of uniform administrative guidance, are just some of the problems that have already been spread on our record.

Today we will hear from NASA activities and some of their prime contractors. NASA enjoys a far better reputation than DOD when it comes to the use of creative methods to increase awards to small and small disadvantaged firms. I sincerely hope that the testimony we are about to receive will prove that reputation warranted and will restore at least some of my confidence in the system. I would like to announce to you that the House is in session. We went in at 10 o'clock this morning. There will be votes. I assume the only way I can handle it is when we have recorded votes is to take a 15-minute recess. We only have 15 minutes in which to vote. We will take a 15-minute recess each time we have a recorded vote. I regret that that is an added burden to the witnesses, but I have no choice but to do that.

Other members of the subcommittee will be joining us from time to time. We are spread out over many, many activities in the Congress, and all of us have multiple committee assignments. I fully anticipate that the other members will join us as time permits. [Congressman Addabbo's opening statement follows:]

OPENING STATEMENT OF HON. JOSEPH P. ADDABBO, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF NEW YORK

It is well known that the Department of Defense is responsible for over 80 percent of the Federal purchase budget. In fiscal year 1983, DOD awarded approximately $128.2 billion in prime contracts exceeding $25,000. This represents an $11.5 billion increase from fiscal year 1982. DOD statistics also indicate that in fiscal hear 1983, the top 100 companies received $89.6 billion of all DOD contracts or 69.9 percent of all awards. This is a substantial increase from fiscal year 1982 where the top 100 companies received $76.8 billion or 65.9 percent of all awards.

As a percent of all defense subcontracting, small disadvantaged business received 1.6 percent during fiscal year 1983 despite a substantial increase in the total DOD purchase budget. It is further evident that the amount of DOD dollars going to the top 100 contractors has increased steadily as the share of subcontracting dollars to small disadvantaged business remains constant.

Today, I welcome the testimony from four companies that received approximately $17 billion of DOD contracts during fiscal year 1983. I look forward to hearing exactly how these companies are implementing the subcontracting program as well as what is currently underway to improve their subcontracting efforts.

I also look forward to hearing about the subcontracting program at both the Johnson Space Center and the Kennedy Space Center.

Mr. MITCHELL. I would like to now call on our first witnesses, who are representatives from NASA: William Kelly, who is the Director of the Center Support for NASA at the Lyndon B. Johnson Space Center, and James Rice, the Deputy Director for Center Support Operations at the John F. Kennedy Space Center.

Gentlemen, if you will come right to the table, please. Thank you very much for being here with us this morning. You may proceed. TESTIMONY OF WILLIAM R. KELLY, DIRECTOR OF CENTER SUPPORT, LYNDON B. JOHNSON SPACE CENTER, NATIONAL AERONAUTICS AND SPACE ADMINISTRATION, ACCOMPANIED BY JAMES L. NEAL, DIRECTOR OF PROCUREMENT, AND ROBERT L. DUPPSTADT, SMALL AND SMALL DISADVANTAGED BUSINESS SPECIALIST, NASA

Mr. KELLY. I am Bill Kelly from the Johnson Space Center, and I would like to introduce the people that I have with me. Í have

James Neal, director of procurement; and Robert Duppstadt on the far left, the small and small disadvantaged business specialist at the Johnson Space Center.

Mr. Chairman, I plan to read my statement. It is not so long. It would be easier to read rather than trying to summarize, if that is OK with you, sir.

Mr. MITCHELL. Fine. If it is not too long, we have a large number of witnesses to cover.

Mr. KELLY. Thank you.

Thank you for the opportunity to present this statement on the NASA Lyndon B. Johnson Space Center's (JSC's) implementation of the subcontracting program established under section 211 of Public Law 95-507.

Before getting into the subcontracting aspects of JSC's Small and Small Disadvantaged Business Program, I would like to speak briefly on the center's accomplishments with respect to direct awards to small and small disadvantaged businesses.

During the past 3 fiscal years, JSC's obligations to small business have increased 42 percent and to small disadvantaged business, it has increased 65 percent. Specific progress in contracting with small and small disadvantaged businesses for the past 3 fiscal years is as follows: Total business, fiscal year 1981, $1,567.7 million; fiscal year 1982, $1,627.6 million; and fiscal year 1983, $1,664.0 million. Small business, fiscal year 1981, $40.7 million; fiscal year 1982, $49.5 million; and fiscal year 1983, $57.1 million. Small disadvantaged business, fiscal year 1981, $10.1 million; fiscal year 1982, $16.4 million; and fiscal year 1983, $16.8 million. Large business, fiscal year 1981, $1,527 million; fiscal year 1982, $1,578.1 million; and fiscal year 1983, $1,606.9.

