Mr. MITCHELL. Thank you very much, General. TESTIMONY OF VICE ADM. EUGENE A. GRINSTEAD, DIRECTOR, DEFENSE LOGISTICS AGENCY, DEPARTMENT OF THE NAVY, ACCOMPANIED BY RAY DELLAS, DIRECTOR, SMALL AND DISADVANTAGED BUSINESS DIRECTORATE Admiral GRINSTEAD. Mr. Chairman. I am Vice Admiral Grinstead, the Director of the Defense Logistics Agency. I have with me Ray Dellas, who is the Director of the Small and Disadvantaged Business Directorate within DLA. He is sitting over here on the end, first row. I would like your permission to enter the statement which I have previously submitted. Mr. MITCHELL. Without objection, the entire statement will be submitted for the record. [Admiral Grinstead's prepared statement with attachments follows:] PREPARED STAtement of VicE ADMIRAL EUGENE A. GRINStead, Director, Defense LOGISTICS Agency, Department of the NAVY MR. CHAIRMAN, I AM VICE ADMIRAL GRINSTEAD, DIRECTOR OF THE DEFENSE LOGISTICS AGENCY (DLA). I AM ACCOMPANIED BY MR. RAY DELLAS, DLA STAFF DIRECTOR, SMALL I AM PLEASED TO APPEAR THIS MORNING AND DISADVANTAGED BUSINESS UTILIZATION. BEFORE THE SUBCOMMITTEE ON SBA AND SBIC AUTHORITY, MINORITY ENTERPRISE AND GENERAL SMALL BUSINESS PROBLEMS TO DISCUSS THE EXPERIENCE OF THE DEFENSE LOGISTICS AGENCY IN IMPLEMENTING THE SUBCONTRACTING PROGRAM ESTABLISHED UNDER SECTION 211 OF PUBLIC LAW 95-507. BEFORE I TAKE UP THE SMALL AND DISADVANTAGED BUSINESS UTILIZATION PROGRAM, I WOULD LIKE TO PROVIDE A BRIEF OVERVIEW OF DLA AND ITS MISSION. THE AGENCY WAS CHARTERED IN 1961 ΤΟ PROVIDE WORLDWIDE SUPPLY AND LOGISTICS SUPPORT OF COMMERCIALLY AVAILABLE ITEMS TO THE MILITARY SERVICES. DURING OUR 23 YEARS OF PARTNERSHIP WITH THE SERVICES, DLA ́S RESPONSIBILITIES IN SUPPORTING THE DOD COMMUNITY HAS GROWN BOTH QUANTITATIVELY AND QUALITATIVELY AND EXPANDED TO SUPPORT DEPARTMENTS AND AGENCIES OUTSIDE THE DOD AS WELL. CURRENTLY, WE FMPLOY NEARLY 50,000 PEOPLE TO OPERATE SIX DEFENSE SUPPLY CENTERS, SIX CONSOLIDATED STORAGE ACTIVITIES, NINE CONTRACT ADMINISTRATION SERVICES REGIONS AND FIVE SERVICE CENTERS. WE HAVE A RESPONSIBILITY TO SUPPLY AND CONTRACT FOR NEARLY 2.3 MILLION DIFFERENT ITEMS OF SUPPLY WHICH EQUATES TO 57 PERCENT OF ALL NATIONAL STOCK NUMBERS. THIS IS MORE THAN TWO AND ONE HALF TIMES THE NUMBER MANAGED BY THE AIR FORCE, ALMOST FOUR TIMES THE NUMBER MANAGED BY THE NAVY, SEVEN TIMES THE NUMBER MANAGED BY THE ARMY AND 55 TIMES THE NUMBER MANAGED BY THE MARINE CORPS. THE NINE DEFENSE CONTRACT ADMINISTRATION SERVICES REGIONS (DCASRS) FURNISH CONTRACT MANAGEMENT AND PAYMENT SERVICES, NOT ONLY TO DLA, BUT TO ALL OTHER DOD CONTRACTING ACTIVITIES, AS WELL AS OTHER GOVERNMENT AGENCIES SUCH AS NASA AND THE DEPARTMENT OF ENERGY. THE DCASRS ARE MANAGING 320,000 CONTRACTS WITH A TOTAL FACE VALUE OF APPROXIMATELY $160 BILLION. THE DCASRS PAY CONTRACTORS AT THE RATE OF OVER $41 BILLION A YEAR. IN ADDITION TO