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95th Congress }
2d Session

JOINT COMMITTEE PRINT

CONFERENCE ON MEASURING PROGRESS
IN PARTICIPATION BY MINORITY AND
FEMALE CONTRACTORS IN
FEDERAL PROCUREMENT

REPORT
OF THE

JOINT ECONOMIC COMMITTEE
CONGRESS OF THE UNITED STATES

w

JUNE 12, 1978

Printed for the use of the Joint Economic Committee
U.S. GOVERNMENT PRINTING OFFICE
25-828


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WASHINGTON: 1978

JOINT ECONOMIC COMMITTEE
(Created pursuant to sec. 5(a) of Public Law 304, 79th C~.)
RICHARD BOLLING, Missouri, Chairman
LLOYD BENTSEN, Texas, Vice Chairman
HOUSE OF REPRESENTATIVES
HENRY S. REUSS, Wisconsin
WILLIAM S. MOORHEAD, Pennsylvania
LEE H. HAMILTON, Indiana
GILLIS W. LONG, Louisiana
FARREN J. MITCHELL, Maryland
CLARENCE J. BROWN, Ohio
GARRY BROWN, Michigan
MARGARET M; HECKLER, Massachusetts
lOHN R. ROUSSELOT, California
JOHN R. STARK,

SENATE
JOHN SPARKMAN, Alabama
WILLIAM PROXMIRE, Wisconsin
ABRA:ElAM RIBICOFF, Connecticut
EDWARD M. KENNEDY, Massachusetts
GEORGE McGOVERN, South Dakota
JACbB K. JAVITS, New York
WILLIAM V. ROTH, JR., Delaware
JAMES A. McCLURE, Idaho
ORRIN G. HATCH, Utah
Exewtlve Director

LOUIS C. KRAUTHOFF II, AHiltant Director
RlCHARD F. KAUFMAN, General Coumel

ECONOMISTS
THOMABF.DERNBURG
li.'.ENT H. HUGHES

WILLIAM R. BUECHNll:8
L. DOUGLAS LEE

PHILIP McMARTIN

DEBORAH NORELLI
GEORGE R. TYLEa

MATZ

MINORITY

CHARLES H. BRADFORD


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STEPHEN J. ENTIN
MASK R. POLICINSKI

(II)

M. CATHEIUNE MILLJ:a

LETTERS OF TRANSMITTAL

To the Members of the-Joint Economic Committee:

JUNE' 8, 1978.

Transmit_ted herewith is a rep<>rt on the "Conference on Measuring
Progress in Participation by Minority and Female Contractors. in
Federal Procurement," conducted under the auspices of the Joint
Economic Committee at the initiation of the late Senator Hubert H.
Humphrey, cochairman of the Subcommittee on Economic Growth and
Stabilization. Former committee member Repres~ntative Otis G. Pika
chaired the conference in the absense of Senator Humphrey. Senator
Jacob K. Javits addressed the conference and provided staff assistance
to help organize and conduct it.
The report, based on the input of representatives of more than 50
Federal departments and agencies who participated in the conference,
consists of staff findings and recommendations, the transcript of the
proceedings and an appendix of statements and written responses by
departments and agencies to an extensive questionnaire on procurement
practices.
·
The views expressed are those_ of the participants and staff and do
not necessarily represent the vie,vs of other members of the Joint
Economic Committee or the committee staff.
Sincerely,
RICHARD BOLLING,

Chairm<_Ln, Joint Economic Committee.
JUNE

5, 1978.

Hon. RICHARD BoLLING,

Chairman, Joint Economic Committee,
U.S. Congress, Washington, D.C.
DEAR MR. CHAIRMAN: Transmitted herewith is the report on the
September 23; 1977, "Conference on Measuring Progress in Participation by Minority and Female Contractors in Federal Procurement."
The conference was initiated by the late Senator Hubert H.
Humphrey as cochairman of the Economic Growth and Stabilization
Subcommittee of the Joint Economic Committee. It was chaired by
former committee member Representative Otis G. Pike in Senator
Humphrey's absence. Senator Jacob K. Javits addressed the conference and provided staff assistance to organize and conduct it.
The report is composed of three sections:
Part I. A staff summary identifying the major themes and
recommendations stemming from the statements and discussion
of conference participants.
Part II. The transcript of proceedings of the opening session.
Part III. An appendix of all written submissions from the
various departments and agencies in response to questions on the
procurement process.

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IV

Michelle Babbitt, legislative research assistant to Senator Javits;
and Richard Boltuck, former research assistant on the Joint Economic
Committee to Senator Humphrey are the authors of part I. Prior to
the conference, the authors carried out research in this area and found
that minorities and women are underrepresented in Federal procurement. In part I they identify the various issues of concern to the
minority and female sectors and recommend avenues of change.
In addition the authors review some of the present policy and
literature concerning ~he role of minorities and women as government
contractors.
We feel that items I; III, IV, and V are extremely viable recommendations. They should stimulate additional discussion of the problems
of minorities and women in the procurement process and serve as a
catalyst for legislative action, where necessary. Item II should be
the subject for additional and extensive evaluation before it is accepted as a basis for policy and program formulation.
The views expressed in this report do not necessarily _represent the
views of other members of the Joint Economic Committee or the
committee staff.
Sincerely,
JACOB K. JAVITS,

Member, Joint Economic Oommittee.
OTIS G. PIKE,
Former Member, Joint Economic Oommittee.

Hon. RICHARD BOLLING;

JUNE 5, 1978.

Chairman, Joint Economic Oommittee;
U.S. Congress, Washington, D.O.
DEAR MR. CHAIRMAN: The "Conference on Measuring_ Progress in
PIU"ticipation by Minority and Female Contractors in Federal Procurement" constitutes one of the last congressional initiatives of my
late husband. It reflects his continuing efforts to strengthen and
promote the growth of minority-owned business and to provide
opportunities for women to assume their rightful role as full and
equal participants in the Nation's business community.
Although I am not a member of the Joint Economic Committee;
I wish to take this op:portunity to commend it for holding the conference under its auspices and to associate myself with the recommendations presented by Senator Jacob K. Javits and former
eommittee member Representative Otis G. Pike.
Sincerely,
MURIEL HUMPHREY,


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Member, U.S. Senate.

CONTENTS
!Pap

Letters of TransmittaL __ ------------------------------------------

n1

CONFERENCE ON MEASURING PROGRESS IN PARTICIPATION BY MINORITY AND F~MALE CONTRACTORS
IN FEDERAL PROCUREMENT
I. Staff Summary and Recommendations___________________________
II. Transcript of Conference Proceedings____________________________
III. Appendix:
Conference Questions ________ -----------------------------Department of Labor Response_____________________________
Department of Agriculture Response________________________
General Services Administration Response____________________
Contract Compliance I?ivision, GSA, Response_______________
Department of Commerce Response_________________________
Department of the Treasury Response_______________________
Department of Housing and Urban Development Response_____
Environmental Protection Agency Response__________________
National Aeronautics and Space Administration Response______
Department of the Air Force Response_______________________
Contracts and Purchasing Unit, Administrative Programs Staff,
Department of Justice, Response__________________________
Bureau of Prisons, Department of Justice, Response___________
Federal Bureau of Investigation, Department of Justice, Response_________________________________________________
Central Intelligence Agency Response________________________
U.S. Postal Service Response_______________________________
Department of Transportation Response_____________________
Federal Aviation Administration Response___________________
National Endowment for the Humanities Response____________
Department of Health, Education, and Welfare Response______
Department of State Response______________________________
Veterans' Administration Response__________________________
U.S. Government Printing Office Response___________________
Office of Management and Budget Response__________________
Andrulis Research Corp. Reponse___________________________
Attachments:
1. Statement by the President________________________
2. Minority Business Enterprises Subcontracting Program_
3. The Interagency Council for Minority Business Enterprise________________________________________
4. Firm Headed by Woman Is Ordered Reinstated in
Minority Program______________________________
5. GAO Report on Questionable Effectiveness of the 8(a)
Procurement Program___________________________


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I. STAFF SUMMARY AND RECOMMENDATIONS
Several major themes dominated the presentation of the panelists
and ensued during the discussions of the conference. This section is
an effort by respective staff members of the Joint Economic Committee 1;1,nd Senator Jacob K. Javits' office to identify .these themes,
place them in a broader factual context, and suggest direction for
reform as indicated from the proceedings. The recommendations are
solely those of the staff authors, and do not necessarily reflect the view
of other staff members, or of the committee. They should be viewed
as departure points for continued exploration.
GENERAL OVERVIEW

The Federal procurement process accounts for roughly $60 billion
of purchases per annum. For many years, Federal procurement has
been utilized as a tool to achieve social ends, particularly to increase
the viability of firms owned or controlled by members of classes
affected by past discriminatory practices. To eradicate many of these
past ills, two major executive actions were taken in the past 10 years:
(1) Section B(a) program.-In October 1967, section 8(a) of the
Small Business Act of 1953 was expanded in order to channel
Federal contracts to firms located in urban areas of high structural unemployment. By 1969, this initiative, administered by
the Small Business Administration, had been altered to stress
the development of minority business ownership instead of
employment of the disadvantaged.
.
(2) Office of Minority Business Enterprise (OMBE).-Executive Order 11458 (March 5, 1969) authonzed the establishment of
the Office of Minority Business Enterprise (OMBE) in the Department of Commerce. Its responsibilities include: (1) Coordinating Federal procurement with minority firms, (2) promoting
mobilization of State and local resources for aiding minority
enterprise, (3) serving as a data collection center and an information bureau, and (4) funding organizations to provide training
and technical assistance for minority entrepreneurs and conducting special pilot demonstration projects.
THE JOINT ECONOMIC COMMITTEE CONFERENCE

The Economic Growth and Stabilization Subcommittee, at the
request of the late cochairman Senator Hubert H. Humphrey, sponsored a conference on September 23, 1977. The purpose for such a
conference was to address the Nation's existing minority arid· fem1;1,le
enterprise development program as it pertains to the Federal procure-.
ment process. Deficiencies in this area were identified and recommendations were made for improvements in the program. The conference was comprised of a panel of government and private witnesses,


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and a participating audience representing over 50 government procurement offices from the executive departments, bureaus, and agencies.
Transcripts of the morning session form part II of this volume, while
part III is composed of submissions in resJ?Onse to subcommittee·
written inquiries regarding procurement practices.
The conference was deemed timely in light of the critical relation
of procurement policy to the economic development of disadvantaged
small business. In addition, many factions indicated intense and diverse interest in the development of Federal procurement policy, ineluding proposals to extend affirmative action procurement to female
entrepreneurs.
Several women's organizations contended that data collection and
analysis pertaining to the female element in national enterprise, and
as sellers to the Federal Government, were grossly insufficient to,
provide the information base needed to enact a new social policy to
encourage develo:ement of female firms.
Concurrently, illegalities within the SBA's 8(a) program resulted
in a moratorium and no new firms received certification for entrance
into the program. The moratorium was subsequent to much publicized
hearings of the Senate Subcommittee on Federal Spending Practices
and Open Government. These hearings, chaired by Senator Lawton
Chiles in July 1977, exposed blatant instances of noncompetitive
awards under the 8(a) program secured through the "fronting" of
:i:ninorities in substantially nonminority businesses, in addition to other
abusive practices. The moratorium has been lifted and SBA has made
a commitment to tighten the reins on its administration of the S(a)
program.
· In early September 1977 the President announced his instruction
to all executive de_partments to double their purchases of services and
goods from minority firms, through direct and indirect procurement
activities during the next 2 fiscal years. The President expects this
increase to raise the level of Federal Government purchases from
minority firms to about $1 billion. (See attachment 1.) Accurate data
on such contracting is not readily available and, undeniably, reliable
statistics are crucial to :proper pursuit of the President's target.
The conference was mtended to cast light on these areas by assembling: (1) The officials who interpret the existing laws and policies,
(2) those who are dissatisfied with these policies and their implementation, (3) the congressional legislators who have the ability and
responsibility to effect change, if necessary, and (4) the procurement
personnel who award contracts in compliance with existing policies.
GENERAL FINDINGS

Participating agencies and departments, which included many. of
the major procurement offices, submitted a voluminous amount of
material in response to staff inquiries on the Federal procurement
process. (See part III).
The nature of procurement activities makes it difficult to package
into generalizations. With the exception of the General Services
Administration (GSA) which is responsible for purchasing all civilian
government vehicles and buildings (or ordering construction), and
many smeller items of shared utility throughout government such as
office supplies, most purchases placed by government agencies are

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small in dollar value-under $10,000. Though the number of contracts
under $10,000 is unknown, this note has strong implications for de,.
signing an effective procurement program responsive to those groups
targeted by this affirmative action initiative.
None of the agencies collected data on female owned, controlled,
or managed businesses, and many indicated that in the absence of
congressional or Executive directions to do so, they would not commence such actions on their own. However, most officials indicated
that additional data on women could be collected in the future at a
relatively small expense to the agency. The conference participants
reported that the quality of data their agencies maintained was
generally good, although not superior. In contrast, data from the
8(a) program was superior. This is attributed to SBA's task of contracting and monitoring subcontracts. The quality of data, where
available, deteriorated as the tiers of contracting increased. In part,
this is due to the lack of attention paid to the origin of the components of the final products; i.e., did a certain nut or bolt originate with
a minority firm? In addition, this unsupplied information is often due
to ill-defined requirements for reporting, and weak enforcement. GSA•
does require nominal reports from the contracting agencies through
to the subcontracting level, but they questioned the reliability of
this data. In some cases, procurement officials expressed doubt as to
the veracity of primes in reporting subcontract composition.
Procurement for the Department of Defense is unique as the Department has special procurement needs and contracts with comparatively few, and the same, major contractors to deliver reliable
defense systems. Therefore, DOD controls the subcontracting process
about as closely as most other agencies and departments control
their prime contracting processes.
Some agencies reported a "cumbersome relationship" with SBA
in administering the 8(a) subcontracting program. This group includes
the Department of Housing and Urban Development, and the Department of Agriculture. Other departments, including GSA and the
Veterans' Administration note the "inordinate time" involved in
filling some 8(a) subcontracting needs, thus making procurement
through SBA comparatively laborious and inconvenient to the agency's
own competitive award procedures. The Department of Health, Education, and Welfare, however, claimed that 8(a) subcontracting took
less time than its in-house procedure. The difference may result from
variances in the efficiency of competitive bidding from department
to department.
While these actions provide a working background for better
understanding the present procurement process, the problems which
must be addressed are best discussed in relationship to the recommendations presented in the following section. Prior to discussing
the components of an improved system, it should be noted that in
the following recommendations, the procurement process is regarded
as an appropriate tool to achieve certain objectives. Additionally, the
procurement field is comprised of both private and public institutions
whose duties should be closely integrated: The Office of Federal
Procurement Policy in 0MB, GSA, OMBE, SBA, the multitude of
procurement offices, departmental minority business enterprise councils and so on. At this time the respective staff members have not
undertaken a comprehensive review of the intermeshing of these
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'parties as the issue requires a study unto itself. Rather, the recom'inendations center upon constructive, broad approaches which war1rant consideration by Congress, the President, and others in a position
to influence the Federal procurement process.
RECOMMENDATIONS

I. Innovations in policy administration of proven effectiveness should
be adopted and implemented rapidly, by executive order if necessary.
The General Services Administration has implemented an experimental contracting procedure which has proven to be of significant
value in promoting minority small business. The program presently
is limited to selected GSA construction contracts.
The primary element of the GSA program is a contractual requirement that 20 percent of construction subcontracts go to minorityowned firms. Used on a limited scale for only several months, this
program has already resulted in more than 20 million contracting
dollars being awarded to minority subcontractors, with projections of
a marked increase in the near future.
The 20 percent obligation is imposed in an appendix to the standard
GSA construction contract. (See attachment 2.) Attachments to the
appendix include a certificate of compliance which requires all contractors to list all minority subcontractors they intend to employ, and
the dollar value of the subcontract to be awarded. Failure to fulfill the
terms without evidence of making "every reasonable good faith effort"
(including steps specified in amendments to the standard form), can
result in the contracting officer taking either of two courses: (1) He may
terminate all or a portion of the contract ("the carrot"), or (2) he may
weigh previous actions in determining the "responsibility" of the firm
for the awarding of future contracts ("the stick").
Mr. Ed Mitchell, Director of the GSA Contract Compliance Division and a conference panelist, characterized this "carrot-stick"
approach as "pioneering," but also predicted it would take a minimum
of 5 years to incorporate into the Federal Procurement Regulations
(FPR) which govern the procurement activities of all agencies and
departments.
We support the above-mentioned GSA program and recommend its
widespread application.
.
We urge the Interagency Council for Minority Business Enterprise
(see attachment 3), composed of Under Secretaries, Deputy Secretaries
and Deputy Administrators of major agencies and departments, with
the responsibility for promoting minority business assistance from
within the Government to promptly bring this program to the attention of the President. In light of the President's ambitious commitment to double minority procurement throughout the Government in
2 years we hope he sees fit to use his authority to override normal
course by implementing such a program through an Executive order.
II. The B(a) program should be administered through direct agency and
departmental contracting, rather than through SBA subcontracting. The
SBA should continue to vigorously monitor the program and encourage
cooperation with government procurement offices. In addition, SBA also
should junction as a clearinghouse of information on certtfied disadvantaged contractors.
·

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Problems within the 8(a) program are evident. In 1977, the program
was shadowed by the cloud of congressional investigation and disorder
was so recognized that new firms were not certified. To abate past
abuse, some firms were decertified without due process as was subsequently determined in court. (See attachment 4.) One judge said that
the SBA decertification review procedure "did not constitute a hearing in the United States."
Many procurement officials at the conference claimed the process of
purchasing through subcontracts had inherent deficiencies. One
difficulty was due to the legal prime contractor being the Small
Business Administration, not the firm filling the order. Thus, the
responsibility for compliance lay with the SBA rather than the
contracted firm. Courts have ruled that a department cannot default
the SBA, another Government agency for nonperformance, or inadequate performance. The Department of Agriculture's attempts to do
so have been unsuccessful. Consequently, some agencies admit to a
hesitancy to enlist certified minority firms through SBA for fear of
entering an inflexible arrangement. This apprehension by the contracting department inhibits full use of the program. The more
accountable the individual firm, the more use the departments will
make of the program.
For similar reasons, the subcontracting procedure is a disservice
to participating minority firms who receive "special treatment.''
The low rate of graduation from the 8(a) program (first documented
by the General Accounting Office in a 1975 report) (see attachment
5), may be partially due to the special status which exists through
a subcontract. "Special treatment" cannot help but undermine the
self-respect of minority business owners who aspire for eventual
entry into the competitive mainstream. If the 8(a) program were·
administered through direct contracting, one level of bureaucracyone entire set of legal relations-would be eliminated.
Perhaps the greatest benefit of such a change would be the ability
for efficacious utilization of the critical bulk of procurement money
now disbursed in small purchase contracts of under $10,000. According
to one agency official these purchases are viewed as "nickle and dime
stuff" and often are acquired after three or fewer perfunctory bids
are obtained from companies listed in the yellow pages of the telephone
directory. SBA lists should be employed rather than the yellow pages.
Such action may result in increased minority :procurement. In addition, these contracting dollars could be credited to Departments'
targets for minority procurement.
SBA should continue their efforts to certify qualified applicants
into the program and then publish lists of minority firms for distri.:.
bution throughout the Government. If this "clearinghouse" role
were SBA's prime responsibility in the 8(a) program perhaps it would
be administered with greater thoroughness and equability. Systematic
updates, by geographical region and type of firm, would help to assure
that certified firms meet eligibility standards. SBA should determine
when ii:firm is ready to "graduate" from the program and see that it
does so.


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It was found that many subcontracting opportunities sent to SBA
are returned unfilled and then must be offered competitively. Via the
method of direct procurement, delays in filling contracts, which were
noted by several procurement officials, would be alleviated. Under
the proposed system each department and/or agency would administer
its own contracting program and therefore, be responsible for its own
timeliness.
In addition, SBA may elect to reevaluate and perhaps revise the
measures used to determine who or which group is socially and
economically disadvantaged and institute more objective standards
in determining whether a class necessitates assistance. The concept
of being disadvantaged and receiving special assistance does not come
under question, rather it is the criteria which is being used to render
the decision. Indeed, the utilization of the phrase "socially and
economically disadvantaged" is nondescript and relies to a great
extent on the judgment of the Small Business Administration. The
language was gleaned from the Economic Opportunity Act of 1965.
If more objectivity were applied to the selection process, specifically
in the economic end (statistical criteria combined with the humanistic
element), the function may be adminiE>tered with greater equality.
III. Every agency and department should be required to initiate strong
ejforts to sensitize all of their personnel to the special needs of the minority
and female sector in the procurement process.
The procurement process within a department or agency typically
has three major stages. First, a need arises in the operation of the
department for certam goods or services which must be obtained from
private enterprise. Second, the internal competing needs of the various
units of the department are reconciled withm their budget constraints
by program officials. The contents of the contracts are then defined.
The specifications are then passed to the procurement officials who
are the department's representatives in the marketplace, actually
buying on the best terms available.
In responding to the reauests in the awarding of contracts: (1)
within the Department, (2) of national policy, (3) of budgetary
constraints, and (4) for efficiency and expediency, program officials,
we believe, develop contract specifications in ways which deer.ease
the prospect of contracting with minority firms. Procurement officiali;i
contend that it is a more arduous and time consuming process to
locate a qualified minority and/or female firm. The contracting officials
may be aware and sympathetic with the national policy of affirmative
action procurement, but unable to implement it ~roperly without
cooperation from other links in the procurement cham.
The Department of Transportation, as only one example, hBB
recognized this problem and has developed a series of seminars to
familiarize program officials with ways in which they may facilitate
the Department's minority procurement objectives. Such efforts should
be instituted throughout the Government and mig_ht include textual
guides prepared for procurement officials by OMBE and SBA.
IV. Steps must be taken toward increasing procurement with female<YWned firms.
There are three substantive areas concerning female procurement
which have been identified:
(1) What constitutes a woman-owned business needs to be
clearly defined and uniformly accepted throughout the Government. Presently, 51 percent female ownership characterizes a

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female-owned firm although in fact this definition varies among
agencies and departments. With the interests of women in
mind, we believe the basis for a female-owned business should
rely more heavily on the criteria of active management (definitional problems here as well) than on the percentage of fema)e
stock ownership. The President's Task Force on Women m
Business will address this definitional problem as they study the
role women play in the nation's economy. We look forward to
their recommendations on this issue.
(2) The female element needs to be incorporated into the
data system in order to ascertain the status of female firms in
the economy, and their degree of participation in the Federal
procurement process.
(3) On the basis of new data, partici ation can be measured
and it can be determined whether specia efforts for procurement
opportunities need be extended to nonminori~ female firms;
The Office of Federal Procurement Policy (OFPP) part of the Office
of Management and Budget, has taken initiatives toward establishing
a definition for female owned firms. The task is inordinately difficult
as various factions must be considered and numerous questions
answered. Should publicly owned corporations be included in the
definition? Does the definition apply to firms which are located in
States with community property laws? Is "fronting" for men likely
to be a frequent abuse, if definition is based on female ownership?
In a September 1977 report, the House Subcommittee on Minority
Enterprise and General Oversight copiously documented the plethora
of definitions for a female business now used in existing policies. Quite
clearly, this multitude of definitions leads to confusion. OFPP, in
attempts to draw information from the private sector to assist them
in establishing a definition, tentatively has decided not to solicit information from publicly owned corporations, as the nature of these
corporations does not hold for small female-owned businesses. This
action was taken at the urging of the President's Task Force on Women
in Business. These publicly held corporations may have the following
characteristics: (1) A great deal of stock is held by nongender institutions (pension plans, etc.), (2) most corporations have roughly the
same sex composition of shareholders, (3) stockholdersmsually don't
exert managerial control, (4) the :financial stability of owners is
usually not intimately tied to the success of the enterprise, and (5)
the data would be costly to accumulate. Affirmative action procurement
always has been targeted to small businesses typically organized in
partnerships or sole proprietorships.
OFPP will incorporate the female data element in its new Federal
Procurement Data System (FPDS) scheduled to be instituted in
October 1978.
Attempts to be responsive to female contractors are met with
hesitation and skepticism. Some minority firms see a fixed and limited
amount of contracting dollars available for non-competitive distribution to targeted groups. They contend that by extending affirmative
action to nonminority women, their portion would be further divided.
there~y leaving less for minority business. If women were to :particidate m these programs we would recommend that the allocation for
this program be expanded. Mr. Frank Kent, executive director of the

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National Association of Minority Contractors, one of the. largest
national minority associations, is an advocate of women being included
in the 8(a) program. However, it is unnecessary to assess this possibility here as the decision to extend the 8(a) program should be based
on whether an identifiable group is indeed socially or economically
disadvantaged, rather than on minority classification.
Women are not a minority nor should they be classified as such.
blassifying them as minorities would present troubles for i>_olitical
leaders, ·as Representative Pike noted at the conference. Femaleowned firms, specifically nonminority -female firms, should receive
certification for acceptance into the 8(a) program via the criteria of
being "socially or economically disadvantaged." A business owner may
be disadvantaged for historical reasons without being a member of a
minority class; any identifiable disadvantaged class would be eligible
for inclusion.
There has been considerable discussion concerning stigmatizing a
specific group by labeling them socially and economically disadvantaged. This ma;y be a greater disservice than benefit, specifically
psychologically. Philosophically, the authors have difficulty in making
such categorizations. However, we acknowledge that it may be to
the individual's interest to apply these classifications in that it removes the burden of proof of being socially and economically dis.,
advantaged from the small business person and places it with the
Government-the Small Business Administration.
Are women disadvantaged? The answer is not clear. However, the
Department of Commerce's figures for 1973 show that 4.6 percent
of the Nation's firms were female-owned, while only 0.3 percent of
the total receipts were those of female firms. Female enterprise is
shamefully underrepresented in the States.
Female-owned firms are unique in their composition and encounter
additional problems. They are usually concentrated in the retail and
selected services industries, where opportunities for Federal contracting are lower than those firms involved in construction, manufacturin~, etc. In some supply sectors, female business is virtually nonexistent, including the manufacturing sector, where it accounts for
less than 0.05 percent of volume. In addition, firms owned by women,
like those owned by minority men, are "petite" in size, and suffer
greater hardships than those normally incurred. They must compete
with small businesses, which are substantially larger in size.
It presently is impossible to substantiate whether the Government
has discriminated against female entrepreneurs in the procurement
process as data is unavailable. This is in contrast to existing statistics
which show women certainly are underrepresented in the national
economic mainstream. This information may indicate needs for special
efforts for women entrepreneurs.
Pending legislation in the House addresses the problem of underrepresentation by socially and economically disadvantaged groups.
The legislation presumes that socially and economically disadvantaged
groups and group members include American Negroes and Hispanic
Americans but are not lim,ited to these groups. The bill states that
the presumption of being disadvantaged "may be rebutted with
respect to any individual if the administration feels, on the basis of


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substantial evidence, that such individual has not experienced impediments to establishing, maintaining, or expanding a small business
concern as a result of being a member of a group * * * presumed to
be socially and economically disadvantaged."
The legislation does not direct its attention toward women. However, the present definition of socially and economically disadvantaged
groups does provide for some flexibility. In order for women to be
included, a change in regulations would be necessary, rather than a
change in law. If forthcoming statistics indicate that women "have
suffered the effects of discriminatory practices or similar invidious
circumstances over which they have no control" then we would
encourage this classification to be extended to women. In addition,
other classes of people who have been socially and economically disadvantaged should be included for this program if said condition is
fully documented.
Following data implementation, appropriate action should be taken
concerning proportionate female participation in procurement. Special
efforts, although not minority status, should be directed toward
women entrepreneurs.
V. The Congress should adopt national targets for minority and female
enterprise within Federal procurement so as to facilitate measurements
of growth.
In May 1975, the Commission on Civil Rights issued a report
entitled "Minorities and Women as Government Contractors."
They suggested such a target and urged that:
Within the next 5 years, the Federal Government should increase the annual
dollar value of its contracts and subcontracts with minority males, minority
females, and nonminority, female-owned firms to an amount at least equal to
their representation in all American business (page 129).

Most authorities concede this to have been, under the best of conditions, an overly optimistic and ambitious goal. But the form of the
goal statement is appropriate, if indeed, these groups receive less than
their pro rata share of contract dollars.
In his September 12, 1977, statement on the development of
minority businesses, President Carter ties progress to specified increases in dollar amounts over 2 fiscal years, a relatively short period.
This type of goal lends itself to government management planning.
Ideally, the President's objective should be harmonized with a target
for longer term progress.
Present data insufficiencies thwart the advocation of more specific
recommendations as we cannot condone or condemn without ample
documentation. With set goals, and continuing congressional involvement and monitoring, the effectiveness of these affirmative action
programs will be assured.


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Federal Reserve Bank of St. Louis

II. TRANSCRIPT OF CONFERENCE PROCEEDINGS
FRIDAY, SEPTEMBER 23, 1977

CONGRESS OF THE UNITED STA'l'ES,
SUBCOMMITTEE ON ECONOMIC
GROWTH AND STABILIZATION OF
THE JOINT ECONOMIC COMMITTEE;
Washington, D.O.
The subcommittee met, pursuant to notice, at 10 :15 a.m., in room
6326, Dirksen Senate Office Building, Hon. Otis G. Pike (member
of the full committee) presiding.
Present: Representative Pike and Senator Javits,
Also present: Richard Boltuck, research assistant; and Michelle
Babbitt, legislative research assistant to Senator Javits.
OPENING STATEMENT OF REPRESENTATIVE PIKE
Representative PIKE. Ladies and gentlemen and procurement
officials from the various departments of Government and, particularly, invited panelists: First, I apologize for being late. I was almost
here, and the bells rang for a vote in the House, and I had to turn
around and go back.
I am Congressman Otis G. Pike, presiding in the absence of Senator
Humphrey.
You are, no doubt, aware of Senator Humphrey's devotion and
dedication to the question of the rights of women and ethnic minorities; and, while we are here in body, I know that he is here in mind
and spirit.
The problems we are here to examine are of great importance to
social justice and the survival of fairness within a prosperous freeenterprise system.
The President has recently directed that Federal contracting from
minority firms be doubled within the next 2 fiscal years. But doubled
from what?
I understand from the White House Domestic Policy Council
that there were three base figures provided from three different executive department sources.
The Office of Federal Procurement Policy said that $625 million
of contracting for minorities was occurring. The Small Business
Administration said $500 million. The Commerce Department said
$838 million. They are spread all over the map.
The Office of Minority Business Enterprise has the chief statistical
function in this area, but the Civil Rights Commission has repeatedly
found substantial differences between their own research and the
Office of Minotiry Business Enterprise official figures.


