media, minority media that beseige me all the time about exclusion.

I'd like very much to get the agency awards from each of you for your advertising services for 1980, 1981, 1982, and 1983. Give me a brief explanation on the subcontracting plans for each one of those contracts.

Second, Mr. Daub and I are awfully good friends and we're together most of the time; I am very much concerned about his concern on whether the same companies are getting all of the business as we increase the goals. I think, to a very large extent, with reference to 8(a), that is surely being remedied because of the new fixed program participation term. However, even without that, I just know we are not beginning to tap the absorptive capacity of minority businesses, no where near the capacity.

For many reasons, I will insist and persist at this juncture in our history for goals and quotas, there are a number of factors out there that mitigate against the inclusion of minorities and until we change that climate to a significant degree, that's where I take my stand.

Mr. DAUB. Will the chairman yield?

Mr. MITCHELL. Very briefly, because I have two other points I want to make.

Mr. DAUB. I did not mean to suggest in any way my lack of commitment to goals or quotas; I only stated that, and I have no problem with that, so we don't disagree, Mr. Chairman.

I'm concerned that within the framework of the setting of standard performances and objectives, that we're seeing the same companies cycle through and get bigger and bigger pieces of that pie as the goals for performance go up, but other minority and small and disadvantaged businesses don't get to come in and take a shot at the business.

Mr. MITCHELL. I understood very clearly. I will try to dig out of my files, a letter that I sent to the corporations in Silicon Valley who were advocating for a systems management sort of approach that you're talking about. I raised very very serious questions with regard to the implementation of that.

Just as an illustration of what I'm talking about, perhaps one of the largest contracts ever awarded to a minority was done recently by the Boeing Co., a healthy contract. If you're doing that in terms of systems management, that very healthy contract would mean that in just one area you've done exceedingly well, but in the other areas of the Boeing Co., maybe you haven't. That's my concern now and let me share that letter with you; I have some concerns about that, and let me close out with my little feeble question about Fort Monmouth, NJ. That's the one that I raised earlier, Fort Monmouth, a subsidiary of RCA has gotten a contract, it's called RCA Support Services. That contract had available subcontracting opportunities: $2.6 million and of that $2.6 million, minorities got $1,726. Who approved that contract?

Mr. Hall.

Mr. HALL. The contracting officer at the Fort Monmouth Communication Command.

Mr. MITCHELL. Have you been made aware of my concerns about this particular contract?

Mr. HALL. Yes; I have. We're looking into it. The incentive award has not been made to RCA as requested.

Mr. MITCHELL. But you have considered doing that for it was proposed at one time?

Mr. HALL. They have asked for it; it's on hold.

Mr. MITCHELL. What have you done to remedy what is an absolutely abominable situation with reference to subcontracting? Mr. HALL. With RCA?

Mr. MITCHELL. Yes.

Mr. HALL. Well, reading the file of the RCA, they have gone to the minority groups in New York and New Jersey trying to find companies that qualify. It's difficult for them to find such firms in the categories they're in, you know, the various services we're talking about that would qualify them for that type of contract.

Mr. MITCHELL. I'm trying to control my temper. But here you had a minority firm operating at Fort Monmouth which had done a large portion of that contract for 3 years and received all kinds of awards for it.

Mr. HALL. Yes.

Mr. MITCHELL. Now, it's out and do you mean to tell me these birds say that they can't find somebody. That's what really disturbs me. I think it's a copout and I think it's wrong. Mr. Hall, I honestly hope that you will take the action necessary to correct that situation because that's a clear signal to the minority business community that you can be ousted once you do an umbrella contract and you're not going to get a shot at even subcontracting. I'm going to ask you to let me know within no more than 30 days what you've done on this one particular situation; it's atrocious and it's completely unacceptable, I'm certain, to every member of this commit

tee.

Gentlemen, thank you very much for being with us this morning. Our next witness is the Principal Deputy Under Secretary of Defense for Research and Engineering in the Office of the Secretary of Defense. Mr. Wade, thank you for being here.

TESTIMONY OF JAMES P. WADE, JR., PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE FOR RESEARCH AND ENGINEERING, OFFICE OF THE SECRETARY OF DEFENSE, ACCOMPANIED BY NORMA LEFTWICH, DIRECTOR, SMALL AND DISADVANTAGED BUSINESS UTILIZATION; AND HARVEY GORDON, ASSISTANT DEPUTY UNDER SECRETARY FOR ACQUISITION MANAGEMENT Dr. WADE. Thank you, Mr. Chairman. We are indeed pleased to appear before you today to report on the DOD implementation of the subcontracting program established under section 211 of Public Law 95-507.

With me today, on my left Norma Leftwich, from the Office of the Secretary of Defense, Director of Small and Disadvantaged Business Utilization. On my right, Mr. Harvey Gordon, the Assistant Deputy Under Secretary for Acquisition Management.

