PAGENO="0001" SJ8A's)~á) SUBCONTRACTiNG PROGRAI~= MIINORITTY ENTERPRliSE r77~I ~ HEARINGS BEFORE THE SUBCOMMITTEE ON GOVERNMENT PROCUREMENT OF THE SELECT COMMITTEE ON SMALL BUSINESS UNITED STATES SENATE NINETY-SECOND CONGRESS FIRST SESSION ON THE SMALL BUSINESS ADMINISTRATION'S 8(a) SUBCONTRACTING PROGRAM SAN FRANCISCO, CALIF-SEPTEMBER 29 AND 30, 1971 RUTGERS~' Oit~ GoVER~~T DOC~~ Printed for the use of the Select Committee on Small Business U.S. GOVERNMENT PRINTING OFFICE 70-654 0 WASHINGTON : 1971 ~(qS~ t/p~: O27~J~-:: PAGENO="0002" SELECT COMMITTEE ON SMALL BUSINESS [Created pursuant to S. lies. 58, 81st Cong.J CHESTER H. SMITH, Staff Director and General Counsel JOSEPH L. WARD, 4ssistant General Counsel KEITH A. JONES, Minority Counsel JOSEPH M. MONTOYA, New Mexico, Chairman EDWARD J. GURNEY, Florida J. GLENN BEALL, JR., Maryland ROBERT DOLE, Kansas JACOB K. JAVITS, New York* ALAN BIBLE, Nevada, Chairman JOHN SPARKMAN, Alabama JACOB K. JAVITS, New York RUSSELL B. LONG, Louisiana PETER H. DOMINICK, Colorado HARRISON A. WILLIAMS, Ja., New Jersey MARK 0. HATFIELD, Oregon GAYLORD NELSON, Wisconsin ROBERT DOLE, Kansas JOSEPH M. MONTOYA, New Mexico EDWARD J. GURNEY, Florida FRED R. HARRIS, Oklahoma WILLIAM B. SAXBE, Ohio THOMAS J. McINTYRE, New Hampshire J. GLENN BEALL, JR., Maryland DAVID H. GAMBRELL, Georgia ROBERT TAFT, Ja., Ohio SuBcoM~fIrrEE ON GOVERNMENT PROCUREMENT RUSSELL B. LONG, Louisiana JOHN SPARKMAN, Alabama DAVID H. GAMBRELL, Georgia ALAN BIBLE, Nevada* *Ex officio member. 11 PAGENO="0003" 4 CONTENTS Statement of- Aitken, Capt. Douglas G., Supply Corps, U.S. Navy, Officer in Charge, Naval Regional Procurement Office, Naval Supply Center, Oakland, Calif.; accompanied by Robert M. Gilbertson, small business spe- cialist; and Lt. Comdr. Ray N. Beeman, Jr., Director, Purchase Page Division 181 Allstead, Robert A., Chief, Procurement Division, Office of Deputy Chief of Staff for Logistics, Sixth U.S. Army, Presidio of San Francisco, Calif 198 Angello, Joseph C., vice president, Bank of America, San Francisco, Calif 2 Beeman, Lt. Comdr. Ray N., Jr., Director, Purchase Division; ac- companied Capt. Douglas G. Aitken, Supply Corps, U.S. Navy, Officer in Charge, Naval Regional Procurement Office, Naval Supply Center 181 Blackledge, Charles, community development program, Small Business Administration; accompanied Donald E. McLarnan, Regional Director, Region IX, SBA 98 Cochran, Col. Robert W., Director, Procurement and Production, Sacramento Air Material Area, McClellan Air Force Base, Calif.; accompanied by Mrs. Kathryn Scheld, small business specialist~~ 209 Curtis, Emory C., vice president, Plan of Action for Challenging Times, San Francisco, Calif 129 Dones, Ray, president, National Association of Minority Contractors, San Francisco, Calif 22 Fore, Wallace, vice president, operations, North American Rockwell Aerospace Group; accompanied Kenneth B. Gay, vice president, material, North American Rockwell Corp 48 Gay, Kenneth B., vice president, material, North American Rockwell Corp., El Segundo, Calif.; accompanied by Wallace Fore, vice president, operations, North American Rockwell Aerospace Group 48 Gilbertson, Robert M., small business specialist; accompanied Capt. Douglas G. Aitken, Supply Corps, U.S. Navy, Officer in Charge, Naval Regional Procurement Office, Naval Supply Center 181 Grayson, John, president, Univox California, Los Angeles, Calif 31 Hernandez, Mike, D. & H. Wood Products, San Jose, Calif 169 Hum, Charles K., president, Aerospace Services, Inc., Oakland, Calif 78 Hutton, Jerry, representative, Office of Minority Business Enterprise, U.S. Department of Commerce, San Francisco, Calif.; accompanied Jay I. Leanse, Deputy Director, Office of Minority Business Enter- prise, U.S. Department of Commerce, Washington, D.C 144 Ireland, Robert J., Regional Director of Business Affairs, General Services Administration Region 9, San Francisco, Calif.; accom- panied by Mr. Snodgrass 236 Leanse, Jay I., Deputy Director, Office of Minority Business Enter- prise, U.S. Department of Commerce, Washington, D.C.; ac- companied by Jerry Hutton, representative, Office of Minority Business Enterprise, U.S. Department of Commerce, San Francisco, Calif 144 Malo, Dr. Anthony, assistant regional vice president, National Economic Development Association, San Jose, Calif 119 Maxwell, Anthony, president. Banco del Pueblo, Santa Ana, CaliL - - 16 111 PAGENO="0004" Statements-Continued McLarnan, Donald E., Regional Director, Region IX, Small Business Administration; accompanied by Harry Swinkels, Assistant Chief, Procurement and Management Assistance Division; Charles Blackledge, community development program; and Carl Warren, Page Assistant Chief, business development program 98 Medina, George, vice president, Latin-American Chamber of Com- merce, San Francisco, Calif 140 i\'Iilsap, Quentin L., Quantum Associates, Inc., Oakland, Calif 31 Nash, Thomas, Pride Unlimited, Inc., San Jose, Calif 43 Ramirez, Ricardo D., R. D. Ramirez Construction, South San Fran- cisco, Calif 173 Rogan, John P., vice president, Administration, McDonnell Douglas Astronautics Co., Huntington Beach, Calif 67 Scheld, Mrs. Kathryn, small business specialist; accompanied Col. Robert W. Cochran, Director, Procurement and Production, Sacramento Air Material Area, McClellan Air Force Base, California 209 Swinkels, Harry, Assistant Chief, Procurement and Management Assistance Division, Small Business Administration; accompanied Donald E. McLarnan, Regional Director, Region IX, SBA 98 Taylor, John G., owner and proprietor, Tayko Industries, Sacramento, Calif 179 Tom, Henry W., H. W. Tom and S. F. Tom Co., San Francisco, Calif 97 Warren, Carl, Assistant Chief, business development program, Small Business Administration; accompanied Donald E. McLarnan, Regional Director, Region IX, SBA 98 Williams, Larry, Nairobi Corp., Richmond, Calif 90 EXHIBITS Letter dated January 13, 1971, from E. E. Barrington, president, Alliance Ventures, Inc., to Hon. James Corman, Representative, U.S. House of Representatives 65 Personnel makeup of Aerospace Services, Inc., and Western Airmotive Co., Inc., as of June 1971 83 List of social and welfare agencies worked with on 8(a) programs by Aerospace Services, Inc., and Western Airmotive Co., Inc 84 Small Business Administration loans approved to minorities, nationwide, fiscal year 1971 109 Small Business Administration loans approved to minorities in the State of California, fiscal year 1971 109 Small Business Administration financings of minority small businesses by regular SBIC's and MESBIC's, fiscal year ending March 31, 1970 110 Letter dated November 11, 1971, from David S. Brown, Chief Counsel, Office of Minority Business Enterprise, U.S. Department of Commerce, to Hon. Joseph M. Montoya, U.S. Senate 169 Procurement in the United States by the Naval Regional Procurement Office, Oakland, Calif., fiscal years 1970-71 187 Awards by claimant program as applicable to the Naval Regional Procure- ment Office, Oakland, Calif., fiscal years 1970-71 188 Section 8(a) program awards to the Small Business Administration, by number of contracts, total value, fiscal years 1969-71 189 Supplement to the statement provided by Robert A. Allstead, Chief, Procurement Division, Office of Deputy Chief of Staff for Logistics, 6th U.S. Army, with accompanying charts 201 Fifteen itemized contracts of the Sacramento Air Material Area, by con- tractor name, contract number, item, value, fiscal years 1968-71 220 Letter dated October 4, 1971, from Robert J. Ireland, Regional Director of Business Affairs, General Services Administration Region 9, to Keith A. Jones, minority counsel, Select Committee on Small Business, U.S. Senate, with accompanying chart 234 iv PAGENO="0005" Letter dated October 1, 1971, from Capt. Douglas G. Aitken, Supply Corps, U.S. Navy, Officer in Charge, Naval Regional Procurement Office, Naval Supply Center, to Senator Joseph M. Montoya, chairman, Sub- Page committee on Government Procurement, with accompanying graphs - - 241 Letter dated November 24, 1971, from George Kelsey, president, San Francisco Local Development Corp., to Joseph L. Ward, Assistant General Counsel, Senate Select Committee on Small Business 246 APPENDIXES I. Exhibits provided by the Office of Minority Business Enterprise, U.S. Department of Commerce: Summary of funding of Office of Minority Business Enterprise affiliate organizations during 1969, 1970, and 1971 250 List of affiliate staffing, by professionals, black, Spanish-speaking/or brown, Indian, other, percent - 251 Official list of the National Advisory Council on Minority Business Enterprise, by name, title and business, address, and phone - - - 252 "Minority-Owned Businesses: 1969," a report on minority-owned business enterprises, issued August 1971, U.S. Department of Commerce, Bureau of the Census 255 HEARING DATES September 29, 1971: Morning session 1 Afternoon session 48 September 30, 1971: Morning session 119 Afternoon session 181 V PAGENO="0006" PAGENO="0007" 1 SMALL BUSINESS ADMINISTRATION'S 8(a) SUBCON- TRACTING PROGRAM-MINORITY ENTERPRISE WEDNESDAY, SEPTEMBER 29, 1971 U.S. SENATE, SUBco~rMIrrEE ON GOVERNMENT PROCUREMENT OF THE SELECT Co~Ii\IIT~E ON SMALL BUSINESS, San Franci~sco, Galif. The subcommittee met, pursuant to notice, at 10 mm., in the Cere- monial Courtroom, Federal Building, 450 Golden Gate Avenue, San Francisco, Calif., Senator Joseph M. Montoya (chairman of the sub- committee) presiding. Present: Senator Montoya. Also present: Joseph L. Ward, assistant general counsel; and Keith A. Jones, minority counsel. Senator MONTOYA. The committee will come to order. The Subcommittee on Government Procurement of the Select Small Business Committee is assembling here today to seek information with respect to many problems affecting minority enterprises and mem- bers of ethnic groups. We have called this hearing to hear testimony from representatives of Government agencies, community action organizations, bankers, large Government contractors, subcontractors, and individuals on the 8(a) subcontracting program administered by the Small Business Ad- ministration. As all of you know, the 8(a) program is a device by which the SBA enters into a procurement contract with Government buying agencies and then subcontracts the work to firms owned or operated by members of disadvantaged or minority groups. The 8(a) subcontracting program is but one effort in many being made by the Federal Government to foster the creation of growth of viable "minority" firms. A recent survey-the first of its kind- taken by the U.S. Census Bureau indicates that we have approxi- mately 322,000 minority-owned businesses in the country today with total receipts of $10.6 billion. This amounts to less than 1 percent of total annual business receipts and 4 percent of the total number of firms of the entire busiiiess community. The rationale behind these efforts to improve the percentages is both humanitarian and economically practical. It is humanitarian because we are, as Americans, continuously striving to make equal opportunity.a living reality of our democracy. It is economically prac- tical because the utilization of the vast, but largely untapped, res- ervoir of business talent and skill found in our minority groups can spur us on to an even higher productive output than we now possess. PAGENO="0008" 2 As I have said, there are many programs, both public and private, to achieve greater participation of disadvantaged persons in American business. Almost every Federal agency has such a program. Many private organizations, some publicly funded, have minority business development as their objective. Industry is beginning to realize the benefits to be accrued from assisting fledging minority businesses. There are programs for business loans and guarantees, management and technical assistance, information dissemination services. However, some of these efforts are not what they should be: some are uncoor- dinat.ed, underfunded, understaffed, or lacking in clear guidelines. I believe the 8 (a.) subcontracting program is a very practical ve- hicle for bringing new or fledgling businesses into the mainstream of our free enterprise system. Naturally, we have looked at the vast power of the Federal procurement budget when seeking to implement this program and bring minorities in more sufficient numbers into the regu- lar business community. However, the private sector must share this social responsibility, and this will be an area of continuing concern to the subcommittee. The approach in this context is predicated on the proposition that our Nation's growth has been sparked by the realization of the full potential of every citizen and in providing an opportunity for full participation of all individuals and groups in the progress of our society. The program is not designed to foster a giveaway but rather to in- troduce these firms to the hard realities of the marketplace. Obviously, many of them need access to long- and short-term financing and man- agement and technical assista.nce. We hope to find out at these field hearings whether the various types of assistance are being made available to those businesses qualifying as 8(a) subcontractors. We hope to pinpoint some of the elements of success of these sub- contractors and make them of record as living examples of how this program can work. By the same means, we hope to isolate the pitfalls to be avoided by oncoming firms seeking aid under this program. This is an informal hearing. Many witnesses are joined in panels of similar interest. I would apprecia.te it if each witness would briefly state for the record some background information on his affiliation and his relationship to the 8(a) program, if any. All written statements will be entered into the record of these hearings. After each panelist has presented his introduction, I would like to ask several questions and encourage active responses from all members of the panel. We are especially interested in having your views on what can be clone to improve this program. Our first witness this morning is scheduled to be Mr. Joseph C. An- gello, vice president, Bank of America of San Francisco. Mr. Angello and Mr. Maxwell-Mr. Anthony Maxwell, would you like to join with him, and we will deal with you immediately after and then we will have some questions. STATEMENT OF 3~OSEPH C. ANGELLO, VICE PRESIDENT, BANK OF AMERICA, SAN FRANCISCO, CALIF. Senator MONTOYA. Do you have a written statement? Mr. ANGELLO. Yes, I have. PAGENO="0009" 3 Mr. Chairman, thank you for the invitation to be with you today. My remarks will relate in the first part to your experiences with the SBA-minority entrepreneur programs for the most part. They will not necessarily describe our business loan relations with our many minority busimi essmen outside that program. We draw from our experience of 354 SBA-ME loans made totalmg $12,250,000. I will also reflect on experiences of the $4 million funded California Job Development Corp. sponsored by the nine San Fran- cisco and Los Angeles clearing house banks. To date, this effort has produced 77 loans for $2,500,000 to minority entrepreneurs who could not qualify for bank credit even with SBA guaranty. Overall, our involvement in these programs has been satisfactory. \\Te find ourselves in a constant state of research and education to improve our capability and the chance of success of our minority businesses. The knowledge gained the past 3 years that we have partic- ipated in the program has increased our abilities and resourceful- ness; but we recognize critical problems remain unsolved. Not so much in the loan acquisition, most of the California banks are suffi- ciently acquainted with SBA procedure and have determined a partic- ipation. The major problem now is in the handholding after the loan is made. Management and technical assistance and the lack of these must receive the highest priority of required research and develop- ment. Other problems that need attention include: the need to improve the communications between the minority business community and the financial institutions~ including the Federal agencies. I sense a kind of "credibility gap" exists. A better rapport could prevail. The lack of technical and business management experience contrib- utes heavily to the failure of any small business and especially when qualified management and technical assistance is not available. In this regard, let me share with you a recommendation we are considering for our own bank's utilization as we analyze our progress and prepare for the future. \~Te need to be patient with problems and accept failures as part of the learning curve, yet learn from our experiences that we may overcome the obstacles, such as that at the time an application is taken, a condition be placed in the term loan agreement that would identify a resource to monitor the credit. This resource would be a paid CPA or consultant or a member or team from a community or- ganization such as ICBO or PACT or SBA-SCORE or SBA-AGE, or the like. It would be required~ at least for the first year of the existence of the loan, that a monthly progress report he made at the entrepreneur's place of busihess with the entrepreneur, the monitor, and the bank lend- ing officer in attendance. If progress is sufficient, that first year, the condition could then be required on an every other month or even quarterly basis the second and following years of the life of the loan. ICBO officials have told me the entrepreneur frequently drops them and their consulting services, even though free, once the loan has been granted and he has the money. We could, therefore, assist the corn- mumty organizations by providing a continuity of contact beyond the loan and granting phase. PAGENO="0010" 4 `~\Tit.h regard to SBA's 8(a) contracts. Bank of America has had a very limited experience with this financial program. The Los Angeles Job Development Corp. has also had little experience. There has been only one failure and I believe it is fair to state this was caused by a very poorly operated business and not due to lack of funds or gov- ernmental redtape and delays. The Bank of America has three 8(a) contracts in process, and they appea.r to be progressing well, but it cannot be determined that they are successful until they have been completed. LAJDC has one company with three separate 8(a) contracts in progress. Two appear to be progressing satisfactorily, while one, it is anticipated, may result in a loss. Our research indicates there are pros and cons to the 8(a) contract but the negative factors are not insurmountable. The following re- marks are general in nature as certainly there may be exceptions. First, the advantages as we see them: 1. Subcontracts, a definite unexpected and low-cost increase in sales to the minority contractor. 2. Elimination of highly competitive bidding. SBA is the prime contractor and may sublet the contract to their choice. 3. Built-in profit that. should be more generous than normal, con- sidering the elimination of competitive bidding. 4. Financing of accounts receivable is made easier at a preferred rate for this type financing. Now, for the problems as we see them: 1. Communications between the borrow-er and SBA need to be im- proved, and here it is more of an understanding as to contract content and appreciation of what. is involved. 2. Paperwork delays. There is excessive lag-time between issuance of contracts and purchase orders. t.o shipment schedules and, in some instances, from bidding to approval of prototypes. 3. Point of inspection and acceptance is critical. 4. Start-np cost.s are in some cases prohibitive. A company may be required to manufacture a prototype and to do this may even require additional machinery. Should the contract be awarded, the costs could get out of hand easily if they have t.o step up their operation sub- stantially, particularly in equipment, personnel, and inventory. 5. Many 8(a) contracts require long production runs with which the minority contractor has had little or no experience. This coupled with a strained working capital condition, new employees and limited production capability produces problems. 6. Although the 8(a) contract relieves the minority contractor from the formal bid process, lie must have sufficient understanding of the contract content to cost out the production. That is, relate SBA's anticipated net profits to his own operation. I have four brief recommendations: 1. Greater care should be exercised by SBA in awarding contracts to firms which lack reasonable capabilities to perform. 2. Purchase order st.yle of financing could be integrated with the accounts receivable financing in order to provide the necessary work- ing capital to manufacture the product.. 3. Attention should be given to reduce the time delay from point of contract award to first shipment date. PAGENO="0011" 5 4. Provide on-site inspection for acceptance of the completed product. Senator MONT0YA. Thank you very much, Mr. Angello, for a very fine statement. Now, would you relate for the record, for the benefit of this sub- committee what your direct experience has been with respect to the 8 (a) contracts and also loans to small business concerns in which your bank has participated? Mr. ANGELLO. The three 8(a) contracts we have in existence are all in southern California and are B. & W. Maintenance, a $185,000 contract. Senator MONTOYA. What is B. & W. Maintenance? Mr. ANGELLO. This is a plant maintenance type of operation, clean~ up, et cetera. Mr. Chairman, is it possible to call my associate, Mr. Sergeant, our SBA officer, to join me on the panel. Senator MONTOYA. Certainly. Mr. ANGELLO. There are some items here that I may not be suffi- ciently clear on, so I would like to ask him to assist me. This is Fred Sergeant, assistant vice president of the Bank of America and desig- nated as our SBA loan officer. B. & W. is essentially involved in cleaning plants and keeping them in order? Mr. SERGEANT. Yes, this is my understanding. Senator MONTOYA. Well, when you speak of B. & W. Maintenance, do you mean to say that this is a firm that concerns itself with provid- ing j anitorial services and other maintenance services to plants in the area? Mr. ANGELLO. Yes. Senator MONTOYA. Well, do they do this under 8(a) contracting? Mr. ANGELLO. They have an 8(a) contract. - Senator MONTOYA. From whom? Mr. ANGELLO. From the SBA. Mr. SERGEANT. From the SBA. Senator M0NTOYA. But to which Government agencies do they pro- vide these services? Mr. SERGEANT. Well, this type of loan is handled through. one. of our branches so that the research as to, you know, the procurement of the contract, e.t cetera, is not available to our information here today. Senator MONTOYA. But the point I want to make is: Do they offer this type of service to any Government agency in the area, and, if so, to which agency or agencies? Mr. SERGEANT. 1 do not have the answer to that. Senator MONTOYA. Is it the GSA? Mr. SERGEANT. Is it- Mr. ANGELLO. Not GSA. Mr. SERGEANT. Probably, a military-type installation. Senator M0NTOYA. OK. You do not have the answer, apparently. Well, tell us about the other ones. Mr. ANGELL0. The second one is Barrazo Construction Co. This is a $257,585 SBA 8 (a.) contract. Senator MONTOYA. What is that? PAGENO="0012" 6 Mr. SERGEANT. Here. again, you see, these types of loans are handled and administered right directly through the branches, and the infor- mation w-e have compiled, these statistics are represented in terms of dollar totals and the size of the contract., et cetera. Senator MOXTOYA. You just have the. loan data? Mr. SERGEANT. Yes, sir; that is correct. Senator MOXTOYA. I noticed your recommendation here about sur- veillance of operation. You recommend that.. especially through a CPA or some other type of consultation. I think that. is a very good idea. But is there any way possible for the banking institution and SBA to require., as a part. of the lending contract., that the individual submit himself to this type of surveillance by volunteer agencies? Mr. ANGELLO. Mr. Chairman, there are conditions in SBA's terms for granting a loan that. include educational processes in attending certain types of classes. I have asked some of our legal department. if there would be a problem here, and I'm told that it is worth a try; a condition which requires or would tie the entrepreneur to that resource is very much needed. As I stated. all to frequently, once lie has the money lie discards the consulting agency even though it may be free. Senator MONTOYA. Is it. not better to insure that lie will submit. to it as a part of his borrowing contract? Mr. ANGELLO. Yes, as a. resource; and this is why we state here that. it. would be a. condition of the bank's terms on the agreement, and if it. is a condition that the SBA would permit as an inclusion, I think we caii eiiforce it. Senator MONTOYA. Does the Bank of America. have any such coun- seling services? Mr. ANGELLO. When you get into the counseling services, Mr. Chair- man, bankers usually can make a pretty fair fiscal judgment as the entrepreneur submits financial information. But I find all too often that. lie is not capable of making the. other types of management, skilled judgments with regard to inventory control or marketing, advertising, and that sort of thing, and I think we are going to have to call on other industries for support here. Senator MONTOYA. Well, t.lie only reason I mention it is because the Bank of America. is reputed to be oiie of the biggest banking institu- tions in this country, and I was trying to ascertain whether you had this type of service for these minority entrepreneurs. Some banks do. Mr. ANGELLO. We have it oii a limited basis. We have produced material, written material, we condluc.t seminars occasionally, and we support community organizations, and SBA programs and seminars, and the like. We have not geared a counseling service, as such, for those. We have put our efforts in support. of the. community ageiicies. Senator M0xT0TA. What community services would be available to these business people for surveillance and monitoring the progress of the operations? Mr. ANGELLO. Presently, the services available would be through the community organizations, as I have mentioned here, tying them in, or if the entrepreneur can afford a. fee-paid consultant or CPA or PA, include hum aiid identify him. What we suggest here is that we become specific at the. outset. of the loan, that the monitoring agency be identified. PAGENO="0013" 7 Senator MONTOYA. Here is what I am concerned about. We have had a lot of grants made to so-called community organizations for the purpose of advising minority entrepreneurs, and if you look at some of these community organizations you find there is not one person in there who has had business experience, and still they are offering advice. And I am very concerned about exposing the small business entrepreneur to bad advice or inexperience, because that compounds his problems. Mr. ANGELLO. In Los Angeles, for example, there is a company, private and federally funded operation called MECLA, which is paid technical assistance and consultants that are assigned to the entrepre- neur. At the present time it is on a limited basis. We hope that it can be expanded. I agree, I think that the paid counselor is listened to more emphatically than the free. Senator MONTOYA. I would rather see businessmen in the community on the `banking community assemble some business talent to work on a voluntary basis with these minority entrepreneurs. I think that would be more effective than just calling in somebody who has been given a grant to provide counseling services to minority business enterprises- irrespective of whether the counselors in that particular firm has the competency or capability to do so. I think that that is what is wrong with this type of setup. Do you not agree with me? Mr. ANGELLO. Well, I think we, in the banking industry, are looking for a way to attend to this. We have volunteer programs within the organizations that are somewhat effective, but, yes, generally, I would agree with you on that theorists usually cannot provide too much assist- ance. It takes the man with the practical experience to help the entrepreneur. Senator MONTOYA. Then, SBA can also perform an important fimc- tion, because, usually, the capital that goes into these minority enter- prises is furnished to a large extent by SBA and the rest of it is furn- ished by bank participation; correct? Mr. ANGELLO. Well, the capital, for the most part, is furnished by the bank with quarantees by SBA, yes; correct. Senator M0NTOYA. Under SBA guarantees? Mr. ANGELLO. Yes. Senator MONTOYA. And what can you tell me about what the role of SBA should be as far as surveillance and monitoring and checking with these small business enterprises? Because at the present time, I do not feel that SBA would overload itself since they are not making too many direct loans to start with? Mr. ANGELLO. Well, I think they have the dollar availability to pro- vide that mechanism, at least to assist the private sector. I cannot say that the SCORE or the ACE program has been that effective. I feel that it needs some better direction, maybe a combination of these two with a closer relationship with the expertise. Yes, SBA should take a part and could take a part. Senator MONTO~'-A. I have only seen one of these people working, and that `was on the Navaho Reservation, and he did a magnificent job on the Navaho Reservation, but I have not seen it anywhere else. Mr. ANGELLO. I have met a number of these men in a group and individually, and the dedication seems to be there. I believe they need some very firm direction. PAGENO="0014" 8 Senator MONTOYA. Now, what has been your experience with respect to the loans made to 8(a) contractors? Do they keep up their pay- ments, or do you have to prod them? Mr. ANGELLO. The three that we have had in the Bank of America have been, to this point, all satisfactory. They are on target. The third one I did not mention was Hi-Pro Foods. This was a $300,000 contract. Each of these, incidentally, also has a separate SBA term loan or some kind of revolving line in addition to the 8 (a.) contract financing; Within the Bank of America, the three contracts we have in southern California are performing satisfactorily, as I understand it. The one that is in the Los Angeles Job Development Corp. is California Golden Oaks. They have three separate contracts, and it is my under- standing that two of them are performing well. The third one we may have problems with, and I cannot expand on what those problems are at this time. Senator MONT0YA. Well, do you think that the 8(a) contractors are performing very frugually on this? Are they operating on. a small margin? Mr. ANGELLO. Well, I wonder-again, lack of experience cautions me to generalize, but from what I hear I wonder if, in the main, the con- tractor has a full appreciation of what it takes to perform on an 8(a) contract. I won'der if he is fully realizing and understanding the in- volvement because he is not required to go through the bidding proc- ess. I wonder if he is a little bit misled by the total amount of the contract. Senator MONT0YA. And perhaps, I will ask you: Is it a 15-percent maximum profit permitted on a Government contract? Mr. ANGELLO. Generally, 10 to 15 percent, but when all of the `work is performed and all of the problems that are attendant to a new con- tractor, a relatively new contractor, who has been working on a small plane and begins gearing up on a large level, I think his profit is great- ly minimized from what he expects it to be. Senator MONTOYA. Did I understand you to say that you had only made loans to three of these subcontractors? Mr. ANGELLO. To my knowledge, yes. Senator M0NTOYA. Out of the Bank of America? Mr. ANGELLO. To my knowledge, yes. Senator MoxTorA. `What is the total of all of these three loans? Mr. ANGELLO. $185,000, $237,000. and $300,000. About $725.000. Senator MoxToYA. I see. Mr. ANGELLO. I would qualify that by saying I believe we would look forward to more participation, as we have participated in the other SBA programs with full cooperation, and in this 8(a) program I think there are some built-in features for the banker that are attrac- tive, especially when you consider the advances made and the con- tracts receivable type of arrangement. I think this is attractive to the banker. I cannot explain the minimum number, and I am not sure that is all we have had. Our communications sometimes are not all the very best. Senator M0NT0YA. The point I am trying to make, Mr. Angello, is this: SBA holds itself out as a great friend of minority enterprise, and there are a lot of press releases coming out of Washington these days about it. And then SBA offers to participate in some loans and tells PAGENO="0015" 9 the potential borrower: "We will consider making a guarantee on any loan that you might procure from a financial institution but get a letter from a banker that they will participate and we will consider your application." Then the minority enterpreneur goes to a banking institution and asks: "Will you participate in this loan?" And he finds the door closed on him, and there is where the fault lies-SBA is re- quiring bank participation and there is no bank participation even on the distant horizon. So, where are we? We are nowhere. We are in a land of promise and no action, you see. Now, what do you conceive to be the bankers' role in trying to open a few more pockets here in this particular plate of potential lending? Mr. ANGELLO. If I could relate to three of the major banks that have participated in SBA, Wells Fargo, I believe, has been outstanding, particularly in northern California; Security Pacific, particularly in the last 18 months or 2 years I feel has done an outstanding job in SBA minority entrepreneurships. Finally, the Bank of America, I feel, has demonstrated a full cooperativeness with the SBA programs. I think this could be related to the 8(a), because it is a part of the overall SBA program, and I certainly would not want to overlook, at least in the Los Angeles area, where I have firsthand knowledge, the minority- owned banks, the Bank of Finance, for example, the Pan American Bank. These are heavily involved in SBA. The banking community, for the most part I think, has geared itself to SBA minority entrepreneur credit. I would hope that same cooperative attitude would spill over into the 8(a) program. Senator MONTOYA. How much would you estimate your bank has participated in loans to minority entrepreneurs? Mr. ANGELLO. Oh, my goodness, that would be extremely difficult. We have, for example, 90 branches that are located in predominantly minority populated communities, and through the years, discounting SBA activities, I would say that we have been totally involved in pro- viding business loans to the minority entrepreneur, and that is one of the reasons why I prefaced my remarks, that I was talking only about the SBA-ME program, and approximately $12,500,000 has been ex- pended. I think there has been, and I have experienced, a sense of co- operation. More than that, at the very senior level of the bank, there is dedi- cation. Senator MONTOYA. Is there a program specifically designed to help minority enterprises in the Bank of America? Mi. ANGELLO. Yes; yes. Mostly- Senator MONTOYA. What do you call that program? Mr. AXGELLO. Our urban affairs program, which encompasses hous- ing, employment, the full spectrum, including minority business loans. It is a total effort, and the SBA program is easiest to identify as far as a direct contribution into a minority business loan program per se. The Job Development Corp. is another such effort. Senator MONTOYA. Well, the Job Development Corp. is a more or less united effort by some of the banks in California. Mr. ANGELLO. Nine California banks, yes, collectively. Senator MONTOYA. How many loans have they made? Mr. ANGELLO. I believe it is 77, Mr. Chairman. PAGENO="0016" 10 Senator