time. He has been helpful in furnishing to the chairman and many other Congressmen, much of the information that we have sought from time to time. I thought I should express my gratitude to him for that cooperation.

Mr. ZUCK. Thank you.

Mr. HAWKINS. Thank you, Mr. Oles.

Mr. OLES. Thank you.

[Panel was excused.]

Mr. HAWKINS. The next panel will consist of a panel of officials, Defense Contract Administration Services Region-Los Angeles, General Michael E. DeArmond, Director, Frederick A. Schrieber, Chief Officer of Contract Compliance, and David Lee, Chief of Civilian Personnel.

General DeArmond, we wish to welcome you as a witness to the committee, and certainly look forward to your testimony. I have a copy of the statement which you have prepared for submission to the committee. It will be entered into the record in its entirety at this point, and I assume that you may care to summarize from it, or to deal with it as you so desire. We would like, obviously, to have the highlights; however, we are not confining you to that.

You may proceed.

STATEMENT OF GEN. MICHAEL E. DeARMOND, DEFENSE CONTRACT SERVICES REGION, LOS ANGELES, ACCOMPANIED BY FREDERICK A. SCHREIBER, CHIEF OFFICER OF CONTRACT COMPLIANCE, AND DAVID LEE, CHIEF OF CIVILIAN PERSONNEL

General DEARMOND. Chairman Hawkins, ladies and gentlemen, I am happy to appear before your subcommittee to discuss the efforts of the Defense Contract Administration Services Region. Los Angeles, generally known as DCASR, Los Angeles, to implement Executive Orders 11246 and 11375, prohibiting employment discrimination by Federal contractors. In my prepared statements, which would have been approximately 25 minutes in length, I would have discussed the mission of DCASR, Los Angeles, the functions and the responsibilities of our Contract Compliance Office, equal opportunity employment within our region and, in response to conversations with your committee staff, specific cases involving Data Design Corp. in Cucamonga and Rockwell International in Downey. I was then going to summarize my presentation and respond to any questions that your committee might have.

Following your request, I will just briefly cover my introduction in summary, and in a very broadbrush manner, cover what was in the contents of my statement.

Mr. HAWKINS. Thank you.

General DEARMOND. The Defense Contract Administration Services Region in Los Angeles, DSASR, Los Angeles, is responsible to the Defense Supply Agency for administering Government contracts in the Southwestern United States. Our area of responsibility includes southern California, Arizona, and Clark County, Nev.

We employ approximately 2,700 people to administer 36,000 Government contracts with a value in excess of $7 billion. We have no procurement responsibilities, rather we administer procurement contracts let by the individual military services, the Defense Supply Agency, NASA, GSA, and other Government activities.

Our responsibilities include conducting preaward surveys to determine a contractor's capability to fulfill the requirements of a proposed contract. Our activities in this area include the performance of quality assurance functions, surveillance of production, safeguarding industrial materials in the case of classified contracts, the timely delivery of products, contractual payments, and other actions essential for contract completion in accordance with specifications.

One of our prime responsibilities is to carry out the Department of Defense's contracts compliance program to expand employment opportunity for the Nation's minorities and women. We have two basic objectives in this program: (1) To increase the general employment of minorities and women in the work force of all of the firms under our cognizance who hold Federal contracts; and (2) to insure these workers are provided opportunity for upward mobility in each of these firms.

This program is carried out by our Contracts Compliance Office, which consists of 46 persons-36 of whom are professionals in the business, and 10 are clerical and supporting staff. Among the professionals, 75 percent are male, 25 percent are female, and 61 percent are minority members. Of the minorities in our Contracts Compliance Office, 39 percent are black, 14 percent are Spanish surnamed, and 8 percent are Oriental. Mr. Schrieber, on our left, is the head of that division.

The Government contracts administered by our Contracts Compliance Office are assigned to the Department of Defense by the Office of Federal Contract Compliance, Department of Labor, according to standard industrial classifications. About 40 such classifications fall within our jurisdiction. The principal ones in this region are aircraft and aircraft parts, guided missiles, space vehicles, machinery, motor vehicles, fabricated metals, and miscellaneous business services.

