QUESTIONS OF THE SUBCOMMITTEE AND RESPONSES QUESTION #1: This Committee has reviewed 4 outstanding contracts with the Army involving 9 of the largest contractors doing business with the Federal government. One of these 4 contracts had no goal set for subcontracting to small disadvantaged business. Moreover, this same contract (PRC, No. DAAK 80-79-C-0002) had no goal for subcontracting to small business generally. Please prepare a brief narrative on this contract explaining why the contracting officer thought the lack of goals was justified, and submit the same for the record. Moreover, it can be inferred from this contract (in comparison to others) that small disadvantaged business goals are omitted more frequently than small business goals. Please address this issue with any justification therefore in your narrative. ANSWER: Contract PRC, NO. DAAK 80-79-C-0002 was awarded on 1 November 1978. The solicitation was issued and the contract was awarded prior to the implementation of the new requirements through the Defense Acquisition Regulation in July/August 1979. Accordingly, the contract was in full compliance with all applicable procurement regulations then in effect since there was no requirement for submission of a subcontracting plan. Subsequent modifications adding work did not include a plan because it was determined by the Contracting Officer, with consultation and assistance of program and technical personnel, that no subcontracting opportunities existed. Small disadvantaged business goals and small business goals are always included in contracts where reasonable opportunities for subcontracting exist for those concerns. QUESTION #2: A review of the quarterly statistics reported on SF 295's concerning the following contracts raises a strong inference that goals are being set for small disadvantaged firms at much too low a level: a. GTE, NO. DAAK 80-80-C-0280 b. RCA, NO. DAAB 07-82-C-J114 C. General Dynamics, No. DAAE 07-81-C-0001 Please prepare a brief narrative on each of these contracts explaining why the contracting officers thought these goals were sufficient, and submit the same for the record. ANSWER: Response on each contract follows: a. GTE, NO. DAAK 80-80-C-0280 - This is the initial production (IP) contract for AN/TTC-39 and AN/TYC-39 switches and is the follow-on to the full-scale engineering development contract (FSED). During FSED stage, subcontractors were identified for various components. The need for continuity, interchangeability and reliability of components for these complex equip ments limited flexibility in awarding subcontracts. For these reasons, small disadvantaged business goals that appear comparatively low were considered acceptable for the instant award. It is anticipated that breakout programs will substantially increase small disadvantaged goals in future contracts. b. RCA, NO. DAAB 07-82-C-J114 - The contract is for AN/TSC-94A/100A terminals and low rate multiplexers. Review by project engineers indicated a limited number of small business and small disadvantaged business concerns in complex satellite communications industry. Subcontracting plan incorporated into the contract was submitted to the Command Small and Disadvantaged Business Advisory Office for review and comment prior to acceptance and was considered adequate. The Contract C. General Dynamics, No. DAAE 07-81-C-0001 ing Officer determined that the Small Disadvantaged Business Concerns goal was sufficient because the contractor has a responsible program under which they establish realistic goals. This program includes review of previous buys and maintaining frequent contacts with purchasing personnel to improve utilization of small business concerns. Consideration is given to various Small Business Directories, use of a Procurement Automated Source System, and screening the Bill of Material to identify items potentially obtainable from small business concerns. Additionally, specific efforts are undertaken to locate small, small disadvantaged and women-owned firms and make recommendations to Purchasing Management on their capabilities. Considering the extensive program that has been in place since 1972, realistic goals were negotiated with the contractor. The specific goal percentages were reviewed and approved by the Small Business Administration (SBA) Procurement Center Representative (PCR), without adverse comment, before incorporation by the Contracting Officer into the contract. The Small Disadvantaged Business Concerns subcontracting goal for this Contract represented a significant increase from the prior years c tract plan. The increase was from $32,191 to $800,000 for Sll Disadvantaged Business Concerns, an increase of over 2300%. It should be understood that in the early phase of a program a contractor is expected to have less success with his small business plan because of the lack of data available for selecting sources. As more historical data is accumulated, a greater effort and success can be expected and higher goals are appropriate. During the hearings on the Small Business Subcontracting Program on April 10, 1984, before the Subcommittee on SBA, SBIC Authority, Minority Enterprise and General Small Business Problems, you have asked the Department of Defense Panel members to provide for the record certain information regarding contracts for recruitment advertising services. You have also asked the Army to provide information concerning RCA's subcontract performance and address actions being taken on contractor's request for an incentive fee payment under the Ft. Monmouth base operations contract. With regard to your request on advertising contracts, I am pleased to advise that we have been able to assemble significant data addressing all aspects of the Small Business Subcontracting Program on these contracts. The information compiled for the latest four years is contained in the attachment, and includes names of advertising agencies, value of prime contracts awarded, subcontracting goals for small business and disadvantaged business concerns and their accomplishments. As evidenced from the statistics, the Army's performance against both small business and disadvantaged business goals is excellent and the trend is up. In reference to the RCA-Ft. Monmouth base operations contract, please be advised that the Army responded to your office, by a letter of 30 April 1984, addressing all issues that were raised in your letter of 23 February 1984, which are the same as at the hearings. I hope this information is responsive to your requests. Sincerely, 1 Encl James B. Hall Deputy Assistant Secretary of the Army (Acquisition) ARMY CONTRACTS WITH ADVERTISING AGENCIES The The Army has two contracts with advertising agencies. first contract is with N. W. Ayer & Co. for recruiting advertising which covers requirements for the U.S. Army (active duty, Reserve and Reserve Officer Training Corps), except Army National Guard. The second contract handled by the National Guard Bureau is with Needham, Harper & Steers, Inc. for recruiting advertising for the requirements of the Army National Guard and the Air National Guard. These contracts are awarded for a one year term and contain annual options for two additional years. have been exercised under both contracts. Historically, options Subcontracting plans and goals for small business and disadvantaged business concerns are negotiated for each year. Subcontracting plans are reviewed and evaluated by source selection panels and the contracting officer to insure completeness of the plan and that maximum practicable goals are established. Statistical information requested is provided below for each contractor. |