M0XT0YA. Seventy-seven for $2,500,000? Mr. AXGELL0. Yes. Senator MOxToi'-A. And the Bank of America has expended $12,- 250,000 on minority enterprise loans? Mr. ANGELLO. Yes. Senator MOxTOYA. That is over a period of how many years? Mr. ANGELLO. Since about September 1968, so we are talking about 3 years. Senator MOXTOYA. About 3 years. Do you think that represents good effort on the part of the Bank of America? Mr. ANGELLO. Well, I would say that the effort has been there; I would say that for the most part-and I believe SBA would substan- tiate this, as far as availability of credit to the minority entrepreneur by most branches, it is there. It has been a matter of education, train- ing. You know. the program almost doubled each year. which is an indication of the effort of people like Fred Sergeant who conduct seminars with our people and groups, in conjunction with SBA, on a regional basis. We see it growing year by year. Senator MOxTOYA. I am not trying to deprecate. I think it is won- derful that you have done that much. Tam just trying to ascertain whether this program could be expanded, because I notice that you have SBA guarantees on every one. every bit of $12,250,000 in loans. Mr. ANGELLO. This is the SBA program, Mr. Chairman. There are countless numbers of loans made to minority entreprenuers outside of the SBA program, but I cannot identify and relate in numbers to you these loans. But in this program alone, this is what we have. Senator MONTOYA. Well, there was a very wealthy man in my com- munity when I was out in Santa. Fe, and his name was Sento Conda- lodia. He was very wealthy. And, so, an entrepreneur came into see him and told him: "Mr. Conda.lodia, the First National Bank told me if I could get you to sign my note that they would lend me the money"; and I think that is what the Bank of America has done with all of these entrepreneurs: Uncle Sam has signed the note. So, Sento Condalodia told this man: "You go back and tell the bank that if they will sign the note, I will lend you the honey." Now, I think your testimony has been very valuable, Mr. Angello, and I know that the Bank of America has tried to do certain construc- tive things to recognize the minorities in the California area. I do not expect the banking institution to open its coffers and lend out money without determining whether or not that loan is repayable, whether there is capa:biity for repayment. I do not think that is a. good bank- ing practice to do that. But I am tryii~g to ascertain how SBA can have a more meaningful coordinating role to see that the `banlthig in- stitutions do lend money to meritorious businesses. Mr. ANGELLO. We would look forward to that.. Mr. JoNEs. Mr. Chairman, with your permission, I would like to ask Mr. Angello a further question about the possibility of coordinating the 8(a) contract program with the guaranteed loan program. As I understand it, the SBA will analyze an applicant for the 8(a) program and then determine whether or not that applicant is quali- fied to participate in the program. It occurs to me that at the time of the SBA's decision that the applicant is qualified, it might be appro- PAGENO="0017" 11 priate for the applicant, a representative of SBA, and the applicant's banker to sit down and talk about whether a line of credit arrange- ment could be possible for any future 8(a) contracts and at that time the banker and the SBA could determine what are the proper financial limits for the 8(a) contractor, and at the same time the contractor would be assured that once he was given a contract within these hmits appropriate financing would be available. Do you think that is a fea- sible way of going about financing contractors' contracts? Mr. ANGELLO. I think it would be a sensible approach. In the 8(a) contracts we have had, I would guess that-you might substantiate this, Fred. I recognize a couple of these as being our customers. I know that Hi-Pro was prior to the 8(a) contract. And in most-I would not say "most," but I would say in many instances the 8(a) contractor prospect is already a customer of the bank. I think, gen- emily, lie would go to his own bank and I think that anything that can happen in advance, has to be helpful. Mr. SERGEANT. I would like to add to that, in our experience with these three with which we are familiar, they came to us, and they al- ready had the 8(a) contract awarded; so, it was not a case of coming to the bank and saying: "Would you be willing to participate in it, if we can obtain the 8(a) contract?" Mr. JONES. In Mr. Angello's statement, he mentioned the prohibi- tive startup cost and advance working capital conditions, and that these were problems that might be alleviated if, prior t.o the entering into the contract, there was some determination of financial limits with- in which the contractors ought to work, some undertaking in terms of the line of credit, or otherwise, which would peimit him to oper- ate safely within those limits. Mr. SERGEANT. You see, we, I think, are all saying the same thing. We are saying that we would like to see more selectivity in the award- ing of the contract, where the contract emanates, and if we can be assured that the cont~a.ct is not going to be out of the limits of capa- bility of the company. It sounds like it would be a very nice type of financing for us to participate in. Mr. JONES. Well, as a practical matter, what could you do to ef- fectuate coordination at the point of qualification? Is there something the bank can do, or should we talk to the SBA about this tomorrow? Mr. ANGELLO. I see a practicality and feasibility of the three-way meeting if the leadtime for credit analysis, especially for a new com- pany to the bank, would not prohibit or delay the 8(a) contract let- tmg, but I think if we had the opportunity to look at the experience of the man ahead of time and then add to it what will happen and what can happen with the 8(a), I think we can make more sensible judgments. Yes, I agree with you; I think there is a feasibility to this. Mr. JONES. I think, then, Mr. Chairman, it might be appropriate to mention this possibility "when the SBA testifies tomorrow. That might be a very helpful way of solving some of the problems that have been encountered with the 8 (a) program. Senator MONTOYA. What is your experience with the minibank concept? 70-654 0-72-2 PAGENO="0018" 12 Mr. ANGELL0. The mmibank-Mr. Walter Hoadley, I believe, who is with our Bank, was one of the strong advocators of this concept. It had been in the ABA Urban Affairs deliberations for many months. From what I know of it, this is an infusion of capital by the larger banks or by the ABA member banks into the minority banks, those that have been in existence for at least 3 years and have shown that they relate to the needs of their communities. Is t.his correct? Senator MONTOYA. Yes. Mr. ANGELLO. Well, as I discussed it with Mr. Hoadley, I would certainly support it. Senator MONTOYA. Has the Bank of America participated in this? Mr. ANGELLO. Absolutely. I think we were probably one of the first investors. Senator M0XT0YA. Fine. I believe that is all, Mr. Angello. Mr. ANGELLO. Thank you. Senator MONTOYA. Thank you, Mr. Angello. Next we have Mr. Anthony Maxwell, who is president of the Banco del Pueblo. Santa Ana, Calif. You have submitted a statement, have you not? Mr. MAXWELL. No. The invitation to appear before your committee only asked me to submit a summary of my experience, and I did not prepare a statement to give to the committee. Senate M0XT0YA. Yes. The summary will be made a Part of the record, and you may proceed, Mr. Maxwell. (The summary referred to follows:) PAGENO="0019" 13 ~anco d~1 COMMERCIAL BANK September 29, 1971 SUMMARY OF MINORITY ENTREPRENEURSHIP ACTIVITIES OF ANTHONY MAXWELL PRESIDENT, BANCO del PUEBLO SANTA ANA, CALIFORNIA After an early career as a farm laborer and construction. worker, Mr. Maxwell worked as a postal clerk. In 1956, he migrated to California where he began his banking career with Bank of America, Boyle Heights Area of Los ~~igeles, as Teller. Subsequently, Mr. Maxwell was appoimted to the Officer Training Program at Bank of America. Upon completion of Officer training, Mr. Maxwell received his first Officer assignment as Head of the Loan Depart- ment at the Huntington Park Branch. The following years, he was the Assistant Operations Officer at the Lynwood Branch, Operations Officer at the Montebello Branch, Operations Officer in East Los Angeles, and Assistant Cash Operations Officer at the 4th. and Spring Branch downtown Los Angeles. In April 1965, Mr. Maxwell joined the original staff of Pan American National Bank as Operations Officer. In November 1965, he was appointed Cashier; at that time, 427.429 NORTH SYCAMORE STREETS SANTA ANA~CALIFORNIA 92701 (714) 558-3333 PAGENO="0020" 14 only two Mexican-Americans were holding that position in California. Pan ~merican National Bank was the first Mexican-American Bank in this country. During the next few years, Mr. Maxwell served as Cashier and Lending Officer in a bank serving primarily the Spanish-speaking of East Los Angeles. It was during this time that Mr. Maxwell became more aware of the iniquities facing the Spanish-speaking in regards to banking services. In August 1969, he became Bank President, at that time, the on1~ Mexican-American Bank President in California~ In October 1970, Mr. Maxwell left Pan American National Bank to organize the Banco del Pueblo Commercial Bank in Santa Ana, California. Banco del Pueblo is the only bank in this country with a complete Mexican-American Board of Directors, and featuring a bilingual staff in all areas of banking. Banco del Pueblo is dedicated to providing all banking services to all our Mexican-American and Latin communities, with emphasis on the disadvantaged minorities. PAGENO="0021" 15 Member Board of Directors .of Banco del Pueblo. Member Executive Committee and Board of Directors of Southern California Minority Capital Corporation. Minority Enterprise Small Business Investment Corporation. Member Urban Affairs Committee and Executive Council of the American Bankers Association. Member Executive Council National Bankers Association. Member Small Business Advisory Council, Los Angeles Area. Member Board of Directors of the Mexican-American Opportunity Foundation. PAGENO="0022" 16 STATEMENT OF ANTHONY MAXWELL, PRESIDENT, BANCO DEL PUEBLO, SANTA ANA, CALIF. Mr. MAXWELL. The Ba.nco del Pueblo is one of the newest minority banks in the country, opened about 12 weeks ago with a capital of a million dollars, about. 90 percent owned by the Mexican-Latin coin- munity in Santa. Ana. During this time, we have accumulated a. mil- lion and a half dollars in deposits, which is an infinitesimal amount, small in relation to the major banks in California.. However, in these few weeks we have been open we have already made over $200~000 in loans to the community of Santa Ana. We have approved proposals. SBA-related proposals, totaling $300,000, eight different proposals. Senator M0XT0YA. What do you mean by that? Mr. MAXWELL. WTe have had clients coming in who have been inter- ested in obtaining a participating bank for SBA loans. We have re- viewed the proposals. We have made investigations as to the expertise of the applicants in the business that they are relating to and checked their credit.s and made sure that they are good members of the com- inunity and we have approved these proposals, and in total they add up to approximately $300,000. Senator M0NTOYA. Has SBA given their approval? Mr. MAXWELL. No. They are at. the SBA office, presently being reviewed by the SBA. Senator MONTOYA. How long have you been working on these loans? Mr. MAXWELL. Oh, we started about 4 weeks ago. After we got- Senator MONTOYA. So, SBA has not had adequate time to investi- gate these applicants? Mr. MAXWELL. No, no, they have not. Now, I ~mderst.and-and this is hearsay, but I understand-t.hey have approximately 350 loan pro- posals at the SBA. Los Angeles office that they are working on. aiid I do not know- amid I cannot relate because.I do not know the size of their staff and what. the workload is there in relation to the number of applicants they have. Senator MONTOYA. What has your relationship been with SBA so far? Mr. MAXWELL. When I was president of the Pa.n American National Bank, we became involved with the SBA for the first time, and in a period of approximately 1 year we made approximately $1 million in SBA-related loans, which represented at that time something like 15 percent of our total loan portfolio. This, in my opinion, was a tre- mendous vote of confidence for the minority businessmen in that minormty bank since they are r&at.ively new in our economic scene, and they do not have the loan-loss reserves that the older banks have. Therefore, when they make a loan, it is really a commitment to the community, because we do not have an account. where, if the loan goes bad, you just charge it off against the account without affecting your profits and your capital. I think this points out one very important thing, that the minority banks with which I am familiar, for example, with the Bank of Fi- nance and the Pan American National Bank, they are doing, percent- agewise, a much bigger job in the minority enterprise field, SBA- PAGENO="0023" 17 related and otherwise, than the major banks, even though they have a very small amount of deposits. Take, for example, I think, if we combined the total depositions of the Pan American National Bank and the Bank of Finance, they have about $30 million in deposits, and yet they have, both, approximately $4 million in SBA loans. This shows a commitment; this shows a con- cern, and yet they do it with very limited staff. For example, at our particular bank, since we are new, all of the SBA applicants that come in-in fact, most of the applicants that come in-I have to personally interview and personally make decisions on whether or not they have a viable package. Senator MONTOYA. Do you have any followup services provided for these? Mr. MAXWELL. No; we do not. Senator MONTOYA. Is it your intention to so provide these services? Mr. MAXWELL. It would perhaps be a year before we could provide these services at the present time. Senator MONTOYA. Do you think they are essential? Mr. MAXWELL. I think they are absolutely vital to the survival of most of these programs. If I could relate it to the 8(a), when I was at the Pan American Bank we made an SBA loan to an 8(a) contractor. I believe the amount, if my memory serves me right, was about $200,000 on top of another SBA loan they had at another bank, and the production there involved making practice bombs for the Defense Department. These people were very knowledgeable as to their business, and they made their bid properly, and I understand the program is working quite well. There were, however, a couple of problems that developed. No. 1, the payment coming from the Defense Department put a tremendous drain on the cash flow. Senator MONTOYA. In what way? Mr. MAXWELL. Well, by the time, say, for example-this was, for them, an entirely new line of productioii. Now, you get an SBA loan, and your first payment starts down the line somewhere about 45 to 60 days from the time you fund the loan. There is no way on this new product that is being produced there will be a cash flow shown in that length of time. It is going to be usually about 6 months before-they buying their equipment, installing it in their plant, getting the nec- essary skilled labor, producing the item, delivering it-before they can get paid. So, the payment schedule that starts within 2 months after the loan is funded is really very unrealistic, unless iii the loan proposal there is included enough money to take care of the first four or five payments. Senator MONTOYA. Do you not usually ta.ke care of it yourself in the loan agreement? Mr. MAXWELL. Well, we do now, but at one time we did not. Senator MONTOYA. I never knew a bank that did not take care of itself. Mr. MAXWELL. This is one of the things we learned through eXperi- ence with the SBA program. Senator MONTOYA. That is the way it should be, you get so much per- centage of the progress payments; and you do that in these loan agree- ments; do you not? PAGENO="0024" 18 Mr. MAXWELL. `We do now, yes. But when I was at the Pan American Bank, we did not necessarily provide for this. Senator MOXTOYA. `What was your experience when you were loan officer at the Pan American Bank as far as default on these minority entrepreneur loans? Mr. MAXWELL. I am going to answer specifically relating to the SBA loans. `We had one loan that did not pay back. It was a. $6,000 loan with a 90-percent guarantee. There was another one later on that was 100 percent, and it was about a. $25,000 loan. The loss to the bank was about $5,500. But when you relate that to the interest that the bank earned on the million dollar Portfolio- Senator MONTOYA. So, you did not lose anything? Mr. MAXWELL. ~O. Senator M0XTOYA. `What was your experience with the minibank operation? MiS. MAXWELL. I serve on the Urban Affairs Committee of the ABA, and I was involved in the idea and in selling it, and we, at the Banco del Pueblo. are going to put a percentage of our stock in the minibank. Senator M0NT0YA. You cannot participate in it until you have had 3 years' experience; is that right? Mr. MAXWELL. `We cannot participate; that is true. `We have no need to participate at this time. We hope we never have to. Senator MoxToi-A. Do you make small loans, too, in your bank? Mr. MAXWELL. Yes. Our loans are primarily small loans. We have a limitation of $800,000, legal limitation-I am sorry, not $800,000, but $80,000. to any one borrower. The largest loan we have made to date was a $25,000 loan to a minority person to purchase a restaurant. Senator M0XT0YA. And are you a State bank or nationally chartered? Mr. MAXW~IJL. `We are a. State bank. One comment that I would like to make regarding the 8(a) program is that in some, in one or two, the problem has been improperly pricing the product in that there has not been enough allowance, profit al- lowance, for the business to be able to turn a profit. over and windup with a profit. Senator MONTOYA. `Whose fault would that be? Mr. MAXWELL. IVell, this would be the fault of the person that worked the numbers to arrive at. a figure for selling t.he service. Senator MOXTOYA. Well, usually, since SBA is the prime contractor, SBA should be able to figure out. what. that small businessman who is an 8(a) contractor could make in the way of profit on a markup. Mr. MAXWELL. They should be able to, yes. Senator MONTOYA. Because usually the small entrepreneur w-ho is going into a contract. for the first time is not going to have the ability to figure his profit; is he? Mr. MAXWELL. He would have an extremely hard time, because he is not cognizant of all of the factors that. affect the price of a product. Many times they consider this, or most of the time people do, but not all of them, you know. and they end up at the end with no profit. Senator MOXTOYA. In view- of your experience with Mexican-Amer- ican business people who are starting a business for the first time, or have tried to increase their business on a more sophisticated basis, is it your feeling that there should be some monitoring or surveillance service to help this individual better orient himself and give his busi- ness a better sense of direction? PAGENO="0025" 19 Mr. MAXWELL. Yes. We naturally make direct loans also that have no involvement with the SBA, but there are two areas that we are very insistent upon in counseling with the minority businessman: (1) That he obtain the services of a. certified public accountant so that he can get the necessary information as to sales and costs, and their net profit, and things of this nature, so that they can properly inlay the different parts of their financial statement. That is No. 1. And (2) is an area that they do not generally allow enough im- portance, and that is as to life insurance. So, in these two areas we are leaning very heavily on them. Senator MONTOYA. You require life insurance on your business loans? Mr. MAXWELL. Well, it depends on the amount of life insurance the man already has. If his life insurance is adequate, no. If it is not-for example, I made a loan to a man the other day, $6,000, and lie had a net worth of $110,000, and $10,000 worth of life insurance. Well, ob- viously, there is no relationship. The man needed more life insurance. Senator MONTOYA. I know some banks require from their borrow- ers a life insurance policy which someone in the bank usually writes. Mr. MAXWELL. Yes. The credit life and disability insurance is avail- able through our bank, but it is not a requirement. Most people, par- ticularly installment loan borrowers, want it., because, you know, of the leace of mind that it gives them on it. Senator MONTOYA. Is there any way that a bank like the Bank of America can help your bank directly? Mr. MAXWELL. The Bank of America was helpful to us in our orga- iiization, and, in fact, they are our prime correspondent bank. What we need more than anything else is more involven'ient. As you can see, just in 12 weeks we have more volume, and, as you can see, in 12 weeks, what we have been able to generate, and we obviously cannot continue at that rate with the deposit structure that we have. Senator M0NTOYA. What about Government deposits? Mr. MAXWELL. Yes. I have been working on that since shortly after the bank opened. We have received two deposits that are Government- related, or three, rather. The two major ones, one for $200,000, and another one for $115,000, and both are through the U.S. Marine Corps canteen fund in Washington, D.C. Of course, these are time-certificate deposits, and we aie paying the going rate of interest on them. We also have about a $15,000 deposit from the Operations SER Office in Santa Ana. Senator MONTOYA. What about the Post Office? Mr. MAXWELL. No, we have not received anything at all from the Post Office. Senator MONTOYA. Have you asked them? Mr. MAXWELL. Yes, and their auditor has been out to talk to us, and we have be~iu promised deposits from the Post Office, and we have been promised deposits from HUD, and we have been promised addi- tional deposits from HEW. We have a lot of promises, but we have about four major corporations that have helped us with tax money. North American Rockwell gave us $250,000; Southern California Gas gave $50,000; Southern California Edison gave us $50,000, and these are in for 30 to 60 days, and they cannot be considered in the normal lending functions of the bank, because they are such short-term de- posits. But they do help in the earning factor. PAGENO="0026" 20 Mr. JoNEs. In this connection, Mr. Chairman, it might be helpful to call Mr. Maxwell's attention to Opportunity Funding Corp. which is an OEO-grantee and which also makes deposits to minor banking enterprises. Are you familiar with that? Mr. MAXWELL. Yes, I am. The Pan American National Bank and the Bank of Finance have obtained some of their deposits. We are still working on it.. We find, for example, wheii we apply to HUID for these deposits, that there is an area that creates problems for us, and I certainly consider ourselves to be in the Los Angeles area but many of these deposits are funneled into the local area through the county or the city treasuries. At that point, they become subject to the regulations of the St;ate of California involving deposits in the cities and counties. One of the limitations that is placed on these de- posits is that a bank may not have more than an amount equal to its capital. So, for Pan American Bank or for ourselves that would be $1 million. In other words, what we are saying is that by channeling the funds through this avenue-and I think with about 28 or 30 mi- nority banks in this country, about $30 million, and we shut our mouth That is all that can happen. I really think that some way `should be found for the minority bank to be able to fully participate in the. Federal Government deposits witrhout, these restrictions; because the restriction is very unrealistic, due to the fact that these deposits are collateralized by the minority banks. Senator MoxTorA. Are you saying the State law places a restric- tion that you shall not. have governmental deposits in excess of $1 million? Mr. MAXWELL. Those are in the county treasuries and the city treasuries. Senator M0NT0YA. That. is State and local funds? Mr. MAXWELL. Yes. Senator M0NT0YA. But there is no prohibition on the amount of Federal Government. funds that. can be put into a bank? Mr. MAxWELL. Not directly, no; but when they go into the county treasury first they become subject to this limitation because they then become part of the funds of the county. they go to the county treasury. Senator MoxTorA. I am speaking of the Federal Government and not t.he county or the State. Mr. MAXWELL. But you see, it originates at the Federal level and goes to the county first.. Once it becomes part of the county funds or within the control of the county treasury the limitations step in. Senator MOXTOYA. No, you do not understand me. You are speak- ing of funds that become integrated into State funds? Mr. MAxW-ELL. Yes. Senator M0xT0YA. But. I am speaking of funds like the Post Office funds. Should the Post Office IDepartment. tell you that. they want. to depost. $2 million in your bank; there is no State limitation or pro- hibit.ion on that, is t:here? Mr. MAXWELL. No; there is not. Senator M0NT0YA. That is the point I am making. \`\That about. the requirement that for SBA loans the borrower must obtain bank participation? Is that an inhibition or a serious obstacle as von see it.? PAGENO="0027" 21 Mr. MAXWELL. The way I understand it works is this: The SBA has very limited funds for making direct loans, so, therefore, as I understand, they have a waiting list of loans to be funded directly by SBA, which means that if a person is interested in gettmg a loan within a reasonable~ period of time, he more or less has to obtain bank participatioii; otherwise, he could be waiting and waiting and waiting. and you know business does not wait for anyone. Senator MONTOYA. Well, have you encountered situations where in- dividuals with good repayment capability have failed through no fault of their own to find bank participation on an SBA-guaranteed loan? Mr. MAXWELL. Most of the packages we are currently looking at came to us because the other banks had not shown any interest in them. Senator MONTOYA. Well, as a matter of fact, most of these banks are not interested in small loans of, say $5,000 to $10,000, to minority enterprises, are they, unless the individual has triple A credit? Mr. MAXWELL. I do not know to what extent their interest is, but I do know that when my people, particularly-and I am talking about the Latin-American, Spanish-American, or whatever name is attached to it-go to these banks, they are either turned or given the impression that it is going to take such a long time that it discourages them; and, so, they wind up at my bank, and, of course, we have a very limited staff, and we are trying to do the best we can to get these things proc- esseci. I do not know how meaningful this is, but all of the packages that have come to our attention have been good packages. Senator MONT0YA. Have you had referrals to your bank from other banks on loan applications? Mr. MAXWELL. No; no, we have not. Since I was in the East Los Angeles area and I am a known banker in banking circles there, some of the people that have come to us, in fact, most of the people that have come to us, have come from referrals from either groups or per- sons in the East Los Angeles area. Some of these people go to the office in East Los Angeles to obtain assistance in preparing their packages, and then they are referred, after attempts are made at another hank to place a loan, t. us. Senator MONTOYA. Do you have an organization here known as CABBIO? Mr. MAXWELL. I do not know. I know the organization exists but I do not know how active it is. I have never been involved with it anyway. Senator MONTOYA. How about MESBICs, have you had experience with them? Mr. MAXWELL. I am a member of the board of directors of MESBICs that is currently being funded, and we were lacking something like $30,000 in subscriptions to get the thing going the other day. We still have not begun our lending. Senator MONTOYA. What can you tell me abou.t the counseling serv- ices that are available from organizations which have been funded through grants under OEO? Mr. MAXWELL. I have not been familiar with any specific cases. Senator MONTOYA. You know of some of these organizations? Mr. MAXWELL. I know they exist, yes. PAGENO="0028" 22 Senator MOXT0YA. Do you, in your opinion, feel they have the capa- bility to advise business people? Mr. MAXWELL. Well, the people that work there, generally speaking, are not, you know, hard-core businessmen who have been forced to make a dollar. They are people who have trained in the field of finance but have not had the practical experience of having to do it themselves. Senator MOXTOYA. Woulcl you start thinking in terms of whether or not an organization can be fornmlated from among successful business people so that such an organization can provide know- how and counseling services to new minority entrepreneurs ? Mr. MAxwELL. This would be a tremendous challenge to anyone, because there are several of them that have to be overcome to effect an organizatioii such as this, No. 1 being that an active businessman, which is really the best one to help in this instance, generally is ex- tremely busy within his own business, there being many demands on his time from charitable groups. government., and different areas; so, finding a group of men who have the, time and would be willing to give to this purpose would be hard. There is also the problem that many times the local businessman does not want another businessman with whom he is familiar looking into his business. Senator MONTOYA. How about. the SCORE program? Mr. MAxwELL. I know they exist. I am not familiar with any clients they have worked with. Senator M0NT0YA. Thank you very much, Mr. Maxwell. Do you have anything else to acId? Mr. MAxWELL. No; except to say that it has been quite a thrill for me to be here today. Senator MoxToYA. Well, I wish you success in your banking opera- tion. We are doing the same thing in New Mexico. starting some new banks there. Thank you. Mr. Ray Dones, president. National Association of Minority Con- tractors, San Francisco. Calif. STATEMENT OF RAY BONES, PRESIDENT, NATIONAL ASSOCIATION OF MINORITY CONTRACTORS, SAN FRANCISCO, CALIF. Senator MoxToYA. Do you have a written statement, Mr. Dones? Mr. DOXES. Yes, sir, I have. Senator MONTOYA. Do you have a. copy? Mr. DONES. I was not able to get copies to you earlier, but I have some copies here if you would like them. Senator MoxToyA. Thank you. You may proceed, sir. Do you wish to reacT your statement? Mr. DONES. Yes, sir. Senator MONTOYA. It is not a lengthy statement, and if you desire to read it, you may prOceedi to dlO so. Mr. DUNES. I will read parts of it. Senator MONTOYA. Well, it will be made a. part of the record, and you may proceed to emphasize parts as you wish and make comments on it as you wish. (The prepared statement submitted by Mr. Dones reads in full as follows:) PAGENO="0029" 23 STATEMENT BY: MR. RAY DONES, PRESIDENT NAMC, NON-PROFIT EDUCATIONAL ASSN. 801 McALLISTER STREET, SAN FRANCISCO, CALIFORNIA BEFORE U.S. SENATE SMALL BUSINESS COMMITTEE SEPTEMBER 29, 1971 At the minority builders conference here in San Francisco in July 1969 where the National Association of Minority Contractors (NAMC) was born, SBA came under severe and caustic criticism from 300 black, brown, oriental and American Indian contractors from all over the country. The Small Business Administration has moved to improve its image in the minority business community in general and with black and brown builders in three special programs. The programs that have been most helpful are the 8(a) "Set Aside" subcontracts, loan guarantee and bonding guarantee programs. The SBA has spent the last two years trying to find ways that would increase their ef- fectiveness and offer meaningful help to minority contractors. The National Association wishes also to thank the Small Business Administration, the Senate select committee on Small Business and this subcommittee for your efforts, for they are beginning to bear fruit. SBA is moving to guarantee letters-of-credit as well as loans made to contractors. These advances can now be subordinated to the interest of surety companies after two years of NAMC urging. SBA is now beginning to understand the need to make their guarantees available for revolving lines of credit, as well as for fixed-amount loans. "Set Aside" is a term that NAMC members are beginning to hear around the country. Under Section 8A of the Small Business Act, the Samll Business Administration is authorized to act as prime contractor on "Set Asides" of various increments of government work. There are set asides which are developed for areas of high un- employment because of their labor surplus. There are set asides which are developed to channel a share of Federal procurement contracts through a mechanism designed specifically for small businesses. Both of these set asides when applied to the construction industry are now available to our membership. Due to the efforts of many people in SBA and out, the urgings of Arthur McZier and of Joseph Conrad from the SBA Washington office the support of Senator Joseph M. Montoya (D.N.M.), sympathetic involvement of the staff and members of this sub- committee and the push of th~ NAMC and its member, the Administra- tion has recently defined 8(a) set aside in such a manner that the current regulations permit the inclusion of the construc- tion industry as a part of the program. Under 8(a) programs the Small Business Administration acts as the General Contractor for the Federal agency which wishes to contract for a specific construction task. SBA then has the option of negotiating with a subcontractor of its choice and of requiring or waiving a surety bond, at its option. PAGENO="0030" 24 Since SBA does not bid or compete with private industry for contracts, 8(a) deals only in jobs that have not yet been publicly announced. Once a contract has been awarded, SBA is responsible to the agency to see to it that the contract is fulfilled in all respects. When a contractor approaches SBA for an "8 (a)" contract several things happen. First, the contractor has to qualify as being "disadvantaged." Secondly, he must prepare financial state- ments, a work history or resume, a 5-year projection of his business and other detailed information. SBA's thinking is that "8(a)" contracts, being preferential, should only serve to get a business on its feet, and so projections must show how the company can become self-sufficient within three years. Although SBA is committed to providing technical and managerial services to its clients, the agency is understaffed in this area and clients must usually look elsewhere for assistance in putting together the necessary paperwork. NAMC strongly recommends an increase in Technical Assistance funds available to expedite the contractors learning process. The funding of the educational and training efforts of Minority Contractor Associations by SBA could greatly enhance the development of minority builders. Once a client supplies~ the needed documents, SEA sets out to find contracts for him. This may involve actively promoting a client, as well as merely attempting to match his capabilities with currently listed jobs. Once a job is found and a suitable price agreed upon, SBA awards the subcontract to the client. The agency, being responsible as prime contractor, follows through with advice and assistance to make sure the contract is completely fulfilled. The NAMC Directors meeting in New Orleans last Saturday and Sunday asked me to inform you of the need to expand the 8(a) contracting capability to state and local government agencies and their political sub-divisions. Although the $100 million that should be available to the program from Federal agencies will doubtless increase the effectiveness of this business- development mechanism, the bulk of Federal funds will not be available without some legislative changes. SBA needs the ability to bring DOT and HUD Programs under the 8(a) contracting capability. Section 3 of the 1968 Housing and Urban Development Act states that: "the Secretary shall require that local contractors and low-income residents be employed to the greatest extent feasible in the development of housing under the specified federal programs." This is one of the strongest provisions which has been enacted re- garding disadvantaged minority contractors and the employment of the poor and should, when properly implemented, provide substantial opportunities for attaining parity in our industry. PAGENO="0031" 25 Several billion dollars are being spent annually under pro- grams which include a statutory mandate of maximum employment opportunities for low-income area residents and the utilization of low-income contractors in federally assisted construction projects. The issue of employment of the disadvantaged minorities and the poor in general is rapidly coming to a head. The significance of developments of this nature is apparent in light of the fact that the federal government parcels out more than $20 billion each yearfor building contracts, covering about half of the construction done in major cities. Jobs are available in the cities where the poor live, and should be linked to programs designed to upgrade the environments of the poor. It is fitting that the development or urban physical and human resources should provide reciprocal benefits. The need for human rehabilitation is certainly as great as the need for physical reconstruction of slum areas. Employment opportunities and requirements relate to both low-income employees and minority contractors as their potential employers. Minority contractors in the nation's capital have been given only one-half of one percent of work on the Washington Metropolitan Area Transit Authority's 96-mile regional rail transit system now well into the construction phase. The program, on which Department of Transportation (DOT) Secretary John A. Volpe has threatened to freeze contract awards for the third time, will take 10 years to complete and require a peak labor force of 6,000 by July, 1973. All indications are that the Small Business Administration wants to make the construction industry in the Washington Metropolitan area, and the transit system project in particular, a model for equal employment opportunity. SBA needs legislative support for their attorneys' rulings that 8(a) can apply to this type of work for "Authorities" or political sub-divisions of local governments in order to ex- pand their sphere of assistance. The NAMC asks you to provide legislation enabling an expansion of 8(a) to all federally-funded programs. PAGENO="0032" 26 ii\Ir. DONES. At. the minority builders conference here in San Fran- cisco in July 1969 where the National Association of Minority Con- tractors (NAMC) was born. SBA came under severe and caustic criticism from 300 black, brown, oriental, and American Indian con- tractors from all over the country. The Small Business Administration has moved to improve its image in the minority business community in general, and with black and brown builders in three special pro- grams. The programs that have been most helpful are the 8(a) "set.