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procurement activities, to help maintain a sound economic structure Nation-wide, and further, we are acutely aware of our need for competent small plants to enable us to meet our prime responsibility to the Nation; that of getting the required number of planes, in the shortest possible time, at the lowest cost to the taxpayer. Because of our strategic bombing missions in World War II we in the Air Force are fully aware of the vulnerability of a nation whose production facilities are highly concentrated. We know we must have a wide dispersal of production facilities, and this necessarily involves small plants either as prime contractors or subcontractors. On this we are, and have been putting forth our best efforts. It immediately raises another problem. In these days of semi-mobilization the volume of procurement is less than it will be should M-day come. Should that day arrive, and it could come suddenly, our requirements would multiply, and we could be faced with the loss of many of our currently used production facilities. We would almost over night, require the facilities of every competent producer in the country, large and small. Will they be there, in operating condition, or will many of them particularly the small concerns, have fallen by the wayside in the dislocation of industry due to material shortages, or due to overexpansion within the industry itself? This problem is to a certain extent outside of our field, though we will be vitally affected by it. We know that your committees are giving it careful study, and you can be assured that the Air Force needs no directive to do its part within its authority.

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So you can readily see why there has always been an active smallbusiness program in the Air Force. Last fall it was stepped up, and it was further expanded upon the President's proclamation of an emergency. Air Force policy with respect to small business is, should be, well known. However, it has just been restated in an Air Force letter to all establishments in Continental United States, as follows: I am now reading a letter signed by General Vandenberg.

The Department of the Air Force desires to reiterate its policy with respect to the participation of small business concerns in defense procurement for the guidance of all concerned.

Established Department of the Air Force policy is to obtain the participation of small plants to the greatest possible extent in the defense production program, whether as prime or as subcontractors, for the purpose of broadening the base of supply and of maintaining a sound nationwide economic structure.

In view of the fact that a very high percentage, in dollar value, of Air Force requirements can be suitably produced only by large plants, and only a correspondingly small percentage, in dollar value, can be suitably produced by small plants, the Department of the Air Force re-emphasizes its declared policy to place as many contracts as possible in this latter category with competent small plants. In the placement and administration of contracts with large, as well as small concerns which, in the opinion of the Air Force offer subcontracting possibilities, the contracting officer and the appropriate administrative office will bring this policy to the attention of the prime contractor, and will make every effort to effect the maximum practicable amount of subcontracting and the resultant use of small plants to the extent consistent with the contractor's responsibility for satisfactory performance.

By Order of the Secretary of the Air Force:

HOYT S. VANDENBERG, Chief of Staff, United States Air Force.

There is a pride of accomplishment within the Air Force, that in our practices we have kept pace with stated policy. Our small-business program is positive, and aggressive. Some of it has been in effect for many months, and other parts will be recognized as an indication of our

determination to provide not just 90 percent effectiveness, but as close to 100 percent as rests within our power.

Now, if I could depart from this text for just a minute

Representative EVINS. As you proceed, it is all right, Mr. McCone. Go right ahead.

Mr. MCCONE. I would like to expand a little on the statements concerning our policy by reading from the Air Force Procurement Procedures, section 1-3-2, Small-Business Concerns, in which it states:

Full consideration will be given to the stated policy of the Department to place with small-business concerns a fair proportion of total procurement of supplies and services for the Department; however, the awarding of contracts to other than the low bidder in those cases where formal advertising is required solely on the basis that a bidder qualifies as a small-business concern is not authorized. For awards to small business concerns in the case of equally low bids, see Regulation, Air Force Procurement 2-4.

Therefore, under our Air Force Procurement Regulations, there is a regulation establishing our policy concerning small business.

With regard to the second area, that of subcontractors to our large prime contractors, each contract contains this provision:

It is mutually understood and agreed that the policy of the Government as declared by Congress in Public Law 413, Eightieth Congress, is to bring about the greatest utilization of small plant facilities which is consistent with efficient production.

The contractor agrees to accomplish the maximum amount of subcontracting to smaller plants that the contractor finds to be consistent with the efficient performance of all of the obligations undertaken by this contract.

My purpose in reading those two is to bring before this committee the fact that the broad policy determinations of the Air Force were implemented by procurement regulation and by clauses that are actually included in the prime contracts, including those which we necessarily must let to large contractors.

I would like now to discuss the organization which we have established for the purpose of carrying out this small-business policy.

I have a chart, and this chart in its broadest way sets forth the procurement organization of the Air Force. I as the Under Secretary have direct procurement responsibility. I have a consultant on small business, Mr. Donald Mitchell, who is the president of the Sylvania Electric Co. He is a part-time consultant and he directs his attention to small business and to our electronic procurement program.

The Deputy Chief of Staff of Matériel is located in the Pentagon Building. He is responsible to the Chief of Staff of the Air Force and also to the Secretary and the Under Secretary. He has in his office an Office of Small Business, with Mr. Weddell acting as its Director. Mr. Weddell is here.

The Air Matériel Command at Wright-Patterson Air Force Base, at Dayton, Ohio, is the command through which all procurement of the Air Force is directed. In that regard, I would like to emphasize for the committee that the Air Force differs from either the Navy or the Army insofar as all our procurement activities are concentrated in one command, whereas the Navy spreads their procurement through their bureaus and the Army through the technical services.