While JSC's total business obligations in fiscal year 1983 amounted to over $1.6 billion, it is significant to note that our prime contract for the shuttle and 19 other major contracts, not within the scope of small business, amounted to more than $1.5 billion.

I draw two conclusions from these statistics: One, in view of what is left after our obligations are paid to our major hardware and support contractors, we have done a good job in getting contract dollars to small and small disadvantaged businesses, and two, there should be considerable subcontracting opportunities for small and small disadvantaged businesses under JSC's hardware and support contracts with large businesses.

With respect to subcontracting goals for small and small disadvantaged businesses, NASA only establishes an overall Agency goal. There are no center-level goals set for subcontracting to small and small disadvantaged businesses. However, each subcontracting plan contains a goal for both small and small disadvantaged business. The small and small disadvantaged business specialist at JSC reviews all plans and submits his comments to the contracting offi

cer.

The plans are also reviewed by the contracting officer and, during negotiations, it is his responsibility to determine and negotiate goals that represent the maximum practicable opportunity for small and small disadvantaged business subcontracting consistent with efficient contract performance.

The contractor's progress toward reaching these individual sub

the contractor's semiannual report. Additionally, the Small Business Administration periodically audits contractor plans for compliance and reports the findings to the contracting officer.

During the preceding 3 fiscal years, we have reviewed and approved 75 subcontracting plans representing $3.1 billion in planned subcontracting obligations. These plans contained goals totaling $553 million for small business and $58 million for small disadvantaged business. Attached to this statement is a listing of these plans by fiscal year, including the dollar value of all planned subcontract commitments and the amounts committed as goals for small and small disadvantaged business.

It should be noted that individual contract plan figures are deleted for some contractors because of restrictive legends. However, totals by fiscal year and for the 3 fiscal years include all subcontracting plans.

At JSC, we have not received any subcontracting plan that we considered as totally unacceptable. There have been, however, areas in some of these plans where changes were required during negotiations. The contractors have been cooperative in their negotiations, and all of the plans now on contract are completely acceptable and are considered to represent the maximum practicable opportunity for small and small disadvantaged business subcontracting. To date, no contractor has been found in violation of the negotiated subcontracting plan.

JSC has an outreach program which is centered around our commodity source list. This list contains the names and addresses of firms by commodity. The firms are also identified as large, small, disadvantaged, and women owned. This source list, which fills four volumes, contains listings of over 4,000 firms, of which 70 percent are small businesses.

Additionally, there are 462 small disadvantaged firms in the listing and 153 women-owned firms. Periodically, a separate source list containing only the women-owned and small disadvantaged businesses is printed. Both lists are distributed to all JSC contracts organizations and to all of JSC's major contractors. In addition, when small and small disadvantaged businesses visit JSC, they are encouraged to include their firms on the JSC source list. We also extend this encouragement when we participate in congressional business conferences and local or regional trade fairs.

Another valuable tool of the JSC Outreach Program is our listing of current prime contracts over $100,000. This listing, along with the names, addresses, and telephone numbers of prime contractor purchasing personnel, is available to all firms through the JSC industry assistance office for subcontracting opportunities.

Chairman Mitchell's letter to Mr. Beggs requested some data on award-fee contracts at JSC. For the preceding 3 years, JSC has awarded four award-fee contracts averaging $33.8 million each. Including contracts awarded prior to fiscal year 1981, JSC has 21 active award-fee contracts totaling $10.9 billion. If we exclude the Shuttle Orbiter contract with Rockwell International, which accounts for $8.7 billion, the average value of the remaining 20 active award-fee contracts is $101.2 million.

To improve the operations of the subcontracting program at JSC, we will encourage closer contact of the prime contractor's subcon

tract plan administrators with JSC's small and small disadvantaged business specialist. Regular meetings, possibly quarterly, could result in a mutual exchange of information that could increase subcontracting opportunities to small and small disadvantaged businesses. Additionally, we will periodically reemphasize, both to our prime contractors and internally, the requirements of Public Law 95-507 with respect to subcontracting opportunities for small and small disadvantaged businesses.

Small and small disadvantaged businesses have made important contributions to the Government's programs at the Johnson Space Center both as prime contractors and subcontractors. We are proud of JSC's overall performance on behalf of the small and small disadvantaged business community, and I am glad to have had the opportunity to discuss the JSC program with you.

I would appreciate it very much if you would enter into the hearing record some tables which I have brought along showing various approved subcontracting plans.

Thank you.

[The tables referred to above follow:]