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If changes are to be made, let's make them. If they mean more
money must be appropriated, let's do it, but I doubt it. It probably
means just getting knowledgeable officials together more often, as
we are doing today, and reorganizing the system.
Let me stress: Without good, aggregate figures, Congress will not
set a procurement policy. We essentially have never changed the one
contamed in the 1953 Small Business Act. Such progress as has occurred has been embodied in Executive orders and regulations interpreting the 1953 Act.
One other issue: We should seriously consider the Civil Rights
Commission recommendation to extend affected class status to women
as well as ethnic minorities. This has not been the Small Business
Administration's position in administering the 8(a) minority subcontracting program.
We know in our hearts that women have been victims of discrimination in the business community, too. Perhaps this will require
congressional leadership. If so, the discussion today should, or at
least may, clarify how.
You should know that a congressionally sponsored conference is
a rare event, indeed. It is an innovation in a subject area such as this,
and on its success will rest its emulation by other committees.
Witnesses frequently find hearings stilted and stiff, and only limited, selected information can be conveyed to a few peo.Ple.
Here we are seeking to foster informality, seekmg insights and
wisdom from these people-not necessarily the heads of departmentswho understand best the problems. And we are encouraging interchange. This is accomplished by bringing together everyone who has a
substantial contribution to make.
The format for the day will be as follows: First, we will hear from
the members of the panel. Then questions of the panel or individual
panelists will be entertained from procurement officials in the front
rows of the audience section.
Following recess this morning and lunch, the participants will reconvene in three separate but simultaneous workshops. All participants are asked to pick up an assignment sheet before you leave for
lunch. The staff will have it prel?ared by that time.
I understand Mr. Joe Kernan 1s substituting today for Mr. Winford
Smith. Mr. Kernan is the chief of the Program Support Division
of the Small Business Administration. That is the Office of Business
DeveloJ>ment. Is that right, Mr. Kernan?
Mr. KERNAN. Yes, sir.
Representative PIKE. The panel has statements to lead off with.
Mr. Kent, are you prepared to go first?
Mr. KENT. Yes, sir.
Representative PIKE. Fine.
STATEMENT OF FRANK KENT, EXECUTIVE DIRECTOR, NATIONAL
ASSOCIATION OF MINORITY CONTRACTORS

Mr. KENT. Thank you very much, Congressman Pike and members
of the Joint Economic Committee, and procurement officers from the
various agencies.
I am pleased to be here to represent the National Association of
Minority Contractors, an organization which represents approxi
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mately 75 percent of the minority contractors in the country, to talk
about an issue which is very important to us because it means our
lifeblood.
Very firmly, we believe in the capitalistic system and the freeenterprise system. And because we believe so strongly in it, I want to
make a couple of points this morning, because we believe that our
country is at a point where it is in senous danger.
Congressman Parren Mitchell spoke to us yesterday at our annual
conference and he said something that almost all who were at the
luncheon agree with.
We are not so much afraid of dangers from the outside as much as
we are of dangers from within. Our country is going to be strong if
we enable every citizen to really obtain those things that the Constitution and the Bill of Rights provide. And that is everyone has the
right to really pursue his highest dream or goal.
Several years ago, when I was interested in the Defense Department's procurement activities, I was amazed with the percentages,
which were 0.007 percent minority procurement. That was out of
billions of dollars.
Yesterday, Congressman Mitchell said that a study which his
office had done showed that there is not more than 1 percent minority
procurement by any agency of the Government.
If that figure is correct, and I believe that is, then we are not doing
a very good job of bringing minorities into the mainstream of our
Amencan economic life, and government, which should be showing
the way, is not showing the way.
The second part of the issue is that President Carter did announce
that his administration wants to double within 2 years minority
procurement. If they double it within 2 years, minority _procurement
goes from 1 percent to 2 percent. That is a good move, but I believe
that parity for minorities and women in this country can be achieved.
There are qualified minorities who can bid for the Jobs competitively
and can get the jobs done.
An interesting thing happened earlier this year. The Interior Department, probably had one of the worst records of any agency in
terms of mmority procurement. It had never had more than a million
dollars in minority procurement in any given year. Yet. this year, in
one quarter, with .some concentrated activity, it went from $1 million
to $17 million.
Now, that says an awful lot of things to me. What it says is that,
if there is a c.oncentrated effort by procurement people to find minorities and get them involved in getting those contracts, the job can
be done.
We found out an interesting thing in the District of Columbia
working with the procurement people. The District had a percentage
rate of about 2 or 3 percent minority procurement in a city that has 11,
75 percent minority population.
The procurement people had difficulty believing that there were
qualified minorities who could do the job. When we suggested to them,
~'Set goals of 10 percent," they said, "That's too high." We said,
"We have already demonstrated that when Metro-transit authority-set minority goals of 15 percent, we met it every single
time, even though the major contracting firms had said, 'There is
no way you can make it.'"

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But, all of a sudden, when the goals were set, somehow they found
the minority firms, legitimate minority firms.
In 3 years with Metro we were able to claim $80 million m contracts from minority contractors.
What is the reason for that? It is a concentrated effort.
I believe most people involved in procurement really don't know
where to look for minorities. Perhaps today we can make suggestions.
Where do you find them?
I think the same question goes for women. However, Dona
O'Bannon is going to speak about that, so I am not going to go into
that part of it.
But I am sure that the same thing applies there.
We found the Defense Department, when we were doing this
study, did not keep accurate records. It had no idea, for example,
how many minority subcontractors there were. The figures which
we were given really didn't portray the actual number of minorities
who were in fact contracting with the Defense Department either
through prime contracts or subcontracts.
I think that accurate records are a key requirement, not only for
prime contractors, but for subcontractors as well.
Finally, we found that far too many people who have the responsibility for procurement think that this is a matter for the Office of
Civil Rights, as OJ.)posed to the Office of Procurement. I am suggesting
that if the minonty procurement pro~am is to work, it has got to
be something which pervades the entire agency, particularly m the
places where the contracts are made.
The National Association of Minority Contractors is willing to
assist ;you in any and every way to provide opportunities for minorities.
We will be glad to help you find those minorities.
I believe that most of you have received a copy of our Minority
Builder magazine, which we p:!Jblish on a bimonthly basis. If you did
not receive a copy of it, we will have some copies before the end of the
meeting for you.
Through that magazine we are trying to give you success stories of
minority contractors, architects, and engineers whom you can read
about and, hopefully, file away and invite to bid on the various projects
that you have.
In addition to that, we publish a digest that goes to most minority
contractors in the country and identifies job opportunities. We would
be very happy to publish those opportunities which your agency may
have so that minority contractors can know about them.
They don't always read the journals that you probably use, but
they get this digest and they know that it is slanted toward their
interests. I think that you will find you will get some response.
I will be ha:ppy at some point, Congressman, to answer questions.
Representative PIKE. I think that the most orderly way to proceed
would be to let the. entire panel speak first and then let the whole
panel respond to questions.
The next person to testify will be Mr. Ed Mitchell, the Director of
Contract Compliance Division of the General Services Administration.


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STATEMENT OF ED MITCHELL, DIRECTOR, CONTRACT COMPLIANCE
DIVISION, GENERAL SERVICES ADMINISTRATION
Mr. MITCHELL. Congressman Pike, ladies and gentlemen, I look at
this opportunity that has been given me today in two ways. Not only
can I express some of my experiences to you in working with the socalled business arm of the Government, but likewise learn from you
so that I can participate with you in changing what I agree, with
Frank Kent, is an untenable situation.
Representative PIKE. Mr. Mitchell, I will interrupt you just enough
to say that, if you don't teach me more than you learn from me, this
is going to be a failure. [Laughter.]
Mr. MITCHELL. Because of the credibility question, I would like
to take just a miniscule amount of time to give you a little bird's
eye view of this agency that I represent.
GSA is basically a service organization and, under the direction
of its Administrator, Joel W. Soloman, is organized like many of your
organizations, or like much of the private sector, as a multi-billiondollar conglomerate conducting business in several diverse fields
ranging from what could be classed as broad policymaking for the
total government to service through people.
Its principal customers, the recipients of its goods and services,
are primarily the other offices and agencies that make up the executive branch of the United States Government.
After a quarter of a century of service to the Federal Government
and the American taxpayer, GSA is continuing to refine its methods
of meeting its traditional responsibilities for Government work space,
supplies, and records.
Today, the agency is changing and looking to the future, not the
past. It is responding to fresh challenges that all institutions \\'Ork
to improve the quality of life in America.
People are important to GSA, both its own employees and those it
serves. I think it has been the emphasis on people, the human approach
necessary to achieve excellence, for which we strive.
Within GSA we recently have been using what we call a systems
approach to tie all facets of our management together, to relate
objectives to plans, plans to programs, and programs to services,
services to resources, and resources to schedules and costs, and all
within the same conceptual framework and all projected several
years into the future.
As a facilities manager for the Federal Government, GSA uses as
a prime consideration in selecting sites for new construction projects,
as well as for leased space, the availability of low- and moderateincome housing on a nondiscriminatory basis, :r,ublic transportation,
and the like. Where these items are not available, many persons,
minorities and females, and large numbers of young white families,
find that because of the high housing costs they are in effect denied
jobs and opportunities.
We have for some time recognized that a number of socioeconomic
problems have been alleviated, if not eliminated, through the Federal
procurement process.


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GSA's objective is to fully use this process to assist the disadvantaged in becoming viable business entrepreneurs and taxpaying
citizens as they strive for a more equitable share of our private
enterprise system.
We do have various information systems, one for internal work,
others for instance that I have in my Contract Compliance Division
activities, which can provide managers from division chiefs to the
Administrator with the information upon which to base informed
Equal Employment Opportunity decisions.
I do not want you to take that statement, though, as an indication
that GSA today can give you a reliable figure as to the number of
contracts, in their totality, awarded to either minorities or female
firms.
A few years ago, when we were giving a workshop to enhance
opportunities for females, we couldn't come up with that figure. We
were able to find out that we had six female construction firm owners
on projects all over the country, and some 89 females in key jobs on
construction projects, as of August 12 of that year.
But as to how many precisely in total, we did not know, and to
my I?ersonal knowledge, I would not under any circumstances say
in this forum that we do have a reliable plan that could do that right
now.
Our affirmative action plans have been approved earlier, and in
some cases made models, but we recognize the fact that we have
come nowhere near our goals, although we have made significant
progress when you compare it with what we were doing a few years
ago.
But we still are nowhere near it, though we are willing to try new
things.
Now, just for a moment, so you will have a little background in
which you can judge whether the statements I make are believable,
are worthy of belief, let me tell you what the scope of my current
responsibilities are as Director of Contract Compliance with GSA.
This is the program related to employment and evaluation of
affirmative action on the part of contractors that do business with
the Federal Government.
The Compliance Division in GSA, which I head, is assigned three
construction industry codes for both the General Services Administration and the Postal Service.
If you consider, then, the construction projects that are on papernot those that are in being right now, but on paper-you are talking
about literally thousands of projects.
If you consider what is in-being right now, you are talking about
some 900 to 1,200 projects of quite extensive costs that are going on
all over the United States at the present time.
In addition to construction, we are assigned the responsibility for
36 service and supplies industries, some of them of critical importance.
The utilities industries-communications, paper, lumber Eroducts,
and ground transportation, just to list a few-employ millions of
our mvilian work force.
Now, let me tell you what we have done in the past.
First, I will start from where we were not too many years ago. We
had only given $300-and-some-odd-thousand to minority contractors


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in a given period of time. Since that time, we have been able to increase minority procurement in one program alone to a rough average
in excess of $50 million a year.
It has been quoted at various times, a few years back, that GSA
was doing about a third of the work that was done in the Federal
Government in the 8(a) program.
We did establish business service centers, in many key areas all
over the United States, to assist disadvantaged entrepreneurs so that
they could become more viable. We did start emphasizing women's
participation, and here in Washington one year we had a special meeting for it.
We have a circuit-rider system to assist disadvantaged entrepreneurs, and periodically we go all over the United States on that. We
have conducted seminars. We work with the principal associations
such as the National Association of Minority Contractors.
On the other side of the coin are the Mechanical Contractors of
America and other groups which we work with, nationally and locally,
in our different field offices.
Our goals for the 8(a) program are continuing. We likewise try in
many ways to do other things to increase the opportunity for the
disadvantaged in the business field. I will give Just one or two
examples.
We broke through a logjam that permitted us to put a building
housing a private activity managed by minorities, on Federal property
in Denver, Colo. It is a model daycare center run and operated by
Hispanics.
In that same area we set up a vehicle maintenance shop, which,
because of the high density of Government employees, the minority
firm was almost assured of success.
In our so-called model building in Seattle, the maintenance contractor is a minority.
We put concessions in buildings. GSA man~ges some 10,000 buildings nationwide. That activity is ongoing. W 0\ even, as I have said
once or twice, we took the step, as they say, where angles fear to
tread, and we worked out a joint venture between Puerto Ricans
and natives of the Virgin Islands to construct the Federal office
building and courthouse there, which was successfully completed.
In one of our regions, region 10, in the Northwest-I am choosing
that because there is not a large minority population-approximately
25 percent of our contracts in that particular region, in the construction field, went to minority firms.
But I don't want to just talk about the past. What about now?
What are we doing now?
We like to think that we are pioneering a minority subcontracting
program which requires that 20 percent of the subcontracts in this
re~on would go to minorities. As of right now, that is working well.
We have awarded about $20 million on that right now, and we
expect in excess of some $14 million more shortly.
The contracts, the bid conditions that we enter into there, require
this. There are things like that going on all over, and in addition to
that there is one paper I have here about what we can do by just
asking the contractors doing business with us what they are domg,
because, when we ask them, then there are certain of them that say,
"With your help, we will do quite a bit."

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As an example, one firm set up a MESBIC and now has been doing
a multi-million-dollar business every year with minority firms.
Thank you very much.
Representative PIKE. Thank you very much, Mr. Mitchell.
Our next panelist will be Deborah Snow; a researcher for the U.S.
Commission on Civil Rights.
Ms. Snow, before you proceed, it is probably unfair to raise this
issue at this time, but there is something about the heady atmosphere
of the Senate Office Building which causes prepared 10-minute speeches
to expand, and I would simply suggest to you that, if we are going to
get through the panel in trme for a question :period at all, I would
appreciate it if you would do your best to limit your remarks to 10
minutes.

STATEMENT OF DEBORAH SNOW, RESEARCHER, U.S. COMMISSION
ON CIVIL RIGHTS
Ms. SNOW. Thank you.
I really appreciate the opportunity to join in this conference today.
Many of you are probably familiar with the report, "Minorities
and Women as Government Contractors," which the Commission
on Civil Rights published in 1975.
This summer, we had the opportunity to do a little work in trying
to update the statistics in the report. That document is not published,
but it is available from the Commission. It is just called "Staff Update" to the report.
Overall, the Commission's interest in procurement came about as
a result of a series of conferences on economic development for minorities and women in 1972. The Commission's goal was development of
a healthy minority and female business community fully integrated
with the mainstream economy.
The Commission looks on procurement as a tool for fostering
business developmen1,/for minorities and women. We are very concerned with nondiscriminatory access to procurement dollars, whether
at the Federal level or the State and local government level.
But we also are especially interested in using procurement markets
to foster business development. We believe this is entirely justified
in the light of centuries of exclusion from participation in the economy.
To have remedial measures such as special contracting programs
is an established national policy over several administrations.
So we don't see much point at this stage in asking whether to have
special contracting programs. We have them, and we need to know
how to make them effective.
Our interests in problems of data grow out of this basic approach.
We are especially interested in having data that we can use to understand what is going on. We are also interested in a variety of data
that will allow us to evaluate progress being made to achieve the
overall goal of business development. This includes evaluating special
programs and participation of agencies as government contractors
m achieving this goal.
I would like to share with you a couple of the problems that we
have run across as we tried to study minority and female government
contractors.

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We are in a position basically of being a user of the data that -are
generated by you.
In the first place, there are roblems of data gaps where there
absolute!y is no information. 0 course, t~e key example of ~his ~s
contractmg by the Federal Government with women. T.here Just is
no information.
I will be happy if I hear today that some agencies are now providing that information. In the work we have done in the past, there is
nothing anyone can say. It ends up being a closed subject.
When we wrote our report, we had to say, and it was about page 30
of the report, "There is no information about women."
Also, we found an appalling lack of information on subcontracting
with minority firms.
DOD had a little information. They weren't sure it was reliable,
so we weren't sure it was reliable. So we couldn't talk about that
program.
We also found a lack of overall information on procurement. We
get very different answers, as Congressman Pike suggested, to the
question of, "How much does the Federal Government buy from
minorities?"
We get equally different answers to the question, "How much does
the Federal Government buy?" No one seems to know.
There are also a number of problems with reliability and comparability of data. We are interested in being able to compare across
years and across agencies so that, when we evaluate programs or an
agency's performance, we are talking about the same thing.
When we looked at Federal programs, in 1975, we were primarily
interested in the 8(a) program, the minority subcontracting program,
and the "Buy Indian" program.
We did our own survey with the Federal agencies. The information
submitted to us had problems like this; when we asked for direct
contracts with minority-owned firms, we got information on contracts
awarded by grantees and we got a mixture of information that included data on requirements contracts, and call contracts, and concessions-from GSA-but did not identify those as particular types
of procurement.
They told us, in effect, how much they had obligated, but not
how much the,r had spent. It was very, very difficult to reconcile
those figures with the other contracting figures.
With respect to the "Buy Indian" program, we were unable to
distinguish information supplied by the Bureau of Indian Affairs
and the Indian Health Service with commercial firms and their
contracts with Indian tribes, or other nonprofit activities.
It turned out the best estimates we could get were somethin~ like
85 percent of "Buy Indian" contracts were not-for-profit activities.
Representative P1KE. I am obliged to interrupt you again. It has
to do with a vote on the floor of the House at the moment. I must
leave.
I would simply like to say to the panelists and the procurement
officers and the audience, if we learned nothing else from the Bert
Lance hearings recently, we learned that the role of the staff is far
more important than the role of either Senators or Members of the
House of Representatives.

1

25-828-78-4


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I would simply suggest to you that you please continue in my
absence. I will be back as rapidly as I can get here.
Ms. SNow. We also found, and I noticed this again yesterday when
I was looking through an OMBE report, that among the categories
listed for data requested on minority contracting, most agencies reported 8(a) contracts, and a few agencies reported direct contracting
and subcontracting.
HUD reported something called "Indirect Procurement." It didn't
appear to fit into any other category, but was not explained. This is a
problem we ran into again and again, where different kinds of data
are reported with no explanation of what is actually being reported.
For the researcher, this kind of lack of comparability and lack of
reliability creates serious problems. One is that each researcher must
start all over again, which means there is not as much growth in learning as there ought to be in the research done on this.
The other is that no one really knows what is going on. If you read,
for example, the OMBE reports published every year, most of the
curves are up, but no one knows whether that is true or not. It makes
it very, very difficult to set any policy when you don't know where
you are, and you have no way of guessing how far you can go if you
had an active program.
We are concerned with getting from you, in doing this research,
data such as the amount of contracts awarded, the sequence of contracts going to a particular firm, and the share of contracts going to
given minority groups and to women.
Overall, we want to be able to talk about the minority and female
share of Federal procurement-direct procurement, as well as special
pr<>gram procurement and subcontracting.
When we are evaluating :programs, then we get interested in things
like sex and racial composition of staffs of agencies, resources devoted
to special programs, the whole question of outreach, or finding minor
ity and female contractors, and of how the agency and individual
members of its staff work to overcome the inertia of just continuing
to use their old system.
There are all kinds of information that we want to have to do our
job that we don't have because the procurement system doesn't
generate the information.
Let me say with respect to goals that the Commission recommended
as a rule of thumb, or a target goal, that within 5 years, which, since
the report came out in 1975, means 1980, the Federal Government
should be contracting with minorities and female-owned firms
in proportion to their representation in the American business
community.
That is, for example, if minority males have 5 percent of American
business, then the Federal Government should be buying 5 percent
of its procurement from firms mvned by minority males.
This would similarly apply to subcontracting. We would say that
at least 5 percent of subcontracting should go to minority males.
The Commission made this recommendation as an effort to open
discussion on the whole question of what are reasonable goals, taken
from a broad perspective rather than, say, looking at the volume of
contracts in the 8(a) program over the last 5 years, and saying, "Well
why don't we increase that by 6 percent?"


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We believe that kind of goal setting doesn't give enough attention
to the overall problem. It gets too tied to what is happening and
doesn't really reflect what is not happening, which is what we are
most concerned with.
I wanted also to note that I have heard that many procurement
officials believe the reason the Federal Government does not have
any information on contracting for women is that regulations do not
require it.
We don't think that regulations have to require it. We don't think
the regulations prohibit it. But we are willing to call for a change in
regulations if that is necessary. We would like to see the commitment
to get the data.
We think the changes in regulations or Executive orders or whatever
else is necessary will follow.
We believe, and recommended in 1975, and the Commission, I am
sure, would reaffirm this today, that there should be uniform data
collecting and reporting systems. Developing these systems is within
the authority of the Office of Federal Procurement Policy, and we
hope to see action on this very soon.
Thank you, I will be happy to answer questions.
Mr. BoLTUCK. This is Senator Javits. Since he has just arrived, I
will introduce the next panelist.
In deference to Mr. Pike's opinion, I have a feeling if there were no
Members of Congress here, there would be no staff, either, but it
wouldn't work the other way around.
I would like to mention that Mr. Owen Birnbaum of the Office
of Federal Procurement Policy was here this morning. However, he
was called away at the last moment by his office. A very important
matter arose. So we regret that he cannot be with us.
I think the next speaker should be Mr. Allan Stephenson from the
Office of Minority Business Enterprise.
STATEMENT OF ALLAN STEPHENSON, ACTING DEPUTY DIRECTOR
FOR OPERATIONS, OFFICE OF MINORITY BUSINESS ENTERPRISE

Mr. STEPHENSON. Thank you, Senator Javits, ladies and gentlemen.
I would like to preface my remarks with just a few comments
based on some of the remarks that have gone previously.
There is no question but that there is a serious problem as it relates
to minorities and women in the business field.
When we talk about less than 1 percent of the procurement in the
Federal Government, what we are really talking about is the inability
of the Government to sensitize itself to the problems that are facing
the country as they relate to the community, as they relate to anything you want to talk about.
I found through my own involvement in business development, and
I have been in it for 17 years, the last 7 years with the Government,
that the difficulty with people who make decisions relative to minorities
receiving a share of the free enterprise system has to do with their
inability to recognize or to translate success with a minority.
They will see a proposal that is very solid, but somehow they cannot
translate the solid business deal to the minority business person and
see success.

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Most of the time we spend a lot of activity dealing with ways of
assisting disadvantaged people, and everything is concentrated on
their problem. Nobody concentrates on the people who have eaused
the problem, and I say that something has to happen along that line
or we are not going to move down the pike.
A friend of mine told me the other day that the biggest problem
we have trying to solve unemployment is that every:body who is
trying to solve the problem is employed, and maybe 1f some of the
people who were unemployed were in a position to solve the problem,
we might not have the problem.
With that, I will read my statement.
The Office of Minority Business Enterprise was established in
March 1969 by Executive Order 11458.
In October of 1971, OMBE's authority and mandate were significantly broadened by Executive Order 11625. This Executive order
gave the Secretary of Commerce authority to establish within OMBE
a center for the development, collection, summarization and dissemination of information that would be helpful to persons and organizations throughout the Nation that were concerned with the development and promotion of minority businesses.
Now, I said the development, collection, dissemination, but not
with the monitoring or enforcement powers to see to it that the information collected is, in fact, accurate and reflects what we would
want to see reflected.
Executive Order 11625 also requires the Secretary of Commerce to
collect reports and data from other Federal departments and agencies
on their minority business enterprise policies and programs.
OMBE has established a data center to carry out the Secretary's
responsibility.
The data center collects and summarizes detailed information on
assistance provided to minority-owned businesses from our national
network of some 250 contractors and grantees.
In addition, the chief of our data center serves on the Interagency
Council to Minority Business Enterprise, and he is on a special
committee called the Data Committee.
This committee has representatives from approximately 29 departments and agencies. Each member submits annual and semiannual
data on their a~ency's performance in the area of subcontracts, 8(a)
contracts, and ctirect contracts.
These reports are aggregated and provide the basis for our annual
and semiannual reports on public and private performance in minority
business development.
OMBE reqmres all of its contractors and grantees to submit a
standard form entitled "The Business Assistance Report," which
details the type of management or technical assistance minority
persons receive.
The information is on a standard form. It includes such things as
ethnicity, the recipient's sex, the origin of contract, public or private
sector, the amount of the contract, the type of contract, whether it
is prime, subcontract, 8(a), et cetera.
I have copies of this form which I will leave for the committee to
study at a later date.


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Data concerning female-owned minority businesses can be extracted from the OMBE information system. Females are not included in the definition of minority-owned businesses contained in
Executive Order 11625, and, therefore, only minority females are
included in the data we collect from our contractors and the grantees.
We require our contractors and grantees to include the address,
tele_phone number, social security number, and other information on
their reports to us. This gives us the opportunity to do an audit and
to do chent sampling to verify that the information received is correct.
We also use a standardized form to collect data from the Federal
sector,· and we use the standard form, hopefully, so that the data we
collect from the various agencies is identical.
However, as I mentioned earlier, when dealing with the Federal
agencies, we do not collect data on women.
The verification on the data that we collect from the vru·ious Federal
agencies has not really been deemed necessary. We rely on the integrity
of the Under Secretary or the a~ency official who signs the report. If
the information that we are receivin~ is inaccurate, if it is out of sorts,
I guess we need to start looking a little closer at the integrity of the
various agencies.
The data that we collect is aggregated by OMBE and includes in
the report I referenced earlier. These reports are distributed throughout the Federal sector and made available to the general public by
special request, or through published rel?orts.
OMBE uses this data for programing its own plans and evaluations.
I have attempted to define OMBE's business authority and role
as the principal Federal agency responsible for collecting and disseminating data on the public and private sector's performance in
minority business development.
Now; I will attempt to use the data collected to measure the progress minorities have made in participating in Federal procurement.
Before I begin that, let me just say that while the figures may show
a tremendous rise, when you are starting from nothing, almost anything looks good.
I remember recently talking about a company which boasted about
how its top management had increased in terms of minorities by 50
percent and I said, "Well, that sounds pretty interesting. How many
did you have at the outset?"
He said he had two.
So, statistics can play a funny game.
Beginning in fiscal year 1969 through 1976, direct and indirect
government purchases from minority firms increased from $12.6
million to a figure of $834.4 million. That is about $300 million more
than, I think, GSA claims, about $200 million more than SBA claims,
but nonetheless represents the combined figures submitted by the
various Federal agencies.
These increases represent an upward trend of 0.03 percent in 1969
to 1.53 percent in 1976.
While this looks good, much remains to be done.
For example, total Federal procurement in 1969 was $48.9 billion.
As I said, minorities received $12.6 million. Total procurement in
1976 is $54.7 billion. Minorities received $834 million.


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This would suggest that there is room for quite a bit more. It is
also interesting to note that out of the universe of 20 Federal departments and agencies, less than half account for approximately 90
percent of the direct and subcontract procurements a,Yarded to
minority firms in fiscal year 1976.
So half of these 20 agencies produce something like $750 million,
and the other half produced less than $100 million.
These same agencies account for 95 percent of all the minority
awards under the 8(a) program.
President Carter in his message to the members of the Interagency
Council fer Minority Business Enterprise instructed all executive
departments to work with the Office of Minority Business Enterprise
and the Small Business Administration to devise an effective minority
business assistance program.
The President also instructed the executive department to double
their purchases of goods and services to minority firms, through direct
and indirect procurement during the next 2 fiscal years.
Of course, the big question is, when he says "double," is he talking
about roughly a billion dollars, $1.6 billion, or $1.2 billion?
He also instructed the Office of Federal Procurement Policy to
review and revise J?rocurement regulations to assure adequate involvement in minority business firms by requiring that recipients of
major Federal contracts to show how they will involve minority
businesses before, rather than after, the contract has been awarded.
The last point is this: Title 41, of the Federal Regulations states
that contracts over $500,000 requires best agency efforts to hire minority subcontractors.
Out of $27 billion in 1976, minorities receive 0.07 percent.
You can move to the next person, thank you.
Representative PIKE. Thank you very much, Mr. Stephenson.
I am delighted to welcome here this morning the distinguished
ranking Republican on the Senate side of the Joint Economic Committee, Senator Jacob K. Javits of New York.
I will only say that all the things which I said about Senator
Humphrey's dedication to the cause of minority rights, Senator Javits
has likewise been renowned for and has fought for during his entire
Senate career.
Senator Javits, wouldn't you like to say a few words to the panelist.c:
and procurement officers?
Senator JAVITS. Thank you so much, Congressman Pike.
First, I would like to express my gratitude to Congressman Pike
for moderating the discussion this morning. As you know, Hubert
Humphrey, our great hero in this and many other fields, is confined
to Mmnesota. I am over a barrel with a hearing in the Labor Committee, of which I am the ranking member. In addition, I have just
been called to the Foreign Relations Committee, of which I am also
a member.
This is a distinguished panel. I myself have had a lot of experience
with Dona O'Bannon, who has headed the women's movement with
respect to small business, and I express my own appreciation to
Frank Kent, Ed Mitchell, Deborah Snow, Allan Stephenson and
Joe Kernan.


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In my own office, Michelle Babbitt has earned great praise from
Hubert Humphrey himself, and if I may, I would like to put that
letter in the record here. The letter addresses the research she· has
done in this field.
Representative PIKE. Without objection.
[The letter referred to follows:]
CONGRESS OF THE UNITED STATES,
JOINT ECONOMIC COMMITTEE,
Washington, D.C., September 16, 1977.
Hon. JACOB K. JAVITS,

Russell Senate Office Building,
Washington D.C.

DEAR JACK: The Subcommittee on Economic Growth and Stabilization is
sponsoring a conference on "Measuring Progress in Participation by Minority
and Female Contractors in Federal Procurement" on September 23, 10:00 a.m.,
Room 1318 of the Dirksen Senate Office Building.
Though I won't be able to attend, I sincerely hope you can make a brief appearance at the opening session tentatively scheduled to be moderated by Representative Otis G. Pike. Your presence and participation would be especially
appropriate given your interest in this area while on the Small Business Committee,
and the tremendous assistance your staff member, Michelle Babbitt, has been in
offering ideas regarding the conference's design. I expect this conference to be
very revealing and informative, and thus an excellent opportunity to responsibly
shed light on this issue of urgent importance to Congress.
If you decide to attend, please have your staff contact Richard Boltuck of the
JEC staff (4-7944) for further information.
Best wishes.
Sincerely yours,
HUBERT H. HUMPHREY, Vice Chairman.

Senator JAVITS. I have read Congressman Pike's opening remarks
and I associate myself with them completely.
The two big points are that the statistics are unreliable and shamefully small. If necessary, and I think it is necessary, we must pass
further laws to assure an adequate allocation of procurement contracts to minorities and to women.
I need to say nothing further, because Congressman Pike has said
it so very well for all of us.
But I would like to emphasize one point: He has expressed the
unique nature of this conference under the auspices of the Joint Economic Committee, and I hope you will all take advantage of it.
The fact is that the Joint Economic Committee is the seed bed for
many ideas for legislation. Its members are men of considerable influence in other committees where legislation is actually turned out.
I would like to assure you that through my own eyes and ears and
through Miss Babbitt, who is here, we will pay very strict attention
to your thinking.
I pledge my utmost to act on it. I am sure Congressman Pike feels
the same way, and will speak for himself.
I hope you will not feel this is just a forensic exercise. This is very
serious business. There is a very grave deficiency in this field. The
figures are absolutely shameful in terms of the interests which are at
stake, and we will do something about them.
You must help us with an intensive participation in this discussion
and in giving the full benefit of your ideas, and we will follow through.
Thank you, very much.


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Representative PIKE. Thank you.
We do recognize your other heavy commitments, Senator.
Senator JAVITS. Thank you.
Representative PIKE. Our next panelist will be Ms. Dona O'Bannon, president of the National Association of Women Business Owners.

