for and what types of equipment we will need in certain places, either in the satellite or wherever they may be, it would be very hard to set aside. We would have no knowledge at this time until the components are identified.

Mr. BELLER. Mr. Meyer, am I correct in assuming that substantial funds will be expended for research and development purposes? Mr. MEYER. That is right.

Mr. BELLER. Has the corporation developed any plans, policies, techniques, or devices to encourage small business to participate in its procurement?

Mr. MEYER. Not formal plans, but I have discussed with the Small Business Administration generally what we would expect to do in this respect, and we feel that it is possible, through the prime contractor or subcontractor to develop set-asides for small business, to issue invitations to bid to small business.

We, at this time, are operating with a very small staff. We have not yet issued our stock. We have not assumed the full corporate status of staffing and capital, and we haven't gotten a complete procurement plan because we don't know what the program is.

Mr. BELLER. Mr. Meyer, we are well aware, of course, that the corporation's program hasn't gotten off the ground yet and that it is in a formative state. It must have occurred to you that this is the best time to discuss the small business program, before the corporation's policies are firm and set in place. I trust you understand this.

Mr. MEYER. That is right.

Mr. BELLER. Very often we find that a lot of the small business. program, techniques, and devices are undercut by the technical personnel. They are not interested in small business and sometimes are even antagonistic.

I wonder whether the corporation contemplates orienting these people in the direction of understanding the small business program and the need to implement it?

Mr. MEYER. I think we can and have established a basic procurement policy which may guard against this situation you describe. We have established, quite apart from the technical office, the maintenance of the bidders' list, the issuing of the invitations, and in our evalua

tion procedures have a technical input only as a technical input and not as a recommendation for source of contracting.

So we think we have guarded against this.

Mr. BELLER. My comment is that frequently the technical input is so restricted that only big business is eligible to bid. We like technical specifications to be sufficiently broad to enable as many firms as possible to come in and bid.

Mr. MEYER. We will try to follow that policy, and I think in the evaluation, the analysis of the technical comments will bring out whether this situation is prevalent.

We have only had one procurement which, as I explained, had to have performance of prior work, so there couldn't be any technical influence.

Mr. BELLER. I believe you indicated that the corporation would employ set-asides to channel a fair and equitable portion of procurement to small business.

Mr. MEYER. I think it would be quite normal for the corporation to do this. We have, as I said, not made any plans because we really don't know what the procurement will be. If it is applicable for a setaside, we certainly would do this.

Mr. BELLER. This is a device that you would employ !
Mr. MEYER. That is right.

Mr. BELLER. If proper?

Mr. MEYER. That is right.

Mr. BELLER. Thank you, Mr. Meyer.

I have no further questions, Mr. Chairman.

Mr. MULTER. Thank you very much, gentlemen.
Mr. MEYER. Thank you, sir.

ATOMIC ENERGY COMMISSION

(The following is the invitation to the Atomic Energy Commission to testify.)

Hon. GLENN T. SEABORG,

SELECT COMMITTEE ON SMALL BUSINESS,
HOUSE OF REPRESENTATIVES OF THE UNITED STATES,
Washington, D.C., October 8, 1963.

Chairman, Atomic Energy Commission,
Washington, D.C.

DEAR MR. CHAIRMAN: In connection with public hearings scheduled by Subcommittee No. 2 on Small Business and Government Procurement of the House Select Committee on Small Business to review small business procurement practices of Federal departments and agencies, your Commission is invited to testify before the subcommittee on November 13, 1963, at a place to be designated, regarding the following subjects:

1. The programs, practices, techniques, and devices your Commission is employing to effectuate small business participation in Government procurement. 2. A statistical report for fiscal years 1961, 1962, and 1963 showing small business participation in prime procurements, by supplies, services, and construction, indicating number of actions, dollar amounts, and percentages of total procurement.

3. A statistical report for the same period showing small business participation in research and development procurement by number of actions, dollar amounts, and percentages of total procurement.

