Mr. MITCHELL. Mr. Petersen.

TESTIMONY OF ROBERT C. PETERSEN, CORPORATE DIRECTOR, SUBCONTRACT AND PROCUREMENT MANAGEMENT, ROCKWELL INTERNATIONAL CORP.

Mr. PETERSEN. Yes, Mr. Chairman. I too will try to abbreviate my remarks because you have the.complete testimony for the record. The small and small disadvantaged business programs at Rockwell we feel are quite well established. We have outlined in our testimony some of the training activities that we go through. I don't know if you want to reiterate them here.

Mr. MITCHELL. That is in the testimony.

Mr. PETERSEN. It should be adequate.

We have had a small business program, as you probably are aware, along with a number of other aerospace companies for more than 30 years. We have recognized the value of the small businesses and their competitiveness, and more recently the small disadvantaged businesses and their growing competitive base.

I did neglect to introduce Fred Webb, our corporate vice president of materials management from Pittsburgh. He has joined me here today. He joined our company a couple of years ago from General Motors Corp. and is now our senior procurement official for the corporation. Mr. Webb has designated me as the corporate small business liaison officer, and my responsibilities include developing all the small business procedures and policies, and implementing them throughout the corporation.

We do have a corporate small and disadvantaged utilization administrator, who coordinates the small business activities throughout our corporation. Each of our divisions has a small and disadvantaged business utilization administrator designated by the senior material procurement official at those divisions.

We do have frequent meetings of the administrators, exchanging ideas. There are training programs that they develop and implement in the various purchasing organizations. We have listed in our testimony some of the recent awards that the corporation has been recognized for in our small business programs.

We have also included for the record some commitment data on our minority business program. Starting in 1971 when we began keeping records, a little over $900,000.

Mr. MITCHELL. I am sorry, I didn't hear that figure.

Mr. PETERSEN. In 1971 there were $935,000 worth of commitments to minority businesses and this past year, in 1983, there were $70.8 million.

Mr. MITCHELL. $70.8 million?

Mr. PETERSEN. Yes, and we do feel that there is substantial growth that can be realized by continuing our outreach emphasis, and as the small and small disadvantaged businesses increase their sophistication and ability to provide services to the aerospace industry. We are seeing significant improvements in growth in the disadvantaged business base.

I have included our prime contract awards from the Federal Gov

With regard to the value of the subcontracts awarded, the prime contract awards do not necessarily relate to our annual commitments, or procurement activity. I have included the commitment information for all of our Government-related businesses, the space operations, aircraft operations and defense electronics and energy systems. These are the total commitments as well as the commitments to the small businesses and small disadvantaged businesses that we have included in the testimony.

With regard to the efforts that we have initiated since the passage of Public Law 95-507, we have implemented a number of procedural changes and administrative requirements for the preparation of plans and for the reporting against those plans. We feel that our small business program was pretty well established prior to that, so it basically has been one of administrative proceduralizing and reports preparation, the automation of our procurement data in order to provide the contract-by-contract data, needed to fill out the SF 294 reports.

In closing, I would like to suggest that your committee give consideration to an annual type of goals and goal-setting and contractor performance measuring rather than the contract-by-contract reports. You find that in any specific contract or a given subcontract plan, particularly for contract amendments over $500,000, there are elements that are just unexplainable unless you go back and refer to the specific statement of work for that contract amendment. It just does not give you a measure of the contractor's overall performance against a total program when the efforts are reported in such detail.

I thank you for allowing us to comment, and I would be happy to answer any questions that I can.

[Mr. Petersen's prepared statement follows:]

PREPARED STATEMENT OF ROBERT C. PETERSEN, CORPORATE DIRECTOR, SUBCONTRACT AND PROCUREMENT Management, RocKWELL INTERNATIONAL CORP.