STATEMENT OF DONA O'B.Al'm'ON, PRESIDENT, NATIONAL
ASSOCIATION OF WOMEN BUSINESS OWNERS
Ms. O'BANNON. Thank you, very much.
Before Senator Javits leaves, I would like to thank him so much.
In 1975, he recognized the needs and interests of the woman entrepreneur and sponsored hearings in the Small Business Committee
when he was ranking Republican.
In New York City, beginning on Monday, there will be the Women
in Business Week, sponsored by our affiliate, the New York Association of Women Business Owners, and private businesses in the city.
Thank you very much.
Here we are, the women. Women do comprise over half the population, but a very, very small percentage of the businesses.
I know what you are looking for. You are looking for the best
contracts at the cheapest price to do your work the way you are
supposed to do it, and we want to do that, too. We want to help you.
The National Association of Women Business Owners is not seeking
quotas, we are not seeking percentages, we don't want a cut of the pie
that minorities already have now and deserve.
We just want to be on your list, to be able to compete competitively
and come out winning as we frequently do.
We have had a great deal more success in the private sector to date
than we have in the _public sector.
I think a lot of it 1s just lack of credibility on behalf of contracting
officers in the public sector. Our association represents all ages, all
religions, all races, and all professions.
Women are usually found in the service industry because, historically, we have had some problems obtaining credit.
We have had problems similar to minorities added to the problem
of our sex.
We have heard all day that there are no statistics for women. That
is true. There are none. We ourselves are trying to get data to provide
to you.
Yet we are getting very little cooperation from several Federal
Government departments, which we believe should be the leaders.
We do believe that contractors ought to be accountable for not
only their minority participation for their subs, or for any direct
contract you may let, but for their subcontractors.
There is already recognition, both in statute and by many private
corporations to incorporate women entrepreneurs in the business.
The Railroad Revitalization Regulatory Reform Act of 1976 denoted women as minorities for the first time. We are not seeking this
as a general category. We are performing now. We are finding women
can provide goods and services to the railroads, and if we can do it
for the railroads, we can do it for anyone.


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The Alyeska Oil Pipeline Co. contracted with women business
owners who have been very successful.
The Alcan pipeline, which is now undergoing congressional scrutiny,
and which has been selected by the President, both in statute and m
concept is ready, willing, and able to contract with all minority and
women contractors.
The 1975 report by the Civil Rights Commission that Ms. Snow
has referred to before, and which the Secretary of Commerce quoted
several months ago, states less than 1 percent of more that $130
billion spent by Federal, State, and local governments for procurement
went to blacks and women.
I would like to know what percentage went to women. The Department of Commerce study, jointly conducted by OMBE and the
Census Bureau, published in 1976, but based on 1972 statistics,
indicated there were about 400,000 women in businesses.
They rated less than half of 1 percent of all revenues received by
American businesses generally. That was in 1972. How many women
were using initials then and still do, and how many husband and wife
teams were listed as male only, and still are?
Esmark, the marketing firm in Chicago, recently stated there are
about a million women in firms. I don't know how many womenowned firms there are. We are now seeking through private sources
to compile a directory of women-owned businesses in the United
States to obtain this data.
The Equitable Life Assurance Society of the United States, one of
our largest insurance companies, wanted independently to increase
their vendor program to include all women. They wanted to do it in
1975. They wanted to do it in 1976.
They came to the Federal Government, which is the logical repository for a lot of this information. There were no statistics-anywhere.
They came to our organization, which was then a fledgling group of
75 members, and said, "Can you put together a directory?"
With our normal confidence, we said, "Of course," and within 3
months we found 1,140 businesses in the Washington-Baltimore area
and published this directory. If we can do it in 4 months with a small
amount of money, what can you do with the billions and billions of
dollars for Federal procurement?
We are now corresponding with a private consortium of businesses,
to put together a directory of women-owned firms and would welcome
Federal participation.
There are several new programs and commitments by the Federal
Government which I personally welcome. The first is the Small
Business Administration's new campaign under the new Administrator, to increase participation through their seminars and through
their programs to more women-owned businesses.
This began last year under the previous administration, with
Barbara Dunn being named the advocate for women at the SBA. I
personally feel that there is a much greater commitment by the
Small Business Administration to at least provide technical assistance
and advice to women.
The most exciting thing going on now is the task force on womenowned businesses which was formed by the President on August 4.
It is now in the process of being formed, and some representatives, I
understand, have been named.
25-828-78-5


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This task force, named by the President and led by the Department
of Commerce, is just going to look at what, if anything, the Federal
Government can and should do to increase participation in the
Federal procurement process for women-owned businesses.
We may find that there is nothing left to be done. That could be a
very real possibility, because there are no statistics. We may find
that there is a lot to be done. We will find that out.
There are attitudinal barriers that I think you all recognize. I do
know they exist.
There are cataloging barriers. I would like to know how many
Federal contractors have been cited for not using minorities, for not
trying to use women.
I know that there are some government agencies on their own that
have decided to seek out women entrepreneurs and to ask their prime
contractors in the milti-million-dollar figures to seek out womenowned businesses.
The nonenforcement is blatant.
I look at the Defense Department and all of the money that is
spent. I know that there are no statistics as to where a lot of it goes.
I think that is going to be changing, and we really look to you for
help and assistance.
As far as the small business 8(a) set-aside program is concerned
there has been a question as to whether women business owners are
socially and economically disadvantaged as a class.
That is very difficult for me to answer.
I believe that some nonminority women probably are.
As a personal test case, I could say that I went through the public
school system and the college system in our country, and never thought
of going into business, because I didn't think I could do it. Today,
I am very happy to say that I evidently can, and I am very pleased
to say that I am doing it successfully.
I don't know that this will apply to all women in business.
Women frequently don't have the basic business background that
many men do receive.
I do know within the SBA that nonminority women have been
classified for 8(a) set-asides.
They have had to prove their case with great difficulty. I think
one of the things that needs to be done is to have criteria set with
respect to the 8(a) program.
Are women business owners capable of fulfilling Federal contracts?
You bet. We are doing it now with the railroads.
Women have roofing firms; they have industrial chemical firms,
which are competitive with Dow Chemical. They have construction
firms all over this country. Sure, they are in the service industries,
but they are providing million-dollar services and more to some of
the largest companies in this country. They are representing 500
companies all over this country. Why can't they get better access
to Federal procurement?
I can see from some of the looks that you might be thinking, "Why
don't you come and get them?"
Well, we are. We are going to be coming to you, and we are going to
be asking, but we don't expect anything special. We want to be


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treated fairly. We don't want to be treated in a demeaning fashion,
and we simply want information as to the contracting procedure and
equal access to Federal dollars.
I think, when we finish our contract with the Federal Railroad
Administration that ,ve will have provided solid contracts and goods
and services to the railroad industry.
If we can do it for the railroads, as I said before, we can do it for
Defense contractors, NASA contractors, Agriculture, Interior, and
all others.
So, we are here. There is going to be a new and continuing awareness
of women business owners. We want to '°rk with you. We are not
going to attack anybody.
We don't have anything to attack with now. Help us compile the
figures, and we will try to work with you and we will try to do it
independently and on private enterprise money.
Thank you.
Representative PIKE. Thank you, Ms. O'Bannon.
I think what you are saying is help us compile the figures that we
can use to attack you. [Laughter.]
Ms. O'BANNON. I think that can be a fair statement.
Representative PIKE. I am not disagreeing with you.
Ms. O'BANNON. It may be that by the time the figures are compiled, we won't have anything to attack.
Representative PIKE. It is possible, but I doubt it very, very much.
Our final panelist this morning is Mr. Joseph Kernan, whom I
introduced earlier.
Please, Mr. Kernan, go ahead.
STATEMENT OF JOSEPH KERNAN, CHIEF OF THE PROGRAM SUPPORT DIVISION, OFFICE OF BUSINESS DEVELOPMENT, SMALL
BUSINESS ADMINISTRATION

Mr. KERNAN. Thank you, Congressman. Mr. Smith, whom I am
sitting in for this morning, wished to express his gratitude to you and
Senator Humphrey for the opportunity to be here.
I will make my remarks brief, because fortunately all of my colleagues on the panel spoke about the S(a) program and for clarification, the Office of Business Development is charged with the responsibility for the conduct of the S(a) program.
In the news release I know that it was pointed out that S(a) has
been in the spotlight as the result of some recent hearings, and as a
matter of information, Administrator Weaver has appointed his
deputy to have a blue ribbon review board and panel reevaluate and
revamp or make possible suggestions for revamping the S(a) program.
So, in that respect this conference we are at today comes at a very
appropriate time, and certainly Deputy Administrator Patricia
Cloherty would be happy to have the transcript of this conference
for presentation to her review board.
At the present time, to give you an idea as to the scope of the S(a)
program, it would appear that this year it will be somewhere short of
one-half a billion dollars.


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At the end of the month of August, the figures totaled $417 million
in contracts funneled through the SBA by our sister agencies to companies owned, operated, and controlled by socially or economically
disadvantaged persons~
So with that, I will conclude my remarks, Congressman Pike, and
be ready for any questions.
Representative PIKE. At this point, I would like to pretty much
throw this open to questions to the panel from any of the procurement
people who are here, but before doing so, I would like to know whether
-any of the members of the panel themselves strongly disagree with
anything that anybody el~ on the panel has said, and would like to
tee off at anybody else on the panel.
This has been very dull so far, and it seems to me if anybody feels
strongly that anybody else on the panel has said something with which
they strongly disagree, this might be a good time to say so.
Ms. O'BANNON. I don't. I think we are ready for the attack from
the audience.
Representative PIKE. Let me start, not with an attack, but withI guess it is a political type inquiry-and I will address it to the two
ladies on the panel, and my question simply is this: As a matter of
political judgment, if we try to expand the co~cept of 8(a) to include
as a matter of course women owned or operated businesses, don't
you think that we are going to dilute the effort toward ethnic minori·
ties?
Ms. SNow. Congressman Pike, I don't think it is necessary to dilute
the effort toward ethnic and racial minorities, for example, in the 8(a)
program.
The Commission strongly believes, and has recommended before,
and would no doubt do so again, that women should be included in
the "socially or economically disadvantaged" group for the purpose
of participating in these programs.
We also have recommended that the resources allocated to these
pro~ams be exp~nded. If you o~ly i~crease the number of peo~le
entitled to partw1pate, everyone 1s gomg to get less, unless you mcrease the funds.
Representative PIKE. Do you advocate a larger set-aside, and tha.t
women in business be included?
.
Ms. SNow. Yes. It may turn out that legislation is necessary, because, as you know, SBA has not taken that step.
Representative PIKE. I would like to hear from Mr. Kent on the
same subject.
Mr. KENT. I certainly am an advocate of women being included
in the 8(a) set-aside program.
I would, Congressman, be interested in some statistics on what
happened when women were included in the antidiscrimination laws
as they relate to business in particular. I think we would have to go
to private enterprise and find out what happened in private enterprise when antidiscrimination laws were expanded and the efforts
were made to include women.
Were efforts diluted at that point? I think that might give us some
feel for what might happen in this case. I don't really know, but I
would suspect that it probably did not dilute it that much.
Representative PIKE. I am going to ask one last question-Ms. O'BANNON. Could I comment on that?
Representative PIKE. Yes, I ·wish you would.

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Ms. O'BANNON. As far as the 8(a) program, we do not think it is:
necessarily an objective to have women in business as a class included
in 8(a).
We believe if there are objective standards set for those who are
socially disadvantaged that all businesses will have the same opportunity to qualify.
There are now nonminority women business owners classified and
qualified for 8(a) set-asides. I think you have to look into the 8(a)
program and see the repetitiveness of the loans, as frequently there is
repetitiveness of loans to minorities in the procurement process, and
you will find that the pie is not really being divided as you think now.
I think politically it will be a pretty hot question.
Representative PIKE. Politically is where I live.
Ms. O'BANNON. That is right.
Representative PIKE. I guarantee you that the problem is that it
is not one constituency, but several.
Ms. O'BANNON. That is what I mean, if categories were s e t Representative PIKE. I could not agree with you more. I asked at
the beginning where do we define in the law what a minority business
is, and what kind of definitions do we have.
I will now go to Mr. Kernan and ask two questions.
One, why are statistics so miserable, to use a nice, nonemotional
word, and, two, aren't your basic statutes and your own regulations
couched in such nonspecific and mushy language that you have a
little trouble-you may have all the flexibility in the world-but
don't you have a little trouble deciding what is and what is not a
proper 8(a) case?
Mr. KERNAN. Yes, sir. In some cases, it is almost as difficult as
how many angels can dance on the head of a pin.
In regard to the law, specifically, the Small Business Act of 1953,
from whence section 8(a) came, I believe the legislative history would
indicate that section 8(a) was put in there as a carryover from the
Small Defense Plants Act.
It was probably intended to use it in the event of war for mobilization of small business.
It was not until some time in 1968 that this particular section of
the act was utilized for socioecon01nic reasons.
So, therefore, the law itself does not contain language that would
be definitive in any respect regarding eligibility. As the program
developed from 1968 until today, the language that was used, Congressman, as I recall, was gleaned from some of the language of the
Economic Opportunity Act of 1965.
So that the operating regulations and procedures now use the
terms "social or economic disadvantage," and the modifiers might
be described as being "chronic and historic," and then further than
that, as a result of the GAO study, it requested the Small Business
Administration define the connection between this demonstrable
social or economic disadvantage and the inability to compete effectively in the marketplace.
So, that is where we stand today as far as our language, it is highly
judgmental, and it is difficult to arrive at some of these judgments.
Representative PIKE. That answers half my question.
It is so judgmental that what you really get down to is if a procurement officer wants to, he can, and if he doesn't want to, there is
nothing that can make him?

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Mr. KERNAN. The judgment on the eligibility and the approval of
the company for participation in the S(a) program is made by the
Small Business Administration.
Representative PIKE. Whoever makes the judgment, if he wants
to, he can, and if he doesn't want to, there is nothing that can make
him.
Mr. KERNAN. That is correct, sir.
It is made and reviewed in committee. We try to make it from an
operating standpoint as fair and objective as possible.
Representative PIKE. The other half of my question had to do
with statistics. Why are they so at variance with one another.
Mr. KERNAN. I can just speak to the 8(a) program, and I will
answer in this respect, that because these are Federal contracts and
subject to scrutiny, they are minutely accurate in the 8(a) program.
I think you will find the statistics available in the 8(a) program would
be second to none as far as accuracy, because each of them represents the aggregate of each government contract from our sister
agencies.
I think they are very accurate, Congressman, and at the end of
last month, I think it was $417 million this fiscal year.
We do not have in our computer system the capability of drawing
out contracts awarded to companies owned by females. We do not
have thet capability, but as far as the aggregate statistics, I state they
are as perfect as they could be.
Representative PIKE. Mr. Mitchell, does GSA have a computer?
Mr. MITCHELL. Yes, sir.
Representative PIKE. You talked about the difficulty you have
in coming in with these statistics on minority contracting.
Mr. MITCHELL. A number of years ago when I was working with
this intimately, the report by contracting officers within the Federal
Government was submitted to the Department of Labor, and that
was the source from which you attempted to get total figures for the
Federal Government.
We have within GSA certain computer support for the various
services that we have, but when you start to talk to the total Federal
Government that is where you get into various difficulties.
It has been difficult identifying the contractors in the 39 industries
I monitor. I have gone to various sources, to Dun & Bradstreet, to get
that and to be very specific, sir, for a myriad number of reasons I
have not received an acceptable report yet from last September1 year ago-even on a contract that is paid for.
So, I am not using that as an excuse. I am saying when you take the
complete effort-even in the private sector, with all the reports that
are currently required by government-you find out that the reports
do not balance.
Representative PIKE. I have talked too much, but I would just
suggest that sometimes it is easier to get the statistics on a contract
which has not yet been paid for than perhaps on a contract which has
been.
Mr. BoYn. I am Willie Boyd, a member of HEW. I work very
closely with some analysis. I expect both sets of figures may be correct.


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We are required to submit reports on minority business procurement
to OMBE. OMBE gets its 8(a) dollars from SBA and OMBE reports
on 8(a) and non-8(a) contracts awarded to minority firms.
So, that may be the difference.
Representative PIKE. Yes, sir?
Would you please start by giving your name and your position so
that we can have it for the record.
Mr. JOHNSON. Jerry Johnson, chief of procurement from the State
De_partment.
I think one of the big problems in getting statistics particularly on
female firms is because there has been no requirement for any agency
to collect the data.
If we don't have it categorized at the time you start to put a
contract into a data file someplace, it is impossible to retrieve it
without doing a whole research project, and most procurement
offices are short-staffed.
If SBA or OMBE or someone who had need for information on
female firms and minority firms would request such, we naturally
would start to develop that information.
I think that is the cause of why there is no information. Nobody has
required it in the past.
Mr. GoRDON. Arthur Gordon, deputy for procurement in the Air
Force.
In the Air Force, we find that about 1 percent of our contract awards
represents about 90 percent of the dollars obligated.
We find that most of our contracts are awarded to some 5,000
contractors and corporations.
We know of no way in a corporation which is publicly held, where
you have stockholders, to discern particularly when the very stock
held in trusts and so forth, the individual ownership of a corporation.
It is very hard in dealing with a Lockheed-Representative PIKE. Oh, yes, but there is a difference between
stock ownership and management.
You can look at who the president of the corporation is, and who the
vice president of the corporation is, and you get a pretty fair idea
whether they are minority or not.
Mr. GORDON. Whether they are minority managed or owned. I
am talking primarily about women.
Ms. O'BANNON. That would not apply in defense contracting.
Women-owned businesses are cognizant of the fact that you have
difficulty being the prime out of DOD.
What you do is find out what large corporations can do with respect
to subcontracting. This was done on the Alyeska pipeline, and if you
required it to be done, it would be done.
Mr. GoRDON. I am saying that for the purposes of reporting it is very
hard when dealing with corporations to discern whether a corporation
is a woman-owned corporation or a male-owned corporation.
It is very hard to discern, because you have stockholders, and we
don't know when we deal with a corporation what percentage of the
stockholders are fem ale or male.
In dealing with individual proprietorships, or in dealing with companies that certify they are minority concerns, we can compile such


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statistics, but in dealing with corporations, where ownership is decided
by majority stock ownership, it is very hard to distinguish between one
corporat10n and another.
Ms. O'BANNON. Do you ask your primes to distinguish as far as their
subs with regard to minorities?
Don't you have that requirement?
Mr. GORDON. Yes.
Ms. O'BANNON. Therefore, you must have a requirement to break
it down by female and male minorities?
Mr. GORDON. No.
Ms. O'BANNON. That is the thing. I understand that. There is no
way to go back and redo the systems. You can start doing them today.
Representative PIKE. This is more like it.
Yes.
Mr. MARTINO. Roger Martino from the Department of
Transportation.
.
I think we are hitting on the point that we need an accurate definition of what is a female-owned firm before we are going to be able
to collect any data at all, and what we need to do once we get this
definition agreed to, if indeed we decide we are going to collect the
data, we have to have the contract clauses, and in these clauses we
have to put that kind of definition so that the contractors that we are
working with know how to report the data back to us.
Only in that way will we be able to collect any kind of data that
is meaningful.
Ms. O'BANNON. DOT is doing a great job now, especially since we
have a contract with them. But one of the things that we are finding
is that as we are pulling together all of the information, and as we are
finding women business owners-and this applies to other minorities as designated in section 906-we are ready to feed them into a
computer base, and DOT doesn't have it.
There are SBA qualifications of 50 percent ownership of womenowned businesses to qualify for participation under some programs.
Representative PIKE. Ms. O'Bannon, wouldn't you have to concede
that A.T. & T. for example, is probably a women-owned business?
Ms. O'BANNON, Well. A.T. & T. is also one of the corporations that
stron~ly sponsors the association. Yes, and in a lot of cases stock is
held m the woman's name. Women are not in the top management.
Representative PIKE. I agree with you, but I think a legitimate
point has been raised. When you get around to defining ownership, I
don't know how in the case of a corporation you can ignore stock
ownership, and considering where the stock is owned m America
today, I think you are going to find a tremendous amount of womenowned contractors.
Ms. O'BANNON. Well, we provide in order for contracting, both
with our association and in the validating process that we have to go
through to make sure that women are not serving as fronts, that they
not only own it, but that they manage it and have day-to-day management responsibility for it.
As you may well understand, it is a very difficult thing, but we are
dealing, also, with small businesses. It is true that Lockheed could
possibly be female owned in their ownership, but they are being run
by males.


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Mr. VOGEL. Clifford Vogel from FAA.
Are you saying in effect that you are not considering stock ownership to be the definition of a minority firm?
I don't believe there is any further definition of public stock ownership attached to that. In other words, your definition, then, is somewhat different.
Ms. O'BANNON. Yes, it is, because we very frequently found that
the ownership, per se, is not.
But, when you are dealing with Fortune 500 companies, that is not
really what we are talking about.
If you at the FAA wanted to contract with someone, we are dealing
mainly in the small business field, because that is where a lot of the
women businesses are and where a lot of minority businesses are.
But, if you wanted to note it as ownership, you may very well find
that some of your large corporations are women owned. Guidelines
need to be set. I also believe it would be too expensive and certainly
not sensible at all to ask you to go back and find your women-owned
firms that you may have contracted with, but it is certainly something
you can do from today on.
Mr. VoGEL. I would just like to know on this point if I may that I
am not so sure that I would find that A.T. & T. is women owned. I
think you might find it is owned by large institutions, universities
and insurance companies and so forth.
I may be wrong about that. I know a lot of people believe this.
I think Lockheed may be a women-owned corporation, but that is
beside the point. The point Mr. Kent made is that we are really
talking about small businesses when we talk about minorities and
females.
For the most part, if you're referring to the data that OMBE and
Census published a couple of years ago on firms owned by women, you
are talking about microscopic businesses when you talk about the
whole, I mean really small though there are some that are larger.
As to whether Lockheed is female owned or not, we can worry about
that we take care of small businesses.
Mr. GOLDBERG. Herb Goldberg, Department of I:,abor. I have met
with some of the women's groups and some of them have been very
upset about having women counted as an S(a) firm or special deals
under the Small Business Act, because they feel that many businesses
are husband and wife combinations, and instead of the husband being
in the forefront, the wife, then, will have the name on the door and
all of a sudden she is active in management, and then she will be
getting a set-aside to the detriment of other organizations where
the husband stays in the forefront of the business.
Ms. O'BANNON. That is why our organization is not advocating
that women-owned businesses be part of S(a).
I recently had a man call me from Upstate New York and he had
heard about a grant the association had, and he had gotten my phone
number.
He was very excited to tell me he had a firm that would fit in very,
very well, and he would be glad to switch the stock over to his wife's
name.
We told him that he was just the type of person that we weren't
interested in at all.
25-828-78-6

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But, I know your problem, and I agree thoroughly that this is
a problem. It has been a problem with 8(a).
I was personally very sorry to see the whole S(a) program stopped
temporarily in the Senate hearing. There are going to be abuses.
Together, we need to find some way of keeping those abuses to a
miniscule amount because that is a very convenient way to do it.
So, we need to work on guidelines, administratively, legislatively,
and whatever might be necessary.
Mr. GOLDBERG. If you do, the problem will be so tremendous.
Ms. O'BANNON. Do you think it will be?
Mr. GOLDBERG. I know my family and in-laws, there is a husband
and wife business.
Ms. O'BANNON. But they each own it equally?
Mr. GOLDBERG. Everything is in the wife's name for tax purposes.
Ms. O'BANNON. That is why the wealth of the country is supposed
to belong to women. I say that is not true.
Mr. GOLDBERG. To have a set-aside for women one way or the other,
it can be so difficult to handle, and the administrative problems can
be-fantastic that the overhead will drive us to the grave.
Ms. O'BANNON. Didn't you have the same questions with minority
persons?
Mr. GOLDBERG. Can you look at a black man and tell he is black-Representative PIKE. You are not suggesting that you cannot
look at a woman and tell that she is female? [Laughter.]
Mr. GoLDBERG. No, but when it comes to negotiation, it cannot
so much be the wife rather than the husband.
Ms. SNow. I think this is a problem that SBA might comment on.
I would like to say that if the policy change we are interested in were
made-to say that women as a group are socially or economically
disadvantaged for the purpose of participating in these programsthis is not to say that any woman automatically gets a contract.
It never meant that every minority-uwned firm got an 8(a) contract.
SBA still has to make judgments, and one of the judgments it has
to make is whether those individuals or firms are, in fact, socially
or economically disadvantaged.
You are saying, "There are going to be huge problems in doing
this, and therefore we shouldn't do it."
"Men will abuse it, so we don't do it for women."
Mr. GOLDBERG. How do you figure they participate? They didn't
go to college, or high school, and their parents didn't have the money.
What makes them disadvantaged? The fact that they have to have
children?
Ms. O'BANNON. We don't have to have children in the first place.
That is a typically sexist comment we come up against.
It is also illegal to ask, I might note. I think we can deal with these
subjects frivolously, but they truly are not frivolous issues.
If you have a contract, and if you have someone in for an oral
presentation and the woman side of the husband and wife team comes
in, if the woman doesn't make a convincing case, if she cannot support
her contract, then you are not going to award it to her.
You may be charged with discrimination, but you can back it up. If
you do it in a factual way, I don't think it is a problem.


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Many of our business owners don't even want to deal with the
Government, because it is so difficult not only to get the contract,
but the money, and frequently small businesses go out of business
dealing with the Government.
Representative PIKE. Mr. Mitchell.
Mr. MITCHELL. I ·would like to make a comment, because during
my initial remarks I made a statement that ,ve had been doing a test
project in this area that had been very successful.
The many comments I have heard here, particularly on the difficulty
of defining who is disadvantaged and that sort of thing, were faced
prior to the time we instituted this test.
We have had quite a bit of success. We think it is working.
Within a particular part of that appendix to the bid conditions, we
faced all the problems. We have said who was disadvantaged, for
purposes of the particular contract, for a given major construction
project, we gave definitions and actions to be taken.
We went through all the bureaucratic gobbledygook with all the
legal people, too, to see if we could be hung as high as a kite to do this.
We have thus far been able to make it stick, and as I stated, it is in
operation. It has gone over $20 million to minority and female firms,
and by a conservative estimate in the next few months it will go
$12 million more.
In working in contract compliance with many industries, these
questions of how do you define disadvantaged and so on continually
come up.
We Americans have a system that is basic, and I won't go into it,
that talks about probabilities, and we use certain mathematical
means to say that when something is totally improbable unless it is
deliberately done that way, well, it is very easy to show that the percentages, the part that women and minorities play in enterprise, was
totally improbable if it were not deliberately done.
That is what we are trying to change.
Representative PIKE. As a legislator, I ,vould simply have to say if
I were asked to legislate the fact that because they were women they
were disadvantaged, I would have great difficulty doing so.
I don't think that I could legislate anythin~ that says that because
they were women they automatically qualified as disadvantaged.
Mr. Stephenson.
Mr. STEPHENSON. If we were to look 0Jt the universe of small
business and make a comJ?arison of how all small businesses are doing
compared to what minority small businesses are doing and womenowned small businesses, you begin to understand the discrimination.
The simple fact is that unless you are in business with your husband
and it is recognized as a male-owned business, you don't have a
problem, but if you recognize your business is a female-owned business, the gross receipts drop so dramatically it is unbelievable.
Obviously, there is a problem, because the services aren't any less.
We are talking about small businesses, and not major corporations.
When women show themselves as business people, they are discriminated against, and I think that is what the fight is about.
Mr. JOHNSON. Jerry Johnson from the State Department. I would
like to take it from my observation as a procurement officer who
generally stands between my user and my client, the small business,

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the woman who comes in to make that sales pitch, that presentation,
and I would have to agree with Mr. Stephenson that both categories
of minorities, and women, when coming in to make a technical presentation, to try to sell their credibility, I have to live with both sides
of the house.
When I award a contract, my agency looks at me and says, "Why
did you award it to that firm when we don't think he can perform?"
It happens with small businesses. It happens with minority businesses and it happens with women.
We have a problem of selling credibility, and the changing social
-consciousness, and it is a problem of continuing to reinforce these
people's ability to perform.
I think most procurement officers probably get caught in the middle.
They don't have a particular problem, but our users do.
You get the defense industry complex, and I mean no offense,
Mr. Gordon, but the concept is that the big businessmen can successfully perform this job like nobody else can, and I think we all know
that isn't so.
But there is the root of the problem.
Representative PIKE. Mr. Kent, you can proceed in a minute, but
you will have to do it in my absence.
I want to say that I will not be back from this one.
The assignment sheet for after lunch is completed, and available.
I thank the panel very sincerely for what has turned into, I think, a
pretty good discussion, and I have learned something, and I am quite
hopeful that working together we can achieve some relief in what I
think we all mutually can recognize as serious problem areas.
I want to thank all for your participation.
Mr. KENT. I wanted to underscore what was just said by the gentleman from the State Department. During the time that I was in the
Federal Government with the Office of Economic Opportunity, we
did our best to try to promote S(a) set-asides through the agency,
and we assumed that the Office of Economic Opportunity, being
socially minded, would be a leader in this arena.
Yet, when we proposed that a VISTA training contract be set aside
for a minority firm through S(a), why, we couldn't do that, because, as
everyone knows, minority firms aren't qualified, and you know they
can't do the job, et cetera, et cetera. People who were supposed to be
dedicated in this area were using these excuses.
They were supposed to be knowledgeable and have a feel for the
problems.
I say all that because in my original remarks I indicated that, to me,
one of the key problems is getting people to believe that minorities
and women can actually perform, and see this as a venture in American
free enterprise and not as a part of welfarism.
That, to me, is really one of the great difficulties, and something
which I think that procurement people are going to have to tackle
head on, particularly people in key agencies.
Mr. BoLTUCK. I think we have time for one more question from
participants in the audience section, if there are any.
Ms. O'RrnNON. I would like to ask one question. The idea of
credibility really does come up an awful lot with women. I am sure
you are aware of it, as men, those of you in the audience who are, but


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I want to ask that as procurement officers, how many of you reallyand I guess you can't have a show of hands-would doubt that
women can perform on contracts, whether they be service or hardware,
if you have a company that has been in business, say, and let's take,
for example, a roofing firm, hardware, that has been in business for 10
years.
It has a good business, has never defaulted on a contract, has been.
in the private sector, comes in and gets bonding, et cetera.
You have a similar firm, maybe nonminority male owned, and you:
have to weigh these factors.
How many would probably feel the woman could not perform the
contract, even though she had a business, had perhaps established it,
or had inherited it?
How many of you would think she could perform on that contract?
Mr. LuHTANEN. My name is Luhtanen. I think it is not a case of
procurement personnel saying that you, a firm, could not perform that
Job.

We are talking about small business set-asides, we have talked
about 8(a), about minority procurements. We have program people
who consistently, over 150 years, say, "Gee, not my programs, please,
not mine, try somebody else's."
This is what the procurement people have to combat. There is no
question on our part that you could perform.
Mr. BoLTUCK. Okay, if no one has further comments, at this time
I would like to thank everyone for attending the opening session.
There will be three afternoon sessions, and I have a couple of
announcements.
First, would any of the officials who have brought statements in
response to the subcommittee's request place them on the front table
for the benefit of fellow participants and staff and others attending,
but reserve a few copies. I think the best thing to do would be to have
you mail them to the subcommittee to make sure we get them.
In addition, the lists dividing you into three groups are readyand we have tried to be equitable about it-we have tried to keep
representatives from one department in one room. We may have
omitted some people inadvertently. The list will be available outside
the room as you leave.
You should pick up a copy. We are hoping to reconvene the conference
in the three rooms listed on the sheet that you will pick up at approximately one o'clock or a quarter after one. That will give you about
an hour for lunch.
We have received permission to use the south cafeteria in this
building, so you may take any elevator to the basement, preferably
the elevators on that side of the building, which is the south side.
Again, thank you very much and good luck.
[Whereupon, at 12:08 p.m., the conference adjourned.]


