If you will look at this chart 1, you will see that these dotted lines all run to the small business administrator or the small business representative in our various plants, and in all but one or two isolated cases, these fellows work full time on the small business job.

In some of the real small divisions such as at West Virginia where we only have 12 people in purchasing, that function is taken care of by the material director.

(4) In developing potential bid lists we use our own supplier source library, address books, material records, purchasing files, and other available records as well as soliciting information from the SBA. We make available specifications, drawings, and other pertinent data, so that qualified concerns can prepare their bids intelligently.

They

On orders where no known small business source exists, these are referred to the SBA for assistance in locating suitable sources. have helped us locate many good sources, and we appreciate their help and counsel.

If no small business concern is to be solicited on a proposed purchase order requiring contractor officer approval and exceeding $10,000, the contracting officer is notified of the reasons. A copy of our order is sent directly to the local SBA, to give it an opportunity to suggest potentially qualified small business concerns. This is a mandatory procedure for obtaining additional small business sources.

However, the SBA is not notified in cases of emergency, nonrepetitive procurements when there is little likelihood of further requirements for the item. If future requirements do seem likely, the SBA is notified in the interest of locating prospective future sources rather than to meet the immediate requirement.

Similarly, there is no referral to the SBA if the customer has directed us to use a selected source, or if competitive analysis of potentially qualified products shows that only one is feasible.

In any case, we go through these procedures early enough in the procurement cycle to allow any potential bidder sufficient time for submission of bids.

(5) We established a new control system that automatically includes thorough consideration of small business in all direct procurement by North American. Every North American buyer fills out a unique checklist on each transaction, showing

(a) Whether the award went to small or large business;
(b) How many small business firms were solicited;

(c) If the award went to large business, what the reason was. We worked out this checklist in collaboration with Ken Weddell, the Air Force small business specialist. It was the first of its kind to be used by a defense contractor.

(6) All North American purchase orders contain a "Utilization of Small Business" clause, under which our suppliers agree to place with small business concerns the maximum amount of business that is consistent with efficient performance and proper cost.

All our purchase orders and subcontracts of $500,000 or more now require the supplier to establish a small business subcontracting program as described in appropriate Government regulations. Moreover, we urge each subcontractor down to the $100,000 level to establish a small business subcontracting program.

(7) We make systematic efforts to alert small business to potential contracting opportunities. Whenever we make a purchase of $100,

000 or more that seems to offer lower tier subcontracting opportunities, we immediately notify the regional office of the SBA and the small business specialist of the appropriate Government agency, so that they can publish and circulate the information to potential suppliers.

(8) We make a fairly searching inquiry into the question of whether a supplier is or is not a small business. Following the definitions established by the Small Business Administration, we classify a business concern as "small" if it is individually owned and operated; if it does not exceed the limitations set forth for its categories of work as stipulated by ASPR 1-701.1 and by Federal Register title 13, chapter 1, part 121; and if (with any affiliates) it does not dominate the field in which it is bidding.

By "dominate" we mean exercise a controlling or major influence in an area of business activity. And we consider business concerns to be affiliated when either directly or indirectly one has the power to control the other, or when a third party has the power to control both.

In order to classify a supplier correctly, we ask him to complete this survey form. It is the questionnaire we send to the small business firms when we ask them whether they are large or small.

This is shown on chart No. 2, and is a survey form that is sent out to each new supplier and it is a questionnaire type of thing. He mails it back to us, and this questionnaire when completed and folded becomes a return envelope to be forwarded to North American. (The chart referred to follows.)

D. How many people do you employ? (Include all affiliates such as subsidiaries, parent
organization, etc.)

E. If your company is a division, subsidiary or other affiliate of a parent company, what
is the name and location of the parent company?

NOTE

IF YOU ARE A MANUFACTURER, PLEASE complete SECTION II BELOW. IF YOUR FIRM IS
ENGAGED IN BUSINESS OTHER THAN MANUFACTURING, PLEASE COMPLETE ONLY
SECTION III, BELOW. DON'T FORGET TO SIGN IN SPACE PROVIDED BELOW.
SECTION II – MANUFACTURERS

B. If the answer to question I-D above is 500 or less (SMALL BUSINESS) or 1000 or more (LARGE
BUSINESS), the balance of this questionnaire can be ignored.

C. If the answer to question I-D above is between 501 and 1000, list the code number(s) from
Form 67-Y-5, attached, that appropriately describe the product(s) you manufacture.

*This block should only be marked when two or more code numbers are listed and only then if one
(or more) of the codes indicate small business status and the other code(s) reflect large business

status.

SECTION III FIRMS ENGAGED IN BUSINESS OTHER THAN MANUFACTURING
Form 67-Y-5 sets forth the criteria, by type of product or service, for determining a firm's business
size for purposes of the government's small business subcontracting program. Based upon this criteria,
please indicate your company's status by placing a checkmark in the appropriate block and enter the
applicable code from Form 67-Y-S. A Small Business Code ——— .8 Large Business Code.

When we receive it we post the information in appropriate division records and file it as a permanent record.

On occasion, we send a crew into the field to visit the premises of a potential new supplier, as may be dictated by aspects of a requirement. This crew examines the supplier's machines, estimates the floor space, interviews the management and supervisory personnel in order to classify and evaluate the company. This helps us plan how we can best work with the supplier and make maximum use of his potentialities for our mutual benefit. At the same time it verifies our classification of him as a small or large business enterprise.

Since the business status of a supplier may change, we make periodic surveys to update our information on each company. We do this at least once a year, and sometimes as often as semiannually.

This expanded small business program has been repeatedly commended by Government procurement officials during the past 8 years. We are proud of it, because it is one of the key factors that has helped North American maintain its record as one of the lowest cost producers in Government contracting.

As evidence of the continuing effectiveness of our small business program, here are some charts covering our last 3 fiscal years, and this refers to chart No. 3.

Chart No. 3 shows the purchase orders issued-the total orders. For instance, in 1963, out of a total of 663,000 orders, 492,000 were from small business.

This chart shows a remarkable steadiness in the percentage of our total purchase orders that go to small business. In the past 3 years, out of every 100,000 orders we managed to place between 79,000 and 74,000 with small businesses. How many small businesses are involved? The next chart shows this; that is chart No. 4.

(The chart referred to follows.)

The total number of firms involved in 1963 is 15,480 firms, of which 13,110 were small business, almost 85 percent.

This chart shows not only the scope and magnitude of our procurement operations-we dealt with more than 15,000 different suppliers last year but also, once more, the steadiness of our relations with small companies. There is very little fluctuation from one year to the next, although North American's own needs are very diverse and are changing constantly.

The next chart shows the total amounts of North American's disbursements of all kinds, including payrolls. (The chart referred to follows.)

The light upper part of each bar indicates the amount that went to payroll and thus could not be considered available for purchase of materials, supplies, or services from anyone outside the company.

In the disbursement area, in 1963, you will see that our total disbursements were $1,791 million, and our material disbursements were $954 million, so 53 cents out of every dollar that we spent last year went for material disbursements.

Most of the rest of it is for labor.