- aside" subcontracts, loan guarantee, and bonding guarantee programs. The SBA has spent the last. 2 years trying to find ways that. would in- crease their effectiveness and offer meaningful help to minority con- tractors. The national association wishes also to thank the Small Busi- ness Administration, the Senate Select. Committee on Small Business, and this subcommittee for your efforts, for they are beginning to bear fruit, we believe. The 8(a) program has now been expanded, and we understand that during fiscal year 1970 there were about $22 million worth of contracts awarded and last. year the contracting process was expanded to in- clude about $66 million. And we understand from our friends in SBA that the Government plans additional expansion so that $100 million for the next fiscal year will be incorporated. But according to SBA, some of these 8(a) subcontracts let to sub- contractors who had had no Pre\~ious Government. contracting experi- ence go at approximately 10 percent more to do a job thaii it would cost. if subject. to a competitive bidding piocess. We think that this cost is part. of a learning process that is essential to the development of minor- ity contractors and it probably could be decreased with more technical assistance funds available to organizations that. are funded and who have ability to provide some managing assistance in order to make sure that the contractors have the job figured out as it should be. We also think that SBA needs the ability to bring the I)epartment of Transportation and HrD programs under the 8(a) contracting capability. Section 3 of the 1968 Housing and Frban Development Act states that "The Secretary shall require that. local contractors and low-income residents be employed to the greatest extent feasible in the development, of housing under specified Federal programs." This is one of the strongest provisions which has been enactedi regarding dlisa dvan- taged, minority contracts and the employment of the poor andi should, when properly implemented, providle substantial opportunities for attaining parity in our industry. Several billion diOllars are being spent annually under programs which includle a statutory mandlate of maximum employmeiit. oppor- t.unities for low-income area residlents andi the utilization of low-income contractors in fedlerally assistedi construct ion proj ects would improve the employment of the dlisadlvantaged minorities and the poor in gen- eral in the communities that they are designedi to aid. Jobs are available in the cities where the poor live and should be linked to programs designedi to upgrade the environments of the poor. It is fitting that. the development, of urban physical audI human re- sources should provide reciprocal benefits. The need for human reha- bilitation is certainly as great. as the need for physical construction of slum areas. Employment opportunities and requirements relate to PAGENO="0033" 27 both low-income employees and minority contractors, so that as we help minority contractors from the disadvantaged communities we can certainly increase the amount of construction work that is available to the low-income inhabitants of these communities. I would also like to call the subcommittee's attention to the fact that mmority contractors in the Nation's capital have been given only one-half of 1 percent of the work on the Washington Metropolitan Area Transit Authority's 96-mile regional rail transit system now well into the construction phase. `We have been informed that the Small Business Administration attorneys have ruled that the 8 (a) program should be available for Metro construction work. I think that SBA needs now some legislative support for their attor~ neys' rulings, so that 8(a) can apply to this type of work for political subdivisions of local governments in order to expand this specific sphere of assistance. The NAMC asks you to provide some legislation enabling an expan- sion of 8(a) to all federally funded programs. Senator MONTOYA. Where is your organization located? Mr. DONES. Our office is 801 McAllister Street in San Franci'sco. Senator MONTOYA. Are you acquainted with the problems in the Los Angeles area? Mr. D0NE5. Yes, I am acquainted w-ith the problems in the Los Angeles area in that our NAMC secretary and some of our board mem- bers are from Los Angeles. Senator MONTOYA. We had some hearings, through another coin- mittee of which I am chairman, the Economic Development Committee of the Senate, in Watts, and I was very much amazed at the statistical information obtained in the testimony we elicited there, to the effect that the commercial activity in `Watts has gone down from what it was before the riot, in spite of the fact that over $300 million have been spent in `Watts, and most of the money that has been spent in Watts has been on studies and no actioii. Would you agree with that? Mr. DONES. Yes, I agree w-ith that, and I think that there is not an availability of equity funds for people in the minority community for development, or for entrepreneurship that would provide some mean- ingful employment opportunities. Senator M0NTOYA. `Well, many of the people in `Watts were work- ing way out and commuting sometimes 20 or 30 miles, aiid there is very little industrial activity within Watts. The same is true of east Los Angeles, and the unemployment rate in Watts and east Los An- geles is enormous, way ahead of the rest of the country. Now, speaking of minority contractors and the difficulties which they have had with respect to getting bonded, that. has been a concern of the subcommittee for quite some time, as you know, and we have tried to get SBA into this picture so that these people can make bonds under SBA auspices. Now, I do not know what progress was really had, because since I pressed for this we have not had any followup hearings to find out what SBA has done, and we are going to elicit this tomorrow and in future hearings in `Washington. But have you noticed any participa- tion from the private sector w'ith respect to giving small contractors a little more recognition? 70-654 0-72-3 PAGENO="0034" 28 Mr. DONES. I think there has been a great increase in the under- standing of the problem, Senator Montoya, and I think there has been some increase in the development of the contractors, so I think they have gained a far greater share of available work, but, we must real- ize that when you relate it to parity with the total majority popula- tion, we still have a long way to go. To illustrate what I mean, I think of the $100 billion in construction work that currently is annually available, and of the $76 billion or so that was available about 5 years ago when organizations of minority contractors began to orgamze around the country, the minority contractors were getting about one- tenth of 1 percent of the total construction dollar. So, I would say that within the last 5 years their contracting ability has sustained a ten- fold increase, so that now- we have about 1 percent of the total construc- tion dollar. But in order to gain parity, we need a fifteen-fold increase again, in order to get what w-e deem to be the proper share of construc- tion. Senator M0NTOYA. Well, do you not feel that this share would be increased if you convinced the private sector that you had the capa- bility and also the financial ability to take care of these contracts ? Is that not the cause of this gap? Isn't it true that the private sector does not have full confidence in the ability of the minority entrepreneur to serve as a contractor? Is that not where the real fault lies? Mr. DONES. Yes. I think it is the combination of both the lack of ability to work in the private sector and lack of ability to work in the public sector, too. Senator MONTOVA. A lack of communication, too, lack of rapport, and the fact that many minorities have gone into contracting without knowing the full impact of contracting and many of them have gone broke in the process, and when one in a minority goes broke it. reflects on all of the others. Mr. DONES. That is true. Senator. But w-e also need a development of the ability of the minority contractor himself. I think now we are beginning to solve this communications problem so that the private sector and also the Government sector understand now- the basis of the need for developing minority contractors. But we now have the very difficult job of really developing the capabilities and the orga- nizations of the minority contracting entities so that they can take advantage of the opportunities that are available to them. This means tha.t we must increase the capability. the equity capital that lie has, his organizationa.l structure, and also his bondability so that we can move into both the l)ublic and private sectors, because the private sec- tor usually requires some guarantee of performance from either build- er-control mechanisms or a bonding-company mechanism in order to assure the owner that. no loss will be sustainedl in the contracting. Now. the majority group contractors are fairly well organized, and they can provide these kinds of assurances, but minority contractors always, to be competitive. have to be able to provide these same kinds of performance assurances that the maj oritv-group contractor can, and at a competitive rate. Now-, if it costs the majority group con- tractor six-tenths of 1 percent to provide a bond, and it costs the mi- nority contractor 4 or 5 percent.. welL then, lie cannot be competitive working in this field. PAGENO="0035" 29 Senator MONTOYA. Well, is there such disparity? Mr. DONES. Yes, sir; there is a standard bond market and a sub- standard bond market also, and there is a disparity in rates. Senator MONTOYA. Why can you not go to your State legislature to prevent this kind of disparity or discrimination? Mr. DONES. I think that we are afraid that we will have no market if this happens. Senator MONTOYA. What about the provisions of Pubhc Law 91- G09 which permits SBA to guarantee 90 percent of the loss? Mr. I)oNEs. I think this approach is one that will be successful in alleviating the conditions I lust talked about, so that this bonding guarantee from the Small Business Administration, as soon as it is universally administered, will go a great way toward alleviating this disparity. Senator MONTOYA. Do you know of any instances where small con- tractors are being charged more for their bonds than the big con- tractors? Mr. DONES. Well, I know of many instances where contractors are being charged or are paying as much as 5 percent for bonds, and I know of several instances where builders control is required by a bond- ing company or some control mechanism is also required before they will write the bond so that the total cost is larger. Senator MONTOYA. Would you furnish such information in writing for the committee? Mr. D0NE5. Yes, sir; I will be happy to.' Senator MONTOYA. We will be glad to receive it. We would like to look into it. Mr. DONES. But I think that this is because of the development of the small contractor. It is a sort of system that we live in, and rather than an overt kind of discrimination, because bonding companies write bonds when they feel that there is no risk to assuring there will be corn- pletion; then, if the loss percentage goes up, then it is natural to as- sume there will be some attempt to increase the rates also, and if we try to eliminate what we call the substandard market, it means many of the smafler and newer contractors who have not had a wealth of experience in construction and have not established a track record will not find any source of bonds at all if we try to equalize these rates. Senator MONTOYA. Even with the SBA guarantee? Mr. DONES. I think the SBA guarantee has, so far, only been avail- able to contractors at the standard bond rates and I do not know of any guarantees that have been written for a substandard bond market. When that 90-percent guarantee is available, I think that it will lessen the risk of bonding companies, although, frankly, if bonding com- panies feel- Senator MONTOYA. And if it lessens the risk of bonding companies, then it should necessarily reduce the rate; but will it? Mr. DONES. If bonding companies believe there is even 10 percent risk and the guarantee is only 90 percent of the job, they will not write the bond anyway, even at a 5-percent rate. If they think there is an appreciable risk that they will lose even 10 percent, they still will not write the bond. Senator M0NT0YA. Thank you very much. 1 Material not furnished. PAGENO="0036" 30 Mr. JONES. Mr. Dones, under the SBA guarantee program, does not the SBA charge the surety company a fee? Mr. DONES. Yes; I think there is a fee of two-tenths of 1 percent that is charged. Mr. JONES. So, it is really not large enough to be significant? Mr. DONES. No; I do not think the two-tenths of 1 percent charge, in addition to the bondiiig fee if it is a standard market, is going to raise the rate so that it will appreciably affect the job. Now, you know that most construction contracts, particularly those in the FHA sector where bonds are required, or usually required, there is another mechanism that can be used now, I understand. But the profit rate for the contractor is sometimes limited to a. maximum of 4 percent, and if a contractor has a bond market available at 2 percent or 3 percent or 4 percent. well, we use up all of the potential profit. But two-tenths of 1 percent is down within the realm where it is not likely to be a deterrent to this type of contract. Mr. JONES. Did I understand you to say this program is not yet in effect here in San Francisco? Mr. DONES. I think that it is a little too early, you understand, of course, to make an assessment of what the impact will be. There have been probably, 100 applications in process, but I have yet to see the instance where the SBA guarantee was used for a contractor's bond. I think within a month we will know how effective the program is, but it is a little early yet. Mr. JONES. The program was operated on a pilot basis in Los An- geles. Are you familiar with the results there? Mr. DONES. I have talked to John Brown a.nd others there who had some bonds written under this basis, and they indicate that it is ex- tremely helpful to them, and it has been successful in getting bonds for contractors who would not have been bonded before. Mr. Jo~s. Thank you. Senator MONTOYA. Thank you very much, Mr. Dones. The next witness is Mr. Quentin L. Milsap. Mr. Arthur F. Thomas of Pride Unlimited. And Mr. Al Hicks, of San Francisco, and Mr. John G-ra.yson, presi- dent, Univox California. You may all come forward, and we will interrelate your testimony if we possibly can. Mr. NASH. I am a substitute. I am Thomas Nash, the general man- ager, and I am substituting for Mr. Thomas, who is ill. Senator M0NT0YA. You are Mr. Thomas Nash, are you not? You are representing Mr. Thomas? Mr. NASH. Yes, I am. Senator MONT0YA. Who is representing Mr. Hicks? Mr. Hicks is not here. Since Mr. Milsap appears first on the list, would you lead off, sir? PAGENO="0037" 31 STATEMENT OF QUENTIN L. MILSAP, QUANTUM ASSOCIATES, INC., OAKLAND, CALIF. Senator MONTOYA. Do you have a written statement? Mr. MILSAP. No, I do not. Senator MONTdYA. Who has a prepared statement? Mr. GRAY50N. I do, sir. Senator MONTOYA. AU right, Mr. Grayson, you may proceed and sub- mit your statement. How long is it? Mr. GRAYSON. Three pages. It will take about 3 minutes. STATEMENT OF JOHN GRAYSON, PRESIDENT, UNIVOX CALIFORNIA, LOS ANGELES, CALIF. Senator MONTOYA. Well, we have a copy here, and it will be made a part of the record at this point, and you may proceed, sir, to summarize it and give us the highlights, and I will ask you some questions after you do that. (The prepared statement submitted by Mr. Grayson reads in full as follows:) PAGENO="0038" 32 Statement to the Select Committee on Small Business. House of Representatives of the United States Ninety Second Congress 13 September 1971 ~ President Univox California Scope My experience and concern cover a wide range of topics under the heading of Minority Business Enterprise Development; however, I understand this hearing concerns itself with Government Procurement. My comments will therefore be limited to the subject of Government Procurement as it is viewed by this minority business venture (Univox California). I will share my perceptions regarding both the acquisition and performance phases of the procurement cycle. Background Univox California, an electronics manufacturing company, is an unusual minority enterprise for a number of reasons worth mentioning to estab- lish the context in which my experiences are evaluated. My partner, Mr. Bernard Weiss, and I, each bring over 20 years of directly applicable preparation and experience to this venture. This preparation includes training as graduate engineers and work experience with above average achievement as engineers, engineering managers, project managers, and business managers. The start up capital costs, initial market penetration time and costs, along with internal operational procedures and methods effort, were among the major factors which influenced our choosing to begin with the acquisition of an existing firm. This acquisition gave us, among other things, current customers including the major airlines, some of the largest aerospace companies, and many government procurement agencies. These customers were, at that time and since that time, ordering and receiving products from Univox California meeting all specifications and schedules. The products were used by commercial airlines, in military aircraft and equipment, and in other defense programs. To this baseline operation, we intend to develop through all avenues available to us, a major growth activity and a model for minority business development which leverages more business development per dollar than has been the rule. The major obstacle we must hurdle to achieve this goal is low business volume. Our long range plans indicate a transition from solely military and aerospace markets to a number of commercial opportunities. To provide the resources and posture necessary to compete in these areas, a significant increase in sales volume is needed. PAGENO="0039" 33 The U. S. Government could be the source of those increased sales. I understand it is the intent and goal of our government to use its ability to solve such problems. Government procurement policies, therefore, are crucial to the success of Univox and many other minority enterprises. Attempts over the past nine months to acquire an increased sales volume through government procurements have to date utterly failed. I find myself today with a number of immediate and very promising oppor- tunities which would launch Univox toward its objectives, and yet realizing that nine months ago I would have said the same thing. The nine months have been 38 weeks and close to 270 days of "being on the brink of acquiring sizeable government contracts," without one success. This condition has persisted in spite of:, 1. Having the technical and managerial expertise of the principals 2. Being a firm certified under the SBA 8(a) program 3. Having a facility meeting federal specifications for performing electronics manufacturing for military equipment 4. Actually performing on orders from government and military agencies meeting specifications, costs and schedules 5. Providing the Small Business Administration with descriptive information about our capabilities, lists of those agencies of government to whom we have sold items, and the part numbers of the items sold 6. Having a current sales volume insufficient to support the personal financial needs of the principals. Conclusions and Recommendations Whenever I attempt to analyze why this condition exists, inevitably the magnitude and complexity of problems the Small Business Administration and the other agencies have are transferred to me. Instead of experiencing a boost from affirmative and supportive action, I am the constant recipient of delay, declarations of impotence, and often obstruction. My course of action then shifts to the obstacles which hopefully when cleared will open the way for success, while fighting the growing feeling that today's obstacles are not between me and success, but rather between me and other obstacles and other obstacles.... PAGENO="0040" 34 1. Goals for procurement by the government from minority businesses must be consistent with objectives. If ta piece of the action" is believed to provide the stated benefits to both the minority community and the whole nation, then the `piece" necessary to achieve those benefits should be defined and should become the goal. The plans and efforts of those agencies which are crucial to making the intentions a reality must be aimed to goals which are consistent with the objectives. Current goals are established in a vacuum and are keyed to levels which support "successful" annual reports. This kind of goal setting allows an infinite amount of resources to be expended without ever achieving objectives. The result being an expensive, aimless program of `doing something' but producing in the end a pattern of frustration, disappointment, and worst of all the perpetuation of the current dilemma. 2. The profit making organization cannot be excluded from participating in minority business development for profit. The intimate relationship between an organization aiding a minority business and the minority businessman contains the opportunity for a transferral of the "entrepreneurial spirit" which is rightly not a part of the non-profit organizations makeup. Further remuneration based on objectives of business progress, instead of "look good" records would add subtle but effective impetus to results based on objectives. The multitude of difficulties encountered by minority firms in performing on government contracts would be greatly diminished and controlled by the participation of profit-oriented organizations whose partici- pation was purchased. This recommendation is made in an inclusive sense not instead of what is now being done. In summary, I must say that current procurement policies and agencies have failed to capture the opportunity to achieve the intent of the charter of the Small Business Administration's Minority Business Program or the Office of Minority Business Enterprise. I am convinced that without changes in policy such as I have suggested, we shall not achieve what is within our capability and our grasp. The massive and unprecedented action required to bring the minority community into the American economy will grow to impossible proportions unless men such as yourselves act now. I am at your service to provide any additional supportive data you may require and I stand available to participate in helping to develop detail methods of implementing some of my suggestions. PAGENO="0041" 35 Mr. GRAYSON. Thank you, sir. I began my statement, sir, with the fact that I have had some con- siderable experience in the area. of minority business development over the last 4 or 5 years, but I am going to try to aim most of my principal comments and concerns today to the idea of minority business develop- ment in terms of procurement. I am referring to some background in- formation about. Univox California, au electronic manufacturing coin- pany, because I believe it to be an unusual minority enterprise for a number of reasons worth mentioning to establish the context in which my experiences are evaluated. My partner, Mr. Bernard Weiss, and I, each, bring over 20 years of directly applicable preparation and experience to this venture. Tins preparatiomi includes training as graduate engineers and work ex- perience with above average achievement as engineers, engineering managers, proj ect managers, and business managers. Senator MONTOYA. Would you state your educational backgrouiid? Mr. GR~-soN. I have a bachelor of science degree in engineering. Senator M0NTOYA. From what. univeristy? Mr. GRAYSON. Pacific State University in California. We chose in our venture to select an ongoing operation rather than a. startup, because of the vast difference in capital outlay required. This also gave us, among other things, current customers including the major airlines, the largest aerospace companies, and many Government procurement agencies. These customers were, at that time and since that time, ordering and receiving products from Tjnivox California meeting all specifications and schedules. The products were used by commercial airlines, iii military aircraft and equipment, aiid in other defense programs. Senator M0NTOYA. What products do you manufacture? Mr. GRAYSON. We manufacture electronic cable, connectors, control boxes, assemblies for airlines, and military and commercial aircraft. Se1lator M0NTOYA. What was your gross last year? Mr. GRAYSON. We were anticipating $100,000. Senator MONTOYA. Last year? Mr. GRAYSON. That is right. We have been in operation 9 months. Senator M0NTOYA. Oh, I see. Up to now, what has been your gross? Mr. GRAYSON. Approximately, $72,000. Senator MONTOYA. All right, proceed. Mr. GRAYSON. To this baseline operation, we intend to develop through all avenues available to us, a major growth activity and a model for minority business development which leverages more busi- iiess development per dollar than has been the rule. The major obstacle we must hurdle to achieve this goal is low-business volume. On long- range plans indicate a transition from solely military and aerospace markets to a number of commercial opportunities. To provide the resources and posture necessary to compete in these areas, a significant increase in sales volume is needed. The U.S. Government could be the source of those increased sales. I understand it is the intent and goal of our Government to use its ability to solve such problems. Government procurement policies, therefore, are crucial to the success of Univox and many other minority enterprises. PAGENO="0042" 36 Attempts over the past 9 months to acquire an increased sales vol- nine through Government procurements have to date utterly failed. I find myself today with a. number of immediate and very promising opportunities which would launch TJnivox toward its objectives, and yet realizing that 9 months ago I would have said the same thing. The 9 months have been 38 weeks and close to 270 days of "being on the brink of acquiring sizable Government contracts," without one success. This condition has persisted in spite of very significant things: 1. Having the technical and managerial expertise of the principals; 2. Being a firm certified under the SBA 8(a) program; 3. Having a~ facility meeting Federal specifications for performing electronics mannfacturing for military equipment; 4. Actually performing on orders from Government and military agencies meetmg specifications, costs, and schedules; ö. Providing the Small Business Administration with descriptive information about our capabilities, lists of those agencies of Govern- ment to whom we have sold items, and the part numbers of the items sold; and 6. Having a current. sales volume insufficient to support the pel~so1la1 financial needs of the principals. CONCLUSIONS AND RECOMMENDATIONS Whenever I attempt to analyze why this condition exists, inevitably the magnitude and complexity of problems the Small Business Ad- ministration and the other agencies have are transferred to me. In- stead of experiencing a boost from affirmative and supportive action, I am the constant recipient of delay, declarations of impotence, and often obstruction. My course of action then shifts to the obstacles which hopefully, when cleared, will open the way for success, while fighting the growing feeling that today's obstacles are not between me and success, but rather between me and other obstacles. And I would like to add that I have met twice this year, as recently as 2 weeks ago, with the National Association of Black Manufacturers, which is an organization recently formed, comprised of abont 70 manufacturing organizations under black ownership and leadership, and out of that experience I might say that I have found the same thing true of all other minority manufacturers I have met. I submit, then, for your consideration, two recommendations which I am sure, if implemented, would undergird all efforts currently op- erating in a realistic and effective way, an undergirding which would certainly insure men the end of hopes and promises and give them a fulfillment of dreams. The recommendations are: 1. Goals for procurement by the Government from minority busi- nesses must be consistent with objectives. If "a piece of the action" is believed to provide the stated benefits to both the minority commu- nity and the whole Nation. then the "piece" necessary to achieve those benefits should be diefinedi and shiouldi become the goal. The plans and efforts of those agencies which are crucial to making the intentions a reality must be aimed to goals which are consistent with the objectives. PAGENO="0043" 37 Current goals are established in a vacuum and are keyed to levels which support `successful" annual reports. This kind of goal-settmg allows an infinite amount of resources to be expended without ever achiev- ing objectives. The result being an expensive, aimless program of "do- ing something" but producing in the end a pattern of frustration, dis- appointment, and worst of all the perpetuation of the current dilemma. 