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III. APPENDIX
CONFERENCE QUESTIONS
Please respond to the following questions in your prepared statement and summary. Use whatever format you desire. The agenda prepared by the discussion
leaders will be sent under separate cover. Thank you.
(1) Please specify the type and form of data your agency compiles and processes
on contracts awarded to minority and female owned firms. To whom do your report your findings and in response to what statutory or regulatory requirements?
Which of your data are generally available to the public upon request, and which
are not?
(2) What is your assessment of the quality of various aggregate data you reglarly maintain? On a scale of 1 to 10, with 1 representing a total lack of confidence,
rate the reliability, in your judgment, of the various data you process on minority
and female shares of contracting and subcontracting originating with your agency.
(3) To the best of your knowledge, are data you report to other agencies of
consistent quality and sufficient uniformity of definitions to permit useful aggregation with other such government-wide data? Please identify where incongruencies exist.
(4) If asked, could you develop statistics portraying the shares of contracts
issued to minority and female-owned firms and the shares of subcontracts issued
by your prime contractors to such firms? If so, how costly and time-consuming
would the data processing for such an exercise be (estimate)?
(5) Does your agency consider women, as a class, among those likely to be
"socially and economically disadvantaged" for the purposes of the Small Business
Act of 1953?
(6) What suggestions do you have regarding establishment of uniform govern.
ment-wide cont-ractor reporting, recordkeeping, and retrieval standards to facili•
tate availability of trend data on minority and female contracting?
(7) What is your policy, and what objective criteria do you use, to determine
what reports you require of which prime contractors regarding subcontracts they
enter in fulfillment of their contracts? Do you synthesize, in any cases, minority
or female shares of subcontract dollar volume? Are such procedures, such as pro
rata application of corporation subcontracting ratios, reasonably accurate methodologically?
(8) What objective standards do you apply to identify suspected abuse of
non-competitively awarded minority or female set asides? Are some such standards unique to your agency? Can you suggest others which could be adopted in
management control of such contract awards throughout the government?
(9) Does your agency make an effort to break-up contract specifications in ways
likely to maximize the prospect of minority firms' qualifying? How do you select
contracts to be offered through Section 8(a) subcontracts of the Small Business
Administration (SBA)? In your experience, have procurement needs filled through
8(a) subcontracts been processed in as timely a manner as competitively offered
contracts? What other problems, if any, have you had coordinating with the Office
of Business Development of the SBA?
(10) What difficulties, if any, has your agency encountered in the performance
of minority or female contractors? Please cite examples without implicating
particular companies or individuals.
(11) Has your agency attempted to use innovative approaches to expand
participation by minority or female firms? Di, you have ideas you could implement
if not impeded by certain laws, regulations, or judicial decisions? Do you plan to
utilize new approaches in the near future? What ideas might be of general benefit
to 1-our colleagues in their efforts? Please be specific.
(12) If you require bonding of firms awarded noncompetitive minority contracts,
is the requirement internally generated, or a product of statute or regulation?
(13) If you know, could you breakdown the dollar volume of contracts awarded
by:
(a) Competitive and non-competitive awarding;
(b) Minority and female contractors; and
(c) Size of firm.


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42
DEPARTMENT OF LABOR RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

(1) DOL reports semi-annually to Office of Minority Business Enterprise,
Department of Commerce, (OMBE), contracts awarded to minority-owned firms.
The statistics are broken down by S(a) awards and prime awards and subcontracts
awarded by majority firms. This report is requested under Executive Order 11625.
DOL also reports S(a) awards semi-annually to the General Services Administration (GSA). This report is requested under 41 CFR 1-16.
This data is available to the public upon request. No data is maintained on
female-owned firms.
(2) The assessment of the quality of data on a 1-10 scale is 8 for the statistics
on prime awards to minority-owned firms and 5 for statistics on subcontracts
awarded to minority firms.
(3) To the best of my knowledge our data is of consistent quality and sufficient
uniformity of definitions to permit useful aggregation with other Governmentwide data.
(4) The Department of Labor could develop statistics on prime and subcontract
awards to minority-owned firms. The Department does not maintain any statistics
on female-owned firms. There is no way to develop statistics on female-owned
firms unless each and every firm that has received a contract is queried concerning
the sex of its principals. Even if the staff was available, we doubt whether any
replies would be received. However, for estimating purposes $120,000 would be
needed to gather statistics on female-owned firms.
(5) We do not consider women, as a class, to be socially and economically
disadvantaged for the purposes of the Small Business Act of 1953.
(6) There is no need to duplicate for female-owned firms, the current OMBE
and GSA system for minority-owned firms.
(7) The Department of Labor follows the Federal Procurement Regulation11
and requires those contractors, with contracts in excess of $500,000 that offer
potential subcontracting to report on subcontract awards. We do not synthesize
minority or female shares of the subcontract dollar volume.
(8) The Department of Labor sets-aside contracts pursuant to Section 8(a) of
the Small Business Act. The Small Business Administration is requested to vouch
for any firms that claim S(a) status. We do not believe that we have dealt with
any firm that has abused the process. The Department does not have any formal
standards to identify suspected abuse of S(a) set-asides.
(9) The Department of Labor procurements do not lend themselves to a breakup
of contract specifications. All supplies and equipment are usually obtained from
GSA supply sources.
Contracts are selected to be offered to the S(a) process as follows:
The contracting officer(s) and the program officer(s) review requirements as
they are formalized and ascertain through Department records or SBA whether
or not qualified S(a) firms are available for the work. Unfortunately most DOL
procurement from non-GSA sources is either for Job Corps Centers or research.
Job Corps Centers are difficult procurements through the S(a) process and
DOL researchers tend towards established university or non-profit research
establishments.
Procurements processed through the S(a) procedure with SBA are experiencing
delays. SBA does not appear to have the staff to adequately service the agencies' needs.
(10) Problems tend towards performance difficulties brought on by weak capital structures.
(11) Because the problems tend to be under capitalization, DOL expedites the
voucher payment process to assure a regular cash flow. Assistance has also been
rendered in the obtaining of bank credit. We do not know of any restrictions of a
regulatory, statutory or judicial nature which impedes our giving assistance to
8(a) firms.
(12) DOL does not require bonding of its 8(a) firms.
(13) (a) Competitive/noncompetitive-not available.
(b) Fiscal year 1976 minority awards (includes transitional qtr.), $7,060,000.
(c) Size of firms-not available.


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DEPARTMENT OF AGRICULTURE RESPONSE
PREPARED STATEMENT AND SUMMARY

Since the U.S. Department of Agriculture's procurement is highly decentralized,
we must maximize outreach efforts to locate minority and female contractors
capable of supplying the goods and services we buy. Much of our success has been
attributed to actions taken by our own agency personnel. They have located and
placed minority firms on appropriate bidder's lists and directed others to the
SBA for 8(a) consideration. Assistance to minority contractors appears to stress
initiatives to assist urban firms. More emphasis should be given to assisting
firms in areas other than the metropolis. We would recommend that the following
actions be considered to improve assistance to minority and female contractors:
Amend the Federal Procurement Regulations to permit Federal agencies
to engage in minority business set-asides.
Encourage the development of minority and female contractors in those
procurement areas where there is a deficiency of qualified contractors competing for contracts.
Actions to lessen the problems 8(a) firms encounter obtaining bonding
would be a major benefit to those contractors seeking construction contracts.
Since the procurement regulations require maintenance of minority
contractor source lists, initiation of a report to a central clearinghouse and
subsequent publication would assist procurement officials to increase minority
participation.
We appreciate the opportunity to participate in this conference and to be able
to express our views.
RESPONSE TO CONFERENCE QUESTIONS

(1) We compile data concerning all contracts awarded to minorities with a.
further breakdown of contracts in the construction and consultant areas as well
as 8(a) contracts. We submit this data to OMBE on MBE Form 91 in response
to FPR 1-1.1302 and Executive Order 11625. All data are available to the public.
(2) Since the Department has over 200 procurement offices with no automated
data collection system, the data collected would have a low reliability factor of
approximately 4.
(3) Yes, for the most part.
(4) This data could be developed within a 30 day period at an estimated cost of
$3,000.
.
(5) The term "socially and economically disadvantaged" has not been adequately defined to our satisfaction by the SBA. The minority business clauses
required by the FPRs do not include women as a class.
(6) Contractors are already overburdened with reports required by Government regulations. In some cases, contractors do not comply because there are no
compliance procedures to check on them. Contractor's reports would be unreliable
and costly.
(7) The Department awards very few contracts resulting in subcontracts and
those that are awarded are of small dollar amounts. We follow the policies established in the FPRs concerning reports required by prime contractors.
(8) The SBA has responsibility for the 8(a) program and other than the policies
established in the FPRs, we do not set standards for control of this program. We
would recommend adoption of criteria which would standardize eligibility for
entry into the program.
(9) We .have separated projects out of a major procurement so that minority
firms could qualify to do the work. Our agencies submit proposed projects for the
fiscal year to the Regional Offices of the SBA for 8(a) consideration. We have
experienced inaction on the part of SBA in fulfilling our requirements. In the
Western Region, millions of dollars in requirements have been offered with no
resultant 8(a) contracts. Overall, 8(a) contracts have not been processed as timely
as competitive contracts. We have experienced no problems coordinating with
the Office of Business Development of the SBA.
(10) A major conflict exists concerning nonperformance and default procedures
under the 8(a) program. In a case now pending before the Agriculture Board of
Contract Appeals, an 8(a) subcontractor defaulted and was released by the prime
contractor, SBA. The Department of Agriculture asked the Comptroller General
(GAO) if reprocurement costs could be waived. The Comptroller General in


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Decision B-185427 dated April 2, 1976, advised waiver was not appropriate and
that USDA should proceed with a final decision of the contracting officer. The
decision was made assessing reprocurement costs against SBA. SBA appealed to
the Agriculture Board and asked GAO to reconsider. USDA moved for summary
judgment on the basis SBA had admitted the contract and breach. The Board
denied the motion and called for briefs on the Board's jurisdiction. The Board
questioned: Who is the true contractor; should the Attorney General resolve
disputes between agencies; how could a judgment be enfarced; what would be
SBA's appeal rights? The Department of Agriculture believes allowing SBA to
unilaterally dissolve contracts makes such agreements illusory.
(11) We have submitted a nation-wide listing of all proposed construction
projects to Minority Contractors Assistance Project (MCAP) for assistance in
locating and developing contractors. MCAP is an OMBE funded organization
based in Washington, D.C. A change in the Small Business Act allowing agencies to
contract directly with the 8(a) firms would greatly decrease the time spent in
awarding a requirement. The SBA would retain responsibility for certifying firms
eligible for the program.
(12) Bonding is required by regulation on construction contracts and is not
internally generated.
(13) The following figures represent data for Fiscal Year 1976:
(a) We are unable to give a breakdown in this area. Data could be obtained
by contacting each of our procurement offices.
(b) Contracts totaling $10,253,000 were awarded to minority and female
contractors. We are unable to report separate data on female contractors
because it is not collected.
(c) Of the total dollars awarded, $352,726,000, small business concerns
received $240,724,000 or 68 percent.
GENERAL SERVICES ADMINISTRATION RESPONSE
PREPARED STATEMENT

I am Fred Bunke, Assistant Commissioner for Procurement at the General
Services Administration's Federal Supply Service. It is my pleasure to appear
before this conference on "Measuring Progress in Female and Minority Federal
Contracting" on behalf of Mr. Jay Solomon, Administrator of General Services.
The General Services Administration supports Government efforts to assist
female and minority Federal contracting. GSA's principal role in the minority
enterprise program, as is the case with other Federal procuring agencies, is to lend
support through special Federal contracting opportunities. Although there is no
formally established female enterpreneur program, GSA has _participated in a
number of conferences and workshops, for women in business. For example, GSA
has actively sought to involve female-owned businesses in our procurement
activities. On October 6, 1975, GSA was the first agency to conduct a procurement
seminar for females. This was done as part of the observance of International
Women's Year. The Agency also participated in the White House "Women in
Business Conference" held on March 3, 1976. In addition, GSA participated in a
Department of Labor procurement conference in Washington, D.C., on September
20-21, 1976. Outside of Washington, D.C., GSA has co-sponsored or participated
in "women-in-business" conferences in Boston, New York, Chicago, Kansas
City, Houston, Denver, and Los Angeles.
GSA does not currently capture data on contracts or subcontracts with femaleowned firms. Consequently, the remainder of the statement addresses the conference questions only from the standpoint of minority firms. As far as con11idering women, as a class, among those likely to be "socially and economically
disadvantaged" for the purposes of the Small Business Act of 1953, we do not
presently classify women as so disadvantaged. The Office of Federal Procurement
Policy would be the responsible office for making such a determination.
Currently, there is no Government-wide data base to reflect the total share
of Federal contracting, including prime and subcontracting, that is being awarded
to minority enterprise. However, the Office of Federal Procurement Policy
(OFPP) is actively pursuing establishment of a Government-wide data base
that would reflect statistics on contracting and subcontracting with minority
firms. By noticed dated August 17, 1977, the Administrator of OFPP expanded


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the scope of the potential data base to include consideration of maintaining
Government-wide statistics on contracting with female-owned firms. GSA is
participating on an interagency committee working on development of this data
base.
On a civilian agency-wide basis, and pursuant to Federal Procurement Regulation 1-16.804, GSA collects data relative to the dollar volume of minority
:firm subcontracts from Government prime contractors. Collection of the data
was initiated about two years ago, and is obtained from individual agency reports
on Standard Form 37, "Report on Procurement by Civilian Agencies." The
data is not yet reliable. The rating of our confidence in this data, on a scale of
1 to 10, would be 5. On September 12, 1977, GSA initiated a requirement that
civilian agencies submit data regarding prime contract awards to minority firms.
The data, which will be reported on SF37, will not be available until :fiscal year
1978, and will not be very reliable until fiscal year 1979. All data on the SF37
is expressed of the total dollar value of awards in each category, by agency.
In addition, GSA maintains other data internally. In accordance with Executive Order 11625, GSA prepares a monthly report which portrays its efforts
relative to the Small Business Administration's Section 8(a) program. The
report is submitted to the White House and Office of Minority Business Enterprise, Department of Commerce. The data, which has a confidence rating of
10, includes contractor name and location, ethnic type, commodity or service
procured, dollar amount of award, etc.
In the supplies and services area, we have completed data on GSA's share of
prime contract awards to minority :firms. The data, with a confidence level of 9,
would include contractor name and location, commodity or service procured,
dollar amount of award, etc. Although the data is readily available for our
service contracts, a special computer run, at the cost of $300, is required to obtain
the data on our supply contracts.
In accordance with Federal Procurement Regulations, statistics, with a confidence level of 7, are maintained on the total dollar value of prime contractor
subcontract awards to minority firms. However, this data is limited to prime
contracts in excess of $500,000, and is primarily in the construction contracting
area. Contracts for commercial supply items are presently excluded from this
reporting requirement. There has been no formal synthezising of minority shares
of subcontract dollars. Additionally, we have no way of measuring the accuracy
of pro rata applications of corporation subcontracting ratios. Finally, GSA is
able to break down the dollar volume of contracts awarded by: competitive and
noncompetitive awarding; minority contractors; and, size of firm.
With respect to Section 8(a) awards, we accept SBA's written certification that
individual 8(a) contractors are eligible under the SBA established critP.ria for
participation in this program. We do not investigate ownership. No SBA 8(a)
contractor receiving awards from GSA have been implicated in any abuse of this
program to date. All GSA contractors, including SBA 8(a) contractors, must be
determined responsible, and, when appropriate, potential contractors are investigated to determine production capacity and adequacy of sources of supplies and
:finances. Performance and payment bonds required by the Miller Act in connection with construction contracts over $2,000 are mandatory.
Where practical to do so, specifications are broken-out to maxim'ize the prospect
of minority firms qualifying. This is typically accomplished in our construction
requirements. For commercial supply items, we are unable to split our volume
among competitive firms and minority firms to enhance minority firm participation under the 8(a) program. Current guidelines permit us to set-aside up to 40%
of the annual usage of such an item. Additionally, we utilize a geographical zoning
procedure in appropriate cases, whereby the overall requirement is split into
zones. Awards are made by zone, rather than in the total, and this practice serves
to reduce the quantity to one which is within the capability of a competitive,
minority firm.
It is the stated policy of GSA to make all of its construction, supplies and
services eligible for award to minority firm!! under the 8(a) program. SBA is
aware of this policy and attempts to identify available contracting opportunities
and match them with eligible 8(a) firms. Participation has been limited only
by difficulties encountered by SBA in finding 8(a) firms capable of performing the
contracts, which result in millions of dollars of contracting opportunities being
returned after commitment has been made to SBA.
Relative to the processing time for 8(a) cases, we find, with the possible exception of building services contracts, there is an inordinate amount of time required


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from SBA's receipt of the 8(a) proposal to the subsequent award of contract.
Competitive bidding requires a stated time for submission of bids; if late, the bid
is not considered for award. Under the 8(a) program, after the item has been
identified by the procuring agency and SBA, SBA must then insure that necessary
financing, manufacturing and management expertise is available before recommending that the procuring agency make the award. However, after contract
ward, we find that in a number of instances the 8(a) firms fail because of an·
apparent lack of financing or management expertise. Both of these deficiencies
adversely impact our supply and construction programs. Additionally, our contract administration is more intense than under other contract,s because of the
three-party relationship of the contractor, SBA, and GSA. Minority contractors
normally require delivery or performance extensions in excess of the orignial
terms and conditions, caused at times by lack of capital or equipment to continue
with production. and more frequently by lack of expertise and management.
GSA has used innovative approaches to expand participation by minority
firms. Laws, regulations and judicial decisions have not impeded implementation
of any of our ideas. For example, the Federal Supply Service, of GSA, and the·
SBA have entered into an interagency agreement that considerably shortens the·
timeframe involved in establishing the contract price to be paid to the 8(a)
contractor. A "fast-pay" procedure has been introduced to insure that minority
firms receive payment within 10 days after receipt of invoice. Additionally,
GSA's Business Service Centers, located in various cities nationwide, provide·
daily counseling to minority entrepreneurs seeking contracting opportunities
with GSA and the Federal establishment. In FY 1976, Business Service Centers.
participated in 126 minority trade fairs, procurement conference and t'leminars.
In the construction area, one GSA Region has implemented a technology assit'ltance,
program in blueprint reading, estimating and graphics for minority firm!'!. The·
instruction is provided at no cost to the firms by GSA engineers and architects,.
and private industry contractors. Since inception of the program in 1971, 55
persons have successfully completed the courses. In another region, GSA furnishesadvance copies of specifications and job plans of certain prime construction
contracts to apprise minority firms of subcontracting opportunities.
We believe our current program is conceptually sound and providee ample·
opportunity for socially and economically disadvantaged firms to take advantageof GSA contracting opportunities.

CONTRACT COMPLIANCE DIVISION, GENERAL SERVICES ADMINISTRATION, RESPONSE
PROBLEM

To make it possible for disadvantaged, small busineE.s entrepreneurs (minority
and female) to participate equitably in: (a) The great American private enterprise
system; (b) Government programs as contractors and subcontractors; and (c) their
own economic development.
FACTS BEARING ON THE PROBLEM

Historically, minority and female business persons have not been provided a
fair and just opportunity to participate fully in either America's private enterprise
system, or the Federal, State or local procurement process.
In r,pite of commendable efforts by the Small Business Administration (SBA),
the Office of Minority Business Enterprise (OMBE) and selected departments and
agencies of the Federal Government, the results obtained have been minimal.
Most small businesses, particularly those headed by minorities and women, are
extremely vulnerable during business downturns or recessions. The current continuing difficult economic period has wreaked havoc on the disadvantaged entrepreneurs' efforts to become viable, tax-paying citizens as a result of receiving
so much less than a fair share of this country's affluence.
All firms holding Federal Government contracts exceeding $5,000 in value are
presently required to use their best efforts to ensure that "minority business
enterprises have the maximum practicable opportunity to participate in the performance of Government contracts." (Chapter 1, Federal Procurement Regulations, (FPR) 1-1.13.)


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All contractors which are subject to Executive Order (EO) 11246 are also subject
·to this requirement (EO 11625 and the FPR). Routine compliance reviews, con·ducted pursuant to the EO 11246, cover a broad cross-section of the more signifi•cant firms which are subject to EO 11625 and the FPR. Clearly, the inclusion in
these reviews of basic questions relating to the organization and results of contractors' minority business utilization efforts would increase awareness of, and
-compliance with, these requirements throughout American industry.
On April 25, 1975, a formal recommendation was made to the Director, Office of
Federal Contract Compliance Programs (OFCCP) that immediate action be taken
·to ensure that future compliance reviews include consideration of contractors'
•efforts to afford full opportunities to minority entrepreneurs. In a response dated
May 22, 1975, the Director stated, "I have taken a preliminary look at your pro,posal recently submitted concerning minority entrepreneurs. It clearly warrants
our consideration and I appreciate the initiative exercised by GSA, I have asked
my policy staff to review your proposal in depth. I will advise you of what conclu.sions we reach and actions we propose."
The President could, without legislative action, by revising EO 11625 and issuing instructions to the Secretary of Labor, cause all the Federal Governments'
Contract Compliance Agencies to emphasize the equitable involvement of minority
.and female owned firms in the procurement processes of the Federal Government
.as well as the private sector.
CONCLUSION

Clearly, the inclusion in reviews conducted by contract compliance organizations of the federal, state and local governments of basic questions relating to the
organization and results of contractors minority and female business utilization
efforts would increase awareness of, and compliance with, this requirement
throughout American industry. This action could be rapidly accomplished,
resulting in swift increases in the revenues of minority and female owned businesses
.and the deposits in minority and female owned banks-increments which, given
the present economic situation, could be crucial in many instances. Moreover,
'Such action would avoid the substantial costs involved in establishing a program
which would be solely devoted to securing compliance with this requirement, as
well as the even greater social costs which will be incurred if the requirement
'Centinues to be unenforced.
Programs designed to ensure that minority and female owned businesses are
.afforded an equal opportunity to act as suppliers of goods and services to governmental contractors are among those programs which have a high potential for
increasing the employment opportunities of minorities and women.
In spite of limited job opportunities and a generally lower level of income, the
consumer market capability of minorities has been estimated to exceed $100
billions and obviously that of women, the majority group in America is much,
much higher therefore the public relations aspect of the actions considered herein
is definitely favorable to the private sector businesses participating aggressively
in same.
RECOMMENDATIONS

1. Revise Executive Order 11625 to require all appropriate Federal Government
-organizations, in addition to contracting officers, to take every means at their
disposal to assist disadvantaged minority and female entrepreneurs in the economic benefits of the Nation's private enterprise system.
2. Direct that Federal Government organizations, particularly the Office of
Federal Contract Compliance Programs, take immedate action to ensure that all
future compliance reviews include consideration of contractors' efforts to afford
-opportunities to minority and female entrepreneurs, including:
A. Examination of the results of contractors' efforts, measured against
contractors' total expenditures for goods and services.
B. Review of contractors' minority and female business utilization programs to ensure that they contain at least the following minimal elements:
(1) Establishment of meaningful objectives for:
(a) Purchase of goods and services from minority and female
entrepreneurs.
(b) Deposits in minority and female owned banks.
(c) Participation of minority and female owned insurance firms
in company and employee coverage.
(d) Advertising in minority and female owned publications.
(2) Specific assignments of responsibility.


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(3) Development of a staffing system to ensure that objectives
established are met or exceeded. Such a staff would be responsible for
developing policy and monitoring progress under the program.
(4) Development of an ongoing program to identify minority and
female supply and service contractors, insurance companies, financial
institutions, and media. Attention would also be given to the identification of small minority and female firms which would be utilized in
the repair of company vehicles and equipment, and of minority and
female owned retail establishments which might be utilized.
(5) Development of a reporting system which would ensure that the
staff responsible for the program is aware of expenditures for goods and
services, deposits, etc., before they are made in order to ensure proper
monitoring and facilitate the identification of areas in which minority
and female entrepreneurs may be utilized.
(6) Delegation of veto power over expenditures to the program's
staff, in order that the provisions of the program may be enforced,
where necessary.
(7) Development and use of strategies to assist small disadvantaged
entrepreneurs in becoming capable of bidding on an equal basis for
competitive contracts (e.g., breaking down contracts into units to
facilitate use of smaller contractors).

DEPARTMENT OF COMMERCE RESPONSE
PREPARED STATEMENT

The Department of Commerce is pleased to participate in this conference on
"Measuring Progress in Female and Minority Federal Contracting", because it
shares your concern with the flow of Federal procurement dollars to this area of
our economy and advocates changed regulations, to require the collection of data
as it relates to female owned businesses.
The Department formed a Minority Business Program Committee in April
1976, to coordinate program activities to ensure the continued development and
growth of a unified and comprehensive minority business program within the
Department. Some of the programs created by the Committee are:
Established procedures for Commerce's operating elements to utilize minority banks.
GSA/DOC prospective bidder contract program to involve more minority
firms in selected GSA procurements.
Established a program to assist minority owned companies to become
exporters.
Developed special economic study estimates and projections to assist in the
administration of Minority Business Enterprise Programs.
Increased goals for minority procurement and grant programs.
The Department has initiated Affirmative Action steps, as a pilot project, in
several of our CPA contracts where the prime Contractor must subcontract to
minmity owned firms. This process has been challenged and we have been sustained in our actions by the GAO.
We have been actively involved in the promotion of minority business and the
SBA 8(a) subcontracting programs and we have a good record.
Records on women business owners are not maintained, however, Secretary
Kreps has taken positive steps to initiate collection of this data through the Federal Procurement Data System.
An Interagency Task Force on women business owners, initiated by Secretary
Kreps and established by the President, will conduct their first official meeting in
mid-October. The Department of Commerce is the lead agency to enhance the
Government's ability to assist women in business.
A cursory review of the Department's fiscal year 1976 contract files were found
to contain the mandatory clauRe(s) relating to minority business subcontracting
as required by the Federal Procurement Regulations.
The Maritime Administration, Ship Subsidy Construction Division, includes
the subcontracting clauses in all subsidy construction contracts. In fiscal year
1976, $10 million were awarded to minority subcontractors.


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RESPONSE TO CONFERENCE QUESTIONS

(1) The Department of Commerce compiles data on contracts and purchase
orders awarded to minority firms through our own monthly Minority Business
Procurement Report. Information on female owned firms is not obtained from any
offeror, therefore, even a review of contract files will not reveal female ownership
data.
Reports on the above data are submitted as follows:
The SF-37 is submitted to the .General Services Administration as required
by the Federal Procurement Regulations (subpart 1-16.8).
The Minority Business Enterprise Report is submitted to the Data Services
Committee of the Interagency Council for Minority Business as prescribed in
Executive Order 11625 dated October 13, 1971, Section 1(3).
All of the data collected is available to the public upon request.
(2) The assessment of the quality of various aggregate data the Department
of Commerce maintains would be rated 9 on scale of 10 with regard to minority
procurement. No information is available on procurement from female owned
firms.
(3) The Department of Commerce data reported to otµer agencies are of consistent quality and sufficient uniformity to permit useful aggregation with other
government-wide data.
(4) The Department of Commerce can develop statistics portraying the award
actions issued to minority-owned firms. Statistics on female-owned firms are not
being collected presently. Except for the Ship Subsidy Program of MARAD there
is little opportunity for a meaningful minority subcontracting program, because
there are few contracts over $500,000. In fiscal year 1976, $10 million were awarded
under the Ship Subsidy Program to minority subcontractors. It would be very
time consuming and expensive to require prime contractore to implement and
report on a minority subcontracting program. Starting in fiscal year 1978 DOC
will include the Minority Business Subcontracting Clause in all contracts over
$500,000.
(5) The Department of Commerce is not in a position to consider women as a
class to be "socially and economically disadvantaged" for the purposes of the
Small Business Act of 1953. However, individual women can apply for consideration as socially and economically disadvantaged persons.
,
(6) The establishment of a uniform government-wide contractor reporting
system would be beneficial to the Department of Commerce. The Federal Data
System is scheduled to be effective October 1, 1978. This system will capture
the needed data. On June 21, 1977 the Secretary of Commerce initiated a request
to the Administrator, Office of Federal Procurement Policy, 0MB, to provide for
the collection of information identifying contract awards made to businesses
owned by women.
The Interagency Task Force on Women Business Owners, established by the
President will conduct their first official meeting in mid-October 1977. The Task
Force was established on Secretary Kreps' initiative and the Department of
Commerce is the lead Agency to enhance the Government's ability to assist
women in business.
The Task Force is specifically charged with:
Identifying and assessing the adequacy of existing data on women entrepreneurs, identifying needs for additional information, and proposing methods
of collecting it.
Identifying the primary practices or conditions which discourage women
from becoming entrepreneurs, which discriminate against them or place them
at a competitive disadvantage.
Assessing current Federal programs and practices which discriminate or are
designed to mitigate these conditions and practices, and proposing changes in
Federal law, regulation and practice, including impact on the Federal budget.
Due to our limited experience in subcontracting, the Department would defer
to agencies with greater experience in this area (i.e., DOD and NASA).
(7) The objective criteria used by the Department of Commerce to determine
reports required of prime contractors regarding subcontracts is expressed in the
Federal Procurement Regulations. We do not synthesize in any case, minority
or female shares of subcontract dollar volume.
(8) DOC has an extensive audit program to minimize the opportunity for abuse
in minority procurement. Every contract issued in connection with the OMBE
Program is audited. The audit program is invaluable for detecting abuse. Other
agencies could adopt similar measures.

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(9) The Department of Commerce does make an effort to break-up contract
specifications in ways likely to maximize the prospect of minority firms qualifying.
The selection of 8(a) firms to be offered subcontracts through the Small Business
Administration is done by our Small Business Specialist who also performs the
screening process for the small business programs. Some of the 8(a) firms are
selected by track record, knowledge of firms and experience. SBA makes the final
determination in awarding a contract to an 8(a) firm. The Department has
encountered no difficulty in 8(a) contracts being processed in a timely manner.
In sonie cases award is made in a much less time frame than competitively
awarded contracts. The Department has had no major problems coordinating
with the Office of Business Development.
(10) The Department of Commerce has encountered a few difficulties in the
performance of minority contractors.
An interior decorating firm, minority female owned, received a $30,000 contract
and encountered a cost overrun of $7,000. The overrun was not reimbursed by
the Government.
There were two minority female advertising contracts in approximate amounts
of $70,000 and $80,000. One had an overrun of $30,000 and the other contractor
abandoned the contract.
All three of the above contractors were lacking in management and financial
capabilities. Accounting records could not support costs claimed under the
contracts. One of the advertising contractors went out of business without
completing the scope of work stipulated in the contracts due to lack of understanding and intent of the contract.
(11) The Department has attempted to use innovative approaches to expend
participation by minority firms. The Department formed a Minority Business
Program Committee in April 1976, to coordinate program activities to ensure the
continued development and i!"Owth of a unified and comprehensive minority
business program within the Department. Programs created by the committee
are as follows:
Established procedures for all operating elements to utilize minority banks.
The Department will deposit a minimum of $20 million in minority banks
this fiscal year.
The Department's Domestic and International Business Administration
(DIBA), under a recent agreement with the General Services Administration
(GSA) instituted a new DOC/GSA Prospective Bidder Contract Program to
increase opportunities to bid on government contracts. Throuih this program
DOC hopes to involve more minority firms in selected GSA procurements.
Currently exploring opportunities for Bureau of Economic Analysis to
conduct special economic studies or prepare special economic estimates and
projections to assist in the administration of the Office of Minority Business
Enterprise Programs.
Established a program in the Bureau of Domestic and International
Business Admini8tration to assist minority owned companies to become
exporters.
Increased goals over fiscal year 1976 for minority procurements and grant
programs. Fiscal year 1977 minority procurement was increased by 26
percent; grants by 7 percent; ship construction subsidy subcontracting by
20 percent and 8(a) procurements by 20 percent.
We recommend that every acquisition over $10K be advertised in the
Commerce Business Daily by every government agency. The listing in the
Commerce Business Daily should be done far enough in advance to permit
all female, minority and small business firms to identify their capabilities
to the procuring activity.
(12) In general, the Department does not impose bonding requirements on
minority contractors other than that required by statute. In construction contracts, The Miller Act, requires bonding on all construction contracts of $2,000
or more.
(13) The Department of Commerce can not at present break down the dollar
volume of contracts awarded competitively and noncompetitively, to minority
contractors and by the size of the firm. A reporting system to collect this information could be readily established. The Department does not keep records
on female contractors.


