by small business. General Kessler stated in a hearing before this committee (pt. 44, Government Procurement Programs: I, p. 4707): Notwithstanding the limitations which may exist with respect to the placement of prime contracts for major technical items small business concerns profit by submitting to us detailed information as to capacity and skill, since such information is invaluable to us in encouraging prime contractors to subcontract to the maximum practicable extent. * * * The committee raised the issue concerning decentralization of industry and the pricing problems as they may affect military procurement. Many companies have moved to areas industrially uneconomical under the decentralization program in World War II. During war time procurement, these firms contributed a large share of our national war production. Now a number of these firms have closed or may close their doors because they cannot compete with other companies located in more favorable industrial areas. Representatives of the armed services told the committee that they were aware of this condition but under competitive bidding there is little that can be done to aid firms at a competitive disadvantage due to location. No law exists whereby the Government can make an advantageous award to one firm over another because of geographical location. It was pointed out, however, in cases of negotiated contracts, this factor has on occasion been taken into consideration. Subcontracting to the greatest possible extent is a policy of the Air Force. This committee has been informed that in the current year, over $1,000,000,000 in Air Force procurement will go to subcontractors. To facilitate subcontracting, the Air Force maintains established facility records on a geographical basis so that prime contractors can obtain information on possible subcontractors within a reasonable distance from their plants. ECONOMIC COOPERATION ADMINISTRATION Early in June 1948 top-level officials of the Economic Cooperation Administration appeared before this committee. In requesting this meeting, the committee chairman stated: Billions of dollars will be expended in ECA and national security programs in the next several years. The threat to smaller business in such vast programs is obvious. The numbers of inquiries received by the committee, even at this early date, indicate an entire lack of knowledge on the part of the smaller-business man as to how he may participate, equitably, in these Government programs * as well as apprehension that he will be bypassed At the initial hearing the committee learned little or no planning had been devoted to the part small business might play in the ECA program. One of the chief difficulties brought out at this hearing was the lack of information available to small business as to how it might participate in the procurement activity under European recovery plan projects. ECA officials were frank to state that the problems of small business participation in their program had received little attention. No provision had been made to establish a statistical analysis section whereby a break-down of the American firms doing business under this program could be shown. During this hearing, ECA officials agreed they would "explore" the possibility of setting up some competent personnel to look after the potentials for small business. The committee obtained further assurance from ECA officials that a better information service would be attempted to aid small business in obtaining its fair share of foreign procurement. Under date of November 24, 1948, the chairman of this committee received a letter from Paul G. Hoffman, ECA Administrator, which states the efforts being made to aid business to participate in the European recovery program. New programing procedures effective on January 1, 1949, require no contracts may be executed for ECA financed purchases prior to the issuance of a procurement authorization. This, the letter points out, gives small business an opportunity to seek a market for its goods. The letter further shows how ECA is attempting to aid business in finding out who to see and where to go to do business under the ECA program. Pressure is being exerted to have foreign purchasing missions buy through more competitive and open bidding. Lastly, ECA is exploring the possibility of obtaining names of licensed purchasers from the participating countries for informational purposes prior to the letting of contracts. (For full text see appendix.) ATOMIC ENERGY COMMISSION An official of the Atomic Energy Commission appeared before the committee to tell how that agency's procurement policies affect small business. The Commission has an unusual procurement procedure when compared with other Government agencies. There are five main locations throughout the United States where functions of the Atomic Energy Commission are performed. Each of these locations are headed by a "manager" who is responsible for the operation of production, research, and in some cases town management, such as exists at Oak Ridge. His responsibilities also encompass construction of additional facilities in connection with his location project. These managers have broad authority, including advertising and awarding of contracts. Much of the procurement under this program necessarily is done by way of fixed-fee contracts because of the experimental nature of the work being undertaken. Often it is impossible to write definite specifications for this work and therefore no prospective contractor could afford to take a chance on a lump-sum contract. On wellknown items, lump-sum contracts, based on unit prices, are used by the Atomic Energy Commission. The Commission does very little procurement in Washington. Much of this agency's purchasing is done through already existing Government procurement agencies such as the Bureau of Federal Supply, Army, Navy, and Government Printing Office. Even this type of procurement originates in the field project offices. In response to the committee's request, the Atomic Energy Commission furnished the following procurement information as applied to its operation in Oak Ridge, Tenn., from June 1, 1947, to June 1, 1948: Distribution of procurement, Oak Ridge, Tenn., from June 1, 1947. to June 1, 1948 1. Purchased from Government sources established by law, such as Federal Bureau of Supply, Federal Prison Industries.. 