2. The profitmaking organization cannot be excluded from partici- pating in minority business development for profit. The intimate relationship between an organization aiding a minority business and the minority businessman contains the opportunity for a transferral of the "entrepreneurial spirit" which is rightly not a part of the nonprofit organization makeup. Further remuneration based on ob- jectives of business progress instead of "look-good" records would add subtle but effective impetus to results based oii objectives. The multitude of difficulties encountered by minority firms iii performing on Government contracts would be greatly diminished and controlled by the participation of profit-oriented organizations whose participa- tion was purchased. This recommendation is made in an inclusive sense not instead of what is now being done. In summary, I must say that current procurement policies and agencies have failed to capture the opportunity to achieve the intent of the charter of the Small Business Administratioii's minority busi- ness program or the Office of Minority Business Enterprise. I am con- vinced that without changes in policy such as I have suggested, we shall not achieve what is within our capability and our grasp. The massive and unprecedented action required to bring the minority community into the American economy will grow to impossible pro- portions unless men such as yourselves act now. I am at your service to provide any additional supportive data you may require, and I stand available to participate in helping to develop detail methods of implementing some of my suggestions. Senator M0NT0YA. Thank you very much, Mr. Grayson, for a very fine statement, and I mean that sincerely. I know the frustrations about which you speak, because many of the business people in my State have come to me with similar problems, and I want to say, in all sincerity, that I do not think that this problem is engendered by any attitudes on the part of SBA but rather by some of the pro- curement agencies of the Government. Now, for example, I think the Defense Departmeiit could do a better job in recognizing minority entrepreneurs, but they do not do it. They have greater requirements for goods and services in the Defense Department, and there are many communities here that could be reactivated and become economically viable if only the Defense Department would infuse these communities with a little economic plug. I think that is where the fault lies. I think GSA has been doing a fair job in trying to recognize minority enterprises in this country. I w-ant to say that they could do a better job than they are doing, but at least the GSA is trying. And the SBA is merely an instrumentality. They are the agents of the small entrepreneurs, and they are trying to do something. But I am not satisfied with the statistics, because in the Federal procurement pie small business has been going down percentagewise in the last 4 or 5 years, and we keep a study of this on a year-by-year PAGENO="0044" 38 basis. We have been conducting hearings for the last 7 years on what small business derives from the Federal Government. Now, you are a small enterprise, just starting, and you are en- titled to some help. I did not hear you allude to any monetary re- quirements. Your allusions were strictly confined to your hope that the Federal Government. through its vast procurement empire. would recognize your enterprise. Now. you say that you have been certified by SBA to do this t.ype of work is that correct.? Mr. GRAYSON. Yes, sir. Senator M0NT0YA. How many employees do you have? Mr. GRAYSON. Five, sir. Senator MONTOYA. And has SBA or any other agency surveyed your plant Mr. GRAYSON. Yes, sir. Sir, if I might: My reference to IJnivox is more as a demonstration, in the specific, of a condition that exists. Senator MONTOYA. Well, I understand that., and `I have taken it in that light. Mr. GRAY50N. What I hope to communicate to the committee is that there is a fundamental lack, in my judgment, of an implementing way, to make economic development and minority business development a reality in this country, and that is why I take the dangerous time away from my business toda.y to be here, to address that issue. I think that it is not something as va.gi.ie as, when. I go to the SBA, or another agenc . or if I come to this subcommittee, it. is another military procurement policy. I think it is a. question of national urgency. If I read and believe haif of all of the reports, if we are talking about the economic development of a people just as we talk about the economic development of Europe a.t the end of the Second World War, or the Far Ea.st a.t the end of the Second World WTar, we are ta.lking about scoping a development and talking about making a commitment that has something to do with the end result; and I sub- mit, sir, that. that. has never hanpened. either by the Congress or any other group who has said that they really want to make the minority community a part of the economic mainstream of America. And I am saying that it takes something. persons like yourself, to work on the national level of our country who can draft. legislation to say, just like we developed Europe after the war, we need to look at the minority community in America. and we need to develop it., and nothing as small as the typical procurement policies of the Federal big agencies or the typical procurement policies of the private sector can stand in our way. It is the `traditionalism that has created the problem that we are faced with today. So, what I am hoping that. the subcommittee would consider is p05- turing itself toward looking at: "How can we do this t.he way we have done everything else ?" When we said we were going to the moon, for example-and I was privileged to work in the aerospace business for 18 years-we selected a goal there, and we made a commitment; we formed a Government agency, but we gave the private organizations the opportunity to make money, a profit., to get us to the moon. We have excluded private organizations for profit from participating in helping minority businesses. We have deliberately brought in only those organizations that do it on a voluntary or a non-profit-oriented basis, and I think that is fundamentally an error; and I think the PAGENO="0045" 39 only people that can do it are PeoPle such as yourself. I think the whole process of SBA saying one year that we did $30 million in the minority cornmumty and the next year saying that we did $66 million and hope to do $100 million in the minority community the following year does not relate to perhaps maybe the $30 billion or $40 billion that is necessary to make the minority community economically viable. Yet, those are the kinds of goals and those are the kinds of reports you will hear tomorrow. They are not related to what we are trying to accomplish, and I am concerned that at the highest levels of our Government that that awareness which has been applied to every endeavor this country has ever cared about is not being applied to this whole process of minority business development, and it seems to me that what we find ourselves doing is denying that if we want to go to the moon we will go to the top of Mount Everest, because it is closer, and it does not matter whether it is closer on the. top of Mount Everest or whether it is closer in I)eathi Valley, it takes a rocket to get to the moon. And, so, we spend our time talking about better ways to climb a mountain because we are going to the moon, and we evaluate the SBA and we call them names and criticize them and make them better when they are a mountain- climbing operation and we need a rocket. That is what I would like the subcommittee to address itself to. Senator MOXTOYA. I agree with you wholeheartedly, Mr. Grayson in what you have said. But it all spells the frustration of the past and the hopes of the future-that is what it spells. And we have been try- ing to work into a fiber that will bring this realization to bear. Now, of course, in this committee, we are confining our jurisdiction to what we can do through Federal procurement to help small busi- ness enterprises and small business generally. Through other commit- tees in the Congress~ we are trying to do the very thing that you es- poused~ and it is a slow process, and I am very disappointed myself. Mr. GRAY5ON. Could, then, this committee have something to do with setting the goals instead of organizations themselves setting them? Senator MONTOYA. Well, we are trying to. We will have hearings in Washington, and we will ask the Defense Department why they are not doing more. This is not a legislative committee, so we cannot recommend legislation out of this committee. This is merely a commit- tee to hear the problems of small business, and we certify the results of the hearings to the Congress in a report, and then we depend on the other legislative committees to formulate the legislation. Mr. GRAYSON. Could this committee recommend, for instance, that the goals for procurement by all of the Government agencies through the 8(a) program be a specific percentage of the procurement? Senator MONTOYA. Yes, yes; we could do that. Mr. GRAYSON. Well, that is the kind of thing I mean, so that when they set their goals, if there is no legislation, at least the goals they set can be compared against the recommendations of a committee such as this. Senator MONTOYA. Well, we have been trying to do this for years, and we have called in the Defense Department. You do not realize how hard we have tried. If you would just read the hearings, we have been very vocal about our insistence that they do more for the small business community; and I say this from knowledge and I say this PAGENO="0046" 40 most sincerely-the Defense Department could do more and could contribute substantially to the rehabilitation of many communities in this country if they would just spread the procurement pie a little more equitably and with a better economic direction. So, anyway, thank you, Mr. Grayson, for your observations. We appreciate them. Mr. JoNEs. Mr. Chairman, in this connection, I would like to ask Mr. Grayson some questions. Senator MONT0YA. Yes. Mr. JONES. First of all, Mr. Grayson, I am glad you made your comments. I think they are very important, and they were eloquently made. It is helpful to have these suggestions about the types of goals we might wish to set. One of the Problems in setting goals is that all great programs are finally reduced to a question of administration. Goals are fine, but unless they are pursued earnestly at all levels with- in the Government. they merely remain goals. For that reason, I would like to pursue you with some of your own experience with your business, because it may shed some light on the administrative effectiveness of the program we now have. In this con- nection, when did you first go to the SBA for certification under the 8(a) program? Mr. GRAYSOX. I was certified in November of last year. Mr. JONES. So that, in fact, was just about the time you organized the business? Mir. GRAYSON. That is right; at the same time. Mr. JONES. And did you have any difficulty with the certification process? \\Tas that a fairly ra.pid and prompt process? Mr. GRAYSON. I had some difficulty, but it. was overcome in a short period of time. I might acid that. I have an opinion regarding that process. I was certified within about 2 months total from the time I first applied, and it. took a number of things-perseverance, and whatnot. But I am personally convinced that the certification was held up the short time it was and was made because my volume goal was reduced by a factor of 10. And in direct language, I am convinced that was so that the SBA would have a. good-looking record at the end of the year. And, here., again, it is beca.use the program of goal setting a.nd evaluation of those persons who are supposed to be supporting me are motivated by and reporting to a. system that makes them diO the opposite. Mr. JONES. What. was your originally stated goal and what was the goal as finally established? Mr. GRAYSON. My originally stated goal was to develop the busi- ness volume to a rate of $80~000 pa" month by the 12th month of the operation, which would have been a rate of $1 million a year. My present facility has the capability to do a.t least twice that.. The business plan was not going to be approved imless that total amount. was changed to $70,000 for the total year. And I might add that I have dione that. without one 8(a) set.-aside contract. That kind of work comes in on the telephone. Mr. JONES. But at the time of the certification it was essentially a. requirement. of certification that you reduce the goal to that? PAGENO="0047" 41 Mr. GRAYSON. I cannot say it was an essential requirement. In the discussion of what would have to be done to my business plan before it would be approved, that became very clear to me, and I was also told if anything in excess of that came, it would not be effected by the business plan. Mr. JONES. Since then, you have done approximately $72,000 worth of business. How much of this is with the Government? Is that all with the Government? Mr. GRAYSON. I would say that. 50 percent of it is probably with the Government, directly, and maybe 25 percent indirectly through major contractors. Mr. JONES. And on these Government contracts, did you obtain them through formal bidding procedures? Mr. GRAYSON. Yes. Mr. JONES. So, you located- Mr. GRAYSON. Our business is the "phone," because our business from various procurement agencie.s was where larger outfits would not bid on them, because it is low quantity. Mr. JONES. And you have informed the SBA of all of these contracts and your capability for similar such contracts in the future? Mr. GRAYSON. Yes, I have. Mr. JONES. To what do you ascribe their failure to locate these con- tracts or similar such contracts for you? Mr. GRAYSON. I think it is a combination of a number of factors. One of them is their preoccupation of what their objectives are and what is going to be among them more successful and what resources they have to apply to any kind of situation. For instance, they are fear- ful of an operation, and I heard in the previous testimony of Mr. An- gello from the Bank of America what he was suggesting was something that I disagreed with, that they be more careful before they give a con- tract to a minority firm. There is a tremendous amount of carefulness, if anything, and is supported by the self-fulfilling prophecy idea. That is one part of it-they are afraid of an ambitious program, and they do not have to move into ambitious programs, because their goals are the ones they have set. Mr. JONES. Have you spoken to other firms which have been certified for the 8(a) program? Mr. GRAY5ON. Yes. `Mr. JONES. Are their experiences similar to yours? Mr. GRAYSON. Similar and worse. I might add also- Mr. JONES. I do not see how they could be much worse. Mr. GRAYSON. I located a contract, the only 8(a) contract that I am now working on, and I have invested a considerable amount of money in the pursuit of it. I located the procurement source, convinced the procuring agency, the Marine Corps in this case, that lJnivox should be considered on it, and I expedited their proposal, had a copy of it prepared, worked on the proposal -for over 2 weeks before it got to the SBA office and submitted that proposal. And the size of that contract was $866,000. My business proposal was being reviewed by the SBA while the technical proposal was being reviewed by the Ma- rine Corps. When the Marine Corps called the SBA, the SBA was not going to negotiate a contract until we got an answer from the Marine Corps on the technical portion. The Marine Corps called the SBA and PAGENO="0048" 42 told them that they were dissatisfied with my technical proposal. Ill that phone conversation, the SBA told the Marine Corps: "Then, can- cel the procurement." They did not contact me; they did not let me participate in a~ conference or a discussion as to what the differences were or as to why they were dissatisfied. There was not supportive or prenegotiation discussions or any kind of thing which, in my busi- ness, in previous experience in the aerospace business, was the normal next step. and I had to personally fly t.o Washington, D.C., to pur~sue a conference where I could determine the specifics as to why my tech- nical proposal was not satisfactory. As a sidelight, as a result of that, the whole thing was opened up again, and I am given another opportunity to make another presenta- tion to the Marine Corps. But I raise the example to show that the supportive commitment aspect is not there, not because there is someone in the SBA who does not like me or does not want the program to work, it is because the success is not based on him doing the most ambitious, or being the most supportive, or causing the thing to really happen; it is based on the most conservative point, of view that possibly can be taken, and it is based on the guaranteed success-but that is what. we are up against to begin with. Mr. JONES. In connection with s-our second recommendation, Mr. Grayson, I w-oncler if you could be more specific in exactly what you mean by involvement in profitmaking organizations? iMir. GRAYSOX. Yes. I understand that. if an organization wanted to pi'~pose, for instance, to the SBA or any Government agency with the responsibility for minority business development, and would want to ~ropose that, they would take either a new or existing minority busi- ness in some particular condition and Propose a plan of development for a company and provide the expertise and support and tra.ining, or whatever it took, the assistance in negotiating the best contract as well as financing and would write out a program, just like any other kind of program. Then, they would have that program priced and funded. and then be paidi against. those. cost.s. And some of the profit., based on their performance or development of that minority business, such a rela- tionsliip, is not allowed in minority business development; the only kind of organization that can get funded by the Government. to assist the minority business is a nonprofit organization, and I am suggestmg that we have never dlone anything in our country of any significance, anywhere near the magnifudle of what we are addressing ourselves to here today in that. manner. When we wanted to go to the moon, we formed NASA, and NASA. immediately hired people who, for profit, put. us on the moon. WThen we have triedl to do anything of that. nature. that is exactly what. we have done, and I am saying: When you take on a massive task of de- veloping. economically developmg. in the minority community and you exclude this profit-oriented person, you have taken, it. seems to me, the germ of the magic combination we have used in this country of the Government. andi private sector together solving problems. and I am suggesting that at a fraction of the millions of dollars we have spent now-and I am not even saying "Do not dlO it., do not do the other." but I am saying that if we just. in adidlition to that, allow PAGENO="0049" 43 this to happen, then we wouki see a tremendous difference in the effectiveness of aH of these programs~ just where they stand. `Mr. JONES. Thank you, Mr. Grayson, Mr. Chairman. Senator MONTOYA. Thank you, sir. Next will be Mr. Nash. STATEMENT OF THOMAS NASH, PRIDE UEIIMITED, INC., SAN JOSE, CALIF. Mr. NASH. Senator, I am Tom Nash, as I said before, and I am rep- resenting Mr. Thomas of Pride Unlimited. Senator MONTOYA. Would you state who you represent? Mr. NAsH. Pride Unlimited, Inc. Senator MONTOYA. And what is that? Mr. NAsh. Pride TJnlimited is a group of businesses whose primary source of income, comes from the building maintenance busmess, and we are involved in the 8(a) program; and we feel grateful to SBA and your committee for permitting us to speak. I would like so much to go to the defense of some of what I have heard with reference to the Small Business Administration, for prior to our becoming involved with SBA we w-ere struggling, barely able to keep our heads above water because of the closed doors for minority enterprises regardless of what venture they were going into. Senator MONTOYA. How many individuals work in your corporation? Mr. NAsii. At the present time? Senator MONTOYA. Yes. Mr. NAsh. At the present time, we have 73. Senator MONTOYA. Seventy-three ? Mr. NASH. Employees. Senator MONTOYA. And ~he.re do they work? What kind of con- tracts do you service? Mr. NASH. We are servicing right now the Hamilton Air Force Base, the Federal Aviation Administration contracts. The two contracts that we have under the 8 (a) program are those, but as the direct result of having acquired these two w-e have been able to get others, not under the 8(a) program but other businesses. And as a direct result of that, of acquiring this business, these contracts with SBA being with a prime contractor, we have been able to siphon off from some of our other jobs key people, and theii go into the welfare and get people from the welfare program and people who are on work furlough and parolees and people who are trying to get started again in life, and we have been able to pull those into a training program, working through the department of employment, and we have been able to institute a training program wherein we have been able to fill those vacancies with these people. who are working in nonsensitive areas. However, the thing that I am so proud of is the fact that we met a very out- standing member of the SBA here who made available to us not only Ins expertise in this field as far as administrative, functions of it, the administration of our business, was concerned but who also gave to us the right to contact him on a 24-hour basis on any problems that might arise. Now, in my opinion, that, to me, was over and above what was naturally expected of him as an administrator of the business, in or- der to help us. This ~vould show that lie had a real interest. 70-654 0-72-4 PAGENO="0050" 44 And this man was Mr. MacPherson, who is available to us on a 24- hour basis on any problem that might arise. As the result of that, we have been able, from the 8(a) program, to bill out a sum total of $17,640 per month, running to $11,680 a year profit, which caused us then to be able to expand Pride Unlimited, and now we are involved in the. second phase of our program which, to us, is the most important, because we feel the most important thing now for minorities is to get involved in the economic mainstreams of the country, and to do so we must have education. So, Pride Unlimited has now become the. principal investor in the American Business College which is located at 330 South Second Street, where we are still instituting training. Senator M0NTOYA. Do you receive a grant from the Federal Gov- ernment for training? Mr. NASH. Negative. WTe are using an assistance program wherein we are reimbursed a portion of the. amount that is being utilized for training purposes from the St.ate. Senator M0NTOYA. Are you talking about the on-the-job training? Mr. NASH. Right; on the job. Senator MONT0TA. Well, you receive some compensation then? Mr. NASH. \`\Te are receiving some compensation along those lines. Senator M0NTOYA. You have a total- Mr. NASh. Seventy-three employees in the janitorial field, in jani- torial services. Senator M0NTOYA. Up to date, you have been the recipient of $381,- 533 in 8 (a.) contracts? Mr. NASH. Negative. I think it is around- Senator MONTOYA. Well, you have the contract with the Air Force, do you not., in the amount of $101,000? Mr. NASH. Right., and we have a contract with the Federa.l Aviation Administration in the amount of $110,000. Senator MONTOYA. $110,000 from the Department of Trans- portation? Mr. NASH. Right. Senator MONTOYA. And $64,292 which you had in 1970? Mr. NASH. Oh, that includes 1970? Senator MONTOYA. I am talking about the 2 years. Mr. NASH. I see. Ye.s; yes. Senator MONTOYA. Do you have any other contracts? Mr. NASH. Yes; we have. Senator M0NT0YA. In the private sector? Mr. NASH. Right; we do have. For example, we have the Inter- national Business Machines as one of our contracts in the janitorial field. We have a number of other smaller contracts. Senator M0NT0YA. Have you experienced a profit since you have been in operation? Mr. NASH. WTe have. The profit, of course, has been small, because of the fact that we have been in the process of expanding and training of additional personnel which means that we have to overload our staff in order to have a continuing training program. But., there again, the open doors that we have been trying to get open for many years were opened to us. V\Te have submitted ProPosals of all kinds to try and procure contracts. In fact, t.o tell you the truth, w-e did not even know PAGENO="0051" 45 that bids had been let for our Government contracts; these doors were closed to us. But through the SBA, with the SBA bemg in f rout of us, we were able then to deal directly through the SBA, and we have been able to survive and be successful. I think that, as I said before, I am very proud of. I am very proud of our association with Mr. Mac- Pherson out of the SBA office here. Senator MONTOYA. Well, as far as your organization is concerned, 8 (a) has worked for you? Mr. NAsH. It really has. Senator MONTOYA. WTell, that is the first instance I have seen where it is has worked successfully with an organization. Mr. NAsh. Well, we have had a successful operation, and we are looking forward to even greater successes. At the present time, of course, we need more jobs because we have applicants that are stacked up very high. Senator MONT0YA. Well, would you say that because 8(a) made possible the seeds for the existence of your business that you have been able to branch out into the private sector? Mr. NAsI-I. T his is exactly what I have stated froni the very begin- ning. This is why we are very proud of it. Senator MONTOYA. Thank you, sir. Now, Mr. Milsap, what do you have to say, sir? Mr. MIL5AP. I did not know- that I was supposed to bring a pre- pared statement. Senator MONTOYA. Well, you do not have to. You can just give us what you want to give us out of your own mind. Mr. MIL5AP. I would like to say something along the line here that this gentleman here said; 8 (a) did work for us. Senator MONTOYA. What is Quantum Associates? Mr. MILSAP. We specialize in electronic assembly. We do subassem- bly w-ork. We are a job shop for a large electronic company. Now, 8(a) did not put us in business at all. Another company put us into business. Senator MONTOYA. What was the gross of your company during the course of the last year? Mr. MILSAP. Last year, about $130,000. Senator MONTOYA. How many e'mp'loyes do you have? Mr. MIL5AP. We have 17. Senator MONTOYA. And aie you doing 8(a) work? Mr. MILSAP. Presently, yes. We have completed- Senator MONTOYA. Is that the bulk of your work? Mr. MIL5AP. How is that? Senator MONTOYA. Is that a substantial part of your work, 8(a) work? Mr. MILSAP. No; it is not. It was at one time, and that is the thing I wanted to say. We probably would have been out of business if we had not gotten the first contract. We probably would have been out of business because the economy dropped and the private industry was way down in part of our business, and, then, along came 8(a). So, we have managed to survive for that 6-month period, I think until the economy picked up again. Senator MONTOYA. Is your business doing all right now? Mr. MIL5AP. Yes, fine. PAGENO="0052" 46 Senator MONTOYA. But you are interested in more 8(a) work? Mr. MILSAP. Oh, yes, we are; definitely. Senator M0XTOYA. Is there any question that comes up as to your ca.pability to do the work? Mr. MILSAP. You mean for SBA? Senator M0NT0YA. Under 8(a) contracts. Mr. MILSAP. No, not yet. We went through all of the preliminaries, like they sent somebody out to inspect the shop and somebody came there to work. and somebody else came and inspected the shop, and, aside from the amount of paper- work, everything went OK in the amount of time that it. took to get everything going. Senator MOXTOYA. What do you suggest for improvements in the 8(a) program? Mr. MILSAP. First. of all. I suggest. that SBA have more muscles than they have. I do not think they have enough to work with. and I can understand people looking for successes when they start the first time- Senator MONTOYA. WThat do you mean by "muscles?" Mr. MILSAP. Have a. little more authority t.o say where work will go. You see, if McClellan does not say that we have a job that we are will- ing to let out on an 8 (a) contract, then they cairnot do anything about it. So, what are they doing up there ? They are up there twiddling their thumbs and listening to us when we come here, and yet they cannot get on them, you see, for iiot. doing anything. Well, there are probably a few villians. but. I do not think SBA is a villian within itself. So, what I think is that. they should have more authority to say where the work is going. They should know about it when it comes up, and I am Pretty sure they do know about it but they do not have anything to say about. it. Senator MOXTOYA. Well, let me say this, let me say this in all frank- ness. I want to be fair. We are always getting SBA into these hearings and asking them to do a little more in a procureiueiit system, but when we evaluate the evidence. SBA is not in a position to find out about all of the procurement that goes on in Government; they do not have that kind of manpower. And the Defense Department has a way of hiding some of these procurement opportunities. Mr. MILSAP. OK~ why dlO they hide them? Senator M0NT0YA. What. is that? Mr. MILSAP. Why dlO they hidle these opportunities? Senator MONTOYA. That is what we are t.rying to find out. Mr. MILSAP. Well, then, I do not know. All I say is that you a.re a Senator. and- Senator MONTOYA. Trying to find out what goes on in the Defense Department. is just as hard as trying to find your way to the moon. Mr. MILSAP. OK. I can understand that.. But my only point is this, that you are a. Senator and it. takes you and your colleagues to regu- late DOD. Senator MONTOYA. Well. we are doing it; I think we are starting to do a good job in the Congress on that. Mr. MILSAP. OK, OK, let me make another suggestion. In NASA we cut down on the amount of paperwork. It has been sa.id by many, PAGENO="0053" 47 many people that you are not finished until the weight of the paper- work equals the weight of the products, and I can realize there are things that have to be documented, but I think that is a little ridiculous. Senator MONTOYA. Well, we are on the same course. Mr. MILSAP. I really do, and I am sure that Carl Warren will agree with me, because he has to do as much as I do. Mr. JONES. Mr. Milsap, how- long after your company was certified did you receive your first 8(a) contract? Mr. MILSAP. Pardon me? Mr. JONES. How long after your certification was it before you got your first 8(a) contract? Mr. MILSAP. Oh, I would say about 3 months. I do not really know. I do not know if that is true or not, but I would say maybe 3 months. I do not know. Mr. JONES. Approximately 3 months, at any rate. In your conversations with other minority contractors who have ap- plied for 8(a) subcontracts, do you feel that Mr. Grayson's experience or your company's experience is more typical? Mr. MILSAP. Do I feel-What? Mr. JONES. Well, Mr. Grayson testified that his company, after 9 months, had received no 8 (a) contract and that that was the experi- ence which other applicants for 8(a) contracts had had, and I won- dered, in talking with applicants for 8(a) contracts, if you formed the same general impression? Mr. MILSAP. I do not know really of any who have had any. I do not. know any personally. Mr. JONES. I see. Mr. MILSAP. Most of the people I talked to have complaints. They cannot get certified. Something goes wrong some place, they cannot get money. That is another problem; you cannot get money. As far as I know, and if I am wrong I want somebody to correct me, we have not been able to qualify for an SBA guarantee, but Wells Fargo loaned us some money. So, ~ou see, I do not know where the hang-up is there. I really do not. Mr. JONES. As a legal requirement, the SBA cannot extend a guaran- tee unless the bank has shown that it is unwilling to make a loan, so if Wells Fargo would make a loan to you, you see, then under the law the SBA could not make the guarantee. Mr. MILSAP. I have to admit one thing: We did not feel we should have to go through all of the red tape of 6 months of paperwork and then be turned down when we could go to Wells Fargo with a. 3 per- cent higher interest, 3 percent higher interest rate, and take 2 weeks to get what has amounted to a total of $145,000. Senator MONTOYA. Well, you did not complete your application with SBA? Mr. MILSAP. No, we did not. We sent them a financial statement, and it did not look good enough for them. Senator MONTOYA. Thank you, gentlemen. We will stand in recess until 2 o'clock this afternoon. (Whereupon, at 12 :20 p.m., a recess was taken until 2 p.m. this same day.) PAGENO="0054" 48 AFTERNOON SESSION Senator MONTOYA. The committee will come to order. This afternoon we are going to listen to some witnesses from the business sector. We have, as our witnesses here, Mr. Kenneth B. Gay, staff vice pres- ident, material, of North American Rockwell Corp., El Segundo, Calif.; Mr. John P. Rogan, vice president, administration, McDonnell Douglas Astronautics Co., Huntington Beach, Calif., and Mr. Fore. Who are you with Mr. Fore? Mr. FORE. Wallace Fore, vice president of operations, North Amer- ican Rockwell Aerospace Group. STATEMENT OF KENNETH B. GAY, VICE PRESIDENT, MATERIAL, NORTH AMERICAN ROCKWELL CORP., EL SEGUNDO, CALIF.; AC~ COMPANIED BY WALLACE FORE, VICE PRESIDENT, OPERATIONS, NORTH AMERICAN ROCKWELL AEROSPACE GROUP Senator MONTOYA. Do you want to proceed? Do you have a written statement, sir? Mr. GAY. Yes; we have submitted a written statement, and, with your permission, I will not go through it; but I would like to make a few comments. I would like to enter it into the record, if I may. Senator MOXTOYA. Yes; you may proceed to summarize it, and the written statement will be made a. Part of the record at this time. (The prepared statement submitted by Mr. Gay reads in full as follows:) PAGENO="0055" 49 STATEMENT OF KENNETH B. GAY, STAFF VICE PRESIDENT - MATERIAL NORTH AMERICAN ROCKWELL CORPORATION, BEF9RE THE SUBCC~1MITrEE ON GOVERNMENT PROCUREMENT SENATOR JOSEPH M. MONTOYA, CHAIRMAN, SAN FRANCISCO, CALIFORNIA SEPTEMBER 29, 1971' Gentlemen, my name is Kenneth B. Gay, I am the Staff Vice President, Material, for North American Rockwell Corporation's Aerospace and Electronics Groups. I am the designated Small Business Liaison Officer for the corporation. We appreciate the opportunity to give you this presentation about our experiences in the 8(a) subcontracting program. To give you a little of the background leading up to our 8(a) activities, let me explain that we have a subsidiary called NARTRANS CORPORATION located in East Los Angeles. NARTRANS stands for North American Rockwell Training and Services. Originally, we opened NARTRANS to have it serve as a training center for the "hard- core" unemployed. That story is part of the development leading up to our current 8(a) work. In December 1967 North American Rockwell began to investigate the feasibility of developing an on-the-job training plan to train disadvantaged persons for positions in industry. In May 1968 the company's Board of Directors authorized the formation of NARTRANS in which it invested approximately $1 million. At about the same time the company negotiated a contract with the Department of Labor under which it was to be paid approximately $1475,000 over a 15-month period to help defray the high cost of training which was necessarily involved in this kind of a project. The objective of the subsidiary was to provide through continuous and productive work programs an opportunity for so-called "hard-core unemployed" persons to develop vocational skills and work attitudes which would enable them to obtain and keep jobs in the mainstream of American industry. It was originally contemplated that employees who successfully passed through the training program would be transferred to other North American Rockwell divisions in Southern California and other "hard-core" unemployed persons hired to replace them. In addition to training in productive work programs, remedial courses in English and arithmetic were provided in a classroom atmosphere. Starting from the 75 "hard-core unemployed" persons employed in June 1968, employment rose in November 1968 to a peak of 205 "hard-core unemployed" personnel and a staff of 80. Employ- ment has gradually declined since July 1969 to the present level Thf 70 direct workers and a staff of 38. Of these 108 employees, 2~4 are caucasian and the remainder minority. Unfortunately the inception of this program coincided with the beginning of the steep decline in employment in the PAGENO="0056" 50 aerospace industry. Employment in North American Rockwell's aerospace and electronics divisions was at approximately 93,000 in mid-1968. Since that time, employment in these divisions has declined to 37,500. In this climate the original plan to transfer persons successfully completing the training course was not practicable. Of the 86 persons who completed the NARTRANS course and found employment with other companies, only a few were actually transferred to North American Rockwell aerospace and electronics divisions. As originally conceived, NARTRANS was to provide goods and services to the Los Angeles area divisions of the corporation in such fields as drafting, reproduction, typing, key punching, plastics, woodworking, simple machine shop work and tool grinding. Again, the steep decline in North American Rockwell's aerospace business reduced the requirements for NARTRANS products and it became necessary, in order to keep the operation alive, to find work from other sources. Small contracts were obtained from various companies for such work as the manufacture of computer racks, electrical motor repairs, wood products and refurbishment of office furniture. In addition, NARTRANS developed and is now successfully marketing a line of cassette albums. The prices for this item are competitive, the quality good and production is approaching 1300 units per day. However, one successful product line plus miscellaneous small contracts does not provide sufficient volume to maintain NARTRANS as a viable commercial entity. As a result, the company began to explore the possibility of qualifying NARTRANS for Government contract awards under the provisions of Section 8(a) of the Small Business Act. To be eligible for an 8(a) subcontract, a concern must be owned by socially or economically disadvantaged persons or plans must be made for the sale