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DEPARTMENT OF THE TREASURY RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

(1) With respect to collection of data on contract awards, Treasury reports to
the Office of Minority Business Enterprise, semiannually, the number and amounts
of minority contracting both under the Small Business Administration's 8(a)
Program and direct awards to minority firms. This report is submitted at the
request of the Commerce Department, has been assigned Interagency Reports
Control Symbol 1561-DoC-SA and is in consonance with the Federal Procurement Regulations (FPR), Section 1-1.1302(a)(6). These reports are available to
the public under the Freedom of Information Act and, we understand, the Government-wide consolidation is published by the Office of Minority Business
Enterprise. To date, we have not been required by regulation to maintain data
or ascertain ownership status of female-owned contractors.
(2) The quality of the aggregate data on minority contracting we believe is
very reliable (value 9 on a scale of 1-10) with respect to 8(a) contracts, and perhaps a 7 with respect to direct minority contracts, yielding a straight average of
8. Direct minority contracts are identified as such by the representation requirement in the bid form (in accordance with FPR 1-1.1303); the representation is
not always completed, and there is no review of its accuracy when completedhence the lower assessment of data reliability.
(3) To the best of our knowledge, our minority contracting data reported is
able to be aggregated with similar data submitted by other agencies.
(4) Statistics could be developed to portray the share of prime contracts issued
to minority firms on the basis of data collected in the aforementioned OMBE
report. Similar data is not collected for female-owned firms. Major contracts over
$500,000 contain a clause (FPR 1-1.1310-2) which requires prime contractors to
promote minority subcontracting, maintain records on such subcontracting, and
cooperate with any requests from the Government contracting officer in surveys
pertaining to minority subcontracting. Similar procurement regulations do not
exist with respect to female-owned subcontracting. The processing of such a report
could be accomplished for minority contracts and subcontracts at an estimated
cost of $12,000 to the Department (one man-year) and an undetermined cost to
prime contractors. As far as data for female-owned contractors and subcontractors, the basic data collection if performed retroactively would be extremely costly,
perhaps as high as $50,000 (estimated), not counting costs to prime contractors.
(5) With respect to the designation of women as a "socially and economically
disadvantaged" group for the purposes of the Small Business Act of 1953, we
would defer to the Small Business Administration's (SBA) interpretation of that
statute. It is our understanding, however, that women or female-owned firms are
not considered by the SBA as "socially and economically disadvantaged" for the
purposes of the 8(a) Set Aside Program.
(6) We understand that the Office of Federal Procurement Policy is developing
a Government-wide contracting data base system that, when implemented by
Federal Executive agencies, will enable identification of various contract types
and contractors. Such a system could be extended, if this has not already been
planned, to incorporate data collection on minority contracting and any other
areas for which data collection is required by regulation. As far as suggestions,
we would only recommend that the Federal Procurement Regulations incorporate
appropriate contractual provisions to assure that agencies can easily and economically ascertain contractor status. Also, we believe that it would appear to be
extremely costly-and perhaps undesirable-to collect such data on purchase
order awards (i.e., small purchase transactions under $10,000 negotiated under
41 USC 252[c]) which are usually simplified, one-page contractual transactions.
(7) Treasury does not have its own policy with regard to requiring prime contractors to submit reports on any subcontractors.
(8) We have not had set-aside procurements restricted to female-owned or
minority-owned contracts, except for the Small Business Administration's 8(a)
Program for minority firms. SBA, we understand, has standards to identify suspected abuses of the 8(a) Program.
.
(9) Treasury encourages its bureaus to break-up contract specifications, where
feasible, in order to allow minority firms to compete for our requirements. Contracts are selected for 8(a) awards on the basis of known availability of services
and supplies from contractors certified by SBA. Our needs have been processed


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in a timely manner, since the competitive procurement cycle is not required on an
8(a) contract. Our primary suggestion to improve coordination with the SBA is to
have that agency provide us with current liRtings of 8(a) certified firms.
(10) We have not knowingly had any contracts with female-owned firms. As
far as minority contractors, we believe that there have been no major problems.
Any minor problems experienced are generally no different than experienced
with non-minority firms.
(11) Our programs have been primarily geared to furthering minority participation in accordance with Executive Order 11625 and FPR 1-1.13. Our approaches are:
(a) Wide distribution of our pamphlet "Selling to the Department of the
Treasury" to minority firms_ and organizations, as well as to Government
agencies such as SBA and the Office of Minority Business Enterprise.
(b) Development of our handbook title "Minority Business Contracting
Handbook" to be used in our Department's training classes for bureau
procurement personnel.
(c) Staff assistance visits to our headquarters and field procurement offices
in order to emphasize our minority programs to operating staffs.
(d) Participation in conferences and seminars sponsored by or for minority
enterprise.
We will continue these approaches, increasing them as staffing permits. Additionally, we have in the past established Departmental goals for minority contracting and are continuing to do so. For the future, to more accurately portray the
agencies respective amounts of contracting available to minority and other firms,
we suggest that any statistical representation acknowledge that a major portion
of our agencies commercial expenditures are directed to GSA mandatory sources
and large computer or other systems, and are not "available" for minority contracting.
(12) We do not have a special bonding requirement for minority contractors.
(13) Although our existing reports do not break down our expenditures exactly
as the questionnaire requires, the following data for fiscal year 1976 may be
helpful:
(a) Formal advertising (all competitive) 1_______________________ $84,512,000
Negotiated (both competitive and noncompetitive)___________ 80,721,000
Mandatory sources (e.g., under GSA contracts)______________ 86,116,000
Total procurement _____________________________________ 251, 349, 000
(b) Minority contracts: 2
Direct contracts (to the extend identifiable) ____________ _
8(a) set-aside ____________________________________ -- --

445,000
223,000

Total minority contracts ___________________________ _

668,000

(c) Small business contracts 1 _________________________________ 69, 633, 000
Large business contracts __________________________________ 181, 716, 000
Total _________________________________________________ 251,349,000
1 SF 37, Report on Procurement by Civilian Executive Agencies, fiscal year 1976.
• OMBE 91, Minority Business Report, fiscal year 1976.

DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT
RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

Question 1. Please specify the type and form of data your agency compiles and
processes on contracts awarded to minority and female-owned firms. To whom do
you report your findings and in response to what statutory or regulatory requirements? Which of your data are generally available to the public upon request,
and which are not?
Answer. The Department of Housing and Urban Development compiles data
on Contractors as to size of the business and whether or not the firm is minorityowned. To date the Department has not compiled data on female-owned organi-


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zations. We prepare the Standard Form 37 required by Federal Procurement
Regulation on a semi-annual basis to the General Services Administration as well
as the MBE Form 91 to Department of Commerce's Office of Minority Business
En terprise on minority prime contract awards, which includes awards to small
businesses. Any of these reports is available to the public upon request.
Question 2. What is your assessment of the quality of various aggregate data
you regularly maintain? On a scale of 1 to 10, with 1 representing a total lack of
confidence, rate the reliability, in your judgment, of the various data you process
on minority and female shares of contracting and subcontracting originating with
your agency.
Answer. The data we possess is of generally good quality, since all procurement
actions are maintained on a computer-based Management Information System.
The confidence level on reliability is rated at 7.5, since it is conceivable that
because our Certification for Minority Business is requested of Contractors on a
voluntary basis, some might elect not to indicate their minority status. Allowing
for this, and for human error, explains the confidence level we have indicated.
e do not code nor collect data on female-owned Contractors, so this is not
retrievable from our system.
Question 3. To the best of your knowledge, are data you report to other agencies
of consistent quality and sufficient uniformity of definitions to permit useful
aggregation with other such government-wide data? Please identify where
incongruencies exist.
Answer. Yes, our definitions are believed to be consistent with those promulgated to all Government agencies. The Department has implemented no additional
or differing requirements.
Question 4. If asked, could you develop statistics portraying the shares of contracts issued to minority and female-owned firms and the shares of subcontracts
issued by your prime contractors to such firms? If so, how costly and timeconsuming would the data processing for such an exercise be (estimate)?
Answer. We are able to retrieve information at any time on Minority Contracts.
As indicated above, we are unable to retrieve on a retrospective basis, the information on female-owned firms. However we could obtain this in the future as
part of the solicitation process, and enter it into the data bank as a routine matter. To do so with the existing inventory of contracts would require a manual
search effort.
Limited data is available on subcontracts with respect to minority or femaleowned. This effort would require a manual search and/or survey as well.
Question 5. Does your agency consider women, as a class, among those likely
to be "socially and economically disadvantaged" for the purposes of the Small
Business Act of 1953?
Answer. HUD has not promulgated any procurement policy as yet which considers this issue. We have taken our lead from the SBA that if this can be shown
for the purpose of 8(a) certification, we honor that eligibility.
Question 6. Wh~t suggestions do you have regarding establishment of uniform
government-wide contractor reporting, recordkeeping, and retrieval standards to
facilitate availability of trend data on minority and female contracting?
Answer. A requirement to collect these data would have to be promulgated by
the OFPP or the GSA as a new procurement regulation. Until such time as these
data elements are universally defined, trends will not be able to be recognized.
Of possible consideration is a "Representations and Certifications" requirement
on female-owned firms; and a compulsory certification as to minority status.
Question 7. What is your policy, and what objective criteria do you use, to
determine what reports you require of which prime contractors regarding subcontracts they enter in fulfillment of their contracts? Do you synthesize, in any
cases, minority or female shares of subcontract dollar volume? Are such procedures, such as pro rata application of corporation subcontracting ratios, reasonably
accurate methodologically?
Answer. Reports on subcontracts per se are not required. The Department
collects limited data on the identity of subcontractors with respect to minority
or female-owned.
Question 8. What objective standards do you apply to identify suspected abuse
of noncompetitively awarded minority or female set-asides? Are some such
standards unique to your agency? Can you suggest others which could be adopted
in management control of such contract awards throughout the government?
Answer. The only program which HUD uses to accomplish minority set-asides
is the Section 8(a) program. It has not been our experience to suspect any incidents
of abuse in the selection process. As a result, no unique standards have been
established.

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Question 9. Does your agency make an effort to break-up contract specification&
in ways likely to maximize the prospect of minority firms' qualifying? How do:you select contracts to be offered through Section 8(a) subcontracts of the Small
Business Administration (SBA)? In your experience, have procurement needs
filled through 8(a) subcontracts been processed in as timely a manner as competitively offered contracts? What other problems, if any, have you had coordinating with the Office of Business Development of the SBA?
Answer. HUD has issued a regulation (41 CFR 24-1.709-50) which states that
construction, repair and reconditioning work, from $2,000 to $1,000,000, is setaside for Small Business. Other Departmental requirements on the average result
in contracts in the $100,000 range. Each proposed Work Scope is reviewed for
Small Business set-aside. The process is time-consuming, since it requires the·
involvement of too many actors in our judgment.
The coordinating function of SBA is one which is seen as problematic. We recommend that authority be given directly to the agencies to contract with 8(a) contractors. Frequently the placement process experiences undue delays which we feel
could be avoided if a more direct interactive process with the subcontractor were
permitted. The role of SBA should be solely one of certification, business monitoring and eventual "graduation" of client firms, but not to be involved with the
placement of the contracts.
Question 10. What difficulties, if any, has your agency encountered in the performance of minority or female contractors? Please cite examples without implicating particular companies or individuals.
Answer. As a category of Contractors, there is no greater or lesser amount of
difficulty in dealing with minority or female-owned contractors in fulfilling the
terms of the contract. As to the quality of technical performance, there has been
an understandable variance in the quality of the product, usually depending on the
nature of the work.
·
The 8(a) program is designed such that certain of the Government's administrative remedies are lost. This is further compounded by the dual-agency "team"
which represents "the Government". Clarification of this cumbersome relationshipwould permit better contract compliance and monitoring.
Question 11. Has your agency attempted to use innovative approaches to expand
participation by minority or female firms? Do you have ideas you could implement
if not impeded by certain laws, regulations, or judicial decisions? Do you plan to
utilize new approaches in the near future? What ideas might be of general benefit
to your colleagues in their efforts? Please be specific.
Answer. Efforts to expand participation by minority businesses include (1) an
advance notice of procurement opportunities is sent to the minority firms on our
computerized bidders list. In this way, minority firms are alerted to solicitations
available in their expressed areas of expertise.
(2) The Office of Procurement and Contracts and the Office of General Counsel
worked together to use 8(a) firms in the Architect/Engineer selection process
where the Brooks Act is applicable. In one series of flood study contracts for the
flood Insurance Administration, a pool of six minority firms were solicited, resulting in awards to four of them for the study efforts.
(3) One large program office under the Assistant Secretary for Housing has
established a specific minority goals program for placement of repair and reconditioning requirements.
Question 12. If you require bonding of firms awarded noncompetitive minority
contracts, is the requirement internally generated, or a product of statute or
regulation?
Answer. The Miller Act is statutory; there is no discretion in its applicability to
the construction, repair and reconditioning areas It is suggested that consideration
be given to permit some discretion in the bonding requirements for Minority and
Small Businesses Presently, the Miller Act bonding requirements apply at $2,000
and above. It is believed it would enhance the participation of Minority Contractors if this threshold were amended to be consistent with the Small Purchase
threshold of $10,000.00
Question 13. If you know, could you breakdown the dollar volume of contracts
awarded by:
(a) Competitive and noncompetitive awarding;
(b) Minority and female contractors; and
(c) Size of firm.


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Answer. Figures are based on fiscal year 1976:
Total
volume __ -------------------------------------_____ _•
(a) Competitive
___________________________________________
Noncompetitive ___________________________________________ _
(b) Minorities _____________________________________________ _
(c) Small busineRs _________________________________________ •
Other than small business __ ---------------------------------

$257, 103, 000
163,227,860
35, 740, 921
19,300,000
142,260,000
114,843,000

ENVIRONMENTAL PROTECTION AGENCY RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

Federal Agencies/departments are required by Executive Order 11625 to
implement programs directored to the assurance that minority-owned and
operated business enterprises are awarded a reasonable share of Government
contracts. In light of this, the Environmental Protection Agency (EPA) has
developed an aggressive program to implement both the spirit and intent of the
Executive Order. A major segment of our program entails the setting of goals
as to the dollar amounts of procurement to be awarded to these firms.
During the past four fiscal years, EPA has established dollar goals for its
Minority Business Enterprise Program. For fiscal year 1977, EPA established a
goal of $15 million in procurement of both goods and services from minority
businesses. The Agency mid-year report showed that $9 million in minority
business (direct and indirect contract awards) had been accomplished during the
first half of fiscal year 1977. It is anticipated that the Agency's fiscal year 1977
goal of $15 million will be met.
The EP A's Contracts Management Division has been delegated the responsibility for further implementing the Agency's overall Minority Business Enterprise
Program effort.
The Automated Data System which EPA uses provides total actions and dollar
value of awards under section 8(a) of the Small Business Act and minority firms
other than 8(a). A summary of this information is transmitted quarterly to the
Department of Commerce and the Small Business Administration (SBA) in
addition to other appropriate EPA personnel. The summary information is
transmitted to the Department of Commerce in accordance with the guidelines
established by the Secretary of Commerce in conformance with the execution of
Executive Order 11625. The Acency does distribute a publication of relevant data
and levels of proil'am activites of its Minority Business Enterprise Program
efforts.
Based en the Agency's past and present experience it would rate the quality and
reliability of its data as 9 on the scale of one to ten. With regard to subcontracting,
the A,ency's contractinc officer obtained the information from Optional Form 61
submitted by prospective contractors. The information is consolidated by each
major procuring activity and submitted to the Agency's Small Business Advisor
and Minority Enterprise Proil'am Officer for review and evaluation.
The subcontracting data and other data that is referenced above is also reported to the Department of Commerce and SBA. The quality is consistent and no
problems exist with uniformity of definition which would negate the aggregation
of this information with other I agencies.
To date EPA does not have an information system which provides for tracking
the number of contracts and dollars awarded to businesses according to sex. In
order to obtain such information it would involve canvassing each major procuring
activity and require them to review all active contracts in addition to contacting
major prime contractors to provide subcontracting information. This would be
extremely costly and time consuming. The EPA has obtained information from
SBA relating to prime contracts awarded to minority female-owned firms under
the Section 8(a) Business Development Program.
With respect to the subject of women as a class, this Agency has not established
a definitive policy as of this writing.
·
The EPA has no suggestions regarding the establishment of an uniform Government-wide contractor reporting, record keeping, and retrieval standard to facilitate
availability of trend data on minority and female contracting. It is the view of
EPA that the current Department of Commerce's Form (MBE 91) and recent
GSA revised SF 147 satisfactorily fulfills this reporting requirement insofar as
minority, but not for female contracting. It would be easy to revise these forms to
include female contract awards.

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The EPA criteria for determining reporting requirements with respect to a
prime contractor's subcontract activity is based on subcontracting opportunities
that the prime contract may offer. It there are no substantial opportunities, we
do not include the subcontracting clause in the contract, that among other requirements, requires reporting of subcontracts.
The EPA relies primarily upon SBA's approval process in conformance with
SBA's Rules and Regulations Part 129 of Chapter 1, Title 13 of the Code of
Federal Regulations and SBA's Standard Operating Procedure 60-61-2 to identify
suspected abuse of noncompetitively awarded minority or female set-asides under
the 8(a) business development program.
In general, this Agency does not have the types of procurements that lend
themselves to breakup contract specifications in ways likely to maximize the
prospects of minority firms qualifying. We do, however, have procurement such
as ADP in which we have identified multiple tasks. This is also true of several of
the Agency's auditing requirements. In each case, EPA has awarded 8(a) contracts
to those firms certified by SBA to provide such services. Final selection of contract
award is based primarily on a submission of a technical proposal. In the instances
just cited and other procurement the experience to date on processing by SBA
has been generally satisfactory. The EPA has experienced a good working relationship with SBA.
The EPA has encountered minimal difficulties on the performance of minority
and/or female-owned and operated enterprises. This includes 8(a) and non S(a)
minority owned and female firms.
In the furtherance of the MBEP, EPA has entered into an inter-agency agreement with the Department to provide funds of $50,000 for partial support for
the Technology Utilization Program (TUP). One purpose of the program is to
identify EPA research developed products which can be legally transferred to
the TUP, to give minority manufacturers an opportunity to capitalize on early
entry into new developing markets.
The EPA has recently implemented an innovative approach to MBE development. The Agency recently held a Minority Business Procurement Exposition
at its Cincinnati, Ohio Laboratory. The attendees received the opportunity to
present their capabilities and experiences to program personnel having responsibility for developing requirements within their area of operation. Plans are
underway to hold similar expositions in EP A's headquarters and other research
and development laboratories. We do not have any pending projects relating to
MBE which would be impeded by existing laws, regulations or judicial decisions.
EPA is constantly seeking new techniques, approaches and methodologies to
expand and enhance minority participation in all aspects of the Agency's programs. EPA is very much aware of the significance of maintaining a viable-active
MBE program.
Concerning ideas which may be beneficial to other agencies in their (MBE)
efforts, EPA has instituted a formal procurement planning program whereby the
Agency's project officers are required to submit their anticipated plan of contract
commitments to the Director, Contracts Management Division, at the beginning
of the current fiscal year. Such a procedure has enabled the Agency's MBEP
officer to identify an increased number of requirements and/or business opportunities to be directed to these enterprises.
The only requirements that EPA has for bonding are imposed by the Miller
Act (40 U.S.C. 2702-2706) with respect to construction contracts.
The EPA does have the information available to breakdown the dollar volume
of contract awarded by:
(a) Competitive and non-competitive awarding;
(b) Minority (with the exceptions of female contractors);
(c) Size; and
(d) Competitive and non-competitive awarding.

NATIONAL AERONAUTICS AND SPACE ADMINISTRATION
RESPONSE
PREPARED STATEMENT

NASA has a comprehensive procurement information system which provides
accurate specific information on its procurement activities, including prime and
subcontract awards to small business and minority business enterprise. Lacking
a clear definition of "female-owm•d firms", and thusly without a related certification requirement, NASA is unable to collect and report on such firms. NASA is

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also precluded by law from providing specific subcontracting information which
identifies individual subcontractors and the value of such awards under individual
prime contracts. With these exceptions, NASA procurement information is
available on request and is regularly included in NASA's Annual Procurement
Report.
NASA's procurement information system and resulting data is readily compatible with other Federal Agencies, particularly that of the Department of
Defense. It will also be of interest to the Conference, that the Office of Federal
Procurement Policy (OFPP) is directing an interagency effort to establish,a common and inclusive procurement data base for the Government. The system is expected to be operational by October 1, 1978.
With respect to subcontract information, NASA receives aggregate data including small business and minority business from its prime contractors. A recent
revision to its reporting system is expected to provide higher quality data through
the second tier of subcontracting.
In its continuing effort to enhance small business and minority business procurement opportunities, NASA places emphasis on the planning process and the
setting of procurement goals. In addition, prospective NASA contractors are
similarly required to include their subcontracting plans for source evaluation and
selection considerations. In construction contracts, a 20% goal for subcontracting
with minority firms has been established. Though bonding has been an issue, we
believe that it is an important and accepted element in the construction business
to _protect suppliers, workers and subcontractors alike.
In summary, we believe that NASA has an efficient highly accurate procurement
management information system, which we believe is providing more than
adequate measure of our small business and minority business efforts.
RESPONSE TO CONFERENCE QUESTIONS

Question 1. Please specify the type and form of data your agency compiles and
processes on contracts awarded to minority and female owned firms. To whom
do you report your findings and in response to what statutory or regulatory
requirements? Which of your data are generally available to the public upon
request, and which are not?
Answer. NASA does not develop or report information on female owned firms.
The Regulations of the Small Business Administration, as published in Title 13
of the Code of Federal Regulations, sets forth criteria for defining small business
and minority business, but does not provide similar criteria for defining female
owned business entities. Therefore, the current NASA Procurement Regulation
does not require company certification of a female owned and controlled business,
as is required in the case of both small business and minority firms. Accordingly,
NASA's procurement information system does not record data on female owned
firms. With that exception, NASA's procurement information system is able to
provide extensive statistical data on small and minority firms, and others, such
as contractor's name, type of contract, place of performance, contract value,
work description, size and type of firm, and the like. In all, some 37 data fields
are provided on all procurements that are individually reportable (NASA Form
507). Other procurement data is presented in aggregate form.
NASA reports semiannual data on minority contract awards to the Office of
Minority Business Enterprise on MBE Form 91 in accordance with Executive
Order 11625. NASA also reports prime contract and small business and minority
business subcontracting information to the General Services Administration
semiannually on Standard Form 37 in accordance with Federal Procurement
Regulation 1-16.804. With the exception of specific subcontracting information
identifying individual subcontractors and the value of such awards under individual prime contracts, as restricted from disclosure by law (18 USC 1905),
NASA procurement information is generally available to the public on request.
Question 2. What is your assessment of the quality of various aggregate data
you regularly maintain? On a scale of 1 to 10, with 1 representing a total lack of
confidence, rate the reliability, in your judgment, of the various data you process
on minority and female shares of contracting and subcontracting originating
with your agency.
Answer. NASA rates the overall quality of the procurement data it regularly
maintains as a 9. Minority prime contract information is rated as 8, with the
exception of Section 8(a) reporting which is evaluated as 9. Subcontracting information on minority business is rated as 7. NASA has recently revised its
subcontract reporting system to improve the quality of its minority subcontract
data to be effective on October 1, 1977.

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Question 3. To the best of your knowledge, are data you report to other agencies
of consistent quality and sufficient uniformity of definitions to permit useful
aggregation with other such government-wide data? Please identify where
incongruencies exist.
Answer. Data reported on prime contract awards are of sufficient consistency
and quality to permit aggregation with other government-wide data.
Question 4. If asked, could you develop statistics portraying the shares of
contracts issued to minority and female-owned firms and the shares of subcontracts issued by your prime contractors to such firms? If so, how costly and
time-consuming would the data processing for such an exercise be (estimate)?
Answer. With the exceptions concerning female owned firms and the legal
restrictions on specific subcontracting information, as discussed in 1 above,
NASA can and will make available comprehensive prime and subcontract statistical information on small and minority firms. This information is routinely
developed and could be made available at minimal cost, in summary form. This
information is regularly included in NASA's Annual Procurement Report, which is
widely distributed and also available on request.
Question 5. Does your agency consider women, as a class, among those likely
to be "socially and economically disadvantaged" for the purposes of the Small
Business Act of 1953?
Answer. NASA has formed no opinion or policy on whether women, as a class,
would qualify "as socially and economically disadvantaged for the purposes of
Section 8(a) of the Small Business Act." Since the responsibility for the establishment and implementation of eligibility criteria for the Section 8(a) program
resides with the Small Business Administration, we look to that Agency for such
policy formulation and guidance.
Question 6. What suggestions do you have regarding establishment of uniform
government-wide contractor reporting, recordkeeping, and retrieval standards to
facilitate availability of trend data on minority and female contracting?
Answer. The Office of Federal Procurement Policy (OFPP) has the responsibility for establishing a system for collecting, developing, and disseminating procurement data which takes into account the needs of Congress, the executive
branch, and the private sector. To implement this responsibility, OFPP is developing the design of a Federal Procurement Data System (FPDS) which is expected
to become operational October 1, 1978. Under this new government-wide procurement data system all executive branch departments and agencies will report uniform procurement data elements to a central data center, on a quarterly basis.
NASA is participating in a working group with the OFPP, and other procurement agencies, in the development of this system. A proposal for the inclusion ef
information on female-owned companies in the system is presently before the
committee. On August 23, 1977 a notice for comment to this effect was published
in the Federal Register. Data elements on minority contracting have been incorporated in the developing system.
Question 7. What is your policy, and what objective critera do you use, te
determine what reports you require of which prime contractors regarding subcontracts they enter in fulfillment of their contracts? Do you synthesize, in any
cases, minority or female shares of subcontract dollar volume? Are such precedures, such as pro rata application of corporation subcontracting ratios, reasonably accurate methodologically?
Answer. NASA's prime contractors are contractually required to report firsttier subcontracts in excess of $10,000 on each of their prime contracts in excess
of $500,000. Each of the first-tier subcontractors awarded a NASA subcontract
in excess of $50,000 is required to report second-tier subcontracts in excess of
$10,000.
Data on small business and minority firms are reported by NASA contractors
in summary form on NASA Form 524. This summary data does include pro rata
sharing of overhead procurements among the various Government agency customers involved. NASA has no means of evaluating the accuracy of these procedures.
·
Question 8. What objective standards do you apply to identify suspected abuse
of non-competitively awarded minority or female set asides? Are some such standards unique to your agency? Can you suggest others which could be adopted in
management control of such contract awards throughout the government?
Answer. Though I do not fully understand the question, I wish to state that
NASA as an Agency applies the highest moral and ethical standards for its contractors whether they are selected noncompetitively, as within the Section 8(a)
program by the SBA, or through other competitive or noncompetitive procedures.

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Such standards are not unique to NASA and are applicable to all Agencies of
the Federal Government.
We have no specific recommendations to offer. Though we consider the Federal
Procurement process to be relatively free of abuse, we recognize that occasionally
such abuses do occur.
Question 9. Does your agency make an effort to break-up contract specifications
in ways likely to maximize the prospect of minority firms' qualifying? How do you
select · contracts to be offered through Section 8(a) subcontracts of the Small
Business Administration (SBA)? In your experience, have procurement needs
filled· through 8(a) subcontracts been processed in as timely a manner as competitively offered ffontracts? What other problems, if any, have you had coordinating
with the Office of Business Development of the SBA?
Answer. Yes, as a regular function in the procurement planning process NASA
does review its developing procurement requirements for breakout for Section
8(a) contracting and small business set-asides.
At each NASA Installat·on a planning-advisory group, the Minority Business
Enterprise Program Council, is responsible for the development of the activity's
annual minority business program plan, including its Section 8(a) contracting
plan. In addition, the installation's Small Business-Minority Business Specialist
reviews each new procurement requirement, as it is initially identified, for Section 8(a) contracting potential.
Generally speaking, NASA has experienced no undue difficulty in the processing
of Section 8(a) procurements, There have been, of course, some problem situations but for the most part the record has been satisfactory.
We have had no particular problems in coordinating our efforts with SBA's,
Office of Business Development. Its incumbent Director and staff have been most
cooperative and helpful to us. At this time we are working very closely with the
SBA in a general review of the entire Section 8(a) program with the view of correcting basic deficiencies, and to revitalize its business development objectives.
Question 10. What difficulties, if any, has your agency encountered in the performance of minority or female contractors? Please cite examples without implicating particular companies or individuals.
Answer. New minority Section 8(a) contractors, on occasion, have required and
have been given various forms of technical and management assistance in the
performance of their contracts. These include assistance in quality assurance
planning, job estimating, on-site management and organization of work, and the
like. Such NASA assistance is willingly provided, as a normal function of its involvement in the business development objectives of the Section 8(a) program.
Qwestion 11. Has your agency attempted to use innovative approaches to
expand participation by minority or female firms? Do you have ideas you could
implement if not impeded by certain laws, regulations, or judicial decisions?
Do you plan to utilize new approaches in the near future? What ideas might be of
general benefit to your colleagues in their efforts? Please be specific.
Answer. NASA has implemented several innovative approaches to expand the
participation of minority firms in its procurement opportunities. These include
the use of planning-advisory groups, involving top management personnel in the
planning, implementation and review of the minority business program activities
at NASA field installations. These Minority Business Enterprise Program Councils,
have proven to be an effective organizational device for achieving NASA's program objectives. In addition, NASA has established a requirement of its major
contractors to submit their minority subcontracting plans in their proposals for
use in the evaluation and selection process. Approved plans are negotiated into
the resulting contract and may be included in the incentive fee structure, when
appropriate. NASA has also established the contractual goal that at least 20
percent of its construction subcontracting be accomplished by minority firms.
We have no specific ideas that are impeded by law, regulation or judicial decisions to offer. However, we are continuing to seek out other means for enhancing
minority participation in NASA's work.
We believe that the judicious application of the concept of mandatory small
business and minority business subcontracting is worthy of general consideration.
This envisions the development of realistic contractual goals for the particular
contract work, in consonance with the specific capabilities of known small and
minority firms.
Question 12. If you require bonding of firms awarded non-competitive minority
contracts, is the requirement internally generated, or a product of statute or
regulation?


