The report points out that during the 6 months from July through December 1950, small business received 21.3 percent of the total dollar volume of military contracts. (This compares with 24.5 percent for the fiscal year ending June 30, 1950.) Figures for 1951 are available only for Army procurement actions. They show that 22.4 percent of the dollar value of Army contracts went to small business in January 1951, and 27.6 percent in February 1951, as compared with 34 percent for the last 6 months of 1950. (The March report of Army procurement actions, which is not included in the Attorney General's reports, shows an increase to 36.3 percent of the dollar value going to small business.)

The Attorney General's report states that procurement statistics "disclose deficiencies in Government procurement which can be corrected only by the introduction into our mobilization program of the essential element of over-all central planning. * * *""

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The report points out that channeling contracts to large producers results in an "accompanying distortion * in the grant of allocations, priorities, tax amortization certificates and other Government assistance." In other words, when small business loses out in Government procurement, it also loses out all down the line. As an example of this, the report points out that 42 of the 100 largest manufacturing corporations in the United States have received approximately half of the total dollar value of tax amortization certificates granted thus far.

The report states that the esesntial objectives of procurement planning are as follows:

1. The contracts which are let during the accelerating period of military buildup must be spread in such manner that all sizes of business may participate.

2. We must know the capabilities of the businesses which constitute our existing and potential industrial capacity so that we may take appropriate action to insure that those businesses not now engaged in defense production will continue undiminished in strength until they are needed in a period of greater industrial mobilization.

Both of these objectives are contained in the bills for establishment of a Small Defense Plants Corporation.

Some of the suggestions made by small-business men at the field hearings include the following:

1. A Small Defense Plants Corporation should be established.

2. A certain percentage of defense contracts should be allocated to small business.

3. Small businesses should be allowed a certain price differential to keep their facilities in operation.

4. Information on Government procurement should be more adequate, and more easily obtainable.

5. Bid invitations should be sent out on time, and drawings and specifications should be included. Specifications should be brought up to date. 6. Action should be taken to bring new suppliers into the picture for contract negotiation.

7. Small-business facilities should be utilized before large firms are allowed to expand their facilities.

8. Regional procurement offices, with authority to let and interpret contracts, should be established.

Attached are summaries of a number of specific cases brought to the attention of Subcommittee No. 1 during the field hearings:

SUMMARY OF TESTIMONY-INFORMATION ON PROCUREMENT

A. D. Paola, Sandart Venetian Blind Corp., Atlanta, Ga.

Believes primary problem of small-business men is to obtain proper procurement information. Stated that there does not seem to be any central procurement information available, no coordinating agency that will give them the picture on the whole situation with regard to procurement.

A. C. Banker, Steplik Products Co., Atlanta, Ga. (makers of aluminum ladders) "You don't know what is being let. You don't know what they want or why, and you don't know what price they are paying for it-the fact of the matter is, you don't know anything about it.'

Donald B. Kirby, California State Builders Exchange, San Francisco, Calif.

Quantity of units and dollar volume of awards are omitted in recent publications issued by the Department of Commerce. Lack of such information renders the entire publication useless.

·C. A. Rogers, Oceanside Junior Chamber of Commerce, Oceanside, Calif.

The synopsis of contract awards does not provide enough information to enable electronics manufacturers to know whether electronics equipment is involved in the award.

T. B. Hickox, Luseaux Laboratories, Inc., Gardena, Calif. (manufacturers sanitizing agents and detergents)

He asked for specifications on invitation for 25,000 gallons of sterilizing compound. Procurement office was in Brooklyn. Specifications referred to circulars, rulings, and standards recommended by manufacturing associations. Obtaining information regarding these, required contacts with Washington and New York. Bids were closed before sufficient information was obtained to make a bid possible. Ken Moelter, Manufacturers division, Oakland Chamber of Commerce, Oakland, Calif. Reference copies of all bids should be filed at one central office such as Department of Commerce, in which manufacturers could check specifications without taking 7 to 10 days to get information.

Lack of information on dollar volume of contracts eliminates subcontractors contacting prime contractors.