of control of the firm to such persons within a reasonable period of time. In December 1969 planning for the divestiture of NARTRANS by North American Rockwell was initiated and in May 1970 a divestiture plan was submitted to the Small Business Administration. The Small Business Administration acted promptly and approval of a plan was obtained on June 2 of that year. On January 19, 1971 NARTRANS received its first contract award under 8(a) from GSA, in the amount of $66,29~ for plastic goods. During the following seven months NARTRANS has received $922,132 of 8(a) contracts. These contracts were for additional plastic goods and for electronic kits for the Air Force F-lOO and T-33 aircraft. Deliveries on these contracts have started and NARTRANS' plans are based on using these contracts in addition PAGENO="0057" 51 to approximately one million in additional awards to provide the basis for making NARTRANS viable. In conjunction with this, the plan includes further expansion of our successful plastic products for the commercial market and entry into the commercial market for electrical assemblies. Commercial sales for cassette albums, numerous other plastic products, and electrical assemblies are projected at $1436,088 for FY-1972. Although the approved plan schedules the divestiture for June 1973 or earlier, our present planning indicates that divestiture may be possible as early as April 1, 1972. We are anxious to accelerate the divestiture providing we can be confident that the operation is on a sound basis with ample backlog to provide support until commercial products and competitive govern- ment contracts will provide the necessary cash flow. In summary, it must be noted that we are disappointed that the earlier training objectives were not fulfilled to the degree we had hoped. The number of employees prepared for work elsewhere during 1969 and 1970 was short of our goal because we did not anticipate the sharp decline in the aerospace industry which reduced our work inputs to NARTRANS and dried up the requirement for its graduates. It has been fortunate, however, that the SBA program for seeding minority business through Section 8(a) of the Small Business Act has permitted us to change the objectives of the enterprise. Most important, we can now see that the goal of developing NARTRANS into a viable operation ready for divestiture, may be attained as much as a year earlier than planned. In conclusion, gentlemen, our experience with the 8(a) program has been positive. We have no suggestions for improve- ments in either the basic program or its administration. If anyone has any questions I will be happy to answer them. PAGENO="0058" 52 Mr. GAY. Well, this morning, you indicated that you had heard of only one successful 8 (a) program, and I would like to say that we feel that we have had a very successful 8 (a) program, and I would like to tell you a bit about it. When we started out XARTRANS organization we started it for the p~~ir~ose of training the so-called hard core unemployed to the point where they would be able to move into the various divisions of North American Rockwell. Unfortunately, at the time we started the organization, the aero- space industry in general fell into hard times. Our employment fell from some 100,000 to approximately 30,000 to 40,000 during this pe- riod of time. WTe had to change our plans, and we eliminated, if you please, the training program and tried to come up with an organiza- tion that would have a product that the company could sell and that could help in making for a viable organization. We started it. off with many kinds of skills. We ended U~ with basically two types of skills. I have given to Mr. IVard some products that we produced at NARTRANS, the plastic products, the notebooks, and this has been a very successful program. I have some pictures here that I would like to show you. Here are some cliflerent kinds of piod- ucts, plastic Products that our organization makes: cassette holders, tapes, and I have here a picture of our facilities. This represents plas- tic envelope machines which are being utilized by people within our organization. Here is a rotary l1ess that is used for notebooks and cassettes where the operators are put into various stations and the press rotates around to complete the various operations. Here is a picture of the operator putting the product into the piess as it goes around, and the product comes out. And here is a l)icture of one of the finished products, one of the tape-cassette type machines, and I might say that these are being sold throughout the country, through Sears Roebuck, Montgomery Ward, and that. kind of dis- tribution. Senator MoxTovA. I might say that the Library of Congress is using these cases now in sending cassettes to the blind. Mr. GAY. Good. Here is a typical silk screen operation where one of those briefcases such as you have up there can be individualized for individual cus- tomers. Then, here is another big program that represents one basic product line. This has been sponsored and headed by the 8 (a) program that I will talk about in a minute, but this is the central unit for the F-100, ATh'lS program. This is the airboriie integrated marker system. As you can see, there is a substantial amount. of sheet metal type work and electronics work involved. Here is a cable harness assembly or harness board that you can see going through and out as a finished product. And here we have a picture of the electrical assembly area with four of these F-100-D central units in the foreground. You probably can- not see from here, but we have two people here that are, by any defini- tion, the worst disadvantaged that you can have. They are black; they are female; and they are deaf and dumb. They have done an extremely good job under all of these kinds of hardships. Here is a picture of the sheet metal area in our operation and a closer detail of the sheet metal work on the AIMS program. PAGENO="0059" 53 When we decided that we would have to go out of the training busmess and try to get into a viable product sales organization, we got into these two basic product lines. Back in May of 1970, we were able to work out an arrangement with the SBA whereby we establiShed a divestiture plan to divest ourselves of this organization and turn it over to minority ownership ultimately. The ultimate goal that we had set was 3 years, the middle of 1973. Our plan was approved, and we were able to get our first SBA contract, first 8(a) contract~, for GSA work in January of 1971. That work was for notebook binders, half inch, 1 inch, and so on, the kind of bmders similar to the ones that you have up there. Along this period of time, we were competitively bidding for Gov- ernment work and commercial work. We started off in 1969 with about $4,000 worth of commercial work that we were able to obtain competi- tively. Up to this point in time, North American Rockwell divisions were supporting our NARTRANS operation exclusively. In 1970, we had extended our commercial work to some $56,000 and built tins up through 1971. During 1971, we have gotten several 8 (a) contracts that have provided the seed program, if you please, to make this organization a viable organization. We have gotten some F-l00 AIMS programs and some T-33 AIMS programs. As the result of the 8(a) assistance to this organization, where we had planned to divest ourselves of NARTRANS in the middle of 1973, it appears to us that it will be a viable organization almost a year earlier than we hoped and that during 1972 we will be able to accom- plish our divestiture. We think that without the 8 (a) program that we would not have been able to accomplish this, and it is possible that this organization would have had to have been closed up. So, we are rather enthusiastic supporters of the 8(a) program. Senator MONTOYA. I believe you indicated in your statement that you have 108 employees? Mr. GAY. Yes, sir; 40 percent of our employees at the present time are Mexican Americans, 40 percent are black, and we have three orientals, one American Indian, and the balance are Caucasian. Senator MONTOYA. Are you not discriminating against the Caucasians? Mr. GAY. That is possible. Where we are located is in the east-central part of Los Angeles, and just because of the nature of where we are oriented, we feel we have gotten this kind of a mixture of employees. Senator MONTOYA. Off the record. (Discusthon was had outside the record.) Mi. GAY. I might say that our management structure at NAR- TRANS also follows this ratio. We think that we have a very strong management, as a matter of fact. Senator MONTOYA. I think it is wonderful that your company has oriented one facet of its operation toward helping minorities. That is very commendable. I believe you are the only company to have done this, to my know-ledge. I want to hear from McDonnell. Now, you say that you are divesting yourself of this operation, and through an arrangement approved by SBA you are transferring it to someone else. Now, what is the transition? PAGENO="0060" 54 Mr. GAY. No, sir; I did not mean to say that. I said that in 1970 we entered into a divestiture agreement with SBA which said that if we could have a viable organization on or before the middle of 1973 that, at that pomt in time or at some time prior to 1973, we would divest ourselves of the company. What I did say was that with the help of the 8 (a) program it appears to us that this will be a viable organization probably sometime next year. Senator Mox'roYA. Well, how will you divest yourself? I understand "divestiture" to mean that you will rid yourself of the operation. Mr. GAY. Of ownership. Senator MONTOYA. Yes. How will you transfer it ? And who will you transfer it to? Mr. GAY. We have not. gone into the details of that. We. are working with the president of the organization. There appears to be Plenty of minority money available to take over. It is just a. question that we do not want to let that go until we are certain, in our minds, it will be a lasting organization and that the clay after we turn it loose it will not fall apart. Senator M0NTOYA. That. is the way it should be. Now, do you have enough business for this operation now? Mr. GAY. No, sir. That is why the S (a) program has been very helpful. We have run, in terms of business--North American Rockwell opened the organization the first year, which was almost. a half year, with about, roughly, a half million dollars worth of work out of the North American Rockwell divisions. The next year, we contributed in the. neighborhood of a million and three-quarters, and about a quarter of a million we were able to get, as I say, elsewhere, partly from the Department of Labor, contracts for training purposes, and partly for commercial work. This year, we anticipate our commercial work will be in the neighborhood of a quarter of a million dollars. We have Gov- ernment contracts. and part. of those were competitively bid. One con- tract is for Navy work, in the neighborhood of a quarter of a million- closer to a half million, really; but. next. year we are anticipatmg sales of about a half a million commercial and almost. a million and a half Government. Senator MOXTOYA. Well, this plastic casset.te holder i~ coming into its own. WTere you the pioneers Mr. GAY. Our NAR.TRANS people, themselves, were the ones who developed this, introduced it, made the sales and have made a dra- matic inroad in terms of business there. Mr. FORE. May I add, I think this is a good example of the benefits of the 8 (a) program. The plastic. notebooks w-ere a product line that the management of the organization decided they should promote. They did get, initially, an SBA non-8 (a) award, and, subsequently an 8(a) award. At the same time this was going on they were developing this new- product line, and in the year since they first conceived of the cassette holders, they have built that line of business up to a point w-here it will be approximately a~ quarter of a million dollars worth of commercial sales. That is the true benefit of the 8 (a) seed contract concept. It is probably going to be a fair amount of time before they w-ill be able to completely do without this support that they are gettmg PAGENO="0061" 55 from the 8(a), but it seems that this is an excellent example of what can be done. Senator MONTOYA. Now, what kind of business management do you have in this special operation for minorities? Mr. GAY. Go ahead. Mr. FORE. When we first instituted the NARTRANS program we staffed it almost entirely with North American Rockwell employees of demonstrated ability, both minority and Caucasian. In the 3 years that the organization has been in existence, there has been a gradual phasing out of the North American Rockwell em- ployees, as we brought onboard either from lower levels of the North American Rockwell organization or from outside sources qualified people to move into the management slots. I w-ould say, from a p~'~- fessional view, that the majority of the people tend to come from the eiigineering ranks, whether it be minority or Caucasian. The strengths tend to be technological strengths rather than business strengths. Our most recent addition to the organization is a man by the name of Ben Gonzales who has aH the desirable traits of a hardheaded controller; this has been one element that has been missing in our organization in preparation for this divestiture. It is his presence that leads me to believe that by mid-1972 w-e will have completed the divestiture and it will be completely minority manned and operated. Senator MONTOYA. Do you feel that Government is doing enough to promote the partnership arrangement with industry to bring about this kind of minority ownership Mr. GAY. Well, in our case, we think it has been very successful. Senator MONTOYA. Have you had adequate cooperation from the Government agencies? Mr. GA1~. Yes, sir. Senator MONTOYA. In view of your experience, what do you think that Government should do and what responsibilities should industry assume to try to extend this example across the broad spectrum of business activity in this country Mr. GAY. Well, I do not know that I can add anything. As far as other organizations are concerned, if they received the same kind of treatment and the same kind of help that we did. I think that is sufficient. Senator MONTOYA. How did you happen to embark upon this, and what kind of help did you furnish by way of seed money and seed talent to get this thing started? Mr. GAY. As I say, in 1968, we started off with, roughly a half mil- lion dollars. In 1969, about a million and a half dollars. In 1970, our contribution was about a million seven hundred thousand, and it will be in that rough range this year. Senator M0NT0YA. How much have you recovered of this invest- ment? Mr. GAY. Well, not recovered. This is an expenditure that we have put out. Senator MONTOYA. But you have had some sales. Mr. GAY. No, sir; I am speaking only of the North American Rock- well expenditures within NARTRANS and not the commercial sales that we have been able to make to other organizations. PAGENO="0062" 56 Senator MOXTOYA. I am trying to ascertain how much of a return you got back on your investment. Mr. GAY. None. Senator MONT0YA. None? Mr. GAY. None. Senator MONTOYA. Do I understand you to say that NARTHANS still retains its profit? Or were there any profits? Mr. GAY. There have not been any profits. That is what my point is. We anticipate that it will become a profitable organization sometime this coming year, Probably the middle of 1912. Our initial plan was that it probably would not become a profitable organization until 1973. With the 8(a) business which we had not contemplated and which we have gotten in the past year, well, I should say in the past. 7, 8 or 9 months, we feel that it will turn the corner and become a profit- able organization sometime next year. Senator MOXT0YA. Well, in view of your experience, do I understand you to say that it is almost impossible to realize a profit before a 3- year experience? Mr. GAY. I would say "Yes." I think we have done a remarkable job. I am prejudiced, of course. Senator MONTOYA. Well, then, how can we induce Government to start a business that will take 3 years to make a profit? Mr. GAY. I think you have to look at it as that is what it does take. Anybody who thinks that it will take a lesser period of time than that, I believe is not being realistic. Now, there may be exceptions and there may be specific instances. I know of very few. I can think of only one, as a matter of fact, that I have known that has started up and has made a Profit within a year. A new organization can be profitable in not much less than 3 years, and it is unrealistic to think that it can. Senator M0NT0YA. Well, we are not going to eiicounter many North- Anierican-Rockwells that will put $3 million into this type of opera- tion before the operation realizes a profit. That is the point I am try- ing to make and the alternative that we have is through Government incentives or contract bonuses or more intensive 8(a) activity. Mr. GAY. Yes. Senator M0XT0YA. But I doubt very seriously whether you can lmprove upon this timetable even with more 8(a) subcontracting. Mr. GAY. I beg your pardon? Senator M0NT0YA. I doubt very seriously whether you can improve upon the results that you have realized b more 8(a) contracting activity. Mr. GAY. If we had had- let me put. it this way: It it. is to be cx- pected and it. was natural. that our 8(a) contracts. as with any other type of contract., started off rather small and were rather slow in developing. It has only been within like the last few months that. we have gotten substantial volume, andi in any kind of a manufacturing organization tlia.t is the key to maintaining your operations. If you can get. a substantial volume, maintain it over a time. operate efficiently, that is when ou are going to break even or make money. And when you say if we could have had more and couldi have had it faster-which we probably were not ready for-we might. have been able to have done better: well. I am ~iving that. realistically I do not think that could have happened. PAGENO="0063" 57 Senator M0NT0YA. Did GSA come into this picture at all? Mr. GAY. Yes. Our initial contracts were, as I say, for binders, half- inch, 1-inch, 2-inch type binders for some $600,000 with GSA. That was our initial 8 (`a) contract. Senator MONTOYA. `What about the Department of Defense? Mr. GAY. There is the F-100, AIMS program. The first picture that I showed you is the basic unit of the F-100 AIMS program. Since then we have gotten a T-33 AIMS program very similar to that kind of work. Senator MONTOYA. Have you been able to take care of these contracts within the time prescribed? Mr. GAY. `We have-these contracts are yet to be completed, but we can say that the very first orders, the first deliveries that were called for~ were met on schedule with complete shipments, no shortages or anything, and, as a matter of fact, ahead of schedule. Senator MONTOYA. And were all of these- Mr. GAY. So, the answer is "Yes." Senator MONTOYA. WTere all of these contracts 8(a) contracts or were there some set-asides? Mr. GAY. No, all 8(a). Senator MONTOYA. Of course, you would not be qualified for the set- asides, as North American Rockwell. Mr. GAY. No, sir. Senator MONTOYA. Did you do any work for the private sector? Mr. GAY. Yes, sir. As I say, the commercial business was only some $4,000 in 1969. It went to $56,000 in 1970. This year, it will be over a quarter of a million, and will approach probably a half million this year. Next year, we are anticipating a half million in commercial work, straight commercial work. As I say, these cassette holders are being sold not only through Sears and Montgomery Ward but several of the other big chain stores. Senator MONTOYA. `Well, they are just coming into their own are they not? Mr. GAY. We hope so. Senator MONT0YA. `Well, the cassette business is just coming into its own now, but the cases for the cassettes are a very new thing. In fact, the Library of Congress just started buying them for shipping cas- settes. They are putting much of the material that they used to put in Braille for the blind into cassettes now. The cassettes are now being placed in these plastic cases. So, that means quite an expansion for this particular industry. Mr. GAY. Yes. Senator M0NTOYA. How do you think Government can help provide proper incentives so that other companies can follow your example? Mr. GAY. I do not know that I can answer that. Senator MONT0YA. Have you had any on-the-job training provided by the Department of Labor? Mr. GAY. Yes, sir. As I said, initially, our initial contracts that we had when we set this organization up were for helping in the excess training cost from the Department of Labor. In 1969, we had a $321,000 contract, for instance, from the Department of Labor on the MA-2 program. Senator MONTOYA. Was that training successful? PAGENO="0064" 58 Mr. GAY. It was successful. Our problem was having trained the people ~ ~ i~ace to put. them, because we were laying off peopie in all of the divisions of North American Rockwell. As I say, we went from some 100,000 to around 30,000 or 40,000 people during this period of time. Senator MOXTOYA. Have you been able to bring them into the new expanded operation, the ones you have trained? Mr. GAY. No, sir. Senator M0NT0YA. They went into other industries? Mr. GAY. Yes, some did; some did not.. We, during 1968, had seven voluntary-well, we had 24 what we call "departures." Seventeen of them were involuntary; seven were voluntary. Of these, four were for personal reasons, and three went to other employment. In 1969, we had 49 that left for personal reasons, a.nd 40 that went to other businesses. In 1970, 42 left for personal reasons, and 32 were employed else- where. We laid off, in 1970, 28 people, and we were not able to place these 28 people anywhere. In 1971, we had 11 that left for personal reasons, and 11 went to other employment. Thirty nine were laid off, and we were able to place only six of those 39, and, as far as we Imow, the 33 have not been placed and are unemployed. Senator MOXTOYA. What is the average salary of the ordinary em- ployee? What does he earn on a per-month basis? Mr. Fomi. I cannot put it on a per-month basis, but it would be ap- proximately $2.25 an hour. Mr. JoNEs. Mr. Gay, I think that North American Rockwell's establishment of NXRTRANS is quite admirable, and I do not want my further questions to be interpreted differently from that, but I wondered to what extent North American Rockwell in its own con- tracting has an active program of trying to recruit minorities? Mr. GAY. Yes, we have a very act.ive program. We have developed a minority business listing which we feel constitutes the most adequate listing in the country. There are all sorts of different listings, but there is not a.n authori- tative one. I have used t.he ICBO. I have gotten from the Aerospace Industry Association and other companies, their source lists of minor- ity enterprises, and we have established a catalog of these kinds of companies. As our buyers become aware of other minority companies, they send us the information into a central place and we add this to the listing. Each of our buyers are instructed that they are to concentrate, as well as going along with the normal business progra.m, t.hey are to concentrate upon the minority business enterprises as a part of that particular program. And at each of our divisions, we have a small business administrator who is assigned for this specific purpose of assistiiig small businesses and especially assistmg minority business enterprises. Any minority business enterprise coining in or that we are aware of, is funneled from this man to the particular buyer that would be interested in that com- pany's product so t.hiat he goes straight to him; he does not have to cut through a lot of redt.a.pe to get right to the buyer who has tlie~ orders to place. PAGENO="0065" 59 In addition to this, many of our employees are very active in going outside and looking for these companies, rather than waiting for them to come in. We have people assigned at several of our larger divisions who actually spend a lot of their time touring the minority commurn~ ties and, if you please, knocking door to door, finding out what the capabilities are and then guiding them back into our business. We are very active in urban affairs. Down in the Torrance-Compton area some of our procurement people are very active in an EDTJCOM program, trying to help these people understand what they have to do, how they have to react to get business from not just us but from any- body. Mr. JONES. Is there anything in the Federal Government that can be done, either through the SBA or otherwise, which would facilitate this activity? Mr. GAY. Yes, sir. I think one of the big things that could be accom- plished would be if you could find the funds and the people to prepare and maintain on a current basis a minority business enterprise list. That would be valuable. Now, in my case, I am interested in manufacturing concerns only. I am not interested in the retail types of businesses; so, what I would like is a valid listing of minority enterprises with some very short listing as to what their capability is so that I could get this informa- tion to each of our buying personnel, and then those individuals, the buyers, will take it upon themselves to validate the capabilities of the company. I am not suggesting that the Government has to back it but at least if we knew who to contact or who to call, it would be very helpful. I think this should be broken down by areas so that we would know the people, let us say, in the California area or in the Colorado area or in the New York area and where we have a requirement-~and we have plants all over the country-the people that are in a particular locality would be able to know where they could go for what type of product. I think this would be a very helpful thing that the Government could do. Mr. JONES. Thank you very much, Mr. Gay. Mr. Rogan, has the McDonnell Douglas Co. been actively involved, as has North American Rockwell, in recruiting minority subcon- tractors? Senator MONTOYA. Well, Mr. Rogan is going to summarize his state- nient, and then we will ask him some questions. Mr. JONES. All right. Senator MONTOYA. So, your statement will be made a part of the record at this point, Mr. Rogan. (The prepared statement submitted by Mr. Rogan reads in full as follows:) 70-654 0-72-5 PAGENO="0066" 60 STATEMENT BY JOHN P. ROGAN, VICE PRESIDENT-ADMINISTRATION, MCDONNELL DOUGLAS ASTRONAUTICS COMPANY 5301 BOLSA AVENUE, HUNTINGTON BEACH, CALIFORNIA BEFORE SUBCOMMITTEE ON GOVERNMENT PROCUREMENT OF THE SENATE SMALL BUSINESS COMMITTEE SEPTEMBER 29, 1971 In September, 1968, MDAC, a Division of Douglas Aircraft Corporation, opened a training center in South Central Los Angeles to hire and train hardcore minority unemployables, principally blacks and Mexican-Americans. In the first two years of operation 318 trainees were hired and trained. Of the trainees hired 17 were transferred to other lqcations of MDC, 16 found better Jobs with other firms and 101 are still employed at the facility, which is now known as AVI Manufacturing (AVIM). The balance quit or were terminated for various reasons. Lack of aerospace work was the principal reason more people were not trained and that many of the employes had to be laid off. The training was principally supported by a two year training contract with the Department of Labor. That contract expired 30 June 1970. In mid 1970, McDonnell Douglas Corporation and a group of employes at the facility started considering a divestiture plan for the enterprise. Agreement was reached and MDC filed an agreement to form AVI Manufacturing, a California Corporation, on December 1, 1970. A divestiture plan was submitted to the Small Business Administration on 21 October 1970 in order to qualify a new corpora- tion for Small Business Administration Regulation 8A set asides. PAGENO="0067" 61 MDC holds' 119% of the stock, AVIM 51%. The divestiture plan requires MDC to reduce its holdings to 20% in less than 5 years after the initial agreement date. The SEA approved the divestiture plan and qualified AVIM on February 5, 1971. Total personnel of AVIM as of July 14, 1971 was 101. Estimated sales for calendar 1971 are $l,1428,000. Potential commercial product lines being investigated by AVIM are telecommunications components, air aargo containers and commercial furniture refurbishment. The goals and objectives of AVIM are similar to those of other free enterprise companies - profit and growth. The management wishes to develop a viable and versatile company in the South Central area of Los Angeles. A natural adjunct to these objectives will be the employment of people who live in the Watts and Compton areas. It is felt that the status of the employes and their ability to support themselves will be enhanced more in the long run through their profit sharing participation of such an enterprise rather than through simple skills training. It may be noted that the 8A plan was submitted to the ~Los Angeles SEA Office in October 1970, but was not approved until PAGENO="0068" 62 February 5, 1971, and then only through the assistance of Representative Jaynes Corman, Van Nuys, California. This, despite nany discussions by our staff people with SBA Representatives in Los Angeles, San Francisco and Washington, D.C. and further despite universal praise from SBA personnel in these offices that our plan proposal was the best they had ever seen. Los Angeles SBA Office personnel in fact recommended that we visit the Washington, D.C. Office to determine the exact cause of approval delay. Our staff man in charge of the plan proposal, Mr. D. J. Garrity and E. E. Barrington, President-AVIM, did discuss the delay with both San Francisco and Washington, D.C. SBA personnel and were unable to obtain any commitment other than "it will be approved within 2 weeks". This occurred almost three months prior to approval, (see Attachment 1.) Our staff people, Mr. Barrington (a former MDAC employe) and the undersigned have the following candid criticism and recommenda- :tions as a result of our experiences: 1. Both SBA and GSA office personnel were most cooperative at all times but were of little assistance in our attempts to set up an approved 8A b~isiness. While the SBA has published many fine reports and studies for small business ventures, they have little or no "how to qualify for 8A" literature. 2. There seems to be very little decentralized authority. All decisions seem to go to the regional or Washington, D.C. office. This puts local office personnel in the position of sympathetic advisors without authority to act. PAGENO="0069" 63 3. There were definite indications of understaffing of qualified, energetic personnel through our inability to make appointments promptly, to get all required information at one time rather than piecemeal as indicated by Attachment 1, and finally, approval of our plan through Congressional inter- cession. This might be said to add up to typical bureaucratic inertia. ~. Since the 8A approval AVIM has been successful in obtaining two Government contracts. One, we are told, is the largest technical set aside issued to date through the SBA in the amount of $l,5~O,OOO. The Los Angeles office has been most cooperative and helpful in expediting the paperwork involved in the execution of these contracts. AVIM has good prospects for additional contracts in both Government and private industry. 5. Our recommendations, of course, would be that action be taken to remove the problems discussed above. Further, one of the heaviest burdens on a new minority business is that of marketing or finding set aside work for which the business is qualified. In the case of AVIM, management people who should have been in the plant `minding the store" had to travel to some 25 procurement centers at great expense of money, time and plant efficiency. Centralization of Government set aside procurement to one agency with immediate notification to 8A qualified contractor8, while difficult to accomplish, would do much to remove this burden upon understaffed and often in- experienced management. PAGENO="0070" 64 In my opinion, and in the opinion of many businessmen associated with minority business projects, this problem will cause more minority businesses to fail than any operational or financial difficulties. Respectfully, ~ Joh~~. Hogan Attachment 1. Letter E. E. Barrington, President-AVI Manufacturing, to Representative James Corman, January 13, 1971. PAGENO="0071" 65 ATTACHMENT 1. (` 4~\flI7 ALL~AN~ VENTURES ~ &l\L/ LI 4034 BUCKIN~3HAM RD. SUITE 206 LOS ANGELES. CALIF. 90008 (213) 206-7873 January 13, 1971 Congressman James Cornan 1141422 Victory Blvd. Van I~uys, California 911401 Dear Sir: Alliance Ventures Inc. Manufacturing represents a joint venture between the HeDonnel). Douglas Corporation and members of the minority community to develop a training facility, formerly operated by McDonnell Douglas, in South Central Los Angeles into a viable manufacturing operation. Success of this venture is predicated upon government support, through the SPA 8 (a) program, to establish a solid base of capability during our first three years of operation. `ro date the response to our efforts from SPA has been nil. The sItuation, at present, is critical in that we began operations January lith and face the possibility of layoffs and financial loss if not given the opportunity to obtain government business. Following is a su~rnary of our experience with SPA: 1. In mid August we met with Mr. Ed Lush of the Los Angeles Office of SBA to discuss our divestiture plan with McDonnell Douglas and to find out what docwnentation was required to participate in the 8 (a) Program. We were given a model proposal to use as a guide and a suxrnnary of requirements. 2. The first week of October, upon consunation of our negotiations with McDonnell Douglas, we contacted Mr. Lush and gave him three copies of our proposal (see attached Proposal For The Divestiture Of The MDAC-WFST Couth Central Los Angeles Operation). After examining it he stated that it had all of the required information and that approval would be forthcoming. 3. The middle of October I met with Mr. Ed Odell, Chief, Government Contracts Division, SPA, in Washinp-ton, D.C. During our convernatlon I asked about the status of our proposal. He stated that he had no knowledge of it and issnedi- ately called his San Francisco office. After conversing with them he assurred one that the matter would be taken care of and that we would PAGENO="0072" 66 Congressm~.n James Corman -2- Ol-l3-7l~ have anproval shortly. I left a copy of the pro- posal with him so that the General Counsels Office there would have an immediate onnortunity to review it so that the matter could be resolved in a short period of tine. 14. Dy the first week of ?~ovcinber we still had received no notice from SPA so I again contacted Mr. Luck. Re infor~od me that they r.occlcd a ccr~y of the Duci-. noesmeans Agreement entered into bat'~een ourselves and McDonnell Douglas. A copy, signed by Donald Douglas Jr. for McDonnell Douglas, was submitted. (see attachment i) 5. Two more weeks passed end again no notice from SPA. I contacted Mr. Luck who informed me that approval could not be given until they had a copy of the final agreement between ourselves and McDonnell Douglas. The second week of December we delivered three copies of the final agreement to Mr. Luck's office. 