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Answer. Bonding, as used by NASA in the Section 8(a) program, is a requirement
of the Miller Act (40 USC 270a-270e) for construction contracts in excess of
$2,000. The performance bond requirement is intended to protect the Government
against failure of the contractor to perform the contract work. The payment bond
provides protection for employees, suppliers and subcontractors many of whom are
small business and minorities, by ensuring their payment in the event the contractor is unable to do so. This is the paramount consideration in the bonding
requirement.
Question. 13. If you know, could you breakdown the dollar volume of contracts
awarded by:
(a) Competitive and non-competitive awarding;
(b) Minority and female contractors; and
(c) Size of firm.
Answer. Subject to the limitations discussed in 1 above, NASA can provide the
listed information.
DEPARTMENT OF THE AIR FORCE RESPONSE
PREPARED STATEMENT

The Air Force presently compiles minority contract award data which is reported to DOD and is available generally to the public. Subcontract award data
to minority owned firms is also collected. Collection of prime contract award
data is a recent development so we have no experience upon which to assess its
quality. The quality of subcontract award data is excellent. These data are consistent and can be aggregated with other government data.
Contract award data on female-owned firms is not collected. The administrative
cost of collecting such data for DOD and defense contract.ors would be in excess of
$5 million annually.
The SBA defines what groups or classes are "socially and economically disadvantaged." DOD minority subcontract data is collected on the DD Form
1140-1 which is completed by most contractors with contracts in excess of $500,000.
All 8(a) contracts are reviewed by the Air Force for legal sufficiency and fair
market price to prevent abuses. Abuses involving eligibility of firms to participate
in the 8(a) Program and the selection of contractors is the responsibility of the
SBA. 8(a) procurement opportunities are broken out. All proposed new procurements in excess of $2,500 are reviewed for S(a) contracting possibilities. Difficulties
experienced in dealing with minority and female contractors generally are no
different than those encountered in dealing with majority firms of the same size.
The Air Force has utilized innovative approaches to expand participation by
minority firms. The minority business enterprise program is not impeded by law.
Bonding requirements result either from statute or are based on the business
judgment of the contracting officer. DOD can provide a breakdown of the dollar
volume of competitive and non-competitive contracts by minority contractors
and by size of firm. Data does not exist on female owned firms.
RESPONSE TO CONFERENCE QUESTIONS

Question 1. Please specify the type and form of data your agency compiles and
processes on contracts awarded to minority and female owned firms. To whom do
your report your findings and in response to what statutory or regulatory requirements? Which of your data are generally available to the public upon request,
and which are not?
Answer. The Air Force compiles prime contract award data by name of firm
and type of firm (small business, large business or other) on all contracts over
$10,000 under the DD Form 350 reporting system. Prime contract award data is
collected in summary form for contracts of $10,000 or less by type of business
under the DD Form 1057 reporting system. Both reporting systems have been
changed recently to collect data on the number and amount of contract awards
to minority firms. Subcontract award data is reported on the DD Form 1140-1.
None of these systems collects data on contracts awarded to female owned firms.
Air Force data is reported to the Office of the Secretary of Defense. Generally,
all of these data are available to the public.


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Question 2. What is your assessment of the quality of various aggregate data
you regularly maintain? On a scaie of 1 to 10, with 1 representing a total lack of
confidence, rate the reliability, in your judgment, of the various data you process
on minority and female shares of contracting and subcontracting originating with
your agency.
Answer. Since the reporting systems for primes have been changed only recently
to collect data on contract awards to minority owned firms, we have no experience
to evaluate the accuracy of the data. The first full year where we should have such
data will be Fiscal Year 1978. The accuracy of the subcontracting data reported
by Air Force prime contractors is between 9 and 10 on the scale suggested.
Question 3. To the best of your knowledge, are data you report to other agencies
of consistent quality and sufficient uniformity of definitions to permit useful
aggregation with other such government-wide data? Please identify where incongruencies exist.
Answer. The data on contract awards which we report are of a consistent
quality and sufficient uniformity to permit useful aggregation with other government wide data. Such data is provided to OMBE which consolidates the data with
that of other agencies.
Question 4. If asked, could you develop statistics portraying the shares of
contracts issued to minority and female-owned firms and the shares of subcontracts issued by your prime contractors to such firms? If so, how costly and timeconsuming would the data processing for such an exercise be (estimate)?
Answer. As indicated above, we are now in a position to develop statistics
portraying the shares of contracts issued to minority firms but not female owned
firms. We are also able to report shares of subcontracts issued by our prime
contractors to minority firms but not to female owned firms. With respect to
whether such data could be collected for female owned firms, it should be noted
that most of the 25,000 firms that receive contracts in excess of $10,000 from
DOD are corporations. Their stock is widely held and there is no record made as
to the gender of the stockholders. In fact, much of the stock is held in trust for
others. Thus, it would be most costly for corporations to determine the gender
of the beneficial owner of these stockholders. In addition, the administrative cost
to DOD in collecting the data and verifying its accuracy even on a sampling basis
would be costly. It is estimated that the administrative cost to collect these data
for DOD and defense contractors would be in excess of $5 million annually.
Question 5. Does your agency consider women, as a class, among those likely
to be "socially and economically disadvantaged" for the purposes of the Small
Business Act of 1953?
Answer. The U.S. Air Force has no authority to define what groups or classes
are "socially and economically disadvantaged" for the purpose of the Small
Business Act of 1953. The Air Force adheres to the definitions promulgated by
the Small Business Administration which defines such groups and classes in
accordance with applicable SBA rules and regulations.
Question 6. What suggestions do you have regarding establishment of uniform
government-wide contractor reporting, recordkeeping, and retrieval standards
to facilitate availability of trend data on minority and female contracting?
Answer. No suggestions are offered.
Question 7. What is your policy, and what objective criteria do you use, to
determine what reports you require of which prime contractors regarding subcontracts they enter in fulfillment of their contracts? Do you synthesize, in any
cases, minority or female shares of subcontract dollar volume? Are such procedures, such as pro rata application of corporation subcontracting ratios,
reasonably accurate methodologically?
Answer. All DOD prime contractors who have a contract containing the
Minority Business Enterprise Subcontracting Program clause as set forth in
ASPR 7-104.36(b) are required to report awards to minorities on the DD 1140-1
report. This is a standard DOD form which all DOD contractors use to report
such data. No data is reported on awards to female owned firms. The Minority
Business Enterprise Subcontracting clause is required in contracts in excess of
$500,000 which, in the opinion of the contracting officer, offer substantial subcontracting opportunities. Because the contracting officer has this latitude, the
clause and the resulting reporting requirements have not been applied uniformly.
Consequently, DOD is in the process of developing more definitive guidelines
concerning which contracts will contain the clause and therefore which contractors will report minority subcontract award data. The share of minority
award data is not synthesized as such but is actual data except for the allocation


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of overhead type contracts which is based generally on total subcontract dollars.
Question 8. What objective standards do you apply to identify suspected abuse
of non-competitively awarded minority or female set-asides? Are some such
standards unique to your agency? Can you suggest others which could be adopted
in management control of such contract awards throughout the government?
A:nswer. The only non-competitive awards to minorities made by DOD agencies
(there are no set-asides for female.owned firms) are those contracts awarded to
the SBA under Section 8(a) of the Small Business Act. These contracts are reviewed
for complicance with DOD and Air Force regulations concerning legal sufficiency,
fair market price, etc. These standards are not unique to the Air Force. We are
not aware of abuses in those areas over which the Air Force has responsibility.
Abuses pertaining to eligibility and selection of 8(a) contractors are the responsibility of the SBA.
Question 9. Does your agency make an effort to break-up contract specifications
in ways likely to maximize the prospect of minority firms' qualifying? How do you
select contracts to be offered through Section 8(a) subcontracts of the Small
Business Administration (SBA)? In your experience, have procurement needs
filled through 8(a) subcontracts been processed in as timely a manner as competitively offered contracts? What other problems, if any1 have you had coordinating
with the Office of Business Development of the SBA?
Answer. The Air Force does make an effort to break out procurement opportunities to provide minority firms an opportunity to receive an award under Section
8(a) of the Small Business Act. All proposed new procurements of $2,500 or more
are reviewed by Air Force Small Business Specialists to determine whether they
are candidates for the 8(a) Program. Timeliness is a problem in that the responses
of the SBA and the 8(a) contractors generally add to the procurement administrative lead time. However, this problem is recognized and is compensated for by
adequate procurement planning. The Office of Business Development has been
most responsive to our needs.
Question 10. What difficulties, if any, has your agency encountered in the performance of minority or female contractors? Please cite examples without implicating particular companies or individuals.
Answer. Difficulties experienced in dealing with minority and female contractors generally are no different than those encountered in dealing with majority
firms of the same size. Problems that most often occur deal with contract administration and may involve a need for technical or management assistance. SBA
should be given greater resources to provide such assistance.
Question 11. Has your agency attempted to use innovative approaches to
expand participation by minority or female firms? Do you have ideas you could
implement if not impeded by certain laws, regulations, or judicial decisions?
Do you plan to utilize new approaches in the near future? What ideas might be of
general benefit to your colleagues in their efforts? Please be specific.
Answer. The Air Force has utilized innovative approaches to expand participation by minority firms. The Armed Service Procmement Regulation does not
require a like program for female owned firms. The Air Force minority business
contract and subcontract programs are not impeded by law, regulation or judicial
decision. We do plan to utilize new approaches in the near future. For example, the
Air Force plans to require major system prime contractors to specifically identify
minority subcontracting opportunities as a part of their proposal effort. The
amount of minority subcontracting participation and the adequacy of the prime
contractor's plan will be considered in the award of the prime contract. Also, the
minority subcontracting opportunities which are identified will be made part of
the contract. In addition, the Air Force plans to sponsor a number of meetings
between minority contractors and prime contractors to improve subcontracting
opportunities.
Question 12. If you require bonding of firms awarded non-competitive minority
contracts, is the requirement internally generated, or a product of statute or
regulation?
Answer. It could be both. Some bonding requirements are required by statute,
e.g. certain construction work while other requirements are up to the discretion
of the contracting officer. The guidance on the latter is set forth in ASPR, Part X.
Question 13. If you know, could you break down the dollar volume of contracts
awarded by:
(a) Competitive and non-competitive awarding;
(b) Minority and female contractors; and
(c) Size and firm.
Answer. The DOD can provide a dollar breakdown on all data set forth except
for female contractors.

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CONTRACTS AND PURCHASING UNIT, ADMINISTRATIVE PROGRAMS STAFF, DEPARTMENT OF JUSTICE, RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

(1) At present no data is compiled or processed on contracts awarded to female
owned firms. Data on minority firms is reported within the Department of Justice
on DOJ Form 354 which is in turn provided to the Department of Commerce,
Office of Minority Business Enterprise, on Form MBE-91. This minority business
data is provided in response to specific request by the Department of Commerce.
However, the revised Standard Form 37, Report on Procurement by Civilian
Executive Agencies, published in the Federal Register, September 12, 1977 includes data on minority business enterprises. Therefore we expect that the reporting of the data on Form MBE-91 will be discontinued. All such data is available
to the public.
(2) We rate minority data as a 9. We do not maintain data on female owned
firms.
(3) Yes, because there are established forms and formats for providing such
data.
(4) We already develop statistics for contracts and subcontracts to minority
owned firms. Developing similar data on female owned firms would not present
any problems and the cost would be minimal.
(5) Determining what groups or firms• are "socially and economically disadvantaged" under the Small Business Act of 1953 is the responsibility of the Small
Business Administration (SBA), therefore such decisions are not made by the
De£artment of Justice.
(6) The Office of Federal Procurement Policy is responsible for establishing
uniform procurement reporting requirements. A study is now in progress to determine the elements to be included in a Federal Procurement Data System.
(7) Data on awards to minority subcontractors is requried on contracts exceeding $500,000.00 in accordance with Federal Procurement Regulation 1-1.309.
We do not require any data regarding female owned subcontractors.
(8) Other than the 8(a) program administered by the SBA, we are not aware
of any authority which permits "noncompetitively awarded minority or female
set a~ides."
(9) Specifications are reviewed to determine opportunities for minority firms
and to select contracts for award to minority firms under the 8(a) program. Generally, 8(a) subcontracts have been processed as quickly as competitive awards.
(10) We have not been experiencing any difficulties with minority contractors.
(11) We have devoted our efforts mainly to review of specifications. Greater
concentration by requiring activities on this issue early in the development of
specifications might prove beneficial.
(12) We know of no authority to award non-competitive minority contracts
except under the 8(a) procedure. In such cases SBA is awarded the contract.
(13) Currently, the Department does not maintain reports on competitive vs
non-competitive awards and awards to female contractors. If this information
is required, it may be obtained after a search of the contract files. Awards to
minority contractors during fiscal year 1976 and the transition quarter totaled
$213,000.00 Awards to emall and large businesses during the same period totaled
$6,959.00 and $12,911,000.00 respectively.
BUREAU OF PRISONS, DEPARTMENT OF JUSTICE, RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

This response was prepared by staff of the Federal Bureau of Prisons. Opinions
expressed herein are not intended to represent those of the Department of Justice.
(1) A semi-annual "Minority Business Development Report" is prepared and
forwarded to the Department of Justice in accordance with DOJ Order 2301.6.
No data is compiled on female owned firms.
(2) The assessment of the quality of information submitted on the above report
concerning prime contracts is rated as eight (8) ; sub-contracting data is rated as
two (2) ; no data is collected on contracting or sub-contracting with females.
(3) Yes, to our best knowledge, data is consistent and uniform.
(4) Information is available on minority contracts but not female owned-firms.
We have no data from which the shares of sub-contracts issued to minority and
female owned firms can be developed.

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(5) The BOP does not consider women, as a class, socially nd economically
disadvantaged for the purpose of the Small Business Act of 1953.
(6) We have no suggestions to offer.
(7) The only reports required of contractors are those required by Federal
Procurement Regulations.
(8) No standards are applied to check set-asides. No suggestions are offered.
(9) Contract specifications are not broken up for any reason._ Selection of co.ntracts to be offered through the 8(a) program is at the discretion of each contracting officer. We have no statistics on the success or failure of 8(a) contracts.
(10) Any difficulties are resolved by each contracting officer without Central
Office kn·owledge.
(11) BOP personnel have met with groups of minority business representatives.
At these meetings, and in response to correspondence, listings of BOP institutions
have been furnished, suggesting that the representatives contact the institutions
contracting officers to make him/her aware of the products or services that are
available. For the past three years nationwide workshops with contracting
officers have emphasized small business and minority business enterprise programs.
(12) No bonding is required other than those required by the FPR. We require
no bonds for services and supplies.
(13) Cost breakdown between competitive and non-competitive awards cannot
be obtained under our present input source.
FEDERAL

BUREAU OF INVESTIGATION,
JUSTICE, RESPONSE

DEPARTMENT OF

RESPONSE TO CONFERENCE QUESTIONS

(1) A bidder's list for minority businesses is maintained and used as a possible
source of supply when needed. A report on total procurement which includes
contracting by minority businesses is submitted every 6 months in accordance with
Federal Procurement Regulations. Data regarding the award of contracts is
published in the Commerce Business Daily and is available to the public upon
request.
(2) The quality of data regularly maintained is good. However, data processed
on minority business enterprises will generally depreciate with age.
(3) Yes.
(4) It is not believed that any statistics exist within agency files which could be
obtained regarding past contracts issued to prime contractors in regard to shares
of subcontracts issued to minority firms.
(5) No.
(6) Additional record keeping by the Government would be expensive and the
effectiveness would be dependent upon the value that might be received from the
work effort.
(7) Policy is to follow Federal Procurement Regulations for minority business
enterprise set forth in Federal Procurement Regulations Subpart 1-1.13.
(8) The only program utilized involving possible set-asides is the Small Business
Administration 8(a) program.
(9) It has not been practical to attempt to break up contract specifications in
ways likely to maximize the prospect of minority firms' qualifying. Generally,
contracts offered through Section 8(a) are General Services Administration contracts and no procurement problems have been encountered, nor has there been
a need to coordinate any problems with the Small Business Administration.
(10) No performance problems have been encountered this fiscal year.
(11) This Bureau has sent representatives to minority trade shows in the
Washington, D.C. area and also solicits quotations from minority businesses
that are listed in "The Buyer's Guide to Minority Businesses" and "Minority
Suppliers Report Annual Directory."
(12) No bonding has been required in recent years.
(13) For the period 10/1/76-3/31/77.
(a) Not readily available.
(b) $25,000-7 contracts.
(c) Unknown.


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CENTRAL INTELLIGENCE AGENCY RESPONSE
While the Central Intelligence Agency does contract with minority businesses,
it does not feel that its record8 of such actions meet the requirements of ASPR
Section 1-332.2 on minority business enterprise programs. In an attempt to
improve its records, a program was initiated in early 1977 which involves a recertification from all Agency contractors as to whether they qualify as small
business or minority business. Upon completion of this program (early 1978)
appropriate changes will be made to the Agency's automated contract information program, data will be input, and a capability for data recall and reporting
on contracts with minority business enterprises will be on line.
A substantial amount of CIA contracting is handled on a classified basis and
involves either classified or sensitive information on sources and methods which,
in accordance with the CIA Act of 1949, the DCI must protect.
In the interest of protecting this sensitive or classified information, the Agency
does not report names of contractors, contract values or other specific data on
its procurement activities to external parties other than designated oversight
mechanisms.
The Agency operates its procurement system to the maximum practicable extent in accordance with the ASPR except in areas such as acquisition of ADPE
where the FPR is applicable to all agencies. Mandatory ASPR clauses are included
in all contracts.
U.S. POSTAL SERVICE RESPONSE
SUMMARY STATEMENT

1. General Information

PoRtal Service procurement regulations generally closely parallel FPR and
ASPR.
Our procurement is small-contract oriented-nearly 95 percent of purchases
for equipment, supplies, and services are for $5,000 or less.
Over 75 percent of our non-directed-source contract dollars are awarded to
small business ..
2. Data on Awards to Female- and Minority-Owned Firms
No data are maintained on female-owned firms, but signatures on our 12,000
highway transportation contracts suggest that at least 17 percent may have been
awarded to females.
We began maintaining records on minority awards for construction contsacts
and subcontracts this summer, and earlier for equipment, supplies, and services
contracts; we are working to develop reliable data.
3. Polides on Awards to Female- and J,,finority-Owned Firms

We have not regarded female ownership as a reason for special treatment under
small and minority business policies.
We employ SBA lists and make special efforts to attract minority enterprise
bids and to follow up solicitations to identify ways to improve minority participation.
Through contract provisions, we require construction contractors to adopt
affirmative programs for subcontracting with minority business enterprises and
to submit quarterly reports detailing thefr efforts and results.
PREPARED STATEMENT

Good afternoon, I am James M. Williamson, Director of the Postal Service's
Office of Resources Management, Procurement and Supply Department. My
responsibility within the Postal Service relates to procurement for equipment,
supplies and services. With me representing our Real Estate and Buildings
Department is W. Tood Kite, Director of the Office of Design and Construction;
and representing our Mail Processing Department is Robert H. Wieman, Director
of the Office of Transportation Services.


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General Information
Although most of the general Federal procurement statutes have been made
inapplicable to Post Service contracting, we have adopted procurement regulations that closely follow, as a general matter, the GSA Federal Procurement
Regulations (FPR) and the Defense Department's Armed Services Procurement
Regulation (ASPR). We have tried to design these regulations, which we call the
Postal Contracting Manual (PCM), to satisfy both general Federal procurement
policies and the particular needs and responsibilities of the Postal Service, which
include a requirement for substantial economic self-sufficiency.
To a greater degree than some other agencies, the bulk of our procurement is
oriented towards small contracts. For fiscal year 1976, nearly 95 percent of our
purchases for equipment, supplies, and services were for $5,000 or less, and over
99 percent were for $30,000 or less. Most of our transportation contracts are also
small.
The nature of our contracting needs for supplies and services has enabled us to
achieve excellent results in contracting with small business. For fiscal year 1976,
about $104 million or 14 percent of our total contract spending was devoted to
intergovernmental procurement-mostly from GSA lists. Of the awards that we
have made ourselves, data supplied to SBA show that about 77 percent or $50
million went to small business, with about 23 percent or $148 million going to large
business. Of the total in-house contracting, awards worth $639 million were
competitive and about $16 million non-competitive. These statistics are capable of
being compiled with those of other agencies and are available to the public upon
request.
Data on Awards to Female-and Minority-Owned Firms
The small contract orientation of most of our procurements provides considerable opportunity for minority-and female-owned enterprise to contract with
the Postal Service.
"\Ve have not kept records on the numbers of contracts and subcontracts awarded
to female-owned business. However, before this conference, we did search through
our files on our approximately 12,000 highway transportation contracts, using the
name of the award recipient to identify contracts awarded to females. This way
we were able to identify at least 2,000 of the contracts, about 17 percent, as having
been signed by females. Since some names listed only first initials or were not identifiable by sex for other reasons, the actual number probably is larger.
We began to develop the capability to compile data on awards of equipment,
supplies, and services contracts to minority businesses about a year ago. This
summer we began to keep_ records on contruction contracts and subcontracts
awarded to minority firms. To date, we are not satisfied with the quality of our data
collection in this area, particularly on the lower dollar-value contracts. We would
rate our initial efforts at most a 4 on a scale of 10. We are seeking ways to upgrade
these efforts and are confident that some improvements can be made.
On prime construction contracts of $500,000 or more, our contractors are required to submit quarterly report.i on subcontracting to minority business.
We do not favor participation in uniform, Government-wide contractor reporting, including reporting on minority and female enterprise subcontracting.
Such a system would have to try to cope with the many different kinds of contracts,
and would require the development of data processing, staff, hardware, and software. We believe that such efforts would be unduly costly but do not have reliable
estimates of that cost. On the whole, we believe that such a system would be ponderous, bureaucratic, and beset with paperwork.

Policies on Awarels to Female- and Minority-Owned Firms
The Postal Service has not considered female ownership of firms to be a social
and economic disadvantage for purposes of our programs to encourage small business and minority enterprise contracting opportunities.
With regard to minority-owned enterprises, the Postal Service coordinates its
activities with the Department of Commerce, Our procedures direct contracting
officials to make periodic reviews of procurement requirements to select those
suitable to be met by minority enterprise and to negotiate and enter into contracts
with qualified minority firms at prices that may exceed our estimated cost by as
much as 10 percent. We do not have any satisfactory data on such awards to date.
In addition, we review the solicitations in which minority enterprise is involved
and discuss any problems the firm may have had with the solicitation in order to
identify improvements that can be made. The Postal Service does not contract to
the SBA for award under section 8(a) of the Small Business Act.

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We do not prepare restrictive specifications for the purpose of maximizing prospects of minority firms to qualify.
The type and size of many of our procurements lend themselves naturally to
fulfillment by capable small and minority businesses.
Through appropriate contract clauses, we require all construction contractors
having contracts over $10,000 to use their best efforts to see that minority firms
have the maximum practicable opportunity to participate in our procurements of
construction. Each construction firm whose contract is larger than $500,000 must
establish and conduct a program as specified in our contract clause which will
enable minority firms to be considered fairly as subcontractors and suppliers.
Each such major contractor also must submit quarterly reports, as specified,
describing his program, his contracts with minority firms, and the results of his
efforts.
The requirements of the Miller Act for bonding of firms awarded construction
contracts exceeding $2,000-including those awarded to minorities-apply to the
Postal Service as a matter of law.
We have encountered some difficulties with minority contractors but no more
than would be expected from any small business contractor not fully versed in
Government procedures.
On the whole, we certainly regard ourselves today as still in the learning stages
in our programs for securing and identifying contracts with minority enterprise.
We hope these discussions of mutual needs and problems will be beneficial for the
Postal Service.
Thank you.
DEPARTMENT OF TRANSPORTATION RESPONSE
SUMMARY STATEMENT

I all).. Roger Martino of the Office of Installations and Logistics, representing
the Department of Transportation (DOT), and I welcome the opportunity to
exchange comments arid views in a matter of strong mutual interest-progress
in Minority Federal Contracting.
DOT fully endorses the minority contracting program and has had good
results from it. DOT's interest, and the increased opportunity afforded to minority
contractors to participate in DOT procurement can be gauged to some degree
by the growth in program results. Since FY 1973 DOT has been either first,
second or third among all civilian agencies in relative participation in the 8(a)
program.
While the program is growing and largely successful, it can be improved. DOT
generally supports the specific recommendations made in the statement presented
by Mr. Richard Frakes of the Federal Aviation Administration.
I believe that it is appropriate to note the fact that the Office of Federal Procurement Policy is actively pursuing the development of government-wide procurement data base requirements through an interagency procurement data
committee. DOT is a member of that committee, and believes it is an effective
· vehicle for consideration of the operational aspects of much of the data needs
being discussed here today.
RESPONSE TO CONFERENCE QUESTIONS

Question 1. "Please specify the type and form of data your agency compiles
and processes on contracts awarded to minority and female owned firms. To whom
do you report your :findings and in response to what statutory or regulatory
requirements? What of your data are generally available to the public upon
request, and which are not?"
Answer. The Department compiles data required by the Federal Procurement
Regulations (FPR), specifically data required by Section 1-16.804. This Section
prescribes the information required to be reported to the General Services Administration on Standard Form 37, Report on Procurement by Civilian Agencies.
The information is submitted to GSA on a semi-annual basis. The Department
also submits a semi-annual minority business enterprise report to the Office of
Minority Business Enterprise, Department of Commerce.
The DOT Contract Information System contains data on contracts by various
classifications including large and small business, competitive and noncompetitive awards and minority awards. Our information system does not contain information on female-owned businesses. The data in the Contract Information
System is available to the public.

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Question 2. "What is your assessment of the quality of various aggregate data
you regularly maintain? On a scale of 1 to 10, with 1 representing a total lack of
confidence, rate the reliability, in your judgment, of the various data you proceel!I
on minority and female shares of contracting and subcontracting originating with
your agency."
Answer. Procurement in DOT is compl€tely decentralized.
The data in the system comes from the procurement offices in the operating
elements comprising the Department. Data inputs are reviewed prior to entering
the system, and the data, once entered is very reliable. In our opinion, the data
on minority contracting would rate 9 to 10 on the scale described.
Prime contractor efforts to subcontract to minority firms is required by two
Federal Procurement Regulation clauses. The first entitled, "Utilization of
Minority Business Enterprises," is required in contracts in excess of $10,000
and requires a prime contractor to use his best efforts to utilize minority subcontractors. The second clause entitled, "Minority Business Entarprises Suecontracting Program" is required in contracts exceeding $500,000 which offer
substantial subcontracting opportunities and require the establishment of a
positive program to enlist minority subcontractors. This latter clause requires
periodic reports from the prime contractor. We generally feel that the extent of
the minority subcontracting effort should be determined on a contract-by-contract
basis.
Question 3. "To the best of your knowledge, are data you report to other agencies
of consistent quality and sufficient uniformity of definitions to permit useful
aggregation with other such government-wide data? Please identify where incongruencies exist."
Answer. Yes.
Question 4. "If asked, could you develop statistics portraying the shares of
contracts issued to minority and female-owned firms and the shares of subcontracts issued by your prime contractors to such firms? If so, how costly and timeconsuming would the data processing for such an exercise be (estimate)?"
Answer. The requested information on female owned contracting cannot be
developed from currently stored data. However, this information could be generated, but generation would require the following changes:
Type of change and cost impact
Revision to Contract Information System programs and data input forms.
(Minor.)
Changes to the Federal Procurement Regulations to provide an adequate
definition of female-owned businesses. (Minor.)
The exact cost of developing comprehensive records in the area of female owned
business can not be accurately estimated at this time. The major emphasis should
be on developing a workable definition of a female-owned furn and determining
the "ripple effect" cost of imposing the requirement down through subcontract
tiers.
Question 5. "Does your agency consider women, as a class, among those likely
to be "socially and economically disadvantaged" for the purposes of the Small
Business Act of 1953?"
Answer. SBA, under its Act of 1953, has the responsibility for defining socially
and economically disadvantaged contractors. DOT operates within the context
of such definitions.
Question 6. "What suggestions do you have regarding establishment of uniform
government-wide contractor reporting, record-keeping, and retrieval standards
to facilitate availability of trend data on minority and female contracting?"
Answer. The Federal Procurement Data System, when fully implemented,
will standardize required data elements. At present, there is no definition of female
owned business, and there is no measure of the cost impact upon the contractor
community for collecting such information through several subcontract tiers.
Both of these matters need to be addressed before a decision is made with respect
to collecting the data.
Question 7. "What is your policy, and what objective criteria do you use, to
determine what reports you require of which prime contractors regarding 1,ubcontracts they award in fulfillment of their contracts? Do you synthesize, in any
cases, minority or female shares of subcontract dollar volume? Are such procedures, such as pro rata application of corporation subcontracting ratios, reasonably
accurate methodologically?"


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Answer. The Department does not synthesize female shares of subcontract
dollar volume. Because our experience with the application of corporation subcontracting ratios is limited, we are not in a position to judge whether they are
a reasonable accurate methodology.
Question 8. "What objective standards do you apply to identify suspected abuse
of non-competitively awarded minority or female set asides? Are some such
standards unique to your agency? Can you suggest others which could be adopted
in management control of such contract awards throughout the government?"
Answer. The Department relies on the Small Business Administration to conduct the certification review and certify that a minority contractor is eligible for
an S(a) award. The S(a) program is undergoing an intensive review by the Small
Business Administration and the Department supports that effort. DOT does
not attempt to "go behind" the SBA evaluation and certification.
Question 9. "Does your agency make an effort to break-up contract specifications in ways likely to maximize the prospect of minority firms' qualifyings
How do you select contracts to be offered through Section 8(a) susbcontract?
of the Small Business Administration (SBA)? In your experience, have procurement needs filled through S(a) subcontracts been processed in as timely a manner
as competitively offered contracts? What other problems, if any, have you had
coordinating with the Office of Business Development of the SBA?"
Answer. Procurement requests and program requirements are reviewed by a
small business and/or minority business liaison representative in each of the operating elements' procurement offices. Procurements, frequently are selected for
small business set-asides or 8(a) procurements as a result of such reviews and
subsequent liaison with appropriate technical and program officials.
In general, procurements awarded through S(a) subcontracts have proceeded
in a satisfactory manner comparable with other awards. However, delays sometimes develop where it has been necessary to get a minority firm certified by the
SBA for the S(a) program. While it is obviously necessary to keep the number of
firms receiving S(a) assistance to a manageable level, our offices report that there
are times when a procurement opportunity may be delayed or lost entirely
because of the time required to obtain an S(a) certification.
With respect to coordination with the Office of Business Development in SBA,
our procurement offices have noted that the SBA's ability to provide adequate
development assistance to minority firms is seriously limited by the lack of business development expense (BDE) funds. This is particularly true in the construction field where there is an apparent problem in providing substantial assistance
although the needs are often critical.
Question 10. "What difficulties, if any, has your agency encountered in the performance of minority or female contractors? Please cite examples without implicating particular companies or individuals."
Answer. While most minority contracts have been performed in a fully satisfactory manner, some minority contractors have not fulfilled the terms and conditions of their contract within the required period of performance. The statement
by the Federal Aviation Administration provides further information on this topic.
Question 11. "Has your agency attempted to use innovative approaches to
expand participation by minority or female firms? Do you have ideas you could
implement if not impeded by certain laws, regulations, or judicial decisions? Do
you plan to utilize new approaches in the near future? What ideas might be of
general benefit to your colleagues in their efforts? Please be specific."
Answer. The Department has systematically attempted to expand the opportunity for participation by minority firms in DOT procurement and in third
party contracts under our grants program. We actively seek minority contractors
who can provide goods or services which meet our requirements.
The Office of the Secretary has an ongoing program in which minority businesses
wishing to do business with the Department can present information on their
companies' capabilities to minority business liaison representatives from the
operating elements at a single coordinated meeting. Information on how to get on
various Bidder's Lists is provided. Follow-up action is initiated where the company has the capability to meet a need of one or more of the operating elements.
In July 1976, DOT sponsored a major conference in Washington where the Secretary and the heads of the operating elements discussed minority opportunities
under DOT programs with representatives of minority businesses nationwide.
The Federal Railroad Administration has established a Minority Resource
Center under the provisions of the Railroad Revitalization and Regulatory Reform Act of 1976. This Center assists minority contractors in obtaining their fair


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70
share of prime contracts and subcontracts under the several railroad improvement
programs. Periodically, the Department sponsors conferences such as the one
entitled 'Transportation Research and Development-a Briefing for Industry"
held at the Transportation Systems Center in Cambrigde, Massachusetts. Invitations are sent to many minority business firms. The purpose of these meetings
is to familiarize all of industry with anticipated R&D related contracting opportunities within DOT.
Question 13. "If you require bonding of firms awarded non-competitive minority
contracts, is the requirement internally generated, or a product of statute or
regulations?"
Answer. The Department of Transportation is very aware of the difficulties
presented by bonding requirements. We have participated, as a member of the
Interagency Council for Minority Business Enterprise, in a general Federal
Government exploration of possible solutions. We are also engaged in an effort
through the Minority Business Resource Center to ease the bonding problems
of minority contractors in the railroad revitalization_programs. In the highway
programs we have waived the Government-wide 100% bonding requirement and
accepted the bonding levels which the several States routinely apply. In many
instances, these levels are as low as 50% of the contract amount. In the urban
mass transportation field, we obtained a waiver of the 100% bonding requirement
for the Washington Metropolitan Area Transportation Authority (WMAT A).
In this case, WMAT A had evidence of greater small and minority business
participation when WMATA imposed its normal 50% bonding requirements on
projects not supported with Federal funds, and that all interested parties were
adequately protected at the 50% levels.
_
On August 24, 1977, the Office of Management and Budget issued Circular
A-102 Revised. Attachment B to this circular revises Federal requirements for
100% bonding to allow a Federal agency to "accept the bonding policy and
requirements of the grantee provided the Federal agency has made a determination that the Federal Government's interest is adequately protected." We support this approach because it allows for flexible approaches to bonding, while it
assures that all parties interests are protected. However, no matter how flexible
the Federal requirements are, they can not abr<.>gate the State law concerning the
required bonding levels for contracting in each State.
The Department does not support proposals to eliminate bonding requirements
entirely. because bonding provides protection to suppliers -of goods and labor,
and offers a form of assurance that construction contractors have the capacity
to perform. Since many subimppliers are small and minority businesses, the elimination of bonding requirements could work a hardship on the very group, of
contractors- that we are attempting to assist. If bonding is to be eliminated some
other measure of protection should be provided to grantees and subcontractors.
One of the obvious solutions to the problem is to increase the Federal capability
to provide bonds or to guarantee a substantial portion of privately offered bonds.
The Department supports proposals to achieve greater Federal capability in this
area.
Question 13. "If you know, could you breakdown the dollar volume of contracts
awarded by:
(a) Competitive and non-competitive awarding;
(b) Minority and female contractors; and
(c) Size of firm.
Answer:
DEPARTMENT OF TRANSPORTATION, OCT. 1, 1976-MAR. 31, 1977
[Dollar amounts in thousands)
Other than
Small business small business
Total procurement •••••••••••••••••••••••••••••••••••••••••

$472,830

$139,735

$333,095

Form aII y advertised...............................................
Negotiated ••••••••••••••••••••••••••••••••••••••••••••••••••••••
Procurement under other agency contractor..........................

