lower bids, so it is costing the taxpayer some money. The question is, therefore, if there is no criteria, except being a member of a minority, how long should this protective atmosphere go on?

Mr. JOHN ADAMS. My response is that in the Federal Government, we have a small business set-aside program in which all small businessmen may participate, and, Senator, they can all participate as long as the business is small, it would therefore appear safe to assume that if that rationale is valid for the small business community at large, and they can forever participate in the small business set-aside, and any other Federal assistance available to a small business. Then minority small business should be allowed to participate in minority small business programs in perpetuity also.

Now, if the former is right, and I suggest it is, because the Nation wants to assure that those small businessmen survive.

If that is right, then why is it not right for Ted Adams to participate in a minority business program as long as Ted Adams' business is small.

If one is wrong, perhaps they are both wrong.

Senator NUNN. But, wait a minute, you are saying as long as the small business is small, they are eligible to participate in the small business set-aside program, but then you are saying, as long as Ted Adams' business is small, he ought to be able to participate in the minority business program.

If he were white, his small business could become large, and thereby render him ineligible for the small business program, but Ted Adams presumably will always be a minority member. Is what you are saying, is that Ted Adams, no matter what he does, never moves out of that category, and would always be in the 8(a) program, no matter how long he was in business, no matter how successful, no matter what? We have some very successful black businessmen in Atlanta. I think we are one of the leading areas of the State in that regard, but I think it would be very hard for my constituents and probably a lot of other constituents of Senators, north or south, to be in a position to legislate a set-aside program for some of the more wealthy members of the black business community in which they would be automatically eligible no matter what the circumstances were. And yet many struggling white small businessmen would not be eligible and yet could be much worse off financially and in a much more hazardous position.

I do not believe that is politically viable.

Mr. TED ADAMS. Senator, you hit right at the heart of the whole problem, when you said politically viable, and I somewhat agree. Now, under your description of how long, as John Adams said, pertaining to white small businessmen in a set-aside program, the decision would be the same as it is for white small businessmen; that is, he can graduate, he can get out of the small business setaside program when he decides he is able to become big business. What we are saying is that the criteria for the whites should be the same as it is for the blacks.

Now, you mentioned competition and cost; those are two items that are really to be addressed, and since you verify the data, only 20 percent of the Government contracts-that is all we are talking about 20 percent of the Government contracts are put on the

competitive market anyway; 80 percent are negotiated, and what we are talking about here are negotiated contracts.

Now, you speak in general language, you alluded to the fact that the 8(a) program is costing you money.

As a businessman, the return on the investment for the 8(a) program is probably the only program the Government has that is giving you an adequate return on investment.

It is costing you nothing. I am a businessman. It does not cost the Small Business Administration or the Federal Government one dime to do business with me, other than the time that would be spent in my one procurement representative to help draft the contract and knowing I was coming here, I took the liberty of preparing a distribution pie, may I give it to you.

Senator NUNN. We will put it in the record.

Mr. TED ADAMS. Well, I do not know if I want it in the record, but

Senator NUNN. We will do whatever you want to.

Mr. TED ADAMS. Well, take my name off.

[The diagram follows:]

Mr. TED ADAMS. This diagram has some statistics, but if you look in that pie, this is for my company, 1976, we did about $2.4 million in business, and this is with the 8(a) program.

Now, it is interesting to note I supported the community by purchasing goods, services, what have you, to the tune of 26 percent of my expenditures. I more than supported the community by wages, 45 percent. My contribution to local and Federal and State taxes, 21 percent.

We have a profit-sharing plan with my employees, that may be the reason for my success.

I passed out 3 percent to my employees in profits, and retained about 3 percent for growth.

Now, this did not cost Uncle Sam a dime. If you look at the program from that perspective, from a businessman's perspective, you will find it is the best program you have going.

I know of no other program that you get the return on investment that you do on the 8(a) program. So I beg to differ with you, sir; the program is not costing Uncle Sam any money.

Senator NUNN. Well, I thank you very much. I still get back to this one point. Do you believe, either John or Ted, that because you are a minority, we ought to create a permanent program that you would always be able to participate in no matter how successful you are?

Mr. JOHN ADAMS. My comments are a part of a method, Senator, it is my way of showing you some very sound logic in support of a proposition that I believe is not politically sound. But there is sound rationale in that proposition and you obviously understand what I am saying as evidenced by rephrasing it in your question to me. That however, is not my real position, but I did want you to see and understand that position. If a foreigner were to come to this country, they might well conclude that to be a reasonable position, because they do not understand the politics and the real world considerations that goes on in this country.

In this limited context, I am not suggesting the SBA create a program whereby as long as I am black and in business I can continue to participate, but I do think the SBA must have reasonable guidelines, instead of x number of years.

In that connection they already have something to start with, that is, industry-size standards. Other considerations include the firm's competitive ability, they may need training classes which would enable them to move a person from the 8(a) procurement program, which is a protected environment, to the small business set-aside sector, which is also a protected environment.

That is where the minority businessman should be going next, to the small business set-aside, and he can sink or swim there, and can participate, as whites do in that sector, in perpetuity.

Senator NUNN. I agree.

What we are both, I think, shooting for is the same thing, that there is not a permanent status.

Mr. JOHN ADAMS. No, it is not.

Senator NUNN. What we want is not to disqualify people, because they are likely to succeed in their status.

As they move through it, we need to help to make sure they are viable to compete later on.

Mr. TED ADAMS. My answer would be slightly different, and maybe it is because of what I have given up for this country. I am saying, Senator, that you need a program that the minorities can participate in, until we approach parity.

I am saying that is our goal, that is my goal; for all black people, we want a fair share of the pie.

Senator NUNN. But if some blacks stay in it forever, then other blacks never get to move into it, unless you assume the pie is unlimited.

Mr. TED ADAMS. Those who stay in need the help; then the law should be that until we reach parity, and if blacks can stay in this program, as long as they abide by the size standard, as long as they are in fact a small business, I am saying they should stay eligible for this program, until you, the Congress, see that the right has been wronged, and that the Nation is approaching parity.

Now, you are here to change the law. When we see that, when we see blacks getting a fair share of the pie, and Hispanics, then you can change the law, all right.

The laws are not definite; just like you have a law that says blacks could not go to certain places, those laws are changed. Even in your own State they changed the law, and if you look at those successful businessmen in Atlanta, most of them have a sheltered market, black market, not all, but most of them.

We are going after the Federal market, the one we control by our taxes, and I am saying that until we approach parity, that we need a program that we can say as long as we feel it is just and reasonable, and as long as the people feel that way-and I am reasonably sure that politics considered that most whites will agree-parity is not a bad goal, and they will accept it.

I do not think you are reading the mood of the people.

There was an association that just testified before you that is currently suing the Federal Government because of the set-aside in the public works bill.

All right. They are currently suing them, and all this technical assistance that was mentioned by the construction industry. My background was in the Corps of Engineers; I am a retired Corps of Engineers colonel. I would not go in that business because I could not figure out how I could in good conscience participate in the graft and corruption that existed in that industry.

Consequently, I am not in this business today.

One other thing you have to consider, people do business with their friends. My own company, we competed on a contract. It was a subcontractor, a major manufacturer, and I lost, and I was told the reason I lost was because there was another company that was ten times more experienced than we were.

All right. I knew this was a lie, because through the 8(a) program I was the only one in this business, but I asked to check on this company that had ten times more experience. I found out that the company was not organized until two months before the contract went on the street, and had never, in fact, done this before. When I further checked, I found out the fellow who won the contract was a brother-in-law of the procurement officer.

This is the arena we do business in. You cannot ignore it.