6. The last week of December Mr. Lusk informed me that Mr. James Roxie of the local General Counsels Office was holding up approval because he had some questions. I contacted Mr. Moxie and determined that he needed evidence that the ownership of Alliance Ventures Inc. was controlled by minorities. In addition he question- ed the enforceability of the divestiture clause of our agreement. We have attempted to resolve these matters. through subsequent telephone conversations and written memoranda between ourselves, our counsel, counsel for McDonnell Douglas and Mr. Moxie. (see attachments II and III) In summary, over three months have passed since we first submitted our prooosal to SBA. We have attempted to comply with all of their requests and feel that we have been reasonable and patient. The ~oint hns been reached, however, where we feel that we can no longer depend upon normal channels to transact business with the government through them. S~'A cim~ly has not boon responsive. Several government agencies, inc~.u~.ir.g GSA and the Air Force, are willing to do business with us immediately upon 8 (a) certification. Recognizing the urgency of the matter your assistance in expediting our request to participate in the program will be very much appreciated. Sincerely yours, E. E. Barrington President Alliance Ventures Inc. gEB:cm PAGENO="0073" 67 Senator MONTOYA. And, now, you may proceed to try to excell the performance of North American Rockwell. if you wish, Mr. Rogan. STATEMENT OF FOHN P. ROGAN, VICE PRESIDENT, ADMINISTRA- TION, McDONNELL DOUGLAS ASTRONAUTICS CO., HUNTINGTON BEACH, CALIF. Mr. ROGAN. Thank you, Mr. Chairman. I would like to emphasize some specific parts of my submitted state- ment. In September 1968, the Astronautic I)ivision of the then Douglas Aircraft Corp., which then moved into McDonnell Douglas, opened a training center in south central Los Angeles to hire and train hard-core minority unemployables, principally blacks and Mexican-Americans. In the first 2 years of operation, 318 trainees were hired and trained. Of the trainees hired, 1? were transferred to other elements of the McDonnell Douglas Corp., 16 found better jobs with other firms, and 101 are still employed in the facilities now known as AVI Manu- facturing Co. The balance quit or were terminated for various reasons. Lack of aerospace work was the priiicipal reason more people were not trained. Many of the employees had to be laid off. The training was principally supported by a 2-year training contract with the Depart- ment of Labor. That contract expired on the 30th of June, 1970. If I may excerpt from my submitted statement, I would like to note that the Allied Ventures, Tue., Co., which was essentially the financial supporter of Allied Ventures Inc., Manufacturing and Mc- Donnell Douglas Corp. submitted to the Los Angeles SBA office in early October 1970, an 8(a) divestiture plan. This divestiture plan was not approved until February 5, 1971, and then only through the assistance of Representative James Corman, Van Nuys, Calif. This, despite many discussions by our staff people with SBA representatives in Los An- geles, San Francisco, and Washington, D.C., and further, despite urn- versal praise from SBA personnel in these offices that our plan pro- posal was the best they had ever seen. I have assumed here that the Senator has come to San Francisco not for a diet of pabulum but facts. 1. Both SBA and GSA office personnel were most cooperative at all times but were of little assistance in our attempts to set up an approved 8 (a) business. While the SBA has published many fine re- ports and studies for small business ventures, they have little or no "How to Qualify for 8 (a) "literature. 2. Within the SBA, there seems to be very little decentralized au- thority. All decisions seem to go to the regional or Washington, D.C., office. This puts local office personnel in the position of sympathetic advisers without authority to act. Obviously, we cannot criticize without making some recommenda- tion would be that action be taken to remove the problems discussed in my written statement. Further, one of the heaviest burdens on a new minority business or any small business is that of marketing or finding set-aside work for which the business is qualified. In the case of AVIM, management people `who should have been in the plant "minding the store" had to travel to some 25 procurement centers at great expense of money, PAGENO="0074" 68 time, and plant. efficiency. In my opinion, centralization of Govern- ment set-aside procurement to one agency with immediate notification to 8 (a) qualified contractors, while difficult to accomplish, would do much to remove this burden upon understaffed and often mexperi- enced minority management. I realize this would be a. very difficult thing for the Federal Gov- ernment to accomplish, yet I feel that this problem, plus inexperi- enced management on the part of the small business managers, minor- ity or not, will cause more minority businesses to fail than any oper- ational or financial difficulty. I would like to add to my written statement two personal observa.- tions. SBA, as a prime contractor, is a. very tough negotiator. The price negotiated between the SBA and AVI Manufacturmg on a $1,540,000 contract was 10 percent lower thaii that. price that was estimated by a team of McDonnell Douglas experts as a minimal acceptance price. Further, in my opinion- Senator MONT0YA. Well, let me ask you a question at this point.. Mr. HOGAN. Yes, sir. Senator Mox~roYA. But the $1,540,000 contract prevailed; is that right? Mr. RoGAX. That is correct, sir. Senator MOXTOTA. What kind of a profit experience did you have from that contract? Mr. HOGAN. We are not sufficiently far into it, Mr. Chairman. Senator MONTOYA. Have you had any indication? Mr. HOGAN. No indication as yet. We are just in the second month of a. 31-month contract. Senator MONTOYA. Well, did you have similar experiences with other contracts? Mr. ROGAN. Most of the work that has been done in this facility, I will say up to 90 percent of the work that has been done in this facility has been either time and material or fixed-price subcon- tracts. either with the McDonnefl Douglas Astronautics Co. or Douglas Aircraft Company which are both divisions of the McDonnell Douglas Corp. Ninety percent of it. A'\TI Manufacturing now has three Government contracts, the one that I mentioned for $1,- 540,000 and two small set-aside contracts that total approximately $95,000. They also have two commercial contracts that total about $35,000. Now, they have not gotten far enough along on any of these con- tracts for me to really judge, as I am not an active part of the coin- ~any management, because it is 51 percent owned by minority people, 49 percent owned by the McDonnell Douglas, and I have not gotten into sufficient detailed examination of the work efforts and the finan- cia.l statements to say whether they are going to be successful or whether they are going to fail. In my opimon, they are going to be successful. Senator MONTOYA. What do you do mider the $l~540,000 contract? Mr. HOGAN. That is the contract from the Army-Missile Command in Huntsville, Ala., to the SBA for a sensor system which goes into the silos of the Safeguard system for the Spartan missiles of the Safeguard system. It is, based on t.he information I have had from PAGENO="0075" 69 the SBA, the largest technical contract that has been awarded as a set-aside. Senator MONTOYA. And how did you develop the capability to serv- ice this type of a contract? Mr. ROGAN. By the assistance of experts, various experts, in Mc- Donnell Dougias Co., to train the personnel over the course of the operations since September 1968. Senator M0NTOYA. Did you have a Department of Labor grant for this purpose? Mr. HOGAN. We trained under our Department of Labor contract, which, as I said before, lasted for approximately 2 years, through mid-1968 to mid-1970, approximately. `We trained quite a few minor- ity females in electrical harness work very similar to that shown to you by North American Rockwell and my North American friend. Senator MONTOYA. Mr. Gay, do you wish to leave? Mr. GAY. May I? I have an urgent call. Senator MONTOYA. Certainly. Thank you very much. Mr. GAY. Thank you. Senator MONTOYA. Proceed, Mr. Rogan. Mr. ROGAN. The training under the Department of Labor contract essentially developed the skills for the minority female people to do the great majority of the work that must be done under this sensor kit-the Safeguard sensor kit. Senator MONTOYA. What does this involve? Does this involve any electronic work? Mr. ROGAN. It involves some very complex testing of some very delicate humidity, water, and temperature sensors, and it also in- volves manufacturing all of the electrical harnesses and the meta' receptacles, junction boxes, if you will, that contain the sensors once that kit is delivered to the Safeguard site. Then, it will be installed either by the Corps of Engineers or by the McDonnell Douglas people into the Safeguard-Spartan silos. Senator M0NT0YA. There has been a tremendous technology devel- oped in this field because of Vietnam; is that not right? Mr. ROGAN. Oh, yes. Senator MONTOYA. Sensing devices? Mr. ROGAN. Yes, indeed. Senator MONTOYA. So, time problem with you is not in the developing of the technology but rather in manufacturing the finished product? Mr. ROGAN. I believe, Mr. Chairman, the most severe technical prob- lem on this contract is in time manufacturing of the sensOrs which will not be done by AVI Manufacturing but will be purchased and tested by AVI Manufacturing. Senator M0NTOYA. What will they do, then? They will do the testing? Mr. ROGAN. They will purchase and test. Senator MONTOYA. `Whom will they purchase it from? Mr. ROGAN. There are only three qualified contractors in the coun- try. I am sorry I do not have their names with me. Senator MONTOYA. That makes my point, then. They aie not in the manufacturing business; they are in the testing business. Mr. ROGAN. They are in the manufacturing business to the extent that they are manufacturing sheet metal parts very similar to the PAGENO="0076" 70 type of things that Mr. Gay showed you. They are manufacturing electrical harnesses which is principally assembly as opposed to com- POnellt manufacturing. Senator MOXTOYA. WTe11, what assurance do we have that there is going to be a continuity of this type of work. because a. manufacturer usually provides his own testing? I am worried about the future of this organization. Mr. ROGAN. I am not sure I understand your question, Se1lator. Senator M0NT0YA. If you are not going into the manufacture of hardware in this operation and are merely offering the services of testing, what assurance do we have that there is going to be a followup contract. so as to insure the continuity of the operation? Mr. ROGAX. We are. at AVI Manufacturing, a manufacturing operation to the extent that we procure components, electrical coin- ponents, electrical plugs, very high quality electrical plugs, very high quality sensing devices, and then raw materials or essentially raw' materials such as sheet metal, wire, and you build these into a designed assembly. It is a manufacturing business. Senator M0XTOYA. Then, this company makes the finished item; is that it? Mr. ROGAX. And this company sells the finished item; yes, sir. Senator MOXTOTA. All right.. Mr. R0GAX. The contract calls for 32 of those kits. Senator MOXTOTA. All right. WThat do you envision to be the time it would take the company to realize the profit from this operation and any other activities that it. might be able to attract? Mr. ROGAX. Under our submitted divestiture plan which requires that., of course, we reduce the McDonnell Douglas Co., holding in AVI Manufacturing to 20 percent or less within 5 years or less from the date of the organizational agreement., of January 1, 1970, I would cx- Pect that AVI Manufacturing, with only minimal support from the McDonnell Douglas Corp., will hopefully be profitable next year, a minimal profit.. I would hope that in the third year of that. operation that they would produce a profit commensurate to Government con- tractors' profits. Senator MONTOYA. Now, under this divestiture plan, the starting pomt is that the McDoimell Co., owns all of the stock? Mr. ROGAN. No, sir; 49 percent. Senator MONTOYA. Forty-nine? Now, how did the minorities buy the other 51 percent? Mr. ROGAN. The minority provided the other 51 percent through a financing plan, through a company called Alliance Ventures, Inc., who provided a basic amount of initial capital, plus an agreement to supply working capital for a period of 5 years. Senator M0NT0TA. All right. How was this company funded? Mr. ROGAN. This company was funded by its parent company, the Ralston Purina Co. Senator M0XT0YA. And where does Ralston Purina come in on the profits? How does it get repaid? Mr. ROGAN. Yes; they would be repaid through their interest in Alliance Ventures, Inc., which is a minority company which they established. I believe, in early 1968. PAGENO="0077" 71 Senator MONTOYA. So, the loan from this company is bearing in- terest? Mr. ROGAN. That was the original agreement; yes, sir. Senator MONTOYA. And there is a payment of principal due the company from its operation; right? Mr. IROGAN. That w-as the original agreement, but we are now in the process of a legal and financial reorganization. Senator MONTOYA. But you still have to pay what was advanced to this operation? Mr. ROGAN. Ralston Purina is giving up their interest in the AVI Manufacturing Co. which had certain interests in the AVI Co. Senator MONTOYA. Yes; but the AVI Co. has not released its inter- est in entitlement of the payment to the repayment of the loan? Mr. ROGAN. They are in the act of doing that, sir. Senator MONTOYA. They are? Mr. ROGAN. Because they are unable, any longer, to furnish working capital. Senator MONTOYA. All right. What is going to happen to the loan, then? Mr. ROGAN. Certain principals in AVI who are now managing AVIM had a financial interest in AVI, and in return for that financial interest which they personally have returned to AVI, AVI has held AVIM harmless of all its obligations to AVI. Senator MONTOYA. I do not get it. Let us talk in terms of dollars. You ale talking about interest. Now, let us talk in terms of dollars. How much did AVI provide for the AVIM operation? Mr. ROGAN. If I may answer your question, Mr. Chairman- Senator MONTOYA. If you do not know exactly, say approximately. Mr. ROGAN. Approximately, yes. Approximately $25,000 in working capital, approximately $25,000 in a management contract, and the McDonnell Douglas Co. investment in facilities was evaluated at approximately $49,000. Senator MONTOYA. All right. Now, there has been no profit in this operation by AVIM, so if there has been no profit there has been no payment of the principal or interest to AVI or to the McDonnell Co.; right? Mr. ROGAN. There have been no payment of any kind to AVI. Senator MONTOYA. All right. And yoti say that because of the trans- fer of certain interests that the AVI has now canceled the indebted- ness? Mr. R0GAN. Yes, sir. Senator MONTOYA. All right. Now, what kind of an exchange of interest took place here? That is what I am trying to find out. Mr. ROGAN. The two major principals in AVI Manufacturing were also principals of AVI. Senator MONTOYA. So, they have received some remuneration of the AVIM operations? Mr. ROGAN. They have left the AVI operation and given back to AVI their stock interest in AVI in exchange for the initial capital in the initial management contract. Senator MONTOYA. AVIM? Mr. HOGAN. Which AVIM gave back to AVI. Senator MONTOYA. All right. PAGENO="0078" 72 Mr. ROGAX. It is rather complicated Mr. Chairman. Senator MONTOYA. Yes, it is; yes, it is. But the reason I am devel- oping this is because this will not necessarily happen with another similar business arrangement of another company or companies. Mr. ROGAN. It would not have happened, sir, if McDonnell Douglas had not been a 49 percent stockholder. Senator MONTOYA. Right. So, do I understand you to say that AVIM will be ready to start on the basis of its indebtedness incurred in- house rather than through advancements made by AVI? Mr. ROGAX. Well, it is a case between AVI and AVI Manufactur- in~ of "all is forgiven." Senator MONTOYA. Yes. Mr. ROGAN. AVI Manufacturing now holdes three Government con- tracts. Senator MONTOYA. And on those contracts, if they lose, they have to assume the responsibility? Mr. ROGAN. Yes, as a maj or stockholder. Senator M0NT0YA. Yes; and McDonnell will be a 20 percent stock- holder? Mr. ROGAN. The way that we will transfer the McDonnell stock interest in AVIM is based on the profit earned by AVIM. For every certain number of dollars profit that A\,TIM manages to put on their books, the McDonnell Douglas will transfer a share of stock to AVIM to be put iiito a trust account as incentive a.wards to the employees of AVIM. Senator MONTOYA. Yes. Mr. ROGAN. Aiid not just to the officers but to all employees of AVIM. We felt that it was very necessary to create an incentive type of remuneration for all employees of the company. Senator M0NT0YA. Now. on the basis of this arrangement and the McDonnell stock being placed in a. trust arrangement, will, in the possible hquiclat.ion, McDonnell and the management. of the A'\TIM be better served by such liquidation than the employees themselves who might own some stock? Mr. ROGAN. That portion of the stock which it has been agreed upon to be put into an employee trust eventually becomes a gift to the success of the employees of the A\TI Manufacturing. Senator MONTOYA. And does McDonnell Douglas automatically come out of the. picture, as far as management is concerned, or as far as any claims upon the financial structure of AVIM? Mr. ROGAN. None, whatsoever. Well, may I put it this wa.y, Mr. Chairman: Our divestiture plan which was submitted to and approved by time SBA states that in less than 5 years from the date of the agreement, the McDonnell Doug- las interest will be 20 percent or less, which is a requirement of sec- tion 8(a.), as I am sure you know. Senator MONTOYA. All right. Mr. R0GAN. Now, we have not made-there is no written agreement or decision as to what happens to that last 20 percent of the stock. I am inclined to think that once AVI Manufacturing becomes success- ful and totally self-sustaining that we will transfer the balance of that stock to AVI Manufacturing employees similar to the transfer of the previous 29 percent. PAGENO="0079" 73 Senator MONTOYA. What kind of managerial surveillance and super- vision and control will your company have in the future over AVIM and to what extent? Mr. ROGAN. Under our written agreement I have and will have until January 1972, a resident advisory manager. He has no managerial power other than being advisory to the management of AV1 Manufacturing. Senator MONTOYA. Of course, you would expect him to report to you if something were going wrong in the operation? Mr. ROGAN. He reports to me on a regular basis. Senator MONTOYA. And that is the way it should be. Mr. HOGAN. Our interest, Mr. Chairman, is to create a successful business. Now, we also give them reasonable amounts of free, some- times McDonnell Douglas paid time, sometimes employee volunteer time, such as I go down there on Saturdays myself to help them out~ in addition to which, where they need special fields of expertise such as a specialized electronic engineer, we will transfer to them or loan to them, at cost, that specialized individual. At the present time, there are five such specialists, one man to be there for a year, and the other four men to be there for periods of from 30 to 90 days, because they do need, because of the technical requirements of this one particular contract, they do need speciality specialists. Senator MONTOYA. Do you have a breakdown of the number of em- ployees and what racial groups they comprise? Mr. HOGAN. Yes, sir. As of the date of my statement, of the em- ployees, approximately 45 percent were black, 45 percent Mexican- American and 10 percent white. Senator MONTOYA. How many employees do you have? Mr. HOGAN. \Ve have 101, and the makeup of that employment is as in the NARTRANS case, largely a product of the south central area of Los Angeles, and, again, as I said before, the basic point in setting up the business was to create employables out of so-called hard-core nonemployables. Senator MONTOYA. Have you heard of the plan recently announced by Xerox where they will lend out some of their personnel to go out and work with small corporations? Mr. ROGAN. Yes, sir. I have read it with great interest and have forwarded it to my corporate headquarters a copy of it. Senator MONTOYA. You, of course, have done a lot in this enterprise, particularly, and North American Rockwell has, too. Mr. ROGAN. If I may volunteer a statement, Mr. Chairman? Sehator MONTOYA. Yes. Mr. HOGAN. I have approximately 35 percent who voluntarily are working with minority groups either in terms of teaching or expertise assistance in small business. et cetera, even in competition with my minority, and I use that in the sense of dollars' business. I have one engineer who spends a great deal of time with Southern California Manufacturing who has consistently bid against AVI Manufacturing. But that happens to be his area of interest, and I am happy to see him do it. But we have approximately 35 percent who provide expertise or training on their own time and, of course, we encourage this kind of thing. Senator MONTOVA. Yes, sir. PAGENO="0080" 74 Mr. FORE. Not to be outdone by Xerox, I do not know whether any- one is present from Xerox, but we have approximately 20 employees on leave of absence working for minority firms in management posi- tions from the eastern seaboard to the western seaboard. We arrived at the leave of absence as being the best means of doing this. We pro; vide all the fringe benefits, continuity of employment, in order to plo- vide for adequate retirement plans, and so on, but the borrowing coin- pany pa~ s their salaries. Several of the southern California minority organizations have as one of the principal members of the manage- ment of their company one of our leave-of-absence employees. Senator MONTOYA. What do you do? Bill them for the cost. of that employee to your operation? Mr. FORE. No. 1~Te put them on leave of absence, and they pay t.he basic salary; we pay the fringe benefits, the insurance, etc. Senator M0NT0YA. You do not bill that to them? Mr. FORE. No; we pay for it. That is part of our contribution. In addition, to the same thing that Mr. Rogan pointed out, and in terms of the several things that Mr. Gray poiliteci out. employees will dedicate their evening hours. Some reference was made to the Golcleii Oaks Products this morning. The manager of that enterprise happens to be a North American Rockwell employee on leave of absence. For the tecimology to get the same amount of tensile strength out of an oak bat as one would get from-I do not know what they make baseball bats out of-hemlock, or something like that, was a technology trans- fer from North American Rockwell. The manager of Golden Oaks Products is from our Space Division in Downy, where such tecimology is readily available. In addition to the manager, six to 10 employees volunteer their time on weekends. evenings, and sometimes during the work days if there is a critical problem. There is a mutual understand- ing of need. The man who needs the help is willing to ask for it, and the man who can offer it is willing to give it. That is the best possible situation. I think that we both, McDonnell Douglas and North Ameri- can Rockwell enjoy this situation in southern California. Senator MONTOYA. I think that is very commendable. I think that more large businesses ought to do these things. Do you have any questions? Mr. JoNEs. Yes. Thank you~ Mr. Chairman. Mr. Rogan, the problem whic:h AVIM experienced in its certification process took place before the 8(a) program was fully decentralized by the SBA. Are you sufficiently acquainted with the experience of other 8 (a) applicants to know \vhe.t.her the experience after the decentraliza- tion has been more favorable? Mr. ROGAN. I was aware of the fact that we had submitted one of the first divestiture plans under section 8(a), and I am not familiar with any other company's experience. Mr. JONES. I see. Mr. ROGAN. But it was quite a horrendous experience. Without the skill of the McDonnell-Douglas Corp., staff, I do not know how long it would have taken. Mr. JONES. Were there problems in the certification process other than those arising out of the divestiture arrangement? Mr. ROGAN. There were no problem~ w~hatsoever. Our original plan as submitted in October was accepted the following February. PAGENO="0081" 75 Mr. JONES. I mean to ask: Had it not been for the existence of the divestiture arrangement, do you think there would have been any prob- lems in the certification process, or did all of the problems seem to relate to the novelty of the divestiture arrangement from the point of view of the SBA? Mr. HOGAN. The divestiture arrangement was not novel. It followed all of the requirements of section 8(a). The reason that I make a point of the time involved in obtaining qualification under section 8 (a) and therefore qualification for set-asides, had the company, AVI Manu- facturing, been wholly dependent upon set-asides~ it would have gone bankrupt before the program was ever approved. But, as I pointed out, at that time they were 100 percent operating on McDonnell-Douglas with fixed-price contracts of various types. Mr. JONES. It took you 4 months after application to become cer- tified? Mr. ROGAN. Yes. Mr. JONES. What was your post-certification experience? How many 8(a) contracts has AVI received? Mi. HOGAN. Our post-certification experience has been very happy. We have, received three set-aside contracts since February of- Mr. JONES. Of this year? Mr. ROGAN. Of this year; yes. Mr. JONES. And how `long was it `after certification `before you re- ceived the first contract? Mr. ROGAN. Approximately, our first contract that A'S/I Manufac- turing received was approximately in late July, which would have made it 4 to 5 month's. Mr. JONES. I see. Mr. ROGAN. The activity. postapproval, has been wonderful. One of the difficulties, however, is the fact that you must send your best people, your managers, out to do the marketing, and, therefore, they are not there to manage the store. And one of the problems of small business, whether it be minority or otherwise, is lack of expe- rienced management. Mr. JONES. Well, when you say that you have to send your managers out to do marketing work, do you mean that `the SBA itself i's not doin' an adequate job on obtaining certification for subcontracting contracts Mr. ROGAN. `Well, you see, Mr. Jones, you must go out and look at the potential Government work that you are capable of doing, and, then, of course, you have to do that at the various Government pro- curement cen'ters, of which, as you know, there are many. Mr. JONES. Has it been your experience that AVIM w-ould sign the contract and `take it to the SBA, rather than vice versa? Mr. HOGAN. That has been our experience in the three contracts that we have. Mr. JONES. I see. Now, w-ith regard to Mr. Gay's comments on the ways in which the Federal Government might be of more assistance in helping large corporations like McDonnell-Douglas issue subcontrac'ts to minority enterprise firms, do you have anything further to add to that? Mr. HOGAN. I fully endorse Mr. Gay's comment with regard to helping us get the information on qualified small business contractors. Senator MONTOYA. May I interrupt there? 7O-6~34 O-72-----6 PAGENO="0082" 76 I think you are absolutely right in this. I think this is one of the great cases for the lack of rapport between the small business com- munity and the procurement agencies of the Govermnent. Now, what would ou suggest by way of a middleman to bring the two together, that is, the procurement agencies of the Government and the 8 (a) sub- contractor; how do you suggest that. this be accomplished? Now, we can have a list of eligible minority contractors, but that will not do any good. You have got to have a catalyst. in t.he arrange- ment. Now, how do you provide that catalyst? Mr. ROGAN. Well, I believe that the DSA- Senator MONTOYA. Defense Supply Agency? Mr. ROGAN. The Defense Supply Agency, with its catalog of items which is made available to anyone that. wants to pick up a copy of it, and a rather thorough description of those items, and the prevailing approximate prices is one of the best. ways of getting Government pro- curement requirements to the 8(a) or the small business subcontractor directly. But. outside of the kinds of items w~hich the Defense Supply Agency which tend to be the common things which are used across the various units of the Defense Department, outside of that area, pro- curement centers are very frightening. There are literally, there must be, hundreds of them, the many units of the Air Force, the Army procurement centers, the Navy procurement centers. When you have a subcontractor who is qualified to do a rather high content of technica.l work, one who can produce aerospace kind of quality, it is very difficult for him, too, to do anything but go one at a time to these various ominous Army procurement centers and Navy procurement centers of which we have contacted 25, and that is money and time. And, as I mention in my written statement, Mr. Chairman, I would like to see certain procurements set aside by these procurement centers and directed to the SBA and let the SBA contact those people who are qualified to do that work. Senator Mo~croYA. WTell, we have been trying to do this since we en- acted 8(a) and since we began insisting that we make 8(a) meaning- ful. We have had a little problem with the Department of Defense, and I think we are going to have to have somebody else run a little surveil- lance on the Department of Defense and give them the wherewithal to do a little more prodding. Mr. ROGAN. In all frankness, Mr. Chairman, each procurement or- ganization is trying to do the best possible procurement job in terms of quality and cost. Senator MONTOYA. Yes. Mr. ROGAN. They are probably-in view of their mission, their basic mission-they are probably reluctant to set aside bids that might cost them more money out of their budgets by going through SBA or some other agency. Senator MONTOYA. Well, are you trying to say-that is the practical point, but are you trying to say, Mr. Rogan, that the 8(a) contractor cannot compete with the big contractor costwise? Mr. ROGAN. Not in all cases. Well, lie cannot compete with the more experienced contractor in all cases. He must prove himself, and it is very difficult to get enough contracts to prove yourself. PAGENO="0083" 77 Senator MONTOYA. Well, I have had instances where small contrac- tors had been the low bidders and they had the capability and experience to indicate that they knew what they were doing when they submitted such low bids, and some contracting officer or procurement officer would reject the bid unless there is interference from some Member of Congress, and that small contractor would just not be heard. And I have urged reconsideration of quite a few of those bidders, because their rejection was in violation of the law, and, to my knowl- edge, none of these people had ever lost money by a low bid. Mr. ROGAN. Well, I have a limited amount of experience in this area. Senator MONTOYA. Of course, they had the know-how and they had the experience, but they were small. Mr. ROGAN. But in the particular case with which I am very familiar, AVI Manufacturing, they had the know-how, somewhat through Mc- Donnell Douglas support, and they are very competitive businesswise, but the SBA, in my opinion, did not negotiate a price that they should have negotiated with them, because of the pressure from the procure- ment agency behind the SBA, if you will. Senator MONTOYA. Well, as I understand your and Mr. Gay's testi- mony, what we need first is a catalog of eligible minority contractors who can work under 8(a) or under set-asides? Mr. R.OGAN. Yes, sir. Senator MONTOYA. And this catalog must become available to all Government procurement agencies and, in turn, their names must ap- pear in the bid lists of all Government procurement agencies? Mr. ROGAN. I think that would go very far toward curing the problem. Senator MONTOYA. And then I would go further than that. I would suggest that SBA provide some technical people to investigate, on the basis of the small contractors' availability, the procurement needs of the Defense Department and every other Government agency and determine for itself, with its technical help, whether or not it can siphon some of these contracts through 8(a) to the small contractor and his community? Mr. ROGAN. I agree with you completely, Senator. I believe only the SBA could be the best catalytic agent, if you would. Senator MONTOYA. But they must have agents dedicated strictly to this, instead of hodgepodge of expertise which proliferate over the vast spectrum of the DOD spending, and that is what is happening today, a proliferation. So, can you add any more to this? Mr. ROGAN. I do not believe so, sir. I would hate to see a new agency created because I believe- Senator MONTOYA. You must be one of those conservatives? Mr. ROGAN. I am somehow antibureaucratic. But I surely believe that you have in the SBA the basic vehicle to accomplish this job. Senator MONTOYA. Well, I do not care whether you call it a divi- sion or what, but you must have some individuals who have the capa- bility, dedication, and determination to bird dog this mission. Mr. ROGAN. You will find that in my written statement, sir. Senator MONTOYA. All right. OK. Thank you, gentlemen. Mr. ROGAN. Thank you very much. PAGENO="0084" 78 Senator MOXTOYA. Mr. Hum, Mr. Tom, and Mr. Williams. Do you have a written statement, gentlemen? Mr. Hu~r. ~Tes Mr. WILLIAMS. No. Mr. To~r. No. Senator MONT0YA. For the purpose of identifying you gentlemen iii the record, the witnesses now on the panel are Mr. Charles K. Hum, Aerospace Services, Inc., of Oakland, Calif., Mr. Henry WT. Tom, of H. \V. Tom and S. F. Tom Co., San Francisco, Calif., and Mr. Larry Williams, Nairobi Corp. So, you may proceed, Mr. Hum. STATEMENT OF CHARLES K. HUM, PRESIDENT, AEROSPACE SERVICES, INC., OAKLAND, CALIF. Senator M0XT0YA. You have a written statement, sir? Mr. HUM. Yes, Mr. Chairman; I have. Senator M0XT0YA. May I have the written statement? Now, Mr. Hum, for the sake of time we will make your state- ment a part of the record at this point, and you may proceed to summarize it and comment on it and acid to it if you wish. (The prepared statement submitted by Mr. Hum reads in full as follows:) PAGENO="0085" 70 COMMENTS BEFORE SENATE SMALL BUSINESS SUBCOMMITTEE ON GOVERNMENT PROCUREMENT SANFRASCQ~EI~MBER29!1L1 My name is Charles K. Hum, President of Aerospace Services, Inc. Oakland, California. As President of an active Small Business and one which has par- ticipated in the original 8(a) hard-core type program, I have been asked to appear before your Committee. May I thank you for the invitation to appear, and the opportunity to give you my thoughts on the 8(a) program based on several years of participation. First allow me to give you a little'background on our corporation. It was formed In 1964 by myself and a group of individuals who had worked together on aircraft overhaul and modification programs when the company for which we worked decided to quit the business. The original contract was for T-33 Air- craft overhaul and was bid and won competitively, although since we were a new company it took the intervention of the Small Business Administration and a Certificate of Competence before award was finally made. The first con- tract WEtS successfully completed and the cOrporation progressed slowly on competitive contracts until 1968 at which time it was selected as one of the first 8(a) contractors under the original program designed primarily to provide jobs to disadvantaged hard-core untrained personnel. The workload since that time has varied up and down with the availability of 8(a) programs and other programs which could be won cprnoetitively. Employment peaked in 1970. We had approximately 15Qin'June 1971 and