287,633
49, 852

74,675
13, 882

212,958
35, 970


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Federal Reserve Bank of St. Louis

------------135,345
51, 178
84, 167

71
SECTION 8(a) AWARDS
[In thousands of dollars)

1970•••
_-- - _--- -- --- --•••••••••••••••••
- •• - -- --- -- --- • ----- - -- -- • --- -------- ---- • --- -- 1971.
•• ______________
_•••••••
-- •----• •••••
__ •••
__ ••••••••••
1972 .•• _. _••••• _•• _••• _••••••••••••••• __ • _•• _. -- •••••••••••••• _. -- •• -- •••••
19734•••••••••••
·-. _. --------- •••••••••••••••••
---__····-··----- ••
··--··-····
197
_•••••
__ • _••••••••••• _••
• __ -- -- •--__•.•••••
• -- -- • _____
• _____
-- ____ _
1975•••••••••• _•• __ •••• _•••••• _•••• __ •••• _. _. _-- -- • _•• _. -- -- •• __ • --- •••• -- •
1976.• _••••• -- _••••••• _. ___ • _. _•• _••• _. ___ •• ______ • _-- -- • _. _. _. _-- _••• _-- -1977 (6 mo) ___ ._._ •• _••• _••• _____ ._._. ___ ._. _______ • ___ • __________ ••••• ___ _

SBA sec. 8(a)
procurement

Standing
among
civilian
agencies

$894
3, 387
7, 697
30, 317
16,523
23,624
21,955
10, 767

---------------------------·····-------1
3
2
2
--------------

1 In fiscal year 1973 the Federal Aviation Administration and the U.S. Coast Guard awarded several construction contracts
of from $2 to $3 million each under the 8(a) program.

In addition during the first six months of fiscal year 1977 grantees under Federal
Assistance Programs awarded contracts in the amount of $62,681,000 to Minority
Business Enterprises.

FEDERAL AVIATION ADMINISTRATION RESPONSE
SUMMARY STATEMENT OF RICHARD F, FRAKES, DIRECTOR, LOGISTICS SERVICE

I am pleased to have the opportunity to attend this conference which is intended
to focus on the Federal Government's Section 8(a) minority business program.
Through forums such as this, and through collective discussion and analysis, I
believe that we can assist in strengtl;lening and improving what is, in my opinion,
already a good program.
The FAA's experience with the Section 8(a) Program has been good and we fully
endorse and support this worthwhile program. Prior to the inception of the
program, although a limited number of minority firms were included in the F AA's
contracting process, the participating firms were primarily engaged in offering
nontechnical services. Consequently, the resulting dollar awards to minority firms
due to the restricted areas of participation, were low. However, after 1970, we
began to see minority construction engineers, architects, computer systems
analysts, experts in noise abatement, and firms engaged in other aspects of research
and development. Their work has contributed significantly toward helping us in
promoting aviation safety,
The following statistics, which reflect the percentage of direct contract awards
to minority firms compared to total procurement dollars expended, demonstrate
our support for the program:- fiscal year 1974, 3,7 percent, fiscal year 1975, 6.1
percent; and fiscal year 1976, 6. 7 percent.
Although we strongly support the program, we believe there are ways that the
program could be improved. For that reason, I would like to identify several areas
which we believe should be considered.
Bonding
We have experienced problems with the ability of 8(a) firms to obtain bonding
required by the Miller Act for all contracts over $2,000. In some oases the FAA
has been willing or has already awarded a contract to SBA with a specific 8(a)
firm in mind. Later the 8(a) firm was turned down since it could not obtain the
necessary bonding. Thus, the bonding requirements of the Miller Act ~revent
FAA from being able to utilize 8(a) contractors on our construction proJects to
the extent we would like.
Business Development Expense Funds
We believe that development assistance to minority firms in tb,e form of business development expense (BDE) funds should be reviewed. In the construction
field, SBA has often declined to provide substantial assistance to these firms for
··
needs which we believe to be critical.


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BDE permits SBA to make monetary grants to disadvantaged firms which
require :financial assistance at the time of contract award. Since these are grants
funds, the recipients do not have to repay the amounts received. The SBA in its
Standard Operating Procedure 60-41-2 lists several conditions for the use of
BDE. It states that BDE funds may be utilized where necessary to ensure profitability above the negotiated contract price, where additional :financial capability
-is needed to overcome deficiencies in completing work at a competitive price, and
that its use shall be limited to situations essential to program objectives.
We believe our contracting volume with minority firms might increase if BDE
funds, especially for assistance to construction firms, were more readily available.

Section B(a) Certification Procedures
Another area which causes us frequent difficulty relates to the certification of
qualified minority firms by the SBA for the 8(a) program. While we recognize the
SBA responsibility for keeping the number of firms receiving 8(a) assistance to a
manageable level, there have, nevertheless, been many occasions in which an
available procurement opportunity has either been unduly delayed or lost entirely
because of the time required to obtain SBA 8(a) certification. This has periodically
caused us difficulty when we have attempted to introduce into our contracting
process minority firms which we felt could satisfy various FAA requirements.
The time delays experienced in assisting them to secure 8(a) certification have
resulted in delaying the commencement of their work.
We believe that consideration should be given to refining and speeding up the
existing certification process if this can be done without losing control over collecting the information necessary for certification. This would work both to the benefit
of the minority contractor and the Federal Government.
I have attempted to be brief in highlighting some of the areas in which the 8(a)
program could possibly be improved. While I don't necessarily have specific
answers to the concerns I have raised, I believe they warrant attention and consideration.

NATIONAL ENDOWMENT FOR THE HUMANITIES RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

(1) The Federal Procurement Regulations provide for a report on procurement to be submitted to the General Services Administration. In general, compiled data, not precluded under any statute, is available to the public upon
request.
(2) Because of the small number of contracts of this agency, our data are quite
accurate, numerically they would rate as 9.
(3) No reports are currently submitted to other agencies.
(4) Such statistics are available for prime contracts and were furnished in a
somewhat different form to Senator Javits April 21, 1977. Our contracts are small
and there are few subcontracts. A rough estimate could probably be developed by
telephone inquiries, but it is hard to say if the term "subcontract" as you use it
applies to any of our procurements.
.
(5) This agency has not made a determination on this point, but will adhere
to ~overnment wide policy on the subject.
(6) Because the procurements of the National Endowment for the Humanities are small both in numbers of contracts and in expenditures, we defer to larger
agencies on this matter.
(7) See the answer to No. 4 above.
This agency supports the policy of providing maximun opportunities to participate in the performance of government contracting for small businesses and businesses owned by females or minorities. We bring to the attention of non-small
businesses the requirements of Title 41 of the United States Code and applicable
regulations requiring that certain subcontracting opportunities be made available
to minority businesses.
.
(8) The abuses referred to have not been a problem for this agency.
(9) Generally our contracts are not susceptible to being broken up because they
are small to begin with. Our 8(a) subcontract experience, based on a single contract, has been good.
(10) Our agency has had little or no difficulty with either minority or female
contractors.


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(11) Our agency has not been actively innovative in its procurement methods
in the past. We will defer to the ideas of larger agencies that do substantially
greater amounts of contracting.
(12) This agency has not required bonding on its contracts.
(13) During fiscal year 1977 through September 19, 1977:
(a) $222,715.12.
(b) $80,093.78.
(c) $222,715.12 for small businesses.

DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE
RESPONSE
Early in 1971 in re~ponse to Executive Orders 11458 and 11625, the Department
of Health, Education, and Welfare created an office of minority business assistance with a full-time staff to plan, develop, and promulgate Department-wide
policy in support of the Minority Business Enterprise Program; and to provide a
liaison and advocate role for all departmental activities involving assistance to
minority enterprises.
Each year since 1971, the Department has established and met minority business procurement goals. The goals include 8(a), minority business non 8(a), and
subcontract. Performance data are summarized on a semiannual basis and reported
to the Office of Minority Business Enterprise (OMBE), Department of Commerce.
For minority business non-8(a) procurement, the report to OMBE shows number
and dollar value of consultant/software procurement, construction procurements,
other procurements, and the number and dollar value of 8(a) contracts and non8(a) subcontracts awarded to minority-owned firms.
The type and form of data available but not reported to OMBE include a description of the requirement, the name of the contractor, the date of award, the
type of procurement (competitive, noncompetitive, etc.), the type of contract
(cost, fixed price, etc.), the type of contractor (small business, large business,
minority business, nonprofit organization, etc.), the purpose of the contract, etc.
In our opinion, the data which we submit to OMBE are of consistent quality and"
sufficient uniformity of definitions as to permit useful aggregation with other such
government-wide data. In addition, we would recommend collection of the above
types of data as a means of establishing a uniform, Government-wide reporting,
recordkeeping, and retrieval system in order to facilitate the development of
trend data.
There are no statutory or regulatory requirements for reports regarding minority and female owned firms. Executive Order 11625 is the authority for the report
to OMBE. The HEW report is available to the public upon request. Other types
of information are also available, but may require a data processing fee. Inasmuch
as there is no Federal requirement for businesses to identify ownership by sex, we
are unable to provide any information regarding prime or subcontracts awarded
to female-owned firms. We would suggest that the Federal Procurement Regulations be amended to require the inclusion of female representation in solicitation
documents. This is the current means by which minority firms are identified. For
purposes of the 8(a) program, the Small Bunsiness Administration (SBA) determines whether or not a firm falls within the category of socially and economically
disadvantaged. We do not think they consider women as a class to be in this
category.
With the exception of subcontract data, the reliability of our minority business
procurement data is high, and would probably rate a score of 9 on a scale of 1 to 10.
With respect to our subcontracting program, we follow FPR 1-1.1310, and have
no way of determining the reliability of subcontract data since these data are
generated by the prime contractor.
The size of our contracts is such that the prospect of minority firms qualifying
is excellent. In Fiscal Year 1976, for example, 88% of our contracts amounted
to $100,000 or less. In the 8(a) program, we use an innovative process called
limited technical competition, whereby three to five firms are asked to review the
scope of work and then submit informal technical proposals. The firms are rated
by a review panel, and the name of the highest rated firm is submitted to the
SBA for approval. While we have no objective standards which apply specifically
to the abuse of noncompetitively awarded contracts, we have specific criteria
for justification of non-competitive contractual requirements. As a means of
preventing abuse in the 8(a) program, we would recommend that 8(a) firms be

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74
recertified at least once per year. With respect to bonding of minority firms awarded noncompetitive contracts, we have no internal procedures regarding bonding
requirement. The bonding of firms for contracts awarded by this Department
generally involves construction contracts. In any case, however, we follow FPR
1-10.1 and the Miller Act, as amended (40 U.S.C. 270a-270e).
It has been our experience that the processing of 8(a) contracts requires less
time than that for competitively awarded contracts, and the Department's overall experience with minority contractors regarding performance of contract has
generally been good. This includes 8(a) as well as non 8(a) contracting. We work
very closely with the SBA in connection with the 8(a) program. Problems have
been minimal, and our relationship with the SBA has generally been good.
DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE-SMALL BUSINESS PARTICIPATION
(Dollar amounts in thousands)

Total
awards,
dollar
value
Fiscallear:
l 72___________
1973___________
1974___________
1975 ___________
1976 (15 mo) ___

$724,947
860,567
l, 219,627
l, 560,863
2,082,209

Awards to small
business
dollar Percent of
value
dollars
$175,852
208,304
249,200
329,372
396,936

24.26
24.19
20.43
21.07
19.06

Small business set-aside
Dollar
value

Percent
of small
business
dollars

$27,512
17,290
32,362
33, 102
30,188

15.64
8.37
12.99
10.05
7.61

Percent
of total
dollars
3.8
2.3
2. 7
2.1

1.45

Nonprofit
awards, S(a) award,
dollar
dollar
value
value
$342,089

~~·:}~
ass:

102
987,822

$12,980
9,625
19,561
15,366
28,200

DEPARTMENT OF STATE RESPONSE
RESPONSE TO CONFERENCE QUESTIONS

The Department of State has actively supported the Interagency Council for
Minority Business Enterprise and was a participating member of the Council's
Procurement Committee. Though the Department's total procurement dollar is
small and due to the nature of our mission, the range of commodities required is
extremely wide1 the Department fully supports the participation of minority
contractors in tne expenditure of its procurement dollar.
The response to the questions forwarded by your letter represent our best
effort to develop the information requested on very short notice during our end
of the fiscal year peak workload period.
The following responses correspond numerically to the list of questions
submitted.
(1) The Department's central procurement office compiles raw data on a computer file, breaking procurements into the following categories: Negotiated vs.
Advertised, Large Business vs. Small Business, and Minority vs. Non-Minority.
The data may be extracted in any format desired. An annual report in summary
form is made to the Office of Minority Business Enterprise at the Department of
Commerce in accordance with their procedures. The above information is available to the public pursuant to the Freedom of Information Act, however, individual
requests require a special computer run and the cost therefor must be assessed.
The Department does not collect information on female-owned firms.
(2) The data accumulated is provided by various sources and is introduced into
the computer file without verification. In my judgement, our data would rank
"7" based on your criteria.
·
(3) To the best of my knowledge the information collected complies with the
requirements of the Federal Procurement Regulations covering this subject
matter.
(4) As noted in Question No. 1, percentages of contracts awarded to minority
firms could be developed. The available information requested would require use
of the Department's central computer. We have not had an opportunity to develop an estimate of the cost to generate such a report. No information is currently available on the portion of subcontracts issued by Department prime contractors to minority or female-owned firms.
(5) The Department has not developed a position regarding the inclusion of
women, as a class, under the Small Business Act of 1953.


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75
(6) It is difficult for the Department to recommend reporting or record keeping
procedures without a clear definition of the results desired. As a minimum, records
to be kept should be confined to quantitative data which would permit automated
data retrieval.
(7) The Department's contracts are generally small and cover a wide variety of
goods and services. Since our contracts are generally of a competitive, firm fixed
price nature, intervention at the subcontract level usually does not exist. We do
require contractor conformance with standard clauses published in the Federal
Procurement Regulations covering these areas.
(8) The Department has not encountered any problems in this area.
(9) Each requiring office in the Department develops its own specifications,
tailored to its unique area of operations, without regard to the type of firm which
might be selected to perform under a contract. The Procurement Office's small
staff is aware of the Department's policy and attempts to match our diverse
requirements against known sources of supply. Our limited experience with the
"8(a)" program does not lend itself to a meaningful analysis.
(10) The Department has had an occasional problem with contractor performance, however, we are not aware of any particular problems concerning performance by a minority contractor.
(11) Our limited experience in this area has not led to any innovative approaches to minority contracting.
(12) The Department does not require bonding firms as a class.
(13) The information requested except for female contractors could be developed.
The Department of State believes the above information responds to the
spirit and the intent of the questions submitted.

VETERANS' ADMINISTRATION RESPONSE
The following data depicts the Veterans' Administration program for procurement from minority and female contractors. Paragraph numbers correspond to
conference questions submitted by the Joint Economic Committee.
(1) The VA compiles data on the number and dollar value of contracts awarded
under Section 8(a) of the Small Business Act. We also compile the dollar amount
of awards to minority-owned firms through competitive bids. We have not up
until now maintained data on female-owned firms. All data are available to the
public upon request.
(2) On a scale of 1 to 10, I estimate a reliability of 7 on minority-owned firms.
(3) Yes, data presented are included in government-wide compilations.
(4) Not from current reporting system. On a retrospective basis, it would be
impractical at any cost.
(5) No.
(6) Any system established should be compatible with the current reporting
system on small business procurement and the developing federal procurement
data system.
(7) Generally speaking, we have no uniform reporting system on subcontracting
beyond that required by the Federal Procurement Regulations.
(8) We rely on the Small Business Administration to assure equitable distribution among eligible minority firms. Our Supply Auditors, in routine audits, clfeck
to determine if there have been violations of policies or procedures. None are
unique to this agency.
(9) We set aside goods or services in quantities which are compatible with the
capacity of the minority firm. We have on a limited number of occasions broken
up contract specifications for construction contracts. We have no limits on the
number and type of supply and service contracts we will set aside. We have a
construction methods determination board which decides, among other issues,
which projects may be set aside for minorities. There have been a great number
of instances where timeliness has been a problem, but in almost no cases are we
able to process Section 8(a) contracts in as timely a manner as competitive contracts. This has been the major problem existing with the office of Business
Development, SBA.
(10) The majority of contractors the VA has utilized have performed satisfactorily; however, there have been instances of late deliveries or failure to meet
required standards. This has not been a major problem.


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(11) The VA and GSA participated in a test program to attempt to "sponsor"
five minority firms from their entry into the 8(a) program until they graduated
from the program. This entailed detailed coordination with the contractor, th~
procuring agency, SBA and OMBE. Problems were encountered with the coor-,
dination phase and the test program was terminated. At present, there are no
new approaches planned.
.
(12) Bonding is required on construction contracts by the Miller Act.
(13) (a) Competitive _____________________________________ $402,598,000
Non-competitive _________________________________ $958,593,000
(b) Minority________________________________________ $20,900,000
Female _______________________________________ Unknown
(c) Size--Small
business, competitive and non-competi- $749,996,000
tive _____________________________________
Other than small business ___________________ $612, 195, 000
These figures include fiscal year 1976 plus the transition quarter.

U.S. GOVERNMENT PRINTING OFFICE RESPONSE
SUMMARY STATEMENT

I. General Information
The Government Printing Office uses the Federal Procurement Regulations
and Armed Services Procurement Regulations as guides when they do not conflict
with other laws and regulations imposed on the agency.
The majority of our procurements are small purchases. Approximately 94 percent of GPO's procurements are under $10,000, and it is estimated that about 90
percent of our contracts are awarded to small business firms.
2. Procurement Policies

The Government Printing Office is listed in SBA's P~rchasing and Sales Directory. Efforts are made to attract minority enterprise bids, and to improve minority
participation. A booklet, "How to do Business with the GPO", is available to all
contractors.
Female ownership has not been considered a reason for special treatment under
small and minority business procedures.
Construction contractors are required to adopt affirmative action programs for
subcontracting with minority businesses by the provisions of the contracts.
3. Contractor Data

The Government Printing Office keeps no
because they have not been included in the
operated business enterprises.
Information on prime contractors regarding
ment of their contracts is limited, since few
subcontracting.

statistics on female-owned firms,
category of minority-owned and
subcontracts they enter in fulfillGPO contracts require extensive

OFFICE OF MANAGEMENT AND BUDGET RESPONSE
Memorandum for: Office of Federal Procurement Policy Contact Points.
Subject: Federal Register Notice for Comment: Data Elements for Federal
Procurement Data System.
The notice for comment was published in the Federal RegiBter on August 23,
1977, vol. 42, No. 163, page 42412. The notice requests comment on two data
elements proposed for inclusion in the Federal Procurement Data System (FPDS).
The FPDS is targeted to become operational September 30, 1978. Under this
new Government-wide procurement data system all executive branch departments and agencies will report uniform procurement data elements to a central
data center on a quarterly basis. Two new data elements are proposed for the
FPDS which are not now available in the contracting offices and therefore must
be requested of prospective contractors. For this reason agency and private
sector comments are requested.
Your comments are requested on or before September 30, 1977.


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WILLIAM W. THYBONY,

Assistant Administrator for Contract Placement.

77
ANDRULIS RESEARCH CORP. RESPONSE
The attached position paper, entitled "Alternatives for Federal Assistance to
Women in Business," provides suggestions as to how women as a group might
be reasonably classified, and on what specific programs could be developed for
each of the alternative classifications set forth.
ALTERNATIVES FOR FEDERAL ASSISTANCE TO WOMEN-IN-BUSINESS

(By Marilyn W. Andrulis, Ph. D., President, Andrulis Research Corp.*)
PREFACE

The concepts contained in this position paper were submitted to the Senate
Select Committee on Small Business in November 1976 and have been under
discussion with members of staff since that date.
In December 1976, the President of the National Associa)tion of Women Business Owners (NA WBO) stated that one of the reasons for establishing NA WBO
was to "convince the Federal Government to include women * * * in its special
program for minority enterprises." 1 In an effort to dissuade NAWBO from such
a stance, on Jan. 15, 1977, the author presented the Board of Directors with the
portion of this paper dealing with why women should seek a new classification
rather than that of the minority. Although NAWBO is not seeking administrative
or statutory legislation for a new classification, the Association has since determined to advocate that women not be considered minorities.
EXECUTIVE SUMMARY

This paper examines the evolution of Federal assistance and protection to small
business persons. In the paper it is reasoned that the legal precedents of the
Small Business Act and of Executive Order 11625 permit the Federal Government
to legally recognize an heretofore unprotected and unassisted group of business
persons: small businesses owned or controlled by one or more women.
The paper addresses the apparent trend that is developing to group women as
minorities and cites the Railroad Revitalization and Regulatory Reform Act
of 1976 in which women are included as minorities as the first such Federal law
in this direction. Although such a grouping should benefit minority women, it
does not necessarily follow that it will benefit nonminority women; and, since
nonminority women constitute approximately 90 percent of all women-in-business, and would find it difficult or impossible to qualify under the basis of being
socially or economically disadvantaged, it is an issue that needs to be considered.
In addition, the potential for competition arising from placing two struggling
groups, namely minorities and women, into one groupipg, is suggested to be a
move which, if additional funds are not identified to accommodate an increase in
the eligibles, can only be unfair to minorities.
Based on the assumption that women are to be viewed as a separate constituency from that of minorities, three alternatives for Federal assistance to womenin-business are offered: (1) by Executive order, establish an Office of Woman
Business Enterprise in the Department of Commerce, to spearhead a program
for Woman Business Enterprise paralleling that now in existence for Minority
Business Enterprise; (2) administratively, establish a Low-Sales, Small Business
classification (into which over 98 percent of all women-owned businesses would fall)
and provide, among others, special marketing assistance, and special set-asides
for low sales, small businesses; (3) administrative modification of the use of section
8(a) of the Small Business Act to provide assistance and procurements to minorities
and women. The third alternative requires that the funds available for procurements should be increased to reflect the increased number of eligibles.
1. The Precedent of Federal Assistance to Small Business: An Historiacl Perspective
Smallness: The Requirement for Protection.-In the early 1950's it was first
recognized that the inadequate treatment of small business enterprise posed a
serious threat to the very essence of the American economic system of private
enterprise-that of free competition. Obstacles facing small business enterprise
. *The Andrulis Research Corporation Is a woman-owned, small business which Is engaged
In research and development, primarily for the Federal Government.
1 Speech of Mary E. King, Governor's Conference for Tennessee Women In Business,
Hyatt-Regency Hotel, Nashville, Tenn., Doc. 2, 1976, entitled, "Women In Business."·


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were considered to be of such a magnitude as to require Federal assistance if the •
small businesses were to be enabled to contribute to their fullest. In this light, a
policy was set forward by Congress stating that "only through full and free competition can free markets, free entry into business, and opportunities for the expression and growth of personal initiative and individual judgment be assured * * *
Such security and well-being of this Nation cannot be realized unless the actual
and potential capacity of small business is encouraged and developed." It was
"the declared policy of the Congress that the Government should aid, counsel,
assist, and protect insofar as is possible the interest of small business concerns * * *"
In mid-1953, the Small Business Administration was established to "make loans,
guide Federal procurement, provide management training and be the advocate of
small business." 2
Special Groups: The Requirement for Protection.-Not until 1969 was it
further recognized that there could exist special groups which were struggling
for entry into the business enterprise system and who had special needs which
required special government aid, counsel, assistance and protection. In fact, "the
opportunity for full participation in our free enterprise system" by a special group of
prople was reasoned by President Nixon in Executive Order 11625 to be "essential
if we are * * * to improve the functioning of our national economy." The target
group of Executive Order 11625 consists of members of minority business enterprise. For purposes of the Executive Order, Minority Business Enterprise is.
defined as:
"* * * a business enterprise that is owned or controlled by one or more
socially or economically disadvantaged persons. Such disadvantage may arise
from cultural, racial, chronic economic circumstances or background or·
similar cause. Such persons include, but are not limited to, Negroes, Puerto
Ricans, Spanish-speaking Americans, American Indians, Eskimos, and
Aleuts." 3
B. Women-Owned Business: Among the Unprotected
Women-owned businesses, a constituency whose members are plagued by lowsales and with special needs for successful entrance and survival in the entrepreneurial mainstream, are as yet without proper representation.
Smallness.-Documentary evidence as to the size of woman business enterprise
is available in the 1972 Census Bureau survey of women in business. A report
on the survey found that, whereas women constitute a majority of the entire
population, women business enterprise numbered less than 5 percent of all (large
and small) business enterprise; and had an even more strikingly disproportionate
share of only three tenths of 1 percent of the total dollar receipts. Another finding
in the survey is that 98 percent of all woman business.enterprise was being performed under the business form of a sole proprietorship. The average woman
owned sole proprietorship was found to have sales below $25,000; the average·
woman-owned corporation was found to have sales below $100,000 and a staff
consisting of four members. Finally, minority women were found to have grossed
approximately one tenth of the total receipts of nonminority women. 4
The statistics on gross receipts obtained by women in business indicate that
"full and free competition * * * for the expression and growth of personal initiative and individual judgment" 5 are not being assured for women as a group. The
case is even more pronounced for the minority woman business entrepreneur.
Special Group with Special Needs.-History demonstrates that society as a.
whole has not sanctioned the woman business entrepreneur, and that many
women who are in business have entered the enterprise system by default and/or
by necessity due to the death of a male family member who had initiated the·
business. 6 A 1975 statement hr, the Chairman of the Civil Rights Commission
explicitly acknowledges that '* * * female entrepreneurs * * * encounter a ..
great deal of skepticism regarding their ability to perform adequately on government contracts." In the same statement, it is noted that "* * * female entrepre-··
• "From Probation to World Renown." The U.S. Small Business Administration, Its-.
History and Development," Ray E. Stull, S#191, (202) 382--6933, July 30, 1973.
• Executive Order 11625, "Prescribing Additional Arrangements for Developing a Na-tioual Program for Minority Business Enterprise," (Rev. 1, Chg. #4-January 1972), 36:
F.R. 19967.
• "Women-Owned Businesses 1972," U.S. Dept. of Commerce, Bureau of the Census and
the Office of Minority Business Enterprise, WB 72.
• "From Probation to World Renown." The U.S. Small Business Administration, Its.
History and Development." Ray E. Stull, S No. 191, (202) 382--6933, July 30, 1973.
• Enterprising Women, by Caroline Bird, a Mentor Book, New American Library, Times.
Mirror, New York and Scarborough, Ontario, 1976.


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neurs * * * encounter problems of staggering proportions in obtaining information of Federal, State and local government contracting opportunities in time to
submit timely bids; and in obtaining the working capital necessary for effective
marketing and bidding." 7
3. The Carter Commitment
In one of his preinaugural addresses, President Carter promised that the
involvement of women in business enterprise and in Federal Government decisionmaking policy would be a major concern of his administration. Of particular
import to women entrepreneurs is Mr. Carter's recognition of the exclusion of
women-as-a-group from the assistance provided by the Small Business Administration. Specifically, Mr. Carter promised that when he became President, he
would assure the following, among others, for women: 8
Business assistance from the Small Business Administration with loan guarantees, financial advice and contract support that is now absent from the lfe of
the woman entrepreneur:
the "curbing of unfair economic practices such as discrimination against
women in obtaining credit and insurance" because women in particular have
been held back by these unfair practices;"
The directing by Mr. Carter of the Office of the Federal Contract Compliance
Programs in the Department of Labor "to enforce the Executive order 9 forbidding
discrimination by Federal contractors or subcontractors. This will help women
as employees and as business owners in having a fair share of Government
contracting."
Specific employment opportunities for women were also addressed by Mr.
Carter regarding high level, decisionmaking/policy roles in the Departments of
Commerce and of Labor in which women could influence Government procurement practices, targeting contracts to women in business. Recognizing the
under-representation of women in the Federal Government, "especially in the
supergrades," Mr. Carter promised that he would "insist on hiring policies that
will bring far more women into top grades throughout the entire government." 10
4, The Current Tr.end: Women as Minorities
There is a current effort to include women as members of the minority classification, to enable women business owners to benefit from the existing legislation
which covers minority business enterprise. There is an observable polarization
among women leaders as to whether women-as-a-group should be considered as
minorities for purposes of Government contracting and/or employment practices
with many women leaders arguing that women should take advantage of all
avenues available, as for example, the modification of existing legislation.
Women's groups worldwide, including the International Women's Year Commission, and until recently, the National Association of Women's Business
Owners, are pressuring for immediate alleviation of the prejudicial treatment of
the woman entrepreneur through inclusion into the minority grouping. 11 12
The rationale for including women in the minority category seems to derive
from the opinion that lack of opportunity to develop and maintain a competitive
position in the economy is because of cultural, social or economic disadvantages. 13
The position is espoused in detail and strengthened by statistics and examples in
the Civil Rights Commission report on "Minorities and Women as Government
Contractors," published in 1977.14
In the Civil Rights Commission report, females are cited as experiencing
similar, if not identical, obstacles to conducting business as do minorities. The
7 "Minorities and W&men as Government Contractors," U.S. Civil Rights Commission,
1975.
8 Speech given be:tiore the U.S. National Women's Agenda Conference, Oct. 2, 1976,
Washington, D.C. by Governor Jimmy Carter.
• Executive Order 11426, 1969 President L.B. Johnson.
""Speech given before the U.S. National Women's Agenda Conference, Oct. 2, 1976,
Washington, D.C., by Gov Jimmy Carter.
11 "Minorities and W-omen as Government Contractors," U.S. Civil Rights Commission,
1975.
12 "Extending Services of Women Entrepreneurs in Government Business," recommenda•
tion by Women in Employment Committee, approved by the International Women Years
Commission on Feb. 27, 1976.
,a "Extending Services •.of Women Entrepreneurs In Government Business," recommenda•
tion by Women in Employment Committee, approved by the International Women Years
Commission on Feb. 27, 1976.
""Minonitles and :W.omen as Government Contractors," U.S. Civil Rights Commission,
1975.