Ben F. Moomaw, Chamber of Commerce, Roanoke, Va.

Why not permit chambers of commerce to make a selective list of manufacturers to receive directly information on bids. This would eliminate delays.

Roy Seagraves, Industrial Information Service, Burlingame, Calif.

Synopsis of contract award information is so limited in description, it is difficult for small producers to determine what prime contractors have been awarded contracts. There is no feasible method for bringing small producers in touch with prime contractors.

S. N. Field, Custom Plastics, Atlanta, Ga.

He has been unable to secure any information as to proper procedure in securing defense subcontracts. He has tried to get subcontracts; wrote 30 different airplane manufacturers but has yet to receive the "courtesy of an answer."

Roy Seagraves, Industrial Information Service, Burlingame, Calif.

There is confusion and misinformation on procurement in the minds of smallbusiness men. They need a central clearing agency, where small producers can obtain this information and learn of prime contractors. An agency should be set up with regional offices to bring together prime contractors and subcontractors. Small-business firms should register names, facilities, and items they can produce.

SUMMARY OF TESTIMONY-BID INVITATIONS

J. F. McKay, Pascoe Steel & Construction Co., Pomona, Calif.

He sent forms to Wright Field in September 1950, in order to be placed on bidders list for prefabricated buildings. To date, he has never received one unsolicited invitation from the Air Force.

W. T. Gossard, Thyco Electric Co., Alhambra, Calif. (makes electric plugs and cords) He filled in forms 6 months ago to be placed on a bidders' list at Wright Field, but has not received any copies of invitations.

Meyer Sherman, American Specialty Co., Los Angeles, Calif.

He does not receive invitations in time to make bids. On several occasions, invitation was received on the same day bids were scheduled to be opened. They have received cards from armed-service medical-procurement agencies and Ordnance stating that copies of invitations are not available.

Christopher Hammond, Sr., Steel Products Co., Inc., Savannah, Ga.

He endeavored to get invitations to bid from the Army Air Force at Wright Field, but received no invitations even though his company made half a dozen trips there.

A. C. Banker, Steplik Products Co. (makers of aluminum ladders) He has been unable to secure information on bids. He used official guide How To Do Business With the Government, and sent out 250 brochures to every buying organization listed in the guide. Invitation was received, but they could not furnish prints so his company was unable to bid.

George G. Pagonis, Orthon Corp., Paterson, N. J.

He has carried out instructions of various Government procurement agencies by submitting facility report, classification clearance, and have been placed on approved bidders list and still cannot receive invitations to bid.

Harry Freud, Heller Candy Co., Inc., Paterson, N. J.

Procurement center for candy for Army is United States Quartermaster in Chicago. He thinks smaller firms located outside Chicago area should have the same opportunity to bid and on the same basis as Chicago local firms. Have not had a reply to request to be put on bidders list.

L. A. L. Jones, American Steel & Iron Works, Inc., Denver, Colo.

Company heard about a bid from the Navy Department through one of their suppliers and contacted Navy Department for specifications, but received no response. His company wired again for specifications but Navy Department failed to comply. On third contact with Navy, his company received a copy of the bid but no drawings 5 days before the bid was opened. Two days later the drawings arrived but with only 3 days remaining in which to get their bid to Washington. It was impossible to meet deadline..

Max C. Wieluns, S. Wieluns & Son, Inc., Paterson, N. J.

This company has attempted to obtain defense orders by registering with New York Quartermaster and Army and Navy Procurement and the Air Matériel Command at Wright Field, Dayton, Ohio. Plant facilities have been surveyed and listed. Up to the present time, the company has not had the opportunity to bid or negotiate on any defense contracts.

A. R. Wyngarden, Color Craft Co., Indianapolis, Ind.

Government procurement agencies advise his company that due to their not having enough prints to supply all requests or due to insufficient time from invitation to bid opening time to enable them to submit their bids, their request for bid forms was being refused. More time should be allowed between the time bids are sent out and returned. His company was on list to receive information on bids for 2 months yet he did not receive invitation to bid until Monday and the deadline was Tuesday noon.