4. A statistical report for the same period showing small business participation in subcontracting procurement by number of actions, dollar amounts, and percentages of total procurement.

5. A statistical report for the same period showing the number of actions, dollar amounts, and percentages of total procurement of—

(a) Joint small business set-asides;

(b) Unilateral small business set-asides.

6. Criteria and guidelines which determine joint and unilateral small business set-asides.

7. The respective roles of the contracting officer, small business specialist, if any, and Small Business Administration representative in small business setaside determinations and prime and subcontract awards.

8. Techniques or procedures by which procurement actions are screened and monitored to determine

(a) Feasibility of small business set-asides;
(b) Feasibility of small business subcontracting;
(c) Availability of small business for bidding;

(d) Decisions not to invite small business to bid;

(e) Causes for failure to award procurements to small business;

(f) Adequacy of specifications to encourage small business bidding.

9. Proposed techniques and devices to generate and encourage small business procurement, including research and development.

10. Techniques and devices to screen and monitor prime contractors' make-orbuy decisions.

11. Manner in which the Commission is coordinating its procurement activities with the Small Business Administration in furtherance of the Government's small business procurement policies, including such activities as set-asides, subcontracting, and make-or-buy decisions.

12. Such comments as the Commission may wish to make relating to the subject matter of the hearings.

It would be appreciated if you would furnish the committee with the name of the witness who is to testify on behalf of your Commission, together with 10 copies of his statement, on or before November 4, 1963.

Sincerely yours,

ABRAHAM J. MULTER, Chairman, Subcommittee No. 2.

Mr. MULTER. We will next hear from the Atomic Energy Commission, Mr. James Scammahorn. Will you come forward, sir, and introduce yourself for the record, and introduce the gentleman accompanying you.

TESTIMONY OF JAMES SCAMMAHORN, ASSISTANT TO THE DIRECTOR, DIVISION OF CONTRACTS, ACCOMPANIED BY JAMES P. MURRAY, JR., ASSISTANT DIRECTOR, DIVISION OF CONTRACTS, U.S. ATOMIC ENERGY COMMISSION

Mr. SCAMMAHORN. I am James Scammahorn, Assistant to the Director, Division of Contracts, the Atomic Energy Commission. I have with me Mr. James P. Murray, Jr., who is Assistant Director, Division of Contracts in the Atomic Energy Commission.

Mr. MULTER. We are very happy to have you with us.

Mr. SCAMMAHORN. Mr. Chairman and members of the subcommittee, we welcome the opportunity to discuss with you the program, policies, and procedures of the Atomic Energy Commission relating to small business.

Before discussing the specific questions raised in Mr. Multer's letter of October 8, 1963, I would like to address a few preliminary remarks to the nature of the AEC's contracting program in general. We feel that an appreciation of the fact that AEC carries out its operational responsibilities in the main through a relatively few very large prime operating contractors is basic from three standpoints:

First, the manpower and other resources required of these operating contractors is far beyond the capability of the normal small busi

ness.

Second, it is necessary in order meaningfully to appraise the facts and figures which we present here today.

Third, it is important to an understanding of our small business activities in their proper context.

In fiscal year 1963, AEC's total contract expenditures of $2.6 billion break down as indicated on exhibit A. From this exhibit it will be seen that approximately $1.5 billion went to our large operating contractors those 50 or so major corporations, universities, and associations of universities which actually run the vast production and research and development complexes wholly owned by the AEC. And it is here that the overwhelming percentage of opportunities for small business participation in AEC's programs emerge. Here is where the vast bulk of AEC's real procurement is done. And here is where the focus of AEC's small business program lies. I don't wish to imply that we do not place corresponding emphasis on small business participation in the few prime contracting areas suitable for performance by small business-we do. The point I make is that, as a practical matter, the opportunities from a dollar standpoint are at the operating contractor procurement level.