4. Radiation-detection instruments and other miscellaneous: Total____ $6, 432, 187 7, 156, 500 2, 385, 500 9, 542, 000 3, 943, 079 831, 739 4, 774, 818 1,092, 293 1, 108, 500 2, 200, 793 CONCLUSIONS This committee has followed closely the procurement procedures of the main Government purchasing agencies. High-ranking officials have appeared at committee hearings. Some of these hearings have been open to the public while others, for purposes of national security, have been closed sessions. Information brought out at these hearings has been studied carefully by the committee. Many of the controversial issues have been under constant scrutiny of the committee and its staff. Present procurement legislation makes adequate provisions whereby the interests of American small business should be protected. However, complaints of small business, alleging discrimination in the various Government procurement agencies, continue to reach this committee. This, it appears, would indicate announced policy and actual administration are not always in harmony. In may cases these specific allegations have been brought to the attention of the appropriate procurement official by the committee and have resulted in satisfactory adjustment. The Government-advocated program of industry decentralization has caused great hardship on those small firms that moved their plants to less dense industrial areas. Many of these firms are completely shut down while others are on the brink of failure because they cannot successfully compete on Government procurement with firms more favorably located in heavily populated industrial areas. ernment officials state there is no legislative provision whereby this disadvantage may be off-set by a price-letting differential due to geographic locations. Gov A Government official representing one of our most important procurement agencies stated that his project was a big business and that as such they deal with big business. Other ranking Government officials also have implied this same policy, though perhaps not as bluntly. This committee recommends a constant check be kept on all the Government purchasing done with small business. Reporting procedures are established in some of the agencies which do reflect this vital information. Such reports should be studied periodically so that a balance of Government procurement be maintained properly between small and big business. Only in this manner can the interests of small business be guarded in terms of Government procurement. INFORMATIONAL AIDS FOR SMALL BUSINESS IN GOVERNMENT PROCUREMENT Despite the need for adopting some different methods and administrative policies as previously pointed out and recommended, the committee feels small firms should have a condensed picture of current Government procurement procedures. One of the chief difficulties encountered by the small businessman is that he doesn't know where to go to find out what the Government buys and how he can sell to the Government. Thus, the committee has had the staff prepare the following synopsis of how to do business with the Government. This embraces the procurement procedures of various agencies; in general what agencies and divisions of those agencies buy what items; and specific recommendations to smaller businesses on preparing themselves for doing Government business. An excellent source of information concerning Government procurement is the nearest field office of the Department of Commerce. A manual, covering all Government procurement, details the activities of the small-business program in Government procurement and shows how the general operational framework within which an intraagency procurement policy may be carried out through the Department of Commerce field offices. The Department of Commerce has made procurement policy agreements with each of the Government procurement agencies in Washington. These agreements are applicable to procurement activities both in Washington and the decentralized procurement offices. Under these agreements efforts are being made to revise procurement specifications from time to time to permit a competitive position among open bidders and to minimize discriminating requirements which may obstruct or render impossible small business participation in selling a specific item to the Government. Effort also is being exerted to make a geographical distribution of bids to make procurement operations available to the maximum number of small companies. Realizing the necessity of maintaining a structural framework of efficient subcontracting operations, these agreements attempt to provide subcontracting to small business by making awards to larger firms of necessity requiring subcontracting assistance. Contract negotiation procedures are being established whereby an adequate recognition of the interests of small business must be given. This guide, Government Procurement Manual, sets out in detail all procurement activities of the Government. It is a directory of not only the procurement agencies, but it schedules all types of manufactured commodities purchased by each of the Government agencies. As soon as this manual has been distributed to all the field offices of the Department of Commerce (approximately February 1, 1949), any representative of a small-business firm may find out exactly what Government agency is purchasing the item that firm manufactures and where such agency's procurement office is located. The field offices of the Department of Commerce will render every possible aid to small-business firms. A list of these field offices is set forth below: MIDDLE WEST STATES Chicago 4, Ill., McCormick Building, 332 South Michigan Avenue. Cincinnati 2, Ohio, 1204 Federal Reserve Bank Building, 105 West Fourth Street. WESTERN STATES Cheyenne, Wyo., 304 Federal Office Building, Twenty-first Street and Carey Salt Lake City 1, Utah, 508 Post Office Building, 350 South Main Street. Reno, Nev., Elks Club Building, 50 Sierra Street. Butte, Mont., 301A O'Rourke Estate Building, 14 West Granite Street SOUTHWESTERN STATES Houston 14, Tex., 602 Federal Office Building. Albuquerque, N. Mex., Hanesh Building, 203 West Gold Avenue. Dellas 2, Tex., room 602, 1114 Commerce Street. El Paso 7, Tex., 12 Chamber of Commerce Building, 310 San Francisco Street. Phoenix 8, Ariz., 425 Security Building, 234 North Central Avenue. FAR WESTERN STATES San Francisco 11, Calif., 306 Customhouse, 555 Battery Street. Los Angeles 12, Calif., 1546 United States Post Office and Courthouse, 312 North Spring Street. Portland 4, Oreg., 217 Old United States Courthouse, 520 Southwest Morrison Street. Seattle 4, Wash., 809 Federal Office Building, 909 First Avenue. NORTHEASTERN STATES Boston 9, Mass., 1800 Customhouse, 2 India Street. Buffalo 3, N. Y., 242 Federal Building, 117 Ellicott Street. MIDDLE ATLANTIC STATES Baltimore 2, Md., 314 United States Appraisers' Stores Building, 103 South Gay Street. New York 1, N. Y., Sixtieth Floor, Empire State Building, 350 Fifth Avenue. Pittsburgh 19 Pa., 1013 New Federal Building, 700 Grant Street. Philadelphia 2, Pa., 719 Pennsylvania Building. 42 South Fifteenth Street. SOUTHEASTERN STATES Miami 32, Fla., 947 Seybold Building, 36 Nottheast First Street. Atlanta 1. Ga., Post Office Box 1595, 418 Atlanta National Building, 50 Whitehall Street SW Charleston 3, S. C., 310 Peoples Building, 18 Broad Street. Jacksonville 1, Fla., 425 Federal Building, 311 West Monroe Street. Richmond 19, Va., Room 2, Mezzanine, 801 East Broad Street. Savannah, Ga., 218 United States Courthouse and Post Office Building, 125–129 Bull Street. |