currently have dropped back to 94 due to phasing out of contracts. Contracts have always been completed satisfactorily from the standpoint of quality and schedule, and with little or no cost penalty to the government. As was the case with many 8(a) companies there has been no large company sponsorship in our case, I am the majority owner and other employees own the balance. All technical knowhow, equip- ment and funds for operation and expansion has been generated internally. Banking arrangements were worked out with a local bank and all loans guaran- teed personally by the owners During this period ~ve have endeavored to expand and diversify so as to become more independent. We operate an Avionics shop performing airline communication1 navigational and radar equipment repair and overhaul, and operate a fixed base operation with a small aircraft dealership. We are constantlysearching for new avenues to become independent from 8(a) assistance but our ties to hard core employment and high cost location make it extremely difficult in our line of work, I am attaching as part of this written statement some data on our* organization as of June, 1971, including total employment and employee break- down. Note that we employed 21% hard-tore and 53% minorities. PAGENO="0086" 80 Bas&i on our experience I have some constructive suggestions toOffGt. I think it should be made clear that we feel a properly run 8(a) program is bene- ficIal and has a definite place in our economic system While information in- dicated overall 8(a) program may have suffered some bad experiences In the Past, we feel ours has been successful, and sincerely hope our experience will be equated along with those who may have been judged as failures Now for my suggestions. I feel there should be two types of 8(a) programs, (a) Minority ownership per the new concept. (b) Hard-core employment as the original concept, As an example of one who has advanced under the minority ownership concept I can hardly fault that approach, Any program that will assist a ~uel~fied (and I repeat qualified) individual to start his own business has to be good for our free enterprise system, If he-is a minority or-hard-core individual there Is an even greater plus factor. There are many capable Individuals who can benefit from the administrative and financial support afforded by the 8(a~ program, But desire and capability aren't the only factors in startIng a business, Don't underemphasize the necessity of business acumen and sources for funds to operate, These are as important as technical know-how and good personnel. Even with knowhow and personnel our own experience shows you can't get off the ground without funds and woilcing capital to meet the payroll. Banks will not lend money without guarantees or collateral. Progress payments and assign- ment of government contracts are one means of solving this problem. In addition, awarding of a government contract provides both technical and management recog- nition which will get a new company off on a proper image, and this too is important. One of your biggest problems Is simply that you~ a~~,company~ It is in these areas of administrative and financial assistance, and in the allied areas of image, integrity, and responsibility that the SBA and 8(a) programs will assist minorities to form and operate companies that will prosper and employ themselves and others. - But while we consider minority ownership a most important factor, I most assuredly do not feel we should abandon the original concept of employment of -hard-core and minority personnel -- those less able minority workers who by reason of lack of education or iinances are just happy to have a job, While we understand the track record under this old concept was rather poor, our own experience has been good. We think there's a real need for providing meaning- ful JObS to those hard core individuals who rea fly want to work. - Most experI~nce has indicated it is almost impossible to build a viable and competitive firm utilizing such personnel, To some extent this is true, - You do have high absen- teeism and turnover, lower skill-levels and efficiency, less interest in safety and discipline. Admittedly, as a result, even we who have had some success are having continued difficulty in remaining competitive. PAGENO="0087" 81 On the other hand on those programs we have received under 8(a) auspices we feel little if any cost penalty has been experienced. I understand this has not been the case with all 8(a) contractors. If so, let's still appreciate the program for what it can do in the welfare field. Let's establish a hard-core class of 8(a) work programs and openly recognize them as welfare programs. Then let's establish a fund or other means by which any cost penalties can be paid. For example, the Air Force has many programs which could be so assigned. The big problem in these days of tight funding and squeezing of the defense dollar, is the Air Force procurement people cannot justify nor afford to pay a penalty in cost -- therefore, few 8(a) programs. All right then, if a program is developed which will provide meaningful hard-core jobs, pay the Air Force the cost d1ffer~ ential out of a special fund. President Nixon just allocated $200 million to help unemployment areas by providing jObs in public service occupation. What I am suggesting here we do the same thing for hard-core areas using Small Business and 8(a) programs as a medium. It is our experience minority and hard-core personnel can be found who will and desire to work * If they work they can stay off welfare. At the same time they can maintain personal and family pride. As you well know, the concept of self supporting jObS in lieu of a dole is desired by the majority of Americans. The third suggestion has to do with the total time period by which SBA will support an 8(a) contractor before they deny support and let him "sink or swini'. It is our understanding it has been arbitrarily established at 3 years. We are not sure this is realistic, We feel it more a function of type, location, and employee cost in the business. In our own case we operate in the highly competitive defense area. We compete in a technical field and on a national scale. We compete with low cost areas but actually operate in a high cost area utilizing less efficient help. In a business known as one of the most competitive it is highly doubtful that we or anyone else can consistently remain competitive from a price standpoint. Yet at the end of three years, (and even though our c'st penalty has been negligible) we have been told no more assist- ance in the form of 8(a) contracts will be available, live may well go slowly out of business. On the other hand, I have little doubt some minority owned companies who develop a unique product and have low labor costs and good management may need help for only a year or more. What I am suggesting Is that such time determination not be established on the sole basis of an arbitrary limit but on the value of the work being done by the individual company and its overall benefits to the economy and social system. For example a company willing to assume the added burdens of hard core empl~yment would receive extended 8(a) assistance, and if useful enough, even continued assistance so long as it provides hard-core employment. Now let me emphasize: 1, We owe our continued existence in part to the support of the SBA and 8(a) programs. PAGENO="0088" 82 2. We think the 8(a) program is a success and has a place in our social and ecor~mic system. 3. We feel continued consideration should be given to 8(a) hard-core programs. We would be happy to assist in a con- sulting capacity. 4. We think the 8(a) program properly administered can be an effective social and welfare tool and provide a significant means of reducing unemployment. In conclusIon, once again let me express my appreciation for the opportunity to appear before you and to pass on my thought on constructive Improvement to a worthwhile program. I sincerely hope they will aid you In coming to the best possible solutions. PAGENO="0089" 83 AEROSPACE SERVICES, INC. AND WESTERN AIRMOTIVE CO., INC. - WHOLELY OWNED SUBSIDIA~X PERSONNEL MAKE-UP AS OF JUNE 1971 Aerospace Services, Inc. Total on Total Ethnic % Ethnic Program Program on Program on Program T-33 66 22 33.3 Pallets 23 22 95.7 Generators 33 24 72.7 Salaried 24 7 30.4 146 75 52.9% W~sternAjrrnotive Co., Inc. Production 2 1 50.0 Salaried 4 0 0 6 1 16.7% ETHNIC ORIGIN OF EMPLOYEES Caucasian ----- 76 Spanish Surname 6 Oriental 20 Afro-American 43 Other 7 Total 152 Certified HRD 21% PAGENO="0090" 84 LIST OF SOCIAL AND WELFARE AGENCIES WQRKED WITH ON 8 (a) PROGRAMS ~ Small Business Administration 450 Golden Gate Avenue San Francisco, CalifornIa 94102 B. State of California Human Resources Development 301 - 13th Street Oakland, California 94612 C0 State of California Human Resources Development Centers (East Oakland - 8924 Holly Street) (Frultvale Branch 3136 East 14th Street) (Skill Center - 1100 -67th Street) Oakland, California D. Veterans Administration 49 4th Street San Francisco, California E State of California Human Resources Development Center Chinatown North Beach 661 Commercial Street San Francisco, California PAGENO="0091" 85 Mr. HUM. Thank you, Mr. Chairman. What I would like to do,. Mr. Chairman, is just briefly highlight the discussions we have here in these comments I have. First allow me to give you a little background on our corporation. It was formed in 1964 by myself and a group of individuals who had worked together on aircraft overhaul and modification programs when the company for which we worked decided to quit the business. The original contract was for T-33 aircraft overhaul and was bid and won competitively, although since we were a new company it took the intervention of the Small Business Administration and a cerLiflcate of competence before award was finally made. The first contract was successfully completed and the corporation progressed slowly on com- petitive contracts until 1968 at which time it was selected as one of the first 8(a) contractors under the original program designed pri- marily to provide jobs to disadvantaged hard-core untrained per- sonnel. The w-orkload since that time has varied up and down with the availability of 8(a) programs and other programs which could be w-on competitively. Employment peaked in 1970. We had approxi- mately 150 employees in June 1971, and currently have dropped back to 94 due to phasing out of contracts. Contracts have always been completed satisfactorily from the standpoint of quality and schedule, and with little or no cost penalty to the Government. This cost penalty we are talking about is a subsidy, added subsidy, cost. As was the case with many 8(a) companies there has been no large company sponsorship in our case. I am the majority owner and other employees own the balance. All technical know-how, equip- ment, and funds for operation and expansion has been generated internally. Banking arrangements were worked out with a local bank and all loans guaranteed personally by the owners. We are constantly searching for new avenues to become independent from 8 (a) assistance but our ties to hard-core employment and high- cost location make it extremely difficult in our line of work. We would like to have you look at one of the attachments I gave you. Note that we employ 21 percent hard-core and 53 percent minorities. Based on our experience, I have some constructive suggestions to offer. I think it should be made clear that we feel a properly run 8(a) program is beneficial and has a definite place in our economic. system. While information indicated overall 8(a) programs may have suffered some bad experiences in the past, we feel ours has been successful, and sincerely hope our experience will be equated along with those who may have been judged as failures. Now for my suggestions. I feel that there should be two types of 8(a) programs: (a) Minority ownership per the new concept. (b) Hard-core employment as the original concept. As an example of one who has advanced under the minority owner- ship concept I can hardly fault that approach. Any program that will assist a "qualifled"-and I repeat, qualified-individual to start his own business has to be good for our free enterprise system. If he is a minority or hard-core individual there is an even greater plus factor. There are many capable individuals who can benefit. from the adn'iinis- trative and financial s~pport afforded by the 8(a) program. But desire and capability are not the only factors in starting a business. Do not PAGENO="0092" 86 underemphasize the necessity of business acumen and sources for funds to operate. These are as important as technical know-how and good personnel. Even with know-how and personnel our own experience shows you can't get off the ground without funds and working capital to meet the payroll. Banks will not lend money without guarantees or collateral. Progress payments and assignments of Government con- tracts are one means of solving this problem. In addition, awarding of a Government contract provides both technical and management rec- ogmtion which will get a new company off on a proper image, and this, too, is important.. One of your biggest problems is simply you are a `new company. It is in these areas of administrative and financial as- sistance, and in the allied areas of image, integrity, and responsibility that the SBA and 8(a) programs will assist minorities to form and operate companies that will pr~sper and employ themselves and others. But while we consider minority ownership a most important factor, I most assuredly do not feel we should abandon the original concept of hard-core and minority personnel-those less able minority workers who by reason of lack of education or finances are just happy to have a job. While we understand the track under this old concept was rather poor, our own experience has been good. We think there is a real need for providing meaningful jobs to those hard-core individuals who really want to work. Most experience has indicated it is almost impos- sible to build a viable and competitive firm utilizing such personnel. To some extent this is true. You do have, high absenteeism and turn- over, lower skill levels and efficiency, less interest in safety and disci- pime. Admittedly, as a result, even we who have had some success are having continued difficulty in remaining comi )etitive. On the other hand, on those programs we have received under 8 (a) auspices we feel little if any cost penalty has been experienced. I understand this has iiot been the case with all 8(a) contractors. If so, let us still appreciate the program for what it. can do in the welfare field. Let us establish a hard-core class of 8 (`a) work programs and openly recognize them as welfare programs. Then let us establish a fund or other means by which any cost penalties can be paid. For ex- ample, the Air Force has many programs which could be so assigned. The big problem in these days of tight. funding and `squeezing of the defense dollar, is the Air Force Pi~Ocuiement People cannot justify or afford to pay a penalty in cost-therefore, few 8(a) programs. All right, then, if a. program is developedl which will provide mean- ingful hard-core jobs, pay the Air Force the cost differential out of a special fund. President Nixon just allocatedl $200 million to help unemployment areas by plovidling jobs in public service occupations. What I am suggesting here we do the same thing for hard-core areas using small business and 8(a) programs as a medium. It is our cx- perience minority and hard-core personnel can be found who will and desire to work. If they work they can stay off the welfare. At the same time they caii mamt.ain peisoiial andi family pride. As you well know, the concept of self-supporting jobs in lieu of a. dole is desiredi by the maj oritv of Americans. The third suggestion has to dlO with the total time period by which SBA will support an 8(a) contractor before they deny support and let him "sink or swim." It. is our understanding it has been arbitrarily established at 3 years. We are not sure this is realistic. We feel it more PAGENO="0093" 87 a function of type, location, and employee cost in the business. In our own case we operate in the highly competitive defense area. We com- pete in a technical field and on a national scale. We compete with low- cost areas but actually operate in a high-cost area utilizing less ef- ficient help. In a business known as one of the most competitive it is highly doubtful that we or anyone else can consistently remain com- petitive from a price standpoint. Yet at the end of 3 years-and even though our cost penalty has been negligible-we have been told no more assistance in the form of 8(a) contracts will be available. We may well go slowly out of business. On the other hand, I have little doubt some minority-owned companies who develop a unique product and have low labor costs and good management may need help for only a year or more. What I am suggesting is that such time deter- mination not be established on the sole basis of an arbitrary limit but on the value of the work being done by the individual company and its overall benefits to the economy and social system. For example, a company willing to assume the added burdens of hard-core employ- ment would receive extended 8(a) assistance, and if useful enough, even continued assistance so long as it provides hard-core employment. I would like to digress from my comments, Mr. Chairman, if I may, and discuss the thought that you just discussed with the gentle- men from both large companies. I think greater participation by the Department of Defense and other agencies to channel programs into 8(a) programs should be done. I think this can be probably done by utilizing existing Air Force De- fense small business representatives that you now have. We have found in some instances there is a conflict between it, or an area of conflict between the Small Business Administration rep- resentative (PCR's), and the Air Force Defense small business rep- resentatives. I think a closer coordination between the two offices would definitely pinpoint many programs that would go 8(a). To give you an example, Mr. Chairman, this type of situation is the AIMS kit procurement. Aerospace Services was the successful bidder on the T-33 AIMS kit procurement, and this procurement was set aside for small business only. It was not an 8(a) program. However, due to the interceding of NARTRANS and through the large busi- ness pressure brought to bear by North American, NARTRANS receive half of the program. The other half of the T-33 AIMS kit fabrication, and now this completes a circle where an 8(a) contractor like ourselves has become a successful contractor, and then in turn we are competing against other or a portion of our contract was taken away by an 8(a) program which we feel this type of conflict could be definitely determined by the prime depot. This is what I mean, the coordination between the PRC and the Air Force Defense Small Business representative. Both of them either could be channeled through an 8(a) program or could have been left as small business set-aside. We were the successful bidders, so actually w-e have tw-o procurements now. NARTRANS las still half of the T-33 AIMS, and we have got the rest. We delivered the prototype kit. We have also installed the prototype kit on a. T-33 aircraft which we offered to do for free to the Air Force. PAGENO="0094" 88 Senator MONT0YA. Do you do complete manufacturing, or do you do assembly work like they do? Mr. Husr. We do assembly work, which is part of our work, Mr. Chairman. The T-33 program which we have just completed, the T-33 aircraft undergo "Iran" modification and we completely fabri- cated and installed new electronic and electrical harnesses in the air- craft. The airplanes were completely rewired from stern to stern. WTe have a fabrication shop where we fabricate the entire wire harness assemblies with the electrical connectors, aiid this is doiie by hard-core or disadvantaged personnel. Senator MONTOTA. When did you organize your company? Mr. Hu~r. We organized in 1964, sir. Senator MONTOYA. And what kind of business do you do now? Mr. Ht~r. Right now, at present, as we mentioned in the comments, we operate au avionics shop performing airline communication, navi- gational, and radar equipment repair and overhaul and operate a fixed- base operation with a small aircraft dealership. We have been branch- ing away from, as I indicated in our comments, from 8(a) assistance. Senator MONTOTA. Are you diversified? Mr. Ht~r. \\Te are trying to, sir, but as we mentioned in our coin- ment, by having disadvantaged and hard-core employees on our pay- roll we find we are not. too competitive, and that is the reason when we found out about this 3-yea.r limitation deal I made a special trip to discuss the situation with the Small Business Administration in Washington. And, Mr. Chairman, I would like to emphasize, too, that the local SBA office here and the management of the local SB office, especially with the gentlemen that are familiar with the 8 (a.) program, have offered great help to us and assistance. through our 3 years with the 8(a) program, and without their assistance we would iiot be here today speaking to you. Senator MONTOYA. The time is 3 yea.rs and it is 5 years for Indians. You are acquainted with that.; are you not? Mr. HUM. Yes; and that is t.lie reason why I say it would be a differ- ent situation now, Mr. Chairman, if we started under the new concept where it is strictly minority-owned business and you can go out and hire any individua.l you can. But we started under the original con- cept where it was minority ownership plus the hiring that was imposed upon us was to hire and train disadvantaged, hard-core personnel. We have these people on our payroll iiow, and they are less efficient and, therefore, we are finding ourselves iiot too competitive. Senator M0NT0YA. What was your gross last year? Mr. Hu~r. Our gross was combined with the fixed base operation, and so forth, at about $1.5 million. Senator MONTOYA. And was it more than that the previous year? Mr. Hrj~r. No; it is less, a little less, than the previous year because the 8 (a.) programs have since curtailed. Senator M0NT0YA. Would the 8(a) program help your business substantially? Mr. HUM. Yes; it is about 90 percent of our business. And also, Mr. Chairman, I would like to comment- - Senator M0NT0TA. I notice the concept that you have presented here suggests that any penalty costs incurred because of hiring of less effi- cient help or hard-core employees, should be absorbed by SBA. PAGENO="0095" 89 Mr. Hrj~r. Either SBA absorb the penalty costs, Mr. Chairman, or either have the Air Force able to absorb it out of a special fund because that is the reason we feel the reluctance of the Defense Department. Senator MONTOYA. What kind of a toleraiice would you provide? Mr. Hri~r. I think the existing rule now allows it to 33 percent, 33 percent differential under regulations at present. Senator MONTOYA. What do you mean by that? Mr. HUM. The armed services procurement regulation does allow a 33-percent margin, but I doubt very seriously very many programs have been awarded under these, or under that concept. Senator MONTOYA. They have abandoned the 33 percent. Mr. HUM. Yes; they have. I think it is on the books, but whether they actually follow it as a criteria is something that I do not know. Senator MONTOYA. What would you suggest as a reasonable alter- native? Mr. HUM. I think it should be maintained, Mr. Chairman, in that I tiunk the hiring of disadvantaged, hard-core people does take the people off of welfare, and this is one of our Nation's biggest problems at present. Senator MONTOYA. Would you think that this was cheaper than wel- fare for them? Mr. HUM. I think it is; definitely. In other words, these people become- Senator MONTOYA. And the kind of help that would give them back their pride? Mr. HUM. That is definitely true, and to give you an idea, Mr. Chairman, like in our operation, we have only lost in 3 years of opera- tion one paint gun and one drill-motor, and for 3 years of operation, from the loss standpoint, that is a remarkable record. And we find out that among our disadvantaged, hard-core employees we have people that are on parole, ex-convicts, and so forth. We have had girls that have worked in our shop that we have been asked by t'he Department of Employment, the Human Resources Department, to put on our payroll to take them off of welfare, to pro- vide jobs for them, and I think this is good; we have had girls that worked with us for about 3 years, and then an electronic firm that is just down the street offered them $1 to 75 cents more an hour more than we were paying them after they had been trained by us, so I think this proves there is a redeeming feature to this, and especially these people that have come off the welfare rolls. And I think one thing I would like to try to bring up, Mr. Chairman, is the consultation. We have rendered quite a bit of consultation to other small 8(a) contractors. There was a gentleman this morning, in this morning's session, that we have consulted with and advised him. Their company also received an AIMS, an 8(a) AIMS kit for the T-39 aircraft, and he was having to borrow money from the local bank, all of it, to finance it~. So we advised him that there are progress payments avail- able that he should make a request for, and my associates, James A. Thomas, who is vice president and general manager, who is with me today, showed him a letter that we wrote to a contracting officer re- questing that such consideration be given. And this means, Mr. Chairman, additional profit to this company by having it, and once it is allowed by the Defense Audit Department, PAGENO="0096" 90 the Defense Agency says it is an allowable item, then this means more profit to him. Senator MOXTOYA. Why does it mean more profit? Mr. H~r. In other words, he did not. have to borrow that much from the local bank. Senator MOXTOYA. Paying interest on the loan? Mr. Hu~r. That is right. It is a. fixed-price contract., and he is com- mited, and I think this consulting effort., being that we are a small busmess concern ourselves, we understand and realize the. little prob- lems that these gentlemen run into. There is another company that has come by and asked us to look over an FAA bid with them. and we perform this service without any added cost to them other than our own time, which helps add to the success of 8 (a) contractors and minority companies. Everyone that failed is a bad mark against other small business concerns so, there- fore, by helping these little, small minority business concerns, the more successes that we realize, we can show the general public that, yes; it can be done. Senator MoxToYA. Do you feel that there is a lack of counseling available to these small firms? Mr. Hu~r. I think the SBA has its hands full. I made the same comment to Mr. Marshall Parker when I visited him earlier this month, is that I think the field men are shorthanded, the SBA is short- handed in some respects. I think additional counseling could be given if there were more staff at the SBA, more staff, and they had the time to do it. Senator MOXTOYA. Thank you very much, sir. We appreciate your testimony. Now, Mr. Williams STATEMENT OF LARRY WILLIAMS, NAIROBI CORP., RICHMOND, CALIF. Mr. WILLIAMS. Thank you, Mr. Chairman. Senator MOXTOYA. Do you have a statement? Mr. WTILLIAMS. No; I do not have, a prepared statement. I have a few items- Senator M0xT0YA. Who do you represent? Mr. WILLIAMS. Nairobi Corp. Senator MONTOYA. And what is the Nairobi Corp.? Mr. ~\TILLIAMs. Nairobi Corp., is, at present, a group of three black individuals that we incorporated in July 1968 with the idea of doing economic development in the lower income, minority communities. we origmally started there were eight of us altogether. All of us had business experience and/or training of one sort or another, and we come together with the idea of pooling this talent., an experience which we felt we had at that time to make a more viable contribution to some solutions to the economic problems in the community. Over the course of the last 3 ears we have dwindled, or attrition has eroded us to the present three. Currently, we operate two businesses individually in California. Senator M0XTOYA. What are the busniesses? Mr. WILLIAMS. We have an offset and printing shop, Prestige Graphics, a job shop doing commercial printing of all sorts. PAGENO="0097" 91 Senator MONTOYA. What was the gross last year in that shop? Mr. WILLIAMS. Gross last year would probably be roughly in the neighborhood of, I would say, $130,000. Senator MONTOYA. What is the other business? Mr. WILLIA1\IS. Pardon me? Senator M0NTOYA. What is the other business? Mr. WILLIAMS. The other business is Wood Products, which is a wood fabrication plant. We make cargo containers, shipping crates, and other specialized, tailormade, rough wood items of that sort. Senator MONTOYA. How much did you gross in that business? Mr. WILLIAMS. Last year, well, our anticipated-we would expect this year, possibly this calendar year, possibly to gross in the neigh- borhood of $400,000 to $500,000 at the present trend of it. Senator MONTOYA. How much did you gross last year? Mr. WILLIAMS. Last year it was in the neighborhood of $209,000. We have fortunately, I would say, doubled our sales each year since we have been in business. Now, however, although we have doi~e that, that does not necessarily mean we have a lot of profit, obviously. Senator MONTOYA. Did you realize any profits? Mr. WILLIAMS. We have had periods of profit `and of none. Senator MONTOYA. What was reflected for the whole year profitwise? Mr. WILLIAMS. We had a net loss. Senator MONTOYA. You had a loss? Mr. WILLIAMS. Right, as we are running, attained earnings at this point, are running at $44,000 loss over the last 3 years, it is running in this rough neighborhood. Senator MONTOYA. For the 3 years? Mr. WILLIAMS. Right. Senator MONTOYA. Do you live off of these businesses? Mr. WILLIAMS. Yes; we do. We have for the past 3 years, anyway. Senator MONTOYA. How many of you? Mr. WILLIAMS. Three of us. We are also recipients of several 8(a) contracts, and I might point out that we would not probably `be in business today had we not received those 8(a) contracts. Senator MONTOYA. How much have you received in 8(a) contracts? Mr. WILLIAMS. In the print shop we are currently recipients of two contracts which are in a total amount of $45,000. Senator MONTOYA. How much? Mr. WILLIAMS. $45,000 total. That is over a year. And in the wood- shop we recently completed a contract for about $141,000. Senator MONTOYA. For who? Mr. WILLIAMS. For the General Services Administration. We cur- rently have an open-ended contract which is valued at approximately $60,000 in the woodshop, but currently we do not anticipate that orders will reach that amount. Senator MONTOYA. What do you do in the woodshop? Mr. WILLIAMS. We make, for example, in the GSA contract, it was household shipping crates, boxes for shipping household goods over- seas, et cetera. We make, for example, in commercial business we make for IBM special shipping crates for their equipment that they send us blueprints and specifications for. We make simple items such as nursery flats where nurseries put their plant material in for storage in the nursery. These kinds of items. It is basically rough carpentry, 70-654 0-72-7 PAGENO="0098" 92 although some of it, some of the work requires skill, but it is not a highly polished, finished, fine furniture type of operation. Senator MONTOY~. What else does your corporation do? Mr. WILLTA~rs. Those are the two operations. Senator MONTOYA. Are you a holding company? Mr. WILLIAMS. We are a solely owned corporation by the three individuals. Senator MONTOYA. And you operate these businesses under different business names, but they are part of the corporation? Mr. WILLIA3I5. The corporation is the umbrella, as it were, and it deviates with the names, the Westwood and the Prestige are deviates for the corporation. Senator MOXTOYA. How much do you have in 8(a) contracts for this year? Mr. WILIAIA~Is. Currently in the printshop we are still operating on one small contract which was renewed in April of this year for ap- proximately $6,000 for the publication of the Navy Newspaper. Senator MOxTOYA. All right; $7,000, is it not? Mr. WILLIAMS. Approximately, yes. Senator MONTOYA. And you have $69,674 for boxes for the Navy; right? Mr. WILLIA~Is. That is the value of the contract, although as I said it is an open-ended kind of contract. It is not a firm order contract. They order against it, as they need to, so we may or may not realize that out of the contract. Senator M0NTOYA. I see. Mr. WILLIAMS. The other contract that we have in the printshop is currently in an extended period for the second time. This is one of the complaints that we have regarding some of the problems that we have experienced in the 8(a) program. WTe have had experiences of very, very limited time to prepare proposals and consider all of the factors involved in putting together a complicated bid for a. year's publication of that sort. We have, as you saw, we are in second extension. Now, on the major contract we have, which was valued at about $40~000 for the publication of the Navy publication, the "Grapevine," and in the Navy Shipyard- Senator MONTOYA. What is your objection to the extension of the contract? Mr. WILLIAMS. Well, we object to a number of things. One, the fact we are uncertain at this point as to whether or not the contract is go- ing to be renewed under the 8(a) program. We have attempted to get the specifications for which we can prepare a new bid. One of the items we are particularly interested in on this contract is that as we under- stand it, the concept of the 8(a) program is to facilitate and make it possible for small businesses to become competitive in the market. And over a period of time you should be able to take advantages of econo- mies that you can introduce into your operation or offer the contractor, or the vendor, or whatever. New improvements in materials, equip- ment, et cetera. One of the ideas we have for reducing the costs on our current contract, which is in the extended period, is the acquisition of a new type or new piece of typesetting equipment which will make it pos- sible for us to do in-house the copy preparation for this publication PAGENO="0099" 93 at a reduced cost over what we were paying out. We estimate, roughly, at this point, without seeing any specifications, roughly in the neigh- borhood of $200 to $300 per issue. Senator M0NT0YA. Well, what impairments are you experiencing now? Mr. WILLIAMS. Pardon? Senator MONTOYA. What are the impediments you are facing now in accomplishing that objective? Mr. `WILLIAMS. We cannot get the Small Business Administration and/or the supplier to come to terms on this. In fact, we cannot get the specifications. `We have not gotton the specifications in order that we can make the proposals, even though we have made several attempts to do that. Senator MONTOYA. Are they ready to do it? Mr. WILLIAMS. I do not know. Senator MONTOYA. If they are not ready, they cannot, then. Mr. WILLIAMS. Right. I would assume. Senator MONTOYA. Would they extend your contract? Mr. `WILLIAMS. That is the question we have at this point. We have had a very `successful contract, we have performed on time, we have given them a better quality product. Senator MONTOYA. Have you received any indication that they will not extend it? Mr. WILLIAMS. We have no evidence, no indication to that effect. We understand that there is a problem possibly occurring, as oc- curred originally with the former vendor on this contract, who hap- pens to be a former State senator, and we understand there are some pressures being brought to bear there, as far as renewing this