Mr. Chairman, I would like to make a few statements and observations about the subcontracting program in general, placing my statement in full, with your approval, on the record.

Mr. MITCHELL. Without objection, the entire statement will be submitted for the record.

Dr. WADE. Mr. Chairman, it is my understanding that when Public Law 95-507 was passed in 1978, that section 211 envisioned a structured program to define certain obligations and responsibilities to be placed on both industry and Government with regard to, first, increasing subcontracting opportunities for small and small disadvantaged businesses; second, in identifying and utilizing an increased base of small and small disadvantaged businesses; and third, administering and monitoring that effort.

Although the law qualified many of its requirements, many of the measurements of compliance and obligation were defined in less precise terms. For instance, the B clause certifies that a contractor agrees to carry out the policy that small and small disadvantaged businesses shall have the maximum practicable opportunity to participate in contracts let by the Federal agencies, including the awarding of subcontracts to the fullest extent consistent with the efficient performance of this contract.

Further, a contracting officer must make a determination, when negotiating a subcontracting plan, that such plan provides the maximum practicable opportunity for small and small disadvantaged business to participate.

Finally, the law concludes, that "failure of any contractor or subcontractor to comply, in good faith, with the policy or the plan, shall be a material breach of such contract or subcontract."

Now because such terms seem to defy precise quantification, a responsibility is placed on both government and industry to rely on a fair degree of subjective judgment as to whether the intent of these terms have been met on a case-by-case basis. And that is not to say that the Government and industry are left totally at each others mercy in trying to resolve some of these issues.

For instance, as we in the Government gain greater experience in negotiating subcontracting goals, there are certain data available to us upon which we can make more informed and reliable judgments, such as the previous history of subcontracting performance, items to be bought and available sources.

Now, that is also not to say that additional legislation should be contemplated to quantify broad concepts. Yet, I firmly believe that we must walk a thin line between implementing a strong effective Government program and protecting the integrity of any contractors business decisions. However, it is necessary to acknowledge the complexities of a program, that with experience and commitment, both Government and industry can continue to improve.

Implementation of Public Law 95-507 in general, and section 211 in particular, has been a tremendous learning curve for our contracting community and industry. I am not unmindful of the fact that beginning in 1979, notwithstanding a continuing increase in actual dollars awarded to small business through subcontracts, there was a decrease in the overall percentage of awards to small business. I am pleased to report that we have arrested that downward trend and turned the corner to increasing that percentage in fiscal year 1983.

Mr. Chairman, in summary, I would like to say that DOD remains committed to implementing a strong small and small disad

vantaged business program. I personally think that we have indeed come a long way and can continue to improve upon our perform

ance.

This concludes my comments, Mr. Chairman, and we will be pleased to answer any questions that you might have. Thank you. [Dr. Wade's prepared statement with attachments follows:]

PREPARED STATEment of James P. WADE, PRINCIPAL DEPUTY UNDER SECRETARY OF DEFENSE FOR Research and Engineering, Office of the Secretary of DEFENSE

I AM JAMES WADE, PRINCIPAL DEPUTY UNDER SECRETARY FOR

RESEACH AND ENGINEERING.

ALSO WITH ME TODAY ARE, NORMA

LEFTWICH, OSD DIRECTOR OF SMALL AND DISADVANTAGED BUSINESS

UTILIZATION.

WE ARE PLEASED TO APPEAR BEFORE YOU TODAY TO REPORT ON

DOD IMPLEMENTATION OF THE SUBCONTRACTING PROGRAM ESTABLISHED UNDER SECTION 211 OF PUBLIC LAW 95-507.

IN YOUR INVITATION TO TESTIFY, YOU REQUESTED THAT WE RESPOND TO SOME SPECIFIC QUESTIONS BUT BEFORE I DO, I WOULD LIKE TO MAKE A FEW STATEMENTS AND OBSERVATIONS ABOUT THE

SUBCONTRACTING PROGRAM IN GENERAL.

IT IS MY UNDERSTANDING THAT WHEN P.L. 95-507 WAS PASSED IN 1978, SECTION 211 ENVISIONED A STRUCTURED PROGRAM THAT DEFINED CERTAIN OBLIGATIONS AND RESPONSIBILITIES TO BE PLACED

ON BOTH INDUSTRY AND GOVERNMENT WITH REGARD TO: (1) INCREASING SUBCONTRACTING OPPORTUNITIES FOR SMALL AND SMALL DISADVANTAGED BUSINESSES; (2) IDENTIFYING AND UTILIZING AN INCREASED BASE OF SMALL AND SMALL DISADVANTAGED BUSINESSES; (3) AND, ADMINISTERING AND MONITORING THAT EFFORT.