GOVERNMENT SMALL BUSINESS PROCUREMENT PRACTICES AND PROGRAMS PART I U.S. GOVERNMENT AGENCIES TUESDAY, NOVEMBER 12, 1963 HOUSE OF REPRESENTATIVES, INVESTIGATIONS OF THE PROBLEMS OF SMALL BUSINESS, Washington, D.C. The subcommittee met, pursuant to notice, at 10 a.m., in room 1302, Longworth House Office Building, Hon. Abraham J. Multer (chairman of the subcommittee) presiding. Present: Representatives Multer, Smith of California, and Robison. Also present: Representative Harvey of the full committee; Charles S. Beller, subcommittee counsel; Myrtle Ruth Foutch, clerk; and John J. Williams, minority counsel. Mr. MULTER. Good morning, gentlemen. Today, Subcommittee No. 2, the Government Procurement Subcommittee of the House Small Business Committee, opens its hearings to review small business practices and programs of Federal departments and agencies. Hearings have been scheduled in Washington for November 12, 13, and 14, at which the military departments and major Government civilian procurement agencies have been asked to testify. At the subcommittee's request, these departments and agencies have furnished reports of their small business activities and programs for the years 1960-63. (The subcommittee's request of September 16, 1963, was ordered to be inserted in the record at this point.) SEPTEMBER 16, 1963. DEAR SIR: In connection with a study of small business procurement policies, programs, procedures, and practices of Federal departments and agencies being conducted by this committee, kindly furnish the following: 1. Total procurement actions by number and dollars for fiscal years 1960, 1961, 1962, and for 1963, if available; if not, for the latest period of time available. 2. Total procurement actions by number, dollars, and percentage awarded to small business for fiscal years 1960-63. 3. Total procurement actions by number, dollars, and percentage for fiscal years 1960-63 which small business: (a) was not invited to bid, and the reasons for such exclusion; (b) was invited to bid, but did not bid. 1 4. Total procurement invitations by number, dollars, and percentage for years 1960-63 set aside: (a) totally, (b) partially, for small business. 5. The criteria and guidelines which determine a small business set-aside curement, including: (a) personnel contributing to and responsible for such determination (b) feasibility of component breakout for this purpose. 6. The technique or procedures by which the agency screens and monito procurement actions to determine: (a) feasibility of small business set-asides; (b) availability of small business for bidding; (c) validity of the failure to invite small business to bid; (d) validity of the failure to award procurement to small business; (e) timeliness and effectiveness of invitations to bid; (f) reasonableness of specifications. 7. The techniques and devices to generate and encourage small bus procurement. 8. The techniques, devices, policies, and procedures to encourage small ness subcontracting by prime contractors and to screen and monitor program. Your prompt compliance with this request is appreciated. Sincerely yours, ABRAHAM J. MULTER, Chairman, Subcommittee No (The above request was mailed to each of the departments and a cies listed below.) Hon. Cyrus Roberts Vance, Secretary of the Army, Washington, D.C. Hon. Eugene Martin Zuckert, Secretary of the Air Force, Washington, Hon. Bernard L. Boutin, Administrator, General Services Administration, W ington, D.C. Hon. David E. Bell, Administrator, Agency for International Develop Hon. Luther H. Hodges, Secretary of Commerce, Washington, D.C. Hon. Najeeb E. Halaby, Administrator, Federal Aviation Agency, Washin Hon. Anthony J. Celebreeze, Secretary of Health, Education, and Wel Washington, D.C. Hon. Sidney W. Bishop, Acting Postmaster General, Washington, D.C. Hon. Douglas Dillon, Secretary of the Treasury, Washington, D.C. Mr. MULTER. The reports furnished in response to the Septembe request will be included in the record as background material in nection with the testimony of these departments and agencies. Small business legislation has been on our books for many ye A broad review of its effectiveness and the manner of its impleme tion would seem to be in order. Is the small business program doing the job for which it is intend Does it effectively channel a fair and equitable share of procurem dollars to small business? Are the instruments which have been veloped to further this program most effective to do the job? T and other similar questions suggest themselves for our inquiry. To obtain answers to these questions, the subcommittee is conducting a review of Government agencies' small business programs and practices. The three military departments, the Defense Supply Agency, and the major civilian procurement agencies have been invited to testify. It is hoped that our review will reveal the significance, or lack of significance, if that is the case, of our small business program. Through the years our subcommittee has received complaints from industry and Congressmen about small business programs and procurement practices. All complaints have been investigated: some were found to be without merit; others were remedied by administrative action. In view of the great stake which the business community has in this program, the subcommittee has invited business firms and their associations to document their procurement difficulties for the committee's consideration and to testify at its hearing. Please note this invitation includes large as well as small firms. We are interested in viewing this program in the light of its effect on our total economy and each of the segments thereof. We have received requests from many firms and trade associations to testify at our hearings. These are being evaluated to determine whether they are properly within the scope and purpose of these hearings. Sessions will be scheduled at a later date at which industry and its associations will be heard. In all instances in which