MY NAME IS ROBERT C. PETERSEN. I AM CORPORATE DIRECTOR. SUBCONTRACT AND PROCUREMENT MANAGEMENT. FOR ROCKWELL INTERNATIONAL CORPORATION. ROCKWELL APPRECIATES THE OPPORTUNITY TO PROVIDE INFORMATION ABOUT OUR SMALL AND SMALL DISADVANTAGED BUSINESS (SB/SDB) PROGRAM. WE FEEL THAT THE PROGRAM'S EFFECTIVENESS HAS IMPROVED STEADILY SINCE THE INCEPTION OF OUR PROGRAM DATING BACK TO THE EARLY 1950'S. AND WE WELCOME THE OPPORTUNITY TO SHARE OUR EXPERIENCE WITH YOU.

BY WAY OF BACKGROUND, ROCKWELL IS AN $8 BILLION. MULTI-INDUSTRY COMPANY APPLYING ADVANCED TECHNOLOGY TO A WIDE VARIETY OF PRODUCTS IN ITS AEROSPACE. ELECTRONICS. AUTOMOTIVE AND GENERAL INDUSTRIES BUSINESSES. SOME OF THOSE PRODUCTS INCLUDE MILITARY AIRCRAFT, SPACE VEHICLES AND ENGINES. TELECOMMUNICATION EQUIPMENT. GUIDANCE SYSTEMS. MISSILE SYSTEMS

AND ENERGY SYSTEMS DEVELOPMENT.

THROUGHOUT OUR COMPANY WE ARE CONDUCTING A SMALL AND MINORITY BUSINESS PROGRAM THAT HAS PRODUCED APPRECIABLE RESULTS. WE BELIEVE THE ORGANIZATION, POLICIES AND PROCEDURES WE HAVE DEVELOPED AND IMPLEMENTED OVER THE YEARS HAVE RESULTED IN A PROGRAM EXCEEDING THE REQUIREMENTS ESTABLISHED BY GOVERNMENT LAWS AND REGULATIONS.

MR. CHAIRMAN. I WOULD LIKE TO EMPHASIZE THAT OUR SMALL BUSINESS PROGRAM WAS NOT FOUNDED AS A RESULT OF GOVERNMENT LEGISLATION OR

?

GOVERNMENT URGING.

WHEN WE ESTABLISHED OUR SMALL BUSINESS PROGRAM MORE

THAN 30 YEARS AGO IT WAS IN RECOGNITION OF OUR NEED FOR SMALL BUSINESS
AND OUR DEPENDENCE UPON IT. IT WAS COMMON SENSE AS WELL AS GOOD BUSINESS
SENSE TO EMPLOY THE SPECIALIZED SKILLS AND FACILITIES OF SMALL FIRMS FOR

MANY TASKS. THEIR CAPABILITIES HAVE HELPED US REMAIN COMPETITIVE. To
DEVELOP SIMILAR SKILLS IN-HOUSE AND SPEND THE NECESSARY CAPITAL FOR
EQUIPMENT AND FACILITIES WOULD HAVE BEEN UNECONOMICAL. MOREOVER, WE
WOULD NOT BE ABLE TO FULLY EMPLOY THESE EXTRA FACILITIES AND CAPABILITIES
OVER A PROLONGED PERIOD OF TIME.

IF A SMALL OR MINORITY BUSINESS CONCERN HAS THE CAPABILITY TO SUPPORT OUR REQUIREMENTS, IT IS ONLY LOGICAL THAT IT SHOULD BE ABLE TO PRODUCE CERTAIN PRODUCTS AND COMPONENTS MORE COMPETITIVELY THAN WE COULD. IN SHORT. WE BELIEVE DOING BUSINESS WITH SMALL FIRMS IS JUST "GOOD BUSINESS PRACTICE." AS A RESULT. OUR MANAGEMENT RECOGNIZES THE IMPORTANCE OF NOT ONLY KEEPING APPRISED OF THE CAPABILITIES AND POTENTIAL OF SMALL AND MINORITY BUSINESSES. BUT ALSO THE EQUAL IMPORTANCE OF DEVELOPING SMALL AND MINORITY COMPANIES TO KEEP PACE WITH THE GROWING SOPHISTICATION AND COMPLEXITY OF AEROSPACE INDUSTRY REQUIREMENTS.

