that a fair proportion of the total purchases and contracts for supplies and services for the Government be placed with small-business enterprises, and to maintain and strengthen the overall economy of the Nation." Section 207: SBA power to loan small-business money. Section 212 (d): Power to certify firms with respect to their competency, as to capacity and credit, to perform a specific Government procurement contract. PUBLIC LAW 268, 84TH CONGRESS, APPROVED AUGUst 9, 1955 SMALL BUSINESS ACT OF 1953, AMENDED 1955 The purpose of this amendment was to clarify certain portions of the Small Business Act of 1953. PUBLIC LAW 295, 84TH CONGRESS, APPROVED AUGUST 9, 1955 DEFENSE PRODUCTION ACT AMENDMENTS OF 1955 "In order to further the objectives and purposes of this section (sec. 701 of the Defense Production Act of 1950), the Office of Defense Mobilization is directed to investigate the distribution of defense contracts with particular reference to the share of such contracts which has gone and is now going to small business *** either directly or by subcontract *** review policies and procedures and administrative arrangements now being followed in order to increase participation by small business in the mobilization program *** to explore all practical ways, whether by amendments to laws, policies, regulations, and administrative arrangements (or otherwise) to increase the share of defense procurement going to small business *** and to make a report to the President and the Congress * * * encompassing (among other things) specific recommendations by the Office of Defense Mobilization for further action to increase the share of procurement going to small business." PUBLIC LAW 639, 84TH CONGRESS, APPROVED JULY 2, 1956 DEPARTMENT OF DEFENSE APPROPRIATION ACT OF 1956 Section 609: "Insofar as practicable, the Secretary of Defense shall assist American small business to participate equitably in the furnishing of commodities and services financed with funds appropriated under this act by making available or causing to be made available to suppliers in the United States, and particularly to small independent enterprises, information, as far in advance as possible, with respect to purchases proposed to be financed with funds appropriated under this act, and by making available or causing to be made available to purchasing and contracting agencies of the Department of Defense information as to commodities and services produced and furnished by small independent enterprises in the United States, and by otherwise helping to give small business an opportunity to participate in the furnishing of commodities and services financed with funds appropriated by this act." Section 626: "*** Provided further, That no funds herein appropriated shall be used for the payment of a price differential on contracts hereafter made for the purpose of relieving economic dislocations." Mr. ASKINS. We have, also, after 1947 the Selective Service Act of 1948 wherein I believe it was implied last year in the Appropriations Committee of the House, by Congressman Flood, that we uniquely in the Department of Defense had designed to adopt the rule of 500 as our definition for small business. I refer you to what was passed in Public Law 759, 80th Congress, wherein it sets forth the rule of 500. In addition to this, we had superimposed upon us during the Korean conflict the Defense Production Act of 1950 and therein you in Congress said to us again, "We want you to take a look at this small business picture." We have tried to, fairly and squarely, do this. In addition, Public Law 163 was a outgrowth of the Defense Production Act of 1950, as amended, wherein you set forth the Small Defense Plants Administration and then subsequently the Small Business Administration. This organization-all agencies of Government are cognizant of their being, what you have given them in the way of authority, and there is, I believe, at this time the best spirit of cooperation between the Small Business Administration and the agencies of the Government, that has ever existed since the Smaller War Plants Corporation days. We, of course, appreciate that you have not given to the Small Business Administration those powers that were given to the Smaller War Plants Corporation, namely, a price differential, but other authority has been given to them, i. e., the certificate of competency. Public Law 195 of the 84th Congress amended the Defense Production Act and gave us another facet of government to look into our activities, and to report to the President and the Congress. We worked very closely with the Office of Defense Mobilization and fully informed them of our activities, our directives, our Armed Services Procurement Regulations and the mediums used by Army, Navy, and Air Force. This report, in my opinion, was favorable in some instances and in others it was unfavorable, but the conclusions arrived at by that report were acted upon by the Department of Defense and as a result made the small business program of the Department of Defense a better program which we now have to date. Then in keeping with all these laws that we try to follow, we have each year the Department of Defense Appropriations Act and that has been the same for the past five or six years. I quote one part which we feel we are compelled to comply with: Section 626 states, "Provided further, that no funds herein appropriated shall be used for the payment of price differential on contracts hereinafter made for the purpose of relieving economic disclocations." Based on all of these laws, their interpretations, the guidance of the General Accounting Office, Counsel of the Department of Defense, the Army, the Navy, and Air Force, we endeavored to come forth with Department of Defense directives-namely, we set forth our policy relating to small business. Mr. McKellar has enumerated these for you in Mr. McGuire's opening remarks. Mr. MULTER. Let me interrupt you. You are about to pass from the matter of statutes, that you are concerned with, to another subject. Mr. ASKINS. I am just going in sequence to our implementation, next, will be our policy. Mr. MULTER. Before you get to your implementation, may I interrupt you? I think now you may have touched upon the real source of the trouble as to why the Department of Defense resists so strongly the change of definition. Mr. ASKINS. No. sir. Mr. MULTER. Well, maybe not. Let me direct your attention to the fact you set forth here an excerpt from Public Law 759 of the 80th Congress, approved June 24, 1948, which is the only statute you rely on unless somewhere else later in your statement you refer to another statute, but I am assuming you are now passing from statutes to another matter. Mr. ASKINS. Right, sir. Mr. MULTER. You do not set forth what we think is the most important statute on the subject of definition, which is the law as written, as we rewrote it, and as it is now in section 203 of the Small Business Act of 1955, and again I will quote it for the record. SEC. 203. THE PURPOSE FO THIS TITLE. A small-business concern shall be deemed to