S. N. Field, Custom Plastics, Atlanta, Ga.

Their difficulty has been that the time to submit bids is too short. By the time they get the information from the local department of commerce and write for it and get a bid, "we find that we only have from 3 to 5 days to turn out the information required."

John M. Karr, Karr Manufacturing Co., Palo Alto, Calif.

Discriminates against

Too little time between invitation to bid and deadline. Western industry and small manufacturers without personnel to process invitations quickly.

Donald V. Doub, chief engineer, Pacific Gas & Electric Co., San Francisco, Calif.

Time lag between issuing invitations in Washington and dissemination in San Francisco area. Does not allow sufficient time to prepare the necessary information. Bidders near Washington or with representatives in Washington get first consideration.

Rolle C. Rand, Colorado Development Council

There is not sufficient time between the opening date and closing date to find out the cost of production.

Thomas K. Hillard, Swan Hill Manufacturing Co., Pleasanton, Calif.

Plant is being closed down after 5 years in business. They cannot get defense work because invitations are not received in sufficient time to return bids. Invitation to bid on electric harness equipment received with only 7 or 8 days to submit bid. Five major harnesses were involved with 30 components in each. Wesley Dyer, Metal Products Co., Nashville, Tenn.

He has to pass up bids in his line because of insufficient time to prepare bids before the deadline. Invitation to bid is usually received about 6 days after issuance, leaving 6 days to prepare bid and get it in. This leaves only 4 or 5 days to work on it. It is necessary to mail inquiries on subcontract items. Staff of 30 to 40 engineers is necessary to prepare bid in that time, and they do not have that staff. He suggests lead time of at least 30 days.

SUMMARY OF TESTIMONY-SPECIFICATIONS

J. F. McKay, Pasco Steel & Construction Co., Pamona, Calif.

Company applied to Air Force November 2 for invitation No. 934. They received invitation 12 days later, without drawings. Bid was to be opened 6 days later, so they had no time to apply for drawings. Contract was awarded to subsidiary of Lockheed. They received Air Force invitation No. 978, but no drawings. They received invitation No. 2150, issued by Ordnance Tank and Automotive Center, Detroit, Mich., but no drawings.

T. A. Mott, Jr., Dennison Machine Tool Do., Inc., Raleigh, N. C.

They have received requests for bids which did not contain the blueprints. "Usually they put in a slip of paper saying the information will be obtainable at Philadelphia. Little business cannot afford to have someone in Philadelphia.” George G. Pagonis, Orthon Corp., Paterson, N. J.

He has been unable to get specifications, so there is no way of knowing material, labor, and other costs involved in the manufacture of the product.

Robert Bliss, Jr., Bliss Steel Products, Syracuse, N. Y..

They have been unable to obtain drawings along with bid invitations. In several instances, only specification numbers were given. By the time the numbers were explained, it was too late to bid.

Nobel Gowing, Otto K. Olesen Co., Los Angeles, Calif.

Company received invitation from Wright Field on March 19, immediately telegraphed for specifications. They have not received specifications as yet (April 5), although the bid deadline was April 10.

William McLain, Kusan, Inc., Nashville, Tenn. (molders of plastic materials)

On a Navy job, he did not get specifications and called Washington. Only one man in the entire office knew anything about them and he was on vacation. He did not get that contract.

On another job, suggested a change in specifications, making in three parts instead of four with a saving of from 25 to 50 percent in cost. Washington's reply was that there was not time to change the specifications. His engineer could make the change on the drawing board in 5 minutes. Objects to this kind of Government waste of money and material.

Jack Davies, Avalon Products, Los Angeles, Calif.

Government specifications are old. "Some of the things we are bidding on now were drawn up before the Second World War and there have been revisions and amendments, copies of which are not readily available. Drawings practically never were with the invitation to bid. * * * For that reason your bid is often filled with a lot of guesswork which is dangerous, and usually you end up not taking the chance."

