tract administration cognizance. These statistics continue to bear out the fact that primes are achieving and surpassing their goals. Public Law 95-507, as implemented within the Navy, has fostered the development of maximum practicable opportunities for small businesses to participate in the performance of prime contracts, and has helped to ensure continuous increases in subcontract awards to small businesses.

There are ways, Mr. Chairman, however, that I feel we can enhance the effectiveness of the administration of subcontracting programs, and I would like to suggest two.

First, I believe we would be more successful in achieving our purpose by negotiating and approving master subcontracting plans with goals on a corporate, company, or subdivision basis, rather than on an individual subcontract plan basis that is currently required.

Efforts expended in developing subcontracting plans for the thousands of individual Federal contracts awarded each year could be devoted or diverted to ensuring compliance, and monitoring the effectiveness of the plans.

The master plans could be approved by the cognizant contract administration office, and reviewed by the Small Business Administration, for after all, these are the two entities that already have the responsibility for monitoring, evaluating, and documenting the contractors' performance, and they do have the corporate knowledge and experience to know if a contractor is satisfactorily carrying out the subcontract provisions of his prime contract.

Second, Mr. Chairman, the terms of these master subcontracting plans could be extended to cover a period up to 3 years, as determined on a case-by-case basis, thereby reducing the burden created by the annual renegotiation of these plans. For those contractors whose line of work, one, does not significantly change over time, or, two, more importantly demonstrate a solid record of continuously improving performance.

Mr. Chairman, that closes my summary of my comments and my prepared statement, and I would be pleased to answer any questions that you may have, sir.

Mr. MITCHELL. Thank you very much. I do have some questions. I think I would be remiss by not saying it appears that you've made an effort to implement the law.

Admiral SANSONE. Thank you, Mr. Chairman.

[Admiral Sansone's prepared statement with attachments follows:]

PREPARED STAtement of ReaR ADM. JOSEPH S. SANSONE, JR., DEPUTY CHIEF OF NAVAL MATERIAL FOR CONTRACTS AND BUSINESS Management, Department of the Navy

It is a pleasure to appear before your Committee today to discuss the Department of the Navy's implementation of the subcontracting program established under Section 211 of Public Law 95-507.

The Navy's success in actively supporting and fostering the Small Business Program is a matter of record. I believe that our performance in fiscal year 1983 illustrates our solid commitment to the small business community. During the past year, for example, the Navy posted the largest one-year increase in small business awards in the history of the Navy's program. In total, $5.9 billion was awarded to small business on a prime contract basis. represents a 28.6 percent growth in small business awards over the previous fiscal year. Moreover, the Navy achieved unprecedented real dollar increases

This

in our small business set-aside awards (from $2.3B to $3.2B) and small disadvantaged business awards (from $469M to $621M) during fiscal year 1983. Also, subcontract awards to small businesses and small disadvantaged businesses increased from $1.8 billion to $2.1 billion and from $70.5 million to $86.3 million, respectively. Awards to women-owned small businesses increased from $64.3 million to $104 million. These accomplishments can be attributed, in part, to the positive actions the Navy has taken. For example, the Navy has enthusiastically participated in 25 conferences, cosponsored by members of Congress and our Office of Legislative Affairs, since March 1983, in which over 2,700 small business firms were briefed on "How to do Business with the Navy" in both the prime and subcontract roles. We have 12 more planned during the next three and a half months. Similarily, over the last two years the Navy participated in 47 Federal Procurement Conferences for small businesses, having lead coordination responsibility on 12. At each of