To date we have been able to identify 3,573 facilities in this region which fall within our purview, employing approximately 850,000. Because of the large number of facilities, it is necessary to establish a priority for examining the various contractors. We basically select those contractors who employ the largest number of people.

In the body of my comments, Mr. Chairman, we cover the statistics which shows the improvements in employment of minorities, the status of minority employment, the status of female employment in the 222 contractors with whom we keep our records. In addition, we provide the statistics for employment of minorities and females within. my command, and the progress or lack of progress that we are making in that area. We also cover the two cases on which you requested comments, Data Design and Rockwell. Rather than cover any of these specific statistics, I think we had rather respond to questions, since we consider them, all of them important, and I would have a difficult

time selecting one as being more important than the other. In conclusion, I would state that DCASR Los Angeles and I are very much aware of our responsibility to insure implementation of Executive Orders 11246 and 11375 prohibiting discrimination by Federal contractors. I will be happy to discuss any of the statistics that we have. Mr. HAWKINS. General DeArmond, I have not had an opportunity to read this statement. With respect to Rockwell International, which you did review at the request of the committee, may I say that this company was singled out because it has been the subject of quite a number of complaints.

Are you satisfied that a good job is being done by the Rockwell International in the furtherance of its affirmative action goals, both with respect to minorities and to women?

General DEARMOND. Yes, I believe they have provided a satisfactory affirmative action program, and I would like to cover some of the reasons from my statement.

Mr. HAWKINS. I wish you would proceed, particularly with respect to the percentage of women because that seems to be a little more glaring in terms of a failure to progress than even with respect to minorities.

General DEARMOND. Yes, sir.

Mr. HAWKINS. Will you proceed?

General DEARMOND. Rockwell International Space Division employs approximately 11,000 people, and that is the case that we were addressing. Our last review of this facility covering achievements under the 1973-74 affirmative action program, which began on September 1, 1973, found their affirmative action performance acceptable for the following reasons:

One: The minority component increased in all major job categories. These included skilled craftsmen, semi-skilled personnel and laborers. The most significant progress was made in the white-collar category; officials and managers, professionals, technicians, and office and clerical. The overall result reflected an increase in minority representation from 17.5 percent, approximately 1,308 employees, to 20.4 percent, approximately 2,240 employees.

Two: Apart from technicians and office and clerical categories (where the female components remain substantial), female representation increased in every other category-most significantly in officials and managers from 1.6 percent, 10 people, to 3.1 percent, 27 people, and professionals from 3.1 percent, or 123, to 4.2 percent, or 234.

Three: Of the total number of hires, 33.6 percent or 605 were minority representatives; 50 percent or 111 of all college hires were of minority origin; and 29.9 percent or 619 of all promotions went to minority personnel.

Goals in the current affirmative action program, for the year ending September 30, 1975, project an increase in the representation of women and of each minority group in every job category. The overall goals are to increase minority representation from 20.4 percent or 2,240 to 21.8 percent or 2,405; female representation excluding office and clerical, from 7.4 percent, or 710 to 8.3 percent or 718. These goals were

accepted in view of the contractor's transition from a period of growth to one of slight retrenchment in which hires and promotions are limited largely to replacement of attrition. This facility has outlined the following program and procedures to achieve these goals:

A career development program to qualify employees for promotion, whose participants are scheduled to be 60 percent minority and 30 per

cent women.

An immediately promotable minority and female employee system; in other words, "a skill bank," whose members become candidates for all appropriate promotional openings.

A specialized recruiting program to increase minority and female applicant flow. A comprehensive monitoring system requiring concurrence by the company's equal employment management system, EEMS office, in promotions where an "immediately promotable" candidate is rejected; the initial routing of all job requisitions through the EEMS office for its identification of qualified minorities and females, and documentation of the reasons for rejection of any minority or female applicant.