THIS OUTLAY, OUR SIX DEFENSE SUPPLY CENTERS PAY INVOICES AT AN $11 BILLION RATE ANNUALLY, FOR A COMBINED TOTAL EXCEEDING $52 BILLION. OF THIS COMBINED TOTAL, NEARLY 64 PERCENT OF THE PAYMENTS ARE AUTOMATED. OUR AVERAGE OF ON-HAND INVOICES CONSTITUTE 5.2 WORK DAYS OF WORKLOAD. BECAUSE OF OUR ABILITY TO PAY OUR BILLS ON TIME, WE ARE CONSIDERED A GOOD CUSTOMER. IN OTHER ROLES, DLA IS RESPONSIBLE FOR THE DISPOSAL OF SURPLUS DOD PERSONAL PROPERTY; WE ALSO MANAGE THE FEDERAL CATALOG SYSTEM; INDUSTRIAL PLANT EQUIPMENT OWNED BY DOD; AND THE CENTRAL REPOSITORY FOR DEFENSE SCIENTIFIC AND TECHNICAL INFORMATION. OVERALL, THE TOTAL DLA ORGANIZATION CONSISTS OF MANY SITES WORLDWIDE. THE CONSOLIDATION OF THESE MISSION ACTIVITIES IN DLA RESULTED IN AN INITIAL PAYOFF REDUCTION OF 7,700 PERSONNEL SPACES AND AN EXPENDITURE CEILING REDUCTION OF $67.5 MILLION ANNUALLY. IN ADDITION, SINCE 1974, OUR PRODUCTIVITY RATIO OF WORKLOAD TO RESOURCES HAS INCREASED BY 28 PERCENT. ALL OF THESE ACTIVITIES HAVE BEEN OPERATED SUCCESSFULLY AND ECONOMICALLY. IN BRIEF, DLA ́S WORKLOAD HAS BEEN INCREASING IN RECENT YEARS, AND THE FOLLOWING REFLECT THE DEMANDS PLACED ON THE AGENCY BY ITS MILITARY SERVICE CUSTOMERS. WE BUY AND SUPPLY FUELS, FOOD, UNIFORMS AND TEXTILES, MEDICAL SUPPLIES AND MORE THAN HALF THE HARDWARE ITEMS USED BY THE ARMED FORCES--ABOUT $16 BILLION IN ANNUAL PROCUREMENTS. WE MAKE ANNUAL STOCK FUND SALES OF NEARLY $18 BILLION FROM AN INVENTORY --- WE RECEIVE AND SHIP NEARLY 20 MILLION LINE ITEMS ANNUALLY FROM OUR DEPOTS. WE PROCESS OVER 30 MILLION SUPPLY REQUISITIONS ANNUALLY. WE ADMINISTER OVER 320,000 CONTRACTS FOR THE MILITARY SERVICES AND OUR WE PAY NEARLY 3.5 MILLION INVOICES A YEAR, TOTALING MORE THAN $52 BILLION ANNUALLY. WE MANAGE THE REUTILIZATION AND SALE OF SURPLUS PROPERTY HAVING AN AND SHIPMENT OF NEARLY SIX MILLION ITEMS. TURNING TO THE IMPORTANT SUBJECT OF THE SMALL AND DISADVANTAGED BUSINESS PROGRAM, SMALL BUSINESS IS BIG BUSINESS WITHIN DLA AND OVER THE YEARS OUR SMALL AND DISADVANTAGED BUSINESS UTILIZATION PROGRAMS HAVE GROWN SUBSTANTIALLY. OUR WORK IN THIS AREA IS NEVER FINISHED. WE ARE WORKING CONTINUOUSLY TO INCREASE SMALL BUSINESS AND SMALL DISADVANTAGED BUSINESS PARTICIPATION IN THE MULTI BILLION DOLLAR PRIME AND SUBCONTRACT MARKETS FOR WHICH WE ARE RESPONSIBLE. WHAT IS OUR TRACK RECORD? U.S. BUSINESS FIRMS A TOTAL DURING THE PAST THREE YEARS DLA HAS PLACED WITH OF $39.7 BILLION, OF WHICH $17.3 BILLION OR 43% WAS PLACED WITH SMALL BUSINESS FIRMS. SMALL DISADVANTAGED BUSINESSES RECEIVED $1.5 BILLION IN DIRECT AND 8(a) AWARDS DURING THIS SAME PERIOD. OUR SMALL BUSINESS SET-ASIDE PROGRAM RESULTED IN THE PLACEMENT OF $7.1 BILLION OR 17% OF THE TOTAL AMOUNT PLACED WITH U.S. BUSINESS FIRMS. SUMMARIZING AWARDS DURING THE PAST THREE YEARS FOLLOW: STATISTICAL TABLES DLA SMALL BUSINESS AND SMALL BUSINESS SET-ASIDE AWARDS |