be one which is independently owned and operated and which is not dominant in its field of operation. In addition to the foregoing criteria, the Administration making a detailed definition may use these criteria, among others: The number of employees, dollar volume of business. Then I turn to the last part of the same act, in section 224: All laws and parts of laws inconsistent with this act are hereby repealed to the extent of such inconsistency. Mr. ASKINS. Yes, sir. Mr. MULTER. Now we intended by enacting section 224, and I am certain we did thereby repeal Public Law 759 of the 80th Congress, and it ought to be deleted from anything and everything in the Department of Defense records. It ought not to be used by them at any time or place, so far as definition is concerned. Mr. ASKINS. We are fully cognizant of the fact, Mr. Chairman, that, when a public law comes out on a subject such as this definition, that old law is killed, and I was going to, later in the discussion, go into my having been the Army member of the task force of the Small Business Administration and trying to work out a definition which was recently adopted. Mr. MULTER. What was the position of the Army representative on the task force set up by the Small Business Administration to evolve a definition in accordance with the statute as enacted by the Congress? Was it the position of the Department of the Army that the 500-employee rule should be continued?" Mr. ASKINS. It was the unanimous decision of the task force that we felt Mr. MULTER. I don't want to know that. We know all about that. I want to know now: What was the position of the Department of the Army in that task force? Mr. ASKINS. The position of the Department of Army, sir, at that time, was the fact that we recognized that, industry by industry, going on the industry side of the table, is a more equitable way of considering a definition, but we also know, in looking at it from the Army side of the table, that administratively it is very unwieldy and would be terrifically burdensome. Mr. MULTER. Did the Department of the Army recommend that the 500-employee rule be discarded? Mr. ASKINS. No, sir; we did not. We accepted the 500 rule on the basis of what the law gave to the Small Business Administration, and that is that any firm that they choose, that they wanted to certify, we would gladly accept them, and we still do. Mr. MULTER. Of course, you gladly accept it. That is the law. You must accept it. Another section of this same law I did not take the time to read provides that any time the Small Business Administration issues a certificate that a firm is or is not small business, you, the Department of the Army, the Department of Defense, are bound by it. You have no choice. Mr. ASKINS. We are cognizant of that. Mr. MULTER. Very good. Now we come back again to the question of the regulation. As a result of the task-force meeting and its recommendations, the Small Business Administrator did then issue his definition for procurement of 500 employees, but at the same time issued his definition for lending purposes of industry by industry. Mr. ASKINS. Right, sir. Mr. MULTER. Now, I want the record very clear on this so there will be no mistake about it. Regardless of the reasons that prompted you to do it, it was the position of the Department of the Army and you did recommend against the changing of the 500-employee rule. Mr. ASKINS. With one clarification, sir, and that is that consideration be given to 500 and less. It is 500, including its affiliates, and also not dominant in its field. That is the present definition. Mr. MULTER. And are you overlooking the independently owned and operated? Mr. ASKINS. No, sir; we are not. Mr. MULTER. That is part of the definition, too? It must be independently owned and operated, and not dominant in its field. Mr. ASKINS. And not dominant in its field; that is right. Mr. MULTER. And not more than 500 employees. Mr. ASKINS. That is right, or the other alternative is that the Small Business Administration can certify a concern and we accept it. Mr. MULTER. That is the mandate of the law. Mr. ASKINS. That is right. Mr. MULTER. Quite apart from that, the law requires the Small Business Administrator to, by regulation, set up a definition in accordance with the provision of section 203, and it was the recommendation of the Department of the Army, so far as the Army is concerned, that 500 employee maximum number be retained? Mr. ASKINS. With the modifications, sir. Mr. MULTER. Very good. Mr. ASKINS. May I continue? Mr. ASKINS. Thank you. It was purely a mistake on my part in not deleting or carrying through on this. What I was trying to do, in extracting these laws, was to try to go back and show a historical background, to set a stage, for what we have tried to come up with as to policies and procedures, as far as the Army is concerned. Mr. MULTER. Mr. Askins, bear in mind there is nothing personal about these remarks or these questions. Mr. ASKINS. I appreciate that, sir. Mr. MULTER. What you pointed out with reference to the 1948 law, with reference to the Department of Army, this committee has found has been followed in each of the other departments, too. We just can't get any of you to make a change from that which existed prior to 1948 and was written into the law in 1948. Despite the tremendous pressure at that time, that the arbitrary 500-employee definition as adopted by regulation should be changed, it was written into the law in 1948. We have been trying to get it out ever since. We have gotten it out of the law, but we have not gotten it out of the Department. Mr. ASKINS. Yes, sir. All right, sir; thank you. Army policy and the Army program is set forth in Army Regulation No. 715-3, and change No. 4, and with your permission I should like to present this regulation for the record, because I feel that it is the only one place that we have a document that clearly sets forth what our policy is as far as (1) cooperation with the Small Business Administration, (2) our program, and (3) our subcontracting program. (Regulation 715-3 and change order 4 are as follows:) 1. Purpose. The Department of the Army Small Business Policy, as set forth in these regulations, is to establish a. A more comprehensive and more effective small business program, and b. A fully integrated and cooperative program of joint activities, directed toward the discharge of the common responsibility of the Department of the Army and the Small Business Administration that a fair proportion of the total purchases and contracts for supplies and services for the Army be placed with small business concerns. SECTION II DEPARTMENT OF THE ARMY SMALL BUSINESS PROGRAM 2. Purpose. The Department of the Army Small Business Policy is to establish a more comprehensive and more effective Small Business Program. 3. General. A fair proportion of the total purchases and contracts for supplies and services for the Army will be placed with small business concerns, whether TAGO 5434B-Mar. 360485°-56 *These regulations supersede DA Circular 715–1, 24 June 1955. 788 555 |