We believe that these programs and procedures will achieve the goals of their affirmative action program.

Mr. HAWKINS. May I ask you at that point what is the position of the Defense Contract Administration Services in monitoring the efforts of companies against which there are a great number of complaints? Do you recognize the fact that there may be pending in other Federal agencies a substantial number of complaints and if you found that to be a pattern, would you more vigorously investigate and analyze the affirmative action program of that particular contract?

General DEARMOND. Yes, sir. Our primary activity is not one of investigating claims, Mr. Chairman. That is handled by other Federal agencies. Our primary responsibility is to insure the adequacy of their affirmative action program. If we were requested by an appropriate agency to conduct an investigation, we would, or it is my understanding if we had a large number of complaints which might be considered a class action complaint, we would conduct an investigation. We would not, however, on individual complaints.

Mr. HAWKINS. Do you conduct investigations on a preaward basis? General DEARMOND. Yes, we do on a preaward basis.

Mr. HAWKINS. At that point, do you consider the fact that there may be a substantial number of complaints filed, and if so, how do you recognize this situation, and how do you reconcile it?

General DEARMOND. Mr. Schreiber, head of the division, says we do check with the Equal Employment Opportunity Commission where there are a large number of complaints, we do take this into consideration in conducting the preaward, and in determining the adequacy of the affirmative action program.

Mr. HAWKINS. Now, in the statement, on page 7, you say from July 1 to date, our region has issued 30 show-cause letters to noncomplying contractors. Were these all in the field of noncompliance with the affirmative action order?

General DEARMOND. Yes, sir.

Mr. HAWKINS. This is not the total of show-cause actions, I assume! General DEARMOND. That is the total number of show-cause letters issued, sir.

Mr. HAWKINS. But is it confined merely to Executive Order 11246 and subsequent orders relating thereto?

General DEARMOND. Yes, sir.

Mr. HAWKINS. Did you issue show-cause letters in the other areas of your responsibilities with respect to noncompliance with other contract provisions, let's say for materials or time schedules?

General DEARMOND. Show-cause letters are basically for equal opportunity employment. If we do a preaward and find that a corporation is unsatisfactory or a number of other reasons that we would advise the procuring activities of our finding of unsatisfactory, either for technical competence, financial responsibility, or a number of other reasons. Mr. HAWKINS. Well, I was referring back to page 2, where you list responsibilities of the agency and the responsibilities include such things as performance of quality, assurance functions, surveillance of production, safeguarding industrial materials, the timely delivery of products, et cetera.

General DEARMOND. That is correct.

Mr. HAWKINS. And I assume that in the furtherance of those responsibilities, that you sometimes find it necessary to issue show-cause letters, do you not?

General DEARMOND. Sir, they are not called show-cause letters. We advise the procuring agency that there is a difficulty, the contractor will not make its delivery on time. A show-cause letter is

Mr. HAWKINS. Only confined then to Executive Order 11246?
General DEARMOND. Yes.

Mr. HAWKINS. And subsequent orders?

General DEARMOND. Yes, sir.

Mr. HAWKINS. What do you in the event that a company fails in its performance with respect to some of the activities that I have just enumerated? What action do you take against them? Do you cancel, terminate, or do you refuse to continue contracts because of any of the activities outlined?

General DEARMOND. Yes, sir.

If I might briefly turn to the actions that were taken when a contractor is found in noncompliance with the equal opportunity requirement of this contract, in this event, our region issues a show-cause letter to that organization in accordance with the prescribed procedures.

We advise the Department of Defense buying activity and the Office of Federal Contracts Compliance that the contractor is noncompliance. This in effect precludes the awarding of Government contracts to any facility, not to just the one we investigated, under that contractor until he has taken positive action to correct the discrepancies noted in his plan. If an agreement to correct such deficiencies cannot be reached by the contractor within 30 days, our next step would be to recommend to our headquarters in Washington that a notice be issued to the contractor opposing cancellation or termination of the existing contract