OUR SMALL/SMALL DISADVANTAGED BUSINESS ORGANIZATION IS CLEARLY DEFINED. THE CORPORATE VICE PRESIDENT. MATERIALS MANAGEMENT HAS DESIGNATED ME AS THE CORPORATE SMALL BUSINESS LIAISON OFFICER. MY RESPONSIBILITIES INCLUDE IMPLEMENTING THE COMPANY POLICIES AND DEVELOPING THE NECESSARY PROCEDURES FOR DEALING WITH SMALL AND MINORITY BUSINESSES. INCORPORATING APPLICABLE GOVERNMENT REGULATIONS IN OUR PROCUREMENT POLICIES, AND MAINTAINING LIAISON WITH THE GOVERNMENT ON MATTERS RELATED TO SMALL AND MINORITY BUSINESS. ASSISTING ME IS THE CORPORATE

ADMINISTRATOR OF SMALL BUSINESS AND ECONOMIC UTILIZATION.

AT EACH OF OUR

OPERATING DIVISIONS THE DIRECTOR OF MATERIAL HAS DESIGNATED AN ADMINISTRATOR FOR SMALL BUSINESS/SMALL DISADVANTAGED BUSINESS UTILIZATION WHO IS RESPONSIBLE FOR THE EMPHASIS AND ADVOCACY OF THE PROGRAM THROUGHOUT THEIR RESPECTIVE DIVISIONS.

ALTHOUGH OUR DIVISIONS WITHIN THE CORPORATION OPERATE AUTONOMOUSLY.

OUR ADMINISTRATORS AT THE VARIOUS DIVISIONS INTERFACE AND MAINTAIN
COMMUNICATIONS BY TELEPHONE, WRITTEN CORRESPONDENCE AND PERIODIC
MEETINGS. BY COMBINING OUR INDIVIDUAL EXPERIENCES IN SB/SDB PROCUREMENTS
AT EACH DIVISION. WE HAVE ESTABLISHED SB/SDB METHODS AND GOALS WHICH
COMBINE THE BEST FEATURES OF EACH OF OUR INDIVIDUAL PROGRAMS. THIS
ALLOWS ALL TO BENEFIT THROUGH EXCHANGES OF IDEAS AND INNOVATIONS TO
FURTHER ENHANCE OUR SOCIO-ECONOMIC PROGRAM AND OVERALL ACHIEVEMENTS.

THE COMPANY'S SMALL AND SMALL DISADVANTAGED SUBCONTRACTING PROGRAM
IS MULTI-FACETED. COVERING A WIDE RANGE OF ACTIVITIES INCLUDING, BUT NOT
LIMITED TO. BUYER TRAINING. BUYER INCENTIVES. VENDOR ASSISTANCE.
GOVERNMENT AGENCY COOPERATION AND ASSISTANCE. AND SUPPORT TO INDUSTRY AND
SB/SDB ORGANIZATIONS. THESE EFFORTS. SOME OF WHICH WILL BE DISCUSSED IN
MORE DETAIL BELOW. HAVE PRODUCED NOTABLE RESULTS WHICH WE EXPECT TO
IMPROVE AS OUR PROGRAM CONTINUES TO EXPAND. SOME OF THE AWARDS RECEIVED
BY ROCKWELL IN RECENT YEARS INCLUDE:

1983 U.S. SBA SMALL BUSINESS DEVELOPMENT AWARD - COLUMBUS DISTRICT 1983 U.S. SBA MINORITY BUSINESS REGIONAL AWARD ROCKETDYNE AND