these conferences the Navy routinely provided counselors to assist small firms on a one-to-one basis. With regard to motivating and training our small business advocates, since December 1981 the Navy conducted two All-Navy Small and Disadvantaged Business Utilization Conferences in which most of our 171 Small and Disadvantaged Business Utilization Specialists, as well as a large number of contracting officers, met to discuss, in detail, additional ways to improve the Navy's Small Business programs. And just last month the Navy participated in a DoD-Wide Small and Disadvantaged Business Utilization Conference with similar objectives. In addition to these Navy-wide initiatives, individual commands have conducted various training programs at the local level to ensure their contracting and technical personnel are kept abreast of small business program initiatives and of their importance in broadening the industrial base. Also, many of our personnel involved in the acquisition process have a personal interest in the program, not only because they recognize its positive impact on the nation's industrial base, but also because of Navy policy to include small business program accomplishments as part of their performance evaluations. For military personnel, it is an element of their fitness reports and for civilian personnel it is used in annual merit pay decisions pursuant to the Civil Service Reform Act of 1978. Not only are the members of the workforce evaluated but as well Heads of Contracting Activities who are responsible for the attainment of assigned small business and small disadvantaged business utilization goals at their respective activities.

In another initiative, the Navy has gone beyond the Defense Acquisition Regulation (DAR) requirements by establishing regulatory guidance which requires Navy contracting offices to display in a public place all small purchase solicitations in order to stimulate competition and small business

interest.

Speaking of competition, the Navy's performance is dramatically

improving in this area as well, and much of our success can be attributed, I

am sure, to increased participation by small businesses in our procurements. Through the first four months of fiscal year 1984 the Navy awarded $1.6 billion more competitively than during the same period in the previous fiscal year. The competition percentage for this period in 1983 was 21.8 percent, and I am pleased to report that it increased to 41.3 percent for the same period in 1984. This improvement will continue during 1984 as the Navy's initiatives continue to gain momentum. Let me discuss for a moment a few of these initiatives First, the competition advocate program which we established in over 150 of our buying activities. The Navy has a flag rank officer assigned as the Navy's Competition Advocate General and during the last eight months we have concentrated our efforts on achieving maximum results. For example, the Navy CAG was successful in negotiating from a large prime the release of proprietary data rights for over 4,500 parts. This will enhance competition and create further opportunities for small business participation. Second, we are concentrating on breakout and competition for spare parts at the Navy Inventory Control Points and Systems Commands. At the Navy's two Inventory Control Points, using the additional resources Navy has dedicated to competition and breakout, we are seeing results; for example, 1,400 spare parts items have been screened, resulting in 40% being broken out to competition and another 17% being broken out to the original equipment Third, the Navy's multifaceted program called Project BOSS (Buy Our Spares Smart) has been implemented and contains over 100 initiatives actively working to improve the procurement of spare parts in the Navy. Positive top-down efforts like these are producing measurable results for the Navy and account for many of our recent accomplishments in our Small Business and Competition programs. I would like to emphasize that we are in the early

manufacturer.

stages of producing results.

With this as background, I will now provide specific comments on our subcontracting program. The Navy's subcontracting program is conducted within guidelines established by the Department of the Defense (DoD) in its

acquisition regulations.

In 1981 when Public Law 95-507 was enacted the Navy

responded and conducted 12 workshops and seminars nationwide for over 1,500 contracting officers, negotiators, buyers and administrators to ensure proper implementation.

Since that time the Navy has continued the subcontracting

training program and through this contact with the people that make the subcontracting program work the Navy has some observations on how it can be

improved.

In fiscal year 1981, 1,878 Navy prime contracts contained subcontracting plans; in 1982, 2,206; and in 1983, 2,501. Dollar values of these contracts were $17.5 billion, $24.9 billion and $30.8 billion, respectively. Although the Navy has not yet received the SBA Annual Report for fiscal year 1983, of the 6,585 Navy prime contracts awarded during the last three years with plans, only six have been identified by the SBA as not having the required subcontracting plan or a determination by the contracting officer that the contract did not offer subcontracting opportunities. In four of the identified cases the Navy determined that the required plan was either inadvertently omitted from the contract or the required documentation was erroneously omitted from the contract file. Ultimately, the contracts and

contract files were modified to correct the identified deficiencies. In the

other two cases the responsible contracting offices are taking appropriate actions toward resolution. Although the SBA does not identify in its annual reports the number of plans it reviewed each year on a department or agency