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report observed that the policy to exclude white women from the special S(a)
program is administrative rather than statutory. This interpretation is supported by the precedent of admission of a new member to the minority group
(Vietnam veterans were added to S(a) benefit programs in 1973) and was used
by the IWY to recommend to the President as "amendment of Executive Order
11625 to add women to its coverage and to programs administered by the Office of
Minority Business Enterprise." 15
The trend has culminated in the first legislation specifically intended to assist
women. In the Section 906 of the Railroad Revitalization and Regulatory Reform
Act of 1976, women were for the first time included in a minority assistance
program. Section 11 (e), the last sentence of the Act, reads as follows:
"(e) As used in this section, the term 'minority' includes women." Approved
February 5, 1976.
5. Why Women Should Not Be Included in the Minority Grouping
It is predictable that Government, appropriately sensitized to reasonable demands by women, will eventually include women in the minority grouping.
There is, however, evidence of an important problem associated with this solution: that the law will recognize and protect the minority woman in business,
but not necessarily the nonminority woman.
Item: ·when pressured to include women in its S(a) assistance program, the
SBA maintains "that women as a group are not eligible, though individual
women n1ay be." 15•
Item: In direct response to the IWY conference findings, the Office of Minority
Business Enterprise reevaluated the participation of minority women in its program. Since the IWY conference, the OMBE has devised a special outreach program to reach minority business women with pertinent information on services.
available to them.15b
Behind these reactions is the following: the required criterion for participation in minority programs is that one be able to document being "socially and
economically disadvantaged," a position unquestionably defendable by the
black woman, the Chicano woman, the Indian woman, the Aleut woman, to
name a few. Those women in business who can document that their heritage
is one of poverty, prejudice and lack of educational benefits, could and should
qualify for entry into the SBA's S(a) business development program.
Thus, although potentially beneficial to minority women, the explicit inclusion
of women into Minority Business Enterprise doas not per se assure S(a) assistance to nonminority women because of the very nature and definition of eligibility criteria (vide supra).
There are several additional reasons for not including women in the minority
classification:
(a) The potential for competition arising from two struggling groups,
minorities and women, vying for the same funds;
(b) The reasoning by SBA that women are, in fact a majority; with only
some (minorities) among them being socially and economically disadvantaged;
(c) Nonminority women in business who document business disadvantagement because of prejudicial treatment may not be considered eligible
for benefit.
Of these arguments, perhaps the first is the most troublesome. After years of
neglect, minorities have now been recognized as needing Government assistance
and protection to enter the free enterprise system. If, now, women are added to
the minority classification, then the benefits available under the SBA S(a) business development program for those socially and economically disadvantaged, wiiI
be stretched thin in the sharing process. The inclusion of women as a group Into
the minority classification is basically unfair to minorities, unless the sector of
the appropriations pie now cut for minorities is enlarged to accommodate an
additional group of eligibles, namely, women.
Second, because women as a group constitute more than 50 percent of the
population, they are, in numbers, a majority. Some women are indeed socially
and economically disadvantaged, such as minority women, and would be eligible
"'"Extending Services of Women Entrepreneurs i11. Government Business," recommendation by Women in Employment Committee, approved by the International Women Years
Commission on Feb. 27, 1976.
u;a Ibid.
m Ibid.


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for admission to the 8(a) program. It can be reasoned that women in business
are a minority, but in the sense of numbers and sales, not in the sense of emanating from a heritage of poverty and social neglect.
The third argument focuses on the current eligibility requirements of the 8(a)
business development program. The 1972 Census Bureau statistics showed that
approximately 90 percent of all women-owned business are nonminority. Many
of these business owners would be reluctant to seek Government assistance
because of the 8(a) application requirement for documenting social and economic disadvantage. For the majority of nonminority business women, this
·could only be done by documenting gross prejudicial treatment they encounter
in their business dealings, which have resulted in economic disadvantage to their
businesses. The experience of documenting such encounters could be quite humiliating. In addition, the realization that the 8(a) application review is highly
subjective in nature, and is conducted by men, could preclude many women
from seeking Government assistance they need and deserve.
6. Alternative Approaches for Federal Assistance to Women-in-Business
On the assumption that women are to be recognized as a constituency separate
from that of the minority grouping, three alternatives to assist women-in-busirisse
are put forth. Two alternatives require the establishment of a new classification
·for purposes of Government assistance and protecton. The third alternative,
perhaps the simplest administratively, requires an expansion of an eligibility
requirement of the 8(a) program, and an appropriate expansion of procurement
opportunities. The first new classification, that of Woman Business Enterprise,
would readily generate statistics enabling a longitudinal as well as cross-sectional
measurement of women-in-business. The second new classification, that of lowsales, small business, a category into which almost all women owned business
falls, would require administrative guidelines to trace loans and procurements
flowing to women-owned busineses.
6.1. A woman Business Enterprise Program to Parallel the Minority Business Enterprise Program
The following three recommendations directly parallel the existing Government
programs for Minority Business Enterprise; the fourth recommendation is an
adaption, in that procurement assistance for MBEs is provided administratively
through the 8(a) business development program.
1. Define Woman Business Enterprise for the purpose of Federal assistance and
procurement.-The precedent for legally defining a special group of people who
are in need of special assistance and programs is set forth in Executive Order
11625 in which Minority Business Enterprise, is defined. The procedent for protecting business enterprise defined in terms of size alone is set forth in the establishment of the Small Business Administration.
For purposes of this new Executive order, Woman Bu:<iness Enterprise can be
defined as follows:
"A business enterprise that is owned or controlled by one or more womenwh,od
though talented, skilled and/or educated, are inhibited from joining into full ant
free competition in the free enterprise system as a result of (a) established credi
practices which have heretofore favored men, (b) attitudinal predispositions as to
the inability of women to be entrepreneurs, and (c) the preferential treatment
being rendered to men and minorities by the existing federal government programs."
Points (b) and (c) were explicitly cited in the Civil Commission report of
Reference 6.
2. Establish an Office of Women Business Enterprise in the Department of
Commerce; prescribe .arrangemants for developing and coordinating a national
program for Woman Business Enterprise.-The precedent for establishing the
mechanism for implementing a policy decision to assist a specially recognized
group is set forth in the establishment of the Office of Minority Business Enterprise in the Department of Commerce and in the Executive Order 11625 which
is entitled, "Prescription of Arrangements for Developing and Coordinating a
National Program for Minority Business Enterprise."
3. Place qualified women in relevant high-level management positions in the
Department of Commence, Small Business Administration, among others, to
·assure a representation of woman business enterprise.-The precedent for enabling members of specially recognized groups to participate in the planning and
execution of programs relevant to their interests is set forth in the presence of
members of minority groups being placed in management positions in the Office
of Minority Business Enterprise and in the SBA, among others.

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4. Provide set-asides for woman-owned business.-The precedent for set-asides
is an established practice for two classifications: regular small business and
minority business enterprise (assisted through the 8(a) business development
'P,rogram). The IWY Commission specifically recommended that the President
'direct all contracting agencies to increase the percentage of the annual dollar
amount of procurement contracts awarded to women-owned businesses * * *" 18
6.2. Low-Sales, Small Business Classifications
The rather imprecise definition of small business, ranging from sales less than $7
million per year, or 500 employees for service firms, to 1,500 employees for manufacturing firms, does not take into account the special needs of the many for-profit
ventures that gross well below $1 million per year. These businesses, coined as
"low-sales, small businesses," 17 have many pressing needs, among which are
marketing and financial needs. Since 98 percent of women-owned firms are soleproprietorships which gross less than $25,,000 per year, 18 women-owned firms
would be eligible for assistance and protection under an SBA-administered LowSales, Small Business program.
Specifically, the SBA could address the special needs of low-sales, small businesses by any or all of the following proposed actions:
1. Provide marketing assistance. Low-sales, small businesses have the resources
to introduce their goods and services to but a handful of potential customers.
However, SBA could establish formal lines of communication by classifying lowsales, small business according to capabilities and notifying potential buyers
of the existence of their goods and services. In addition, SAB could certify the
business competency of those low-sales small businesses in past contractual efforts, specifying that performance was satisfactory and remained within time/
,cost constraints.
2. Establish low-sales, small business set-asides.
3. Request modification of ASPR and FPR to assure interest paid on loans
required for the purpose of doing government contract tasking being considered
an allowable expense (i.e., chargeable to the contract).
4. Establish contract financing to prevent the burden of documenting credit
rating and of supplying personal collateral to obtain loans to alleviate cash flow
associated with undertaking government contract tasks.
5. Investigate the 1976 modification to ASPR ( DPC Number 76--3, September 1,
1976) which established a method for calculating allowable fee based on equipment purchases/inventory to determine if this modification significantly disfavors
small business, particularly low-sales small business.
6.8. Use of Section B(a) of the Small Business Act to Assist Women-in-Business
A means for non-competitive procurements, Section S(a) of the Small Business
Act, authorizes the Small Business Administration to "accept prime government
contracts from other government agencies and thence to subcontract the performance to small businesses. Since 1968, the SBA has used this authority to
place contracts with eligible firms as a means of supplementing their commercial
or competitive sales".10
Many women-in-business suffer from attitudinal predispositions (prejudices)
which are difficult to prove, and, if submitted to the SBA as a claim of disadvantage, may not be found acceptable by the male-dominated, subjective 8(a)
applicant review process. However, since the policy that only socially and economically disadvantaged persons are eligible for contracts on a non-competitive basis through the SBA is administrative, not statutory (Reference 6), the
policy could be modified to permit assistance to be given by the SBA to women
as a group, as well. The S(a) business development program would thenceforth
be for minorities and women, rather than minorities alone.
If such a policy is implemented, the 8(a) funds must be increased to accommodate the enlarged group of eligibles; otherwise, minorities who are currently
benefiting will be adversely affected by the necessity of sharing business opportunities with an expansion of eligibles.
18 "Extending Services of Women Entrepreneurs in Government Business," recommendation by Women in Employment Committee, approved by the International Women Years
Commission on Feb. 27, 1976.
17 Washington Post Editorial entitled "Can Small Business Survive," by M. Andrulis,
Oct. 14, 1976.
18 "Women-Owned Business 1972," U.S. Dept. of Commerce, Bureau of the Census and
the Office ot Minority Business Enterprise, WB 72.
a Hearings before the House Subcommittee on Minority Business and General Over,eight on the Small Business Administration and Minorities, May 1975.


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AcXNOWLEI>.GMENT

The author has been fortunate in the development of thls position pafer to beable to receive extensive information, support and critical appraisal o her ap-proach from an extremely diverse and talented group of women. They include·
(in alphabetical order):
Anne Blackwell, Office of Federal Contract Compliance Programs, Department
of Labor.
Eve Grover, Vice President, State National Bank.
Diane Kamino, Staff Member, Senator Javits' Senate Select Committee on
Small Business.
Mary King, Deputy Director, ACTION.
Denise Loftu'!z._ Consultant, Andrulis Research Corporation; Director, Continuing_ Education, Trinity College.
Janice Mendenhall, Director, Federal Women's Program.
Dona O'Bannon, President, NAWBO; partner, Alcalde, Henderson, O'Bannon
and Kline.
·
Lorri Simmons, Vice President, WLS, Design Associates Ltd.; advocate and lob-·
byist for small business and for American Indians.

ATTACHMENT 1
THE WHITE HousE,

September 1S, 1977.

STATEMENT BY THE PRESIDENT

During the last decade the Federal government has played a crucial role in
stimulating the development of minority businesses in this country. Working·
in partnership with private enterprise, the government has sought to promoteparticipation in our economy by entrepreneurs from socially and economically
disadvantaged segments of society. There have been some successes and some
failures in these minority business development efforts, but the important benefits
to society to be gained from these efforts have never been questioned. Building
strong minority business enterprises is in the national interest because they contribute to our efforts to reduce unemployment and to stimulate community
development.
It is the policy of this Administration to promote the development of minority
business enterprise. The experiences of the past decade show that the Government cannot solve all the problems in this area, but government at all levels has
an important leadership role. This Administration will actively support minority
business development, and we strongly encourage the private sector to increaseits involvement in this area. The overhelming majority of existing minority
businesses are in the retail and service fields. While I am confident that businesses
in these areas will continue to prosper, it is my hope that we can promote theparticipation by minorities in industries with growth potential such as energy
and telecommunications, where opportunities for development are greatest.
I have discussed this matter with the members of my Cabinet and found
enthusiastic support among them for the Federal government's promotion of
minority business development. Some departments already have ongoing minority
business development activities, but others do not. We must improve the performance of existing activities and create programs in other departments in recognition
of the fact that all departments of government have a role to play in minority
business development.
I intend to rely on the Interagency Council, chaired by Sidney Harman, the
Under Secretary of Commerce, to promote, coordinate and monitor federal
programs relating to minority business enterprise. The Council should meet
regularly to make certain that the issue of minority business development receives
the attention of policy-makers at the highest level of the government.
In order to provide a focus for our efforts and to set achievable goals for this
Administration, I have taken the following actions:
First, I fully endorse the efforts underway to revamp and improve the SBA
Section 8(a) program. Vernon Weaver has established an 8(a) Review Board.
I have asked him to move expeditiously and to consult with interested members
of Congress and other concerned citizens to make certain that this key program
operates in the most efficient, effective and fair manner possible. We should not-


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permit our disappointment at tlrll' iii.annm''in which this worthwhile program has
'been administered in .the past to diminish our desire to make it work.
.. .
. Seco:11d, I have instructed all Executive departments to work with the Office of
?v'linority Bueiness Enterprise and the Small Business Administration to devise
-effective minority business assistance programs:
·
.
·
Third, I have asked the Office of Federal Procurement Policy to review and to
revise procurement regulations to assure adequate involvement of minority and,
·small business firms by requiring that recipients of nJ.ajor federai. contracts show
how. they will involve minority and small busine.sses before rather. than after a
·contract has been awarded.
· ·
· ·
·
Fourth, I have requested that the Tre~sury Department, as an Interagency
Council member, lead a task force to·prepare. a report on sources of capital and
mechanisms for financial assistance for minority business.
·
Finally, I have instructed all Executive departments to. double their purchases
-of services from minority firms through direct and indirect procurement activities
during the next two fiscal years arid to report' to me on their progress in meeting
this goal. This increase should raise the level of Federal government· purchases
from minority firms to about one billion dollars. We will closely monitor the effort
·of each department to see that this goal is achieved.
·
I believe that we should improve and strengthen existing programs rather than
make wholesale changes at this time. However, we will assess the operation of
these programs under their new, leadership, and we will not hesitate to recommend
changes where they seem warranted.
These steps provide a good beginning for our efforts in this area. We will show
steady and sustained progress throughout my term of office in promoting the
development of minority business enterprise.

ATTACHMENT 2
MINORITY BUSINESS ENTERPRISES SUBCONTRACTING PROGRAM

Clause 30 entitled "Utilization of Minority Business Enterprises," of Standard
Form 23-A is supplemented as follows:
1. The contractor shall subcontract with minority business firms in an amount
aggregrating not less than 20 percent of the total dollar value of his subcontracts.
The contractor shall have the right to determine which materials, supplies, equipment and/or work is to be subcontracted to or purchased from minority business
firms in order to meet the percentage specified above. For purpose of meeting the
goal-c.omniitments·required:hereunder; the contractor may.include-only the amount
of:
(a) Each first tier subcontract with minority business enterprise,
(b) Each subcontract between a first tier subcontractor which is not a
minority business enterprise and a second tier subcontractor which is a
minority business enterprise, and,
(c) Each subcontract awarded to a minority business enterprise at any lower
tier provided that none of the higher tier subcontracts in the chain of subcontracting, is a minority business enterprise.
A subcontractual relationship for the purpose noted above shall include subcontracts, purchase orders, letter agreements, letter of intent or other similar
contractual arrangement.
2. (a) Within 5 working days after award of this contract, the contractor shall
submit to the contracting officer on the certificate of compliance form attached
hereto, the names and addresses of all the minority business subcontractors he will
use, or from whom he will purchase materials, supplies, or equipment, in performing the contract, the amount of each subcontract,. and the aggregate amount hereof
(b) If the aggregate· amount of the minority business subcontract awarded or
to be awarded is less than the specified percentage, the contractor will be deemeq
to be in breach of his contractual obligation unless he submits, within such time
as the contracting officer may allow (but not more than 15 calendar days from
the date •of the request) information which the contracting officer deems adequate
to demonstrate that the contractor has made every reasonable good faith effort
to meet the requirement. Information furnished to show that a reasonable good
faith effort was made shall include at least the names of €ach firm solicited· for,
a quotation .on each subcontract; the _price quoted by .each, whether or not the
firm solicited was a minority business, the reason for not subcontracting with a
minority business firm when applicable; efforts by the contractor to supplement

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85
its own lists of minority business sources by contacting the Small Business Administration, trade organizations, the General Services. Administration, minority
contractors organizations, cotnnmnity organizations and other likely sources of
names of additional minority business sdurces with potential interest in competing
for subcontracts; showing that quotations had been solicited from a sufficient
number of minority business firms, capable of performing the work or furnishing
the materials, as to have supported. a--reasonable expectation by the contractor
of being able to meet the percentage·requirement or that no such minority source
competition existed; and all other efforts made by the contractor to meet the
percentage requirement.
·(c) If the contracting officer finds ·that the contractor has not awarded the
specified percentage of subcontracts to minority business firms and has failed to
demonstrate that he made a reasonable good faith effort to comply, he· shall have
the right to terminate all or a portion of the contract for default, in which event
the contractor and his surety shall be liable to the same extent as in the case of
termination pursuant to Clause 5, SF 23-A. Alternatively, the contracting officer
may elect to allow the contractor to complete performance of the contract, but
his breach of this clause of the contract shall be taken into consideration and given
weight in determining whether the contractor is "responsible" in the award of
future contracts.
3. In the event the contractor fails to award a subcontract to a minority
business firm, or terminates a subcontract with a minority business firm, who
was included in the submission required under paragraph 2.a. above, the contractor
shall so notify the contracting officer and, in addition, shall subcontract with
another firm who is a minority business or demonstrate that he made every good
faith effort and had valid and justifiable reason not to award to a minority business
firm.

4. The bidder shall keep the requirements of this clause in mind in soliciting
quotations for purposes of preparing his bid particularly if a subcontractor listing
is required as part of the bid. The obligation to meet the requirements of this
clause will not, alone, be grounds justifying substitution under the provisions of
the "Listing of Subcontractors" clauses, Special Conditions; and conversely,
the contractor will not be deemed to have made a good faith effort to meet the
requirements of this clause if he completed the "Supplement to Bid Form-List of
Subcontractors" in such manner as to preclude meeting the obligations under
this clause.
5. Fulfillment of the requirements of this clause shall not be deemed to relieve
the contractor from otherwise applicable provision of Clause 30 of Standard
Form 23-A.
General Servicea Adminiatration
CERTIFICATE OF COMPLIANCE WITH APPENDIX
(MINORITY BUSINESS ENTERPRISE-EXECUTIVE ORDER 11625)

I. Minority subcontractors participating in project undar contract number
Name of contractor--------------------·
Address ______ -- -- -- -- -- -- --·
Trade--------------------·
Type of firm--------------------·
Minority group --------------------·
Date award--------------------·
Dollar --------------------·
II. Solicitations to minority contractors for bids on project (Exclude successful
·bidders noted above):
Name of contract --------------------·
Address __________________ --·
Trade--------------------·
Type of firm --------------------·
Minority group --------------------·
Bids received:
Yes --------------------·
No --------------------·
Reason for rejection --·------------------·


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86
. III. Other good faith efforts to secure minority enterprise participation oni
project. (Describe.)
Name of Contractor --------------------•
Signed by --------------------·
Title --------------------·
Witness --------------------·
ATTACHMENT

3

THE WHITE HOUSE,

Srptember te, t977.

THE INTERAGENCY COUNCIL FOR MINORITY BUSINESS ENTERPRISE

The lnteragency Council for Minority Business Enterprise promotes minority
business assistance from within the Government. It assures that minority businesses have ready access to all Federal opportunities and programs having thepotential to assist them in their endeavors.
The Council is chaired by Dr. Sidney Harman, Under Secretary of Commerce, and its membership includes Under Secretaries, Deputy Secretaries and
Deputy Administrators of major agencies and departments having programs to
promote and strengthen minority businesses. The Council functions through an
Executive Committee and various program-oriented committees.
Generally, Council members chair the committees whose Executive Directors
are provided by the Commerce Department's Office of Minority Business Enterprise (OMBE). Dr. Randolph T. Blackwell, Direetor- of OMB'E,. supports the
Council with staff assistance, with additional support coming from member
departments and agencies. Under the provisions of Executive Order 11625,
OMBE is the lead agency in the Federal government for the minority enterprise
program.
The program-oriented areas of concentration include: Business Management
Development (Education and Training); Indian Business Development; Minority
Business Opportunities Committee (MBOC) Coordination;· Procurement; and
Special Programs. The MBOC Coordination Committee merits special emphasis
in that it represents the link between the Council and 37 Minority Business
Opportunity Committees. These 37 MBOCs are the IocaT Federal counterparts
of the Council with the responsibility to ensure that department and agency
commitments of programs and resources to minority business within the Council
come to fruition in the 37 jurisdictions.
Primarily the Council seeks to assist minority businesses by: identifying
appropriate resources within each agency, developing strategies to provide
access to the resources, assuring agency support of the strategies, and implementing a comprehensive and coordinated program to assist the minority businesses.
MEMBERS OF THE INTERAGENCY COUNCIL FOR MINORITY BUSINESS ENTERPRISE

Martha M. Mitchell, Special Assistant to the President, The White House,
Washington, D.C.
Sidney Harman, Under Secretary, Department of Commerce, Washington,
D.C.
Hale Champion, Under Secretary, Department of Health, Education and
Welfare, Washington, D.C.
James Joseph, Under Secretary, Department of the Interior, Washington, D.C.
Elsa A. Porter, Assistant Secretary for Administration, Department of Commerce, Washington, D.C.
.
Warren Christopher, Deputy Secretary, Department of State, Washington,.
D.C.
Mary E. King, Deputy Director, ACTION, Washington, D.C.
Robert W. Fri, Deputy Administrator, Energy Research and Development.
Administration, Washington, D.C.
Barbara Blum, Deputy Administrator, Environmental Protection Agency.
Washington, D.C.
David J. Bardin, Deputy Administrator, Federal Energy Administration,.
Washington, D.C.
John C. White, Deputy Secretary, Department of Agriculture, Washington,.
D.C.


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87
Charles W. Duncan, Deputy Secretary of Defense, Department of Defense,
Washington, D.C.
Jay Janis, Under Secretary, Department of Housing and Urban Development,
Washington. D.C.
Peter F. Flaherty, Deputy Attorhey General, Department of Justice, Washington, C.C.
Robert J. Brown, Under Secretary, Department of Labor, Washington, D.C.
Bette B. Anderson, Under Secretary, Department of Treasury, Washington,
D.C.
Alan Butchman, Deputy Secretary, Department of Transportation, Washington, D.C.
William Allison, Deputy Director, Community Services Administration,
Washington, D.C.
Delio Gianturco, First Vice President and Vice Chairman, Export-Import
Bank of the United States, Washington, D.C.
Grace Olivarez, Director, Community Services Administration, Washington,
D.C.
Robert Griffin, Deputy Administrator, General Services Administration,
Washington, D.C.
Wayne Granquist, Associate Director, Office of Management and Budget,
Washington, D.C.
Alan Lovelace, Deputy Administrator, National Aeronautics and Space Ad•
ministration, Washington, D.C.
A. Vernon Weaver, Administrator, Small Business Administration, Washington,
D.C.
Rufus Wilson, Deputy Administrator, Veterans Administration, Washington,
D.C.
Patricia Cloherty, Deputy Administrator, Small Business Administration,
Washington, D.C.
Les Settig, Director, Office of Federal Procurement Policy, Office of Management and Budget, Washington, D.C.
Charles L. Clapp, Vice Chairman, Interstate Commerce Commission, Washington, D.C.
Dr. Randolph Blackwell, Director, Office of Minority Business Enterprise,
Department of Commerce, Washington, D.C.
Edward C. Creutz, Acting Deputy Director, National Science Foundation,
Washington, D.C.
Robert H. McCutcheon, Assistant Postmaster General for Procurement Supply
Department, U.S. Postal Service, Washin_gton, D.C.
Richard E. Wiley, Chairman, Federal Communications Commission, Washington, D.C.
Dennis Green, Associate Director, Office of Management and Budget, Washington, D.C.
Arthur F. Williams, Executive Director, Interagency Council for Minority
Business Enterprise, Washington, D.C.
ATTACHMENT 4
[From the Washington Post, Nov. 12, 1977]
FIRM HEADED BY WOMAN

Is

ORDERED REINSTATED IN MINORITY PROGRAM

(By Timothy S. Robinson)
U.S. District Judge Gerhard A. Gesell ordered the Small Business Administration yesterday to reinstate at least temporarily a Washington research firm
headed by a white woman to a special minority government contract program.
The temporary reinstatement means the woman's firm will continue to the
eligible for about $645,000 in government contracts awarded under the program.
Last summer, the SBA had ruled that Dr. Marilyn Andrulis, the 51 per cent
owner of Andrulis Research Corp., was eligible for the program under which the
SBA handles certain contracts for other government agencies in an attempt
to _spread them amon~ minority groups.
However, in the middle of September the SBA notified Dr. Andrulis that she
had been dropped from the program because she did not fit SBA's description of
being socially or economically disadvantaged.

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88
In issuing the temporary ruling yesterday, Gesell said the hearing that resulted

in Dr. Andrulis' removal from the.program was.improper ..

Gesell said that based on the limited hearing held before him yesterday in
~onnection with a suit filed by Dr. Andrulis, her i;ontract eligibility was taken
away from her .with no notice, no adequate hearing, and no established standards,
"The .findings were submerged and kept out of sight", Gesell said. "That's.
not a hearing in the United States of America."
.
Dr. Andrulis said fa her suit that her application for entrance into the SBA's
:flllnority contracting program passed all early teets witbin the agency. She said
she was prepared to enter into actual contracts when she heard a "rumor" th.at
she was being removed from the program. .
.
Dr. Andrulis said she checked out the rumor and found out that it was true,
~ few days later, the SBA informed hei: that she had been,removed from the
program because she was a "nonminority," because her partner-husband als<;>
is nonminority, because her firm's problems are similar to o.ther small research
firms, because she and her husband are worth probably $200,000 or more, and
because her sex did not deny her "social or economic contacts" necessary for her
field.
Dr. Andrulis claims that, as a wom_an, she is a minority in her field of research,
which includes projects as diverse as anticancer research and. antisubmarine
warfare. She also claims that the other criteria under which s,he was removed from
the program were either inaccurate or not applied to other similar participants j1;1
the program.
·
She appealed the decision within the SBA, but her appeal was rejected at ~
hearing at which no transcript was kept.
Gesell said he would issue the temporary order yesterday because Dr. Andrulis's
business would be irreparably harmed if she were hot eligible for the contracts
and because the probability was high that she would ultimately succeed in her
suit.
·
ATTACHMENT 5
GAO REPORT ON QUESTIONABLE EFFECTIVENESS OF THE 8(a) PROCUREMENT
PROGRAM
[Digest of Report]

Why the Review Waa Made
Section 8(a) of the Small Business Act of 1953 gives the Small Business Administration (SBA) the authority to enter into procurement contracts with Federal
agencies and, in turn, subcontract the work to small businesses. SBA has used
this authority to develop a program designed to assist socially or economically
disadvantaged small businessmen in achieving a competitive position in the
financial marketplace. Since 1968, when the S(a) program was started, SBA
has awarded 6,912 subcontracts totaling $737,100,000 to over 2,800 business··
firms. (See pp. 4 and 5.)
Members of Congress have expressed concern o:ver the benefits derived from the
8(a) program. Accordingly, GAO reviewed the program to determine whether
eligibile firms were becoming self-sufficient a,nd viable..
·
GAO did most of its work in Washington, D.C., and in the Atlanta, Dallas,
Detroit, Philadelphia, New York, and San Francisco areas. (Seep. 35.)

Findings and Conclusions
PROGRESS OF S(A) FIRMS
SBA's success in helping disadvantaged firms to become self-sufficient and
competitive has been minimal. From 1968 to August 1974, only 31 firms success.
·
fully completed the program.
GAO evaluated the progress of 110 firms that had received at least 1 subcontract before December 31, 1970. These firms received over $81.4 million in S(a;)
subcontracts. (Seep. 7.)
.
Of the llOfirms, 73,had not reached self-sufficiency. Twenty firms deteriorated
~ancially, 27 went out of business, and the remaining 26 had either a slight
financial improvement (but not enough to make the firm self-sufficient) or rio


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89
change. Of the remaining 37 firms, 18 berame self-sufficient and 19 were not.
classified because of insufficient information.
A major reason for this lack of success was SBA's inability to control the supply
of contracts from Federal agencies. Although applicants specify in business plans.
the amount of assistance they need each year to become self-sufficient, SBA can-not guarantee any level of assistance.
SBZ did not provide adequate assistance to the 20 firms that deteriorated
financially or the 27 firms that went out of business. Sixteen of these 47 firms
projected a need for $17.1 million of assistance, but SBA provided only $5.8 million
in assistance. (Seep. 9.)
Fourteen of 19 officials at Federal agencies supplying contracts to ASB advised
GAO that they could not forecast their procurement needs so they could not
guarantee SBA any given level of contracts for the 8(a) program. (See p. 10.)
EXTENT AND EFFECT OF SPONSORSHIPS

SBA encourages nondisadvantaged businesses (sponsors) to provide manage-ment services, training, and capital to 8(a) firms.
Ineffective monitoring by SBA of the activities of sponsors coupled with thehigh degree of control exercised by sponsors over disadvantaged firms permits
some sponsors to maintain their standing in the marketplace by using the 8(a)
program. Eighty-nine firms accepted into the 8(a) program had part owners and/or
sponsors who were nondisadvantaged. Of these firms, 77 received contracts.
amounting to about $132.5 million under the program.
Experienced contractors normally become sponsors by forming new corporations
using former employees as stockholders and officers and by providing goods and
services to the new corporations for a fee. The sponsors also obtain 49 percent
or less ownership in the 8 (a) firms. (See app. IV for a description of the relationship,
between a sponsor and an 8(a) firm and the extent to which the sponsor exercised.
controls.) (Seep. 19.)
It appears that SBA relinquished to sponsors its responsibility for insuring that
8(a) firms are provided with capital, management services, and training to aid
them in becoming self-sufficient. The sponsors often controlled the firms, contrary
to SBA's objective of helping the firms to become self-sufficient.
This occurred because SBA did not (1) monitor the extent to which sponsorS;
controlled 8(a) firms or (2) determine whether firms were becoming self-sufficient.
Instead, SBA considered majority ownership of the firms by disadvantaged
individuals as evidence of their control.
Officials of six of the seven sponsors GAO reviewed expressed a desire to develop~


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0