At Wright-Patterson Air Force Base Field we have an office of small business under the direction of Mr. Hine, which I believe is

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adequately staffed to take care of the responsibilities it has in this field.

The Air Matériel Command has six air procurement districts and in each district we have an office of small business. In the northeast district, in Boston, we have Mr. De Persio. In the midcentral district, in Chicago, we have Mr. Colwell. In the central district, in Detroit, we have Mr. Ackley. In the southern district, in Fort Worth, we have Mr. Kay. In the eastern district, in New York, we have Mr. Koivula. In the western district, Los Angeles, we have Mr. Byrnes.

Each of those districts has regional offices, of which there are 34. I will not read them all. In each of those regional offices there is an individual who is responsible to the District Office Small-Business Director, and one is located in each one of the offices. So we have carried this plan completely through our entire procurement system. I would like to file with this committee a photostatic copy of this chart.

Representative EVINS. We would like to have that reproduced for the record. We may want to refer to some of these charts and ask some questions a little bit later. We will let you continue with your statement.

Mr. MCCONE. I should also like to file with the committee the directives concerning the responsibilities of these offices. In the first place, I would like to file a copy of a letter from Deputy Secretary of Defense Lovett to the Secretaries of the military departments, the Assistant Secretaries of Defense, the chairmen of boards, staffs and committees, OSD, and the Directors of Offices, OSD. The subject is Adviser on American Small Business.

It states:

I hereby designate the Chairman of the Munitions Board as my assistant to advise and assist me in assuring that American small business participates equitably in the furnishing of commodities and services financed with funds appropriated under the General Appropriation Act of 1951, Public Law 759, Eighty-first Congress, and in performing those functions prescribed in section 623 of that act. In carrying out this function the Chairman of the Munitions Board shall assure that:

(1) There is made available to suppliers in the United States, and particularly to small independent enterprises, information with respect to purchases proposed to be financed with funds appropriated under the cited act, such information to be furnished as far in advance as possible;

(2) There is made available to purchasing and contracting agencies of the Department of Defense information as to commodities and services produced and furnished by small independent enterprises in the United States;

(3) All other possible actions are taken which will give small business an opportunity to participate in the furnishing of commodities and services for the Department of Defense.

This memorandum supersedes the Secretary of Defense memorandum of December 21, 1949, on this same subject.

ROBERT D. LOVETT, Deputy Secretary of Defense.

I should also like to file a memorandum from Assistant Secretary of the Air Force Zuckert to the Deputy Chief of Staff, Matériel, reading as follows:

Reference is made to your communication of April 20, 1951, recommending the establishment of a Small-Business Office in the Office of the Deputy Chief of Staff, Matériel.

It is requested that such an office be established with responsibility for the following:

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SMALL BUSINESS IN MILITARY PROCUREMENT

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(a) Represent the Under Secretary and the Assistant Secretary of the Air Force (Management), on any policy and program determination committees or boards having to do with small-business affairs to which they may be assigned, including liaison with other Government departments and agencies.

(b) Serve as advisers to the Under Secretary and the Assistant Secretary of the Air Force (Management), and the Deputy Chief of Staff, Matériel, on smallbusiness affairs.

(c) Serve as a focal point for Department of the Air Force activities connected with small business, including reports.

(d) General supervision of the effectiveness of the entire small-business program of the Air Force, reporting to the Deputy Chief of Staff, Matériel.

Representative EVINS. That statement may be included in the record, Mr. McCone.

(The letter dated April 27, 1951, read by Mr. McCone is on file with the select committees.)

Mr. MCCONE. I should also like to include a statement which contains a memorandum from Brig. Gen. N. S. Talbott, Deputy Director for Field Operations, Directorate, Procurement and Industry Planning, United States Air Force, to all district small-business offices concerning district small-business procedures," in which he states: 1. The district and regional commanders have been advised that they are to participate in the following four-way program which has been implemented in each district.

(a) First, chamber of commerce meetings of small-business representatives to be held in various cities and communities in the district in which AF small-business representatives discuss potential prime and subcontracts.

(b) Second, exhibits have been and are being held in which large prime contractors display sample products and consult with small-business firms regarding subcontracts.

(c) Third, the establishment of permanent information offices where smallbusiness representatives can get facts regarding AF procurement. This office to be a joint venture with other services, where possible.

(d) Fourth, important prime contractors are being contacted to be sure that the subcontract base is broadened where possible.

2. The above policy is in the hands of all district and regional commanders and in the hands of the plant representatives. A small-business office now exists in each district office.

(The letter dated April 19, 1951, read by Mr. McCone is on file at the offices of the select committees.)

Mr. MCCONE. Now I would like to turn to the second chart.

Let us look at the results achieved today from this intensive program. This is a chart that refers to the results during the period of January and February 1951 of 102 field installations. I have broken this down into local purchases by the field installations and the purchases at Wright Field, which is the procurement headquarters. During the period there were 61,305 purchase transactions or 72 percent, by number, which went to small concerns. There were 23,502, or 28 percent to large companies.

In dollar value there was $30,453,000, or 70 percent to small concerns; and $13,279,000 or 30 percent to large concerns.

That is what we term our field office procurement. It is the procurement of miscellaneous items that are required for the maintenance and operation of the bases that we have throughout the country. It represents a very large number of small items that come under the heading of local purchases.

In Wright-Patterson Air Force Base, which is our central procurement headquarters, and where all of our aircraft and engines and electronics and principal equipment is purchased, we had 3,481

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