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containing plans for which the Navy had contract administration cognizance.

Note that the prime contractors consistently increased their dollar awards to

both small and small disadvantaged business firms during the last three years

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even though the goal was not achieved during two of those years.

My opinion

as to why the goals were not met are twofold. First, economic conditions

caused primes to retain in-house, work that was formerly subcontracted out to

small businesses because they were trying to retain their own employees.

Second, we were ambitious in our 1982 goal based on 1981 performance. The

establishment of realistic goals and the achievement of those assigned

continues to be the Navy's intent.

Another problem with data collection involves the total number and dollar

va lue of Navy prime contracts awarded in which the performance against the

goals recited in the plans are measured.

These data are not computer

captured.

However, such subcontract data on completed DOD contracts for which

the Navy had contract administration cognizance is reported by the primes and

is centrally compiled and published by the Office of the Secretary of

Defense.

A summary of such data for the Navy is set forth in Table 2.

When considering all completed contracts in fiscal year's 1981, 1982 and

1983, including both those which did and did not meet goals, the primes that

the Navy administered had average goal attainments for small business

subcontracts of 124.7, 141.1 and 116.6 percents, respectively.

For small

disadvantaged business subcontracts, they had average goal attainments of

196.3, 142.2 and 186.7 percents, respectively. This illustrates that overall

the primes are achieving and surpassing their established goals.

In summary, Public Law 95-507 as implemented within the Navy, has fostered

the development of maximum practicable opportunities for small business to

participate in the performance of prime contracts.

It has helped ensure

continuous increases in subcontract awards to small businesses.

The Navy's

implementation has not been without cost or the expenditure of time by the

contracting workforce.

I believe there are ways that the administrative

effort can be reduced, and at the same time, we can enhance the effectiveness

of the subcontracting program.

My suggestions for improving the program are:

First, I believe we could 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 the individual

subcontract plans currently required. By eliminating the subcontracting plans

for the thousands of individual Federal contracts awarded each year, more

effort could be devoted by both the government and the prime contractor to

ensuring compliance and monitoring effectiveness.

The master plans should be

approved by the cognizant contract administration office and reviewed by the

Small Business Administration since these two entities already have the

responsibility for monitoring, evaluating, and documenting a contractor's

performance, and have the "corporate" knowledge and experience to know if the

contractor is satisfactorily carrying out the subcontract provisions of a

particular prime's contract.

Further, they are in a better position to take

corrective action, if necessary, and have better leverage in achieving the

desired results than 1f the responsibility remains fragmented among the

Department's contracting officers.

Second, the term for these master subcontracting plans could be extended

to

cover a period of up to 3 years as determined on a case-by-case basis,

reducing the burden created by annual renegotiation of these plans for those

contractors whose line of work does not significantly change over time or who

demonstrate a solid record of continuously improving performance.

In closing, Mr. Chairman I believe the Public Law 95-507 is good for small

business and for the Navy.

I also believe that if we refocus our efforts

based on our experiences, and take actions as outlined above, we can and will

do even better.

Finally, let me assure you and members of your committee that

the Navy is and will continue to be active in its support of the Small

Business Program.

I would be pleased to answer any questions that you may have.

Thank you.'

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