industry objects to an agency's procurement program or practices as detrimental to its welfare, the agency involved will be invited to attend and comment. Obviously, those business firms and industries subject to small business programs and most directly affected are best able to report the effect of these programs on their business lives. The committee believes that such reports offer a good insight into these programs. In those instances where industry's objections are valid, remedial action should be taken; in those instances where the objections are without merit, industry should be informed of that fact. Since the Small Business Administration is charged by law to "aid, counsel, assist, and protect" the interests of small business, the committee intends to invite this agency to testify at the close of the hearings. The agency will be asked to evaluate the results of these hearings and to offer suggestions as to ways and means of furthering the congressional policy "to insure that a fair proportion of the total purchases and contracts or subcontracts for property and services for the Government" be placed with small business firms. Parenthetically, I might add that this should include subcontracting because that is an important part of procurement, and while the prime contract may be let directly to a big business firm, we are interested in knowing to what extent the big business firm is subcontracting, thus bringing the small business firms into this procurement effort. We hope these hearings will benefit all interested parties. Our Government is the largest purchaser of goods and services in the American market, and the manner in which it exercises this function profoundly affects our economy and people. It must, therefore, exercise this function with wisdom and foresight to the end that it will not capsize our free enterprise system. There is no profit in gaining the world and losing our democratic soul. It is a major responsibility of Government to secure our people against invasion and destruction, and for this purpose it must obtain the best tools of war with which to do the job. But it must also manage its procurement functions in a manner which will continue our democratic institutions virile and effective. Our Nation has become great and powerful through our free enterprise economic system and democratic political system. It is important that these systems remain free, enterprising, and democratic. Our economic system can only remain free and enterprising and our political system, democratic, as long as the channels of opportunity are open to our people. We hope to keep it that way. small business program has been integrated into our procurement effort to insure that our tax dollars are distributed widely among the members of our business community in order to keep our economic system free and enterprising and our political system democratic. The We have listed as witnesses for today's hearings the representatives of the Department of the Army, Department of the Navy, Department of the Air Force, and the Defense Supply Agency. For Wednesday, we have listed the Federal Communications Commission, the Communications Satellite Corporation, Atomic Energy Commission, and the National Aeronautics and Space Administration. For Thursday, we have listed the General Services Administration, the Agency for International Development; Bureau of Public Roads, Department of Commerce; and the Department of the Interior. We hope that we will be able to keep to this schedule and hear these witnesses as scheduled on the mornings as indicated. We will try to sit for some part of each afternoon, if that should become necessary. That always becomes difficult because we are usually interrupted by quorum calls, and the Members spend more time chasing to and from the floor and the committee room than we do listening to testimony. We will try to wind up by noontime on each day. For the convenience of witnesses so that they don't have to rearrange their programs, we will try to hear some of them in the early afternoon each of these days, if necessary. Let the record show the October 7, 1963, letter of invitation to the three military departments, specifying the subjects to be covered by their testimony. (The subcommittee's letter of invitation was addressed to each of the following: Hon. Cyrus Roberts Vance, Secretary of the Army; Hon. Fred Korth, Secretary of the Navy; and Hon. Eugene Martin Zuckert, Secretary of the Air Force; and was ordered to be inserted in the record at this point.) OCTOBER 7, 1963. DEAR MR. SECRETARY: 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 Department is invited to testify before the subcommittee on November 12, 1963, at a place to be designated, regarding the following subjects: 1. The programs, practices, techniques, and devices your Department 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. Multiyear procurement policy, indicating total number of multiyear procurement contracts in force, number with small business firms, and the nature and type of services or supplies thus procured. 7. Weighted guidelines policy, indicating the extent to which it is being implemented and its effect, known or anticipated, on the small business subcontracting program. 8. Criteria and guidelines which determine joint and unilateral small business set-asides. 9. 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. 10. 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. 11. Proposed techniques and devices to generate and encourage small business procurement, including research and development. 12. Techniques and devices to screen and monitor prime contractors' make-orbuy decisions. 13. Manner in which the Department 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. 14. Such comments as you 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 Department, together with 10 copies of his statement, on or before November 4, 1963. Sincerely yours, ABRAHAM J. MULTER, Chairman, Subcommittee No. 2. |