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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
even though the goal was not achieved during two of those years.
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
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
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.
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.
implementation has not been without cost or the expenditure of time by the
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
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
I would be pleased to answer any questions that you may have.