A contract was received for 700 coffee tables for Army. They had to send samples of every material used to Philadelphia to be tested and had to halt production for a month, because they were not informed of this requirement until the day they were scheduled to begin production. A month later, samples still had not been tested, so Army said to go ahead anyway.

Government specifications demand five-ply plywood for desks. All commercial desk manufacturers now use three-ply. Government pays a premium for five-ply and receives no better product.

Walter C. Roberts, Glenwood Manufacturing Co., Burbank, Calif.

His company has developed a formed plywood product as a substitute for aluminum airplane wings and for other military uses. Specifications do not cover the product, since it is new. Procedure of changing specifications is too timeconsuming.

D. D. Barricklow, G-B Corp., Lynwood, Calif. (manufacturer Sta-Clean products) Each branch of service has a different method of procuring. "Some departments are not permitted to purchase because the item is not approved by some centralized depot in the Midwest or East."

Ralph E. Bevard, American Production & Grinding Corp., Syracuse, N. Y.

It is difficult to interpret Government specifications regarding engineering, finishing, and shipping requirements.

SUMMARY OF TESTIMONY-INABILITY TO SECURE CONTRACTS

Ralph E. Bevard, American Production & Grinding Corp., Syracuse, N. Y. Almost all subcontracts he is attempting to obtain are of a temporary nature, since prime contractors are buying equipment to manufacture these parts in their own plants eventually. This causes double cost for tooling up and wastes materials. A local concern has on order 300 machine tools, Government-financed. At the same time, machine tools are lying idle in small facilities.

Henry N. Stam, Paterson Area Full Employment Council

He recommends utilization of existing facilities of small business through subcontracting before any company can get a certificate of necessity to expand its facilities.

Sidney J. Newman, Newman Bros., Inc., Cincinnati, Ohio

The company has taken steps to obtain defense contracts. They have placed their name on bid list and personally contacted information outlets, local procurement offices, and prime contractors. Small business cannot survive the period of time it takes for defense subcontracts to filter down to them from the prime contractors. Even a substantial contract at the present time would be too late because labor force would have to be laid off in the interim wait for materials.

He suggests that legislation be passed making it mandatory for the Government purchasing agencies to place negotiated orders with the thousands of small contractors before awarding certificates of necessity to large contractors to expand their facilities. He recommends that there be a Government-financed lend-lease program for the procurement of expensive special equipment required for defense orders.

Richard M. Oddie, Bank of America, San Francisco, Calif.

One of his managers said: “The general opinion among manufacturers is that Government contracts are channeled to large manufacturers and small-business men are not getting their share, nor are being given an opportunity to bid." F. B. Muller, California Steel & Construction Co., Los Angeles, Calif.

They have cut employees down from 32 to 9 and have only 20 days' work left for them to do. They have been promised subcontracts at first of next year, but can't stay in business that long because of inability to obtain materials for civilian work.

George D. Reish, Reish Products Inc., South Bend, Ind.

He started calling on various Government procurement agencies-Quartermaster, Munitions Board, arsenals, Navy and Air Force, etc.-in his area. Until the time of testimony he had spent 167 man-days in attempts to gain some business from some of these various procurement agencies. No contracts were obtained.

W. H. Jarrett, Sr. and W. H. Jarrett, Jr., of Gasoline Equipment Manufacturing Co., Indianapolis, Ind.

His company was advised by Mr. John F. Skillman, Department of Commerce, that Government contracts have not started to flow down to subcontractors. They have surveyed and contacted every procurement agency, air base, and ordnance department, and are also using information taken from the weekly Government synopsis in their locality. Result: There are few replies and they inform that the contract or subcontract has been let, or that there are no more specifications left, except for a few minor items.

D. R. Kennedy, Kennedy & Borden Machine Co.

Aircraft subcontracting on the west coast is a closed program. He did aircraft subcontracting during the last war, but is now unable to get subcontracting on aircraft. Aircraft manufacturers on the west coast will let subcontracts only within 300-mile radius from the plant.

Paul F. Gilbert, Salinas, Calif.

The company tried to get subcontracts from prime contractors but were told that they were too small to deal with until the war program gets into a larger scale.