contract. We also are aware that probably a similar problem is presented as when we initially got the contract. There was a reluctance on the part of the Navy at Mare Island to transfer the contract from a very con- venient location to the Richmond operation. Senator MONTOYA. Do you do any work for the private sector? Mr. WILLIAMS. Most of our work is for the private sector. We did work for approximately, I would say, a year or a year and a half or 2 years before we even approached the Small Business Administration regarding 8(a) work, because we were of the firm conviction we had to make it on our own, more or less. But, of course, things being as they were, we realized this was another area where we could get some more work. Most of our work is commercial work. We solicit on our own, and have gotten it on our own, and maintain on our own. We have the government work for the print shop which represents, I would say, less than, probably a quarter of our total volume. Senator MONTOYA. Are you able to get proper financing for your business? Mr. WILLIAMS. This has been a difficulty. We are almost 100-per- cent financed. We, as I said, we did this out of motivation rather than financial backing, and we had to get our complete financial package which is backed and guaranteed by the Small Business Administra- tion. We were underfinanced, in our opinion, at this point partially due to lack of experience on our part, not having that business experi- ence, but we were not made aware of these factors in the process of negotiating the loan. PAGENO="0100" 94 Senator MOXTOYA. Do you have a small business loan now? Mr. WTILLIA3Is. Yes, we do. All of our money, the bulk of our money, approximately $76,000 is small business guaranteed. We have another loan of about $12,000 which we secured on our own through the Bank of America. That is our financing, basically. As I indicated, this has been one of our problems. and this is particularly one of the issues we raised relative to the way in which the 8 (a) program is carried out, is that we are not permitted to include in our ProPosals for our separa- tion of our proposals, interest expense or sales expense. For us, of course, this is a tremendous expense, being 100-percent financed, so even though we determine what our overhead is, exclusive of these factors, we still have a major expense item that we are not able to recover. Senator MONTOYA. Are you current on your loan payments? Mir. WILLIA~rs. Yes. As of now we are current on our loan payments. Senator M0NTOYA. And interest, are you current on your interest payments? Mr. WILLIA~is. To my knowledge, we are; yes. This is one aspect that I do not personally handle. My other partner handles is. I run the print shop primarily, but this is a major expense item for us, has been a major expense item for us, and consequently we, even though when we put together a proposal, we build all of the other expense factors in this, we still are not recouping the major part of our ex- penses in doing business under the terms of the contract, and it is one area we feel should be looked at very seriously as far as not putting that kind of restriction on the preparation of an 8(a) proposal. Some of the other problems that we have, if I can continue to allude to some of these, and I will preface all of this, as I said, with the fact that we realize that we would not still be in business, probably, had we not had 8 (a) work, but there are some problems that are noteworthy and need to be looked at. Senator MONTOYA. And you probably would not be in business if SBA had not provided the guarantee for the loans. Mr. WILLIA~rs. That is probably true also. Senator MOXTOYA. They probably helped you quite a bit? Mr. WILLIAMS. Yes. We owe our existence at this point to the Small Business Administration. There is no denying of that. We feel, however, our existence could have been assisted much more positively. Senator MONTOYA. If you had more 8 (a) contracts? Mr. WILLIAMS. WTell, yes, possibly. We shy away from that, how- ever, because, as I say, we are of the opinion that we should not get locked into any one market or any one source. Senator MONTOYA. What do you suggest that SBA do? Mr. WTILLIAMS. Well, some of the things, as I said, that we would suggest is that the restriction on inclusion of interest and sales ex- penses in the proposals for 8(a) contracts be lifted. We also would suggest, along, with, as I said, our understanding is that this whole effort is designed to help the small businessman be- come competitive in the labor market where he does not need this assistance, so in order to do this one of the areas where there is such helped needed is in the marketing area. I think Mr. Rogan pointed out earlier, being an experienced man, particularly in your craft area, you are not aware of the fact of the PAGENO="0101" 95 tremendous marketing assistance and effort that is needed. It would appear to me that one of the positive things that could be done is a l~art of, say, all 8(a) contracts, or part of the financing package that more or less is set-aside part of that package, should be directed strictly at acquiring talented people or expertise in the marketing area so that the business can acquire and maintain a positive sales effort on its own at the same time that we are working on other production problems. We feel that the 8(a) program, similar to the matter being discussed a few minutes ago, your suggestion of having a separate group of people within the Small Business Administration with a specific purpose of soliciting and/or finding work, which would qualify itself for the 8(a) program, would be a tremendous help. There are many Government organizations, for example-to be specific, the Govern- ment Printing Office itself which, of course, we have a particular interest in, and the Atomic Energy Commission, and we understand the Department of the Army. Some of these do not participate actively ol at all in the 8 (a) program. We feel that this is not right, an effort should be made to include them in the total package. The only way that can be done is to have a group of people who are specifically responsible and charged with this responsibility. We feel that the Small Business Administration, under the 8(a) program, can go a long way toward working with the small busi- nessman and his customers, as far as working out problems that may be encountered in the production and lending of technical expertise in the sense of skill expertise, and management expertise. As indicated, myself and my partners have business training and background so that was not really our problem. Our problem was one of getting assistance in solving some of the tangible production prob- lems, scheduling and marketing problems and things of that sort that require previous knowledge or skill in the particular discipline we were working in. But, for example, in working with the small businessman and the Government customer to facilitate the implementation of new and better, improved methods which are designed to make these small businessmen more competitive in the marketplace, and also facilitate cost reductions to the Government customer on his contracts, and this is one of the areas. We think that as part of the financing package, or in some way incorporated in the proposal under the 8(a), that there should be provision for a line of credit, revolving or otherwise. For example, in the case of our woodshop we were faced with a very severe and sincere problem which caused us some of our difficulties today. When we were awarded our initial contract with household con- tainers, it was awarded in July, and we, of course, had to proceed with the preparations of the prototype on the basis of the specification we had, which we did, and this was ready for inspection and approval in August. At the same time the inspection was made, there was determined to be a deviation, not on our part from the specification, but there was a deviation in the specification. This required approval and clarification, and correction from Washington, D.C., which took 2 months. PAGENO="0102" 96 In the meantime, we had geared our operation up, staffed it, and were prepared to go into production based on approval of a prototype back in August, and here we sat in the middle in the meantime holding these expenses of maintaining our plant. We also were not- Senator M0NTOYA. Did you not have other contracts in the plant? Mr. WILLTA~rs. This is the point I was going to make. \\Te were ready and we were not able to adequately go out and market other work because we knew we had a major contract coming in and we did not know what time it was coming in, and we would not have been able to carry on a substantial amount of other work and also perform on the Government contract. So. when the uncert~intv. eeii~ed iiv not knowing when we would be given the go-ahead on the 8(a) contract, we were not able to main- tain our commercial customers. Senator MONTOYA. Well, as a matter of fact, you had not been designated as the one to do the work yet. Mr. WILLIAMS. This was part of the problem, we later understood. Senator MONTOYA. So, therefore, you could not get any financing from a private banking institution, much less from SBA? Mr. WILLIAMS. We understood that. to be a part of the problem later on. So, my point, here. in the meantime, of course, raw materials in this case, particularly in the lumber industry, escalated approxi- mately 40 perceiit during that. period of time. Of course, we were locked into a bid we had submitted on the basis of other prices at. a. lower rate. The contract., of course, was finally awarded under the proposal that. we submitted. In the meantime, of course, as I said, expenses increased, raw material costs had increased so we had to absorb that within the framework of our existing proposal. But, my point about. the line of credit. is this: That. in the case of a small business, as we are, with limited working capital, very tight. financing, it is very difficult for us to come. up with the required work- ing capital to make the major purchases that are required to even start a. contract of this nature. So, consequently, we ended up entering a. trust agreement with a. management consulting group that works with us in ordler that they would make the money available, purchase the material, audi that was the way we were able to even start. the contract. So, a. revolving line of credit of some sort. which would permit the contractor or the small businessman to get a loan, based on need or firm commitments, I think would be a very positive kind of improvement in the total SBA con- cept of packages. Those are the naajor points that I had to make regarding some of the improvements. There are obviously other small ones, but this has been our experience, andi as I said, we feel that. it has been a. helpful one and it was crucial to our existence. We are not. at this point, I would sa.y, begging for or not really wanting more SBA work, as it were, but we would want more assistance to solve some of the problenas that we face that. we feel SBA could provide to us. Senator MONTOYA. Thank you very much, Mr. Williams. That is a very fine statement you have made. Mr. WILLIAMS. Thank you. Senator MoxToi-A. Mr. Tom. PAGENO="0103" 97 STATEMENT OF HENRY W. TOM, H. W. TOM AND S. F. TOM CO., SAN FRANCISCO, CALIF. Mr. TOM. Thank you, Mr. Chairman. When I was asked to appear before this hearing, this was my first experience with this type of hearing. I do not. have a. prepared state- ment as to what I can contribute to the hearing. Senator MONTOYA. Well, sometimes when you do not have a pre- pared statement you do better. Mr. To~r. Well, I was told to tell it the way it is, so that is what I will do. Senator MONTOYA. Well, that is the way to do it. Mr. To~i. Now, we have negotiated and completed several 8(a) contracts. Senator MONTOYA. What do you manufacture? Mr. To~r. I am a general building contractor. Senator MONTOYA. Have you had any trouble making bonds? Mi. To~r. No, sir. Since I have no real comment to make, I just was wondering what I could contribute. Maybe I can at this point com- mend the people at SBA and the agencies that we have negotiated obs with, that they are real helpful and have a pleasant way of doing business. Senator MONTOYA. Have you any 8(a) contracts? Mr. To~r. Yes; I have. I have completed four 8(a) contracts and I received one this morning, a contract for a $310,000 Social building. Senator MONTOYA. Social Security what? Mr. To~i. Administration building. Senator MONTOYA. And you have a $13,000 construction job with the Veterans' Administ.artion? Mr. To~r. That was the first of the year. I have completed that. Senator MONTOYA. You had one for $131,000 for a school addition at HEW? Mr. To~r. That is about 90 percent completed at. this moment. Senator MONTOYA. And $~5,000 for tile floors? Mr. TOM. That is going to be completed this Friday. Senator MONTOYA. You are doing pretty good with the Government. No wonder you do not have any complaints. Mr. To~r. No, sir. Senator MONTOYA. What about the financing for these jobs? Have you encountered any difficulty? Mr. TOM. No. I think there is a reason for that. We have been in business for a;bout 11 years. Senator MONTOYA. Are you a. corporation? Mr. To~r. No, sir; we are a partnership. By being a partnership we can esta:blish a line of credit with our bank on a personal basis. Senator MONTOYA. Yes. Mr. TOM. Of course, naturally they have a hand tied on it, but as- signing persona.l indemnity we can get a lot more money than if we were a corporation. Senator MONTOYA. Yes; I understand that. But, that is because your credit is good. Mr. To~i. That is right, sir, and I think the bonding company works on the same basis as far as we are concerned. PAGENO="0104" 98 Senator MONTOYA. You do not go through SBA for your bonding? Mr. To~r. No, sir. Senator MONTOYA. What do you suggest by way of innovations to improve the service that SBA offers to small business? Mr. To~r. I really do not know, sir. Senator MONTOYA. You are satisfied with their services? Mr. To~r. I am. Yes, sir. Senator M0NT0YA. Have you borrowed any money from SBA? Mr. To~r. No, sir. Senator MONTOYA. You have just par~ic.ipated in the 8 (a) contract- ing? Mr. To~r. That is right, sir. Senator M0NT0YA. How many employees do you have? Mr. To~r. Running between five and 10 on my own payroll. Senator MONTOYA. What. is the ethnic breakdown of your eniployees, sir? Mr. To~r. Oh, about 75 percent. Chinese, several Japanese, and one Caucasian. Senator MOXTOYA. That is all. Thank you very much, gentlemen. Mr. McLarnan, would you bring your people up, sir, and we might give t.he Government 1 more day's work tomorrow. Woulcl you intro- duce your panel sir? STATEMENT OF DONALD E. MoLARNAN, REGIONAL DIRECTOR, REGION IX, SMALL BUSINESS ADMINISTRATION; ACCOMPANIED BY HARRY SWINKELS, ASSISTANT CHIEF, PROCUREMENT AND MANAGEMENT ASSISTANCE DIVISION; CHARLES BLACKLEDGE, COMMUNITY DEVELOPMENT PROGRAM; AND CARL WARREN, ASSISTANT CHIEF, BUSINESS DEVELOPMENT PROGRAM Mr. MCLARXAN. Yes, sir. On my right is Mr. Harry Swinkels, the Assistant Chief of our Procurement and Management. Assistance Division. On my left is Charles Blacklecige, in charge of our Community Development Program. On his left is Carl Warren, Assistant Chief, Business Development Program. Senator M0XT0YA. You may proceed, sir. Do your have a statement? Mr. MCLARXAX. Yes, sir. I am Donald Mc.Larnan, regional director of region IX, Small Business Administration, San Francisco, Calif. I am pleased to be given the opport.unit~- to appear before this hearing on the important. procurement program, commonly referred to as "8 (a) ," which h~s as its goal, giving contract assistanc.e to disadvantaged existing or p0- tential. businesmen. The Small Business Administration has been working very dili- gently with the various Federal procurement agencies and the record of accomplishments to date within the boundaries of this region will show that. it has had my complete backing as well as th1e concerted effort of my procurement. and management assistance staff. As an example, I cite the accomplishments of recently concluded fisca.l year 1971 wherein region IX placed 148 8(a) subcontracts, having a. value PAGENO="0105" 99 in excess of $16.5 million. This dollar figure represents approximately 25 percent of the dollars contracted on this program nationwide tor that period. We have in the past and we will continue to contract for all types of procurement including supply, service, and construction contracts. Region IX includes the States of California, Arizona, Nevada, and Hawaii and these States have experienced a tremendous increase in population. A large segment of these peoples left their former homes because of their dire financial condition and constitute a substantial portion of our disadvantaged population. Accordingly, we recognize our responsibility to assist these people so that they may obtain a part of the ownership of this country's economic life. Through the various programs of the Small Business Administra- tion, we are able to help these firms secure contract by awarding them some subcontracts; and, we are able to assist them in their financial needs through our lending programs. Of equal importance, we work with these disadvantaged firms to develop aiid improve their management capabilities. While substantial progress has been made in this activity during the past fiscal year, we know of the tremendous needs in this area and of the work that must be done and we expect to move further ahead both in dollars awarded as well as number of contracts that will be made duriiig fiscal year 1972. Again, I thank you for the opportunity to appear before this hear- ing and present the Small Business Administration's message for this program. Senator MONTOYA. Thank you very much, Mr. McLarnan. The 25- percent figure which you relate is indeed impressive when compared with the accomplishments in the rest of the country. Now, what special effort do you direct through your organization, through the regional office here, in order to bring about this 25-percent accomplishment? Mr. MCLARNAN. Well, we have a good staff, we work hard, but we are in a very fertile field. lATe only need to do more, and we recognize that we have only scratched the surface, we must have more people to do the work. In other words, there is a limit to what a man can do with his two arms and his two legs. Senator MONTOYA. How many people do you have doing 8(a) work? What are their duties? Mr. SWINKELS. May I answer that, Mr. Chairman? Senator MONT0YA. Yes. Mr. SWINKELS. We have in total in the region of region IX seven people in what we call the business development program, doing 8(a) work. Four of the seven are contract iiegotiators, two located in San Francisco regional office, and two located in Los Angeles district office. The other three are what we can project development officers and their responsibility is to try and obtain some of the work that the various Government agencies have available. Two of these project development officers are located in the San Francisco office, or, pardon me, all three of them are located in the San Francisco office. Senator MONTOYA. IDo you have any contact with the procurement agencies here? PAGENO="0106" 100 Mr. SWINKELS. Yes, sir. Senator MONTOYA. And what have you accomplished through those contacts by way of information that you can pass on to the small business community? Mr. SWINKELS. Well, the contact we do have with the various pro- curement agencies located within our region are such that we have five procurement center representatives that are assigned to the set- aside program. They have additional responsibilities also to try and obtain some of the 8(a) work that may be available from various installations. Of the five procurement center representatives, and one is permanently stationed at the McClellan Air Force Base at Sacra- mento, Calif. Two are located as liaison procurement representatives in San Francisco, the other two are located in the Los Angeles district office. Senator M0XTOYA. What kind of cooperation or information do you receive from the different Government agencies in this area? Mr. SWIXKELS. WTe have excellent working relationships with the majority of the Government installations in this area. Senator MOXTOTA. What about Defense Supply? Mr. SWINKELS. WTe have no Defense Supply Agency here. Senator MOXT0YA. Where is it located? Mr. SwINKELs. Well, the Defense Supply Agencies are located back east, we just have a subsistence center. Senator MONTOYA. There is one in Kelly Field, is there not, a DSA? You do not have any in California? Mr. SWINKELS. No, sir. Senator MONTOYA. What about the Department of Defense branches? What kind of cooperation do you receive from them? Mr. SWIXKELS. Excellent cooperation, the Army, the Navy. Senator M0xTOYA. In this area? Mr. SWINKELS. Yes, sir. Senator MONTOYA. Do you receive any information out of Washing- ington with respect to procurement that might be serviced here? Mr. SWINKELS. Yes, sir. Senator MONTOYA. Who do you get it from? Mr. SWIXKELS. We get it from the central office, the Office of Busi- ness Development. I think Mr. Warren can answer that in a little more detail. Senator MONTOYA. Mr. Warren. go ahead. Mr. WARREN. Yes, sir. Thank you, Mr. Chairman. We frequently get procurement opportunties represented to us that our central office personnel has learned about through their local efforts at that level. These are primarily national procurements. 1 meaii by that that the procurement opportunity is not formerly bought at field level; therefore, the continuity and contact point is much better realized at the Washington level, so our central offices help us fre- quently with this kind of a procurement opportunity. Conversely, we here in the region. if we happen to hear of some- thing that is beyond our own known capabilities of minority com- panies within our regional boundaries, we automatically refer that to our central office for their perusal and possible award to a minority PAGENO="0107" 101 firm in some other region. `We simply just tell the procuring activity that we do not have the capability to handle it and we will refer that immediately to our central office for screening throughout the other nine regions of SBA. Senator MONT0YA. Do you have a list of small business enterprises that might be using the set-aside program or the 8(a) program? Do you have a list in your office? Mr. WARREN. Not a list as such? Senator M0NTOYA. How do you contact them then? Mr. `WARREN. Well, we have approved business plans alphabetically filed. Senator MONTOYA. You have what? Mr. WARREN. Our business plans, business plans of the compames that we are dealing with. Senator MONTOYA. Now, what do you mean by that? Mr. `WARREN. Well, these are business plans that have been pre- sented to us which show projection of the company's planned business operations over the next 3-year period, showing us the amount of 8(a) contract assistance they desire, and how much commercial busi- ness they will expect to enjoy during that period of time. Senator MONTOYA. And theii what do you do with the companies? Mr. WARREN. `Well, once we have the approved business plan, we attempt to find them a procurement opportunity. We admittedly can- not do this in all cases. Senator MONTOYA. I still do not follow. You say you have these business plans on file? Mr. WARREN. Yes, sir. Senator MONT0YA. Do you have the names of small business con- tractors in conjunction with these business plans? Do you have a cross index system? Mr. WARREN. Y~s, sir. Senator MONTOYA. Now, give me an example of what you do, say, for instance, if there is a demand for nuts and bolts? Now, what do you do, what do you do in your filing system.? Mr. `WARREN. Well, we go down through our list to see which com- panies we have with that type of capability, and look through their business plan file to. see if they have the necessary capability to do that specific j~b opportunity. Senator MONTOYA. And you have, a complete list? Mr. SwINi~ELs. We have companies that are registered with us at the present time that have submitted business plans that were approved by our region. Senator MONTOYA. Yes. You have a complete list? Mr. `WARREN. Yes, that is correct. Senator MONTOYA. Now, are these the companies who have satisfied your criteria for a certificate of competency? Mr. WARREN. No, sir. Mr. SWINKELS. The certificate of competency is a separate program in itself that was established at the time the agency was created. The cem~tificate of competency program is eligible to all small businesses when they are low bidder on a set-aside procurement or procurement that is open competition. The certificate of competency has no bearing on the 8 (a) program. PAGENO="0108" 102 Mr. WARREN. As a matter of fact- Senator MONTOYA. What about the certificate of eligibility? Mr. WARREN. Yes, sir, the certificate of eligibility is what I am re- ferring to here in the 8(a) program. The firms in our files are those whom we have approved and consider eligible to participate in the program. Senator MONTOYA. Well, do you have a separate filing system for those who have a certificate. of competency? Mr. WARREN. Well, sir, I do not, myself, because my particular pro- gram is not, as I said, involved with the COC program. Senator M0NT0YA. There was some testimony introduced today indi- cating that there is a vacuum and that there is no known listing of small business enterprises and their capabilities. Mr. WTARREN. Yes, sir, I recall the testimony. I think this was Mr. Ga.y from North American Rockwell. Senator M0NTOYA. And I am trying to find out what you have in your office in this particular direction. and is it adequate, is it. complete, or should we do something more to implement it? Mr. SWINKELS. WTe11, Mr. Chairman, may I answer that? We have in our office what we call a facilities inventory program, which is a program wherein a small business firm can file a form with us, what we call a 166 form, listing their capabilities. Now, this program is open to all small businesses. It is not restricted to disadvantaged or any other type of business. We do have a facilities inventory in our office, but this is on a vohmtary basis with the great nunTher of small busi- nesses, nationwide, some 41/2 million small businesses under the. criteria. of the side standards of the small business. WTe have no way of listing, nor do we have the staff or facilities to enable us to liSt. everyone of these small businesses. We try and list as many businesses that a.re located within our region, region IX, and again, this is on a voluntary basis. In order to do that., we continuously mail out these 166 forms. We use all kinds of association books, tele- phone books if we have to, other public.ations t.ha.t are available, t.o try and get these small firms to register with us in our facilities inventory so that we do have the nucleus of small firms, not particularly for the 8 (a.) program, but to use as a source of supply for any Government agency or any prime contractor, or anybody else that is seeking a small business source of supply in a particular field. Senator MOXTOYA. But., you do not have any catalog? Mr. SWINKELS. They are cataloged alphabetically, under an SIC code known as St.a.ndla.rd Indlustria.l Classification code. This is a system set up by the Bureau of the Budget, and everyone in tile system of the Government agencies and prime contractors has a four-digit coding system that classifies it under a particular industry so you do not have to look up alphabetically all tile time to see if the man is producing an item or what-have-you. It is broken into a. particula.r category. Senator M0XTOYA. Give me an example. Mr. SwINKELs. For example. machine shops are under a classifica.- tion, let us say. of 3599. If we get a request from a procurement agency or prime contractor, let us say, seeking small business sources in a machine shop, the first thing we do is we have the cross index, we look under this four-digit number, and under tha.t. four-digit number 1S PAGENO="0109" 103 listed the various companies we have. Then we pull their file folder and we review them to determine if this is the type of work they are inter- ested in. It is a cross-index sy~tern. Senator MONTOYA. Now, do you make this list available to procure~ ment agencies? Mr. SWINKELS. We are in no position at the present time to catalog it and make it available. It is available to them if they so desire. Senator MONTOYA. Well, the point I am trying to make is I would say that most of the time the procurement agencies will not tell you what they want to buy, locally, and so you are not going to find out, and some colonel in the purchasing office, some retired colonel in the purchasing office might try to favor some one of his close friends. Mr. SWINKELS. This is the responsibility of the procurement center representative. As an example, the individual that is stationed at McClellan Air Force Base in Sacramento is responsible as such that he review every purchase request that goes through the procurement section, and if there is a requirement that could be set aside for small business and the procurement agency says, however, we do not have sources of supply, it is the responsibility of our procurement center representative to come to us through the facilities inventory or any other known resource that is available to him to try and obtain names of small businesses that may be interested in bidding on this procure- ment. Senator MONTOYA. Now, how does it come to you. D'oes he call you every day? Mr. SWINKELS. Through a form we use, what we call a source of supply, which is the standard form which lists the item that is involved. If there are some specifications or some nomenclature avail- able, we require it as it gives us as much detail as possible so we can marry the two together. Senator MONT0YA. Supposing there are 100 procurement items that go through in 1 day, through that procurement office, and your man is there. How is lie going to send you 100 different memorandums? Mr. SWINKELS. He had better; otherwise, lie is not doing his job. Senator MONTOYA. How can he do it? Does he have some help there to do it? Mr. SwINIc~Ls. He has part-time hel.p, but he can always write it down on the form. It is just a basic, simple form. Senator M0NTOYA. Is that an unusual situation in a bid operation? Mr. SWINKELS. Yes, sir. What you mentioned, 100 procurements per day, we would not have all 100 of them coming to us. Out of 100, we may have five which he will pick lip and perhaps call us and give us the basic information on the phone, and follow up with the form. Senator MONTOYA. Do all regions in the country use this system? Mr. SWINKELS. Yes, sir. It is in all regions and cross indexed, also. In other words, when we request the source of supply, we do not request it only from our regional office, but it is requested also from the other regional offices. Senator MONTOYA. Now, how successful is it? Mr. SWINKELS. It has been very successful. I can speak only for my own region here, and it has been very successful as far as McClel- lan Air Force Base is concerned. The statistics, if I may, just for the last fiscal year- PAGENO="0110" 104 Senator MONTOYA. What about-just a minute now. Let us say the San Antonio area wants to purchase certain items. Now, how do you get that information ? Mr. SwIxI~ELs. The San Antonio office is under the Dallas region and the Dallas region also has procurement center representatives that do the same thing as our men do. Senator M0NTOYA. What if they do not manufacture the particular item in the Dallas region? Mr. SWINKELS. That man should come to the other regions, includ- ing us. Senator MoxToyA. Does he? Mr. SwINKEL5. Yes. sir. Senator MoxToyA. He. does? How does he do that? Mr. SWIXTiELS. The same way. but the use of this one form that we use. and also by telephone. if necessary. Senator MOXTOYA. How- many regions do you have in the whole country? Mr. SWINKELS. Te11 regions. Senator MOXTOYA. You mean you circulate to 10 regions, then, all 10. Mr. SwIXKELS. Yes, sir; it circulates the 10 regions. Senator MOXTOYA. WelL I have never heard of that before. Mr. SwIx1u~Ls. As an example, if I may. Mr. Chairman, our pro- curement center representative up at McClellan Air Force Base, last fiscal year. furnished 1~013 small business sources. Out of that 1,013, 468 submitted a bid. Out of the 468 that did, 92 received awards. These aw-ards w-ere in the total sum of $1,679,000. And this. again, is through our source of supply. Senator M0XTOYA. Out of how- much total, out of how- much pro- curement expenditure? Mr. SWIXKELS. I do not have that figure of the procurement ex- penditure. The total procurement expenditure at McClellan Air Force Base last year w-as something like $250 million. Senator MOXT0YA. So, that is less than one-half percent? Mr. SWINKELS. Yes, sir. However, we must exclude out of that $250 million at least $150 million that is customer directed, like the F-ill aircraft and so forth. Senator M0XT0YA. Do you think that we could do more through SBA? Mr. SWINKELS. yes, sir. Senator M0NT0YA. What do you suggest? Mr. SWINKELS. More people. Senator M0NT0YA. More people in what? Mr. SWINKELS. In all of our programs. As an example, you asked a little bit earlier how- many people we have in the business develop- inent program, and I mentioned seven. We have an excellent record in region 9, as Mr. McLarna.n mentioned, but it is not totally clue to just the seven people. We have had to use other competent people, procurement center representatives and facilities inventory specialist, C.O.C. specialists, and others to supplement the personnel for the 8(a) program. Consequently, when we do that, the other programs suffer, and in order for us to do a better job we must have more people. Senator M0NTOYA. WTell, I think that the overall accomplishment in the whole country is rather poor, do you not? PAGENO="0111" 105 Mr. SwINKELs. Well, I do not care to comment for the rest of the country. I am quite proud of what we are doing here in region 9. Senator MONTOYA. There will not be any raise anyway so you can answer that question. Mr. SWINKELS. May I take the fifth amendment? Mr. MCLARNAN. I think it would be helpful if we had a few extra stenographers too. When Mr. Swinkels talks about McClellan Field, there are a lot of centers that we do not have a man there, or we have one there only part time. That is the thing we are talking about. We say we' can do better, but if a man is in transit from one `place to another, and it takes time to ge there, especially out here in the West where we have big distances, it just means we cannot do as much as we would like to do, and that is no criticism of anyone except if you want us to do more, than we will do it, and we will be glad to do it, but we just have to have people to do it. Senator MONTOYA. Well, my point, the point I am trying to make is that SBA is charged with this program, and if they do not have the adequate manpower to do a fair job on it, and to run surveillance `and monitor the purchasing made by these Govermaent agencies, then we `are falling down on the job under the intent of the law. I a'm not blaming SBA for it completely. I think we are all to blame, in the Congress, the administration, and the SBA. I think we should all share some of the blame in this thing. But, I think it is patently clear that something has to be done because small contractors and small mann- turers are not getting their share of the procurement pie. It is going down percentagewise as it goes up dollarwise, so the pie is getting bigger and the percentage gets smaller. I do not have the figures be- cause we have not conducted the hearings this year as to what it was last year, but it has `been going down, and this is why we are having this hearing today. Now, according to your figures you had, there was, I beilieve, $16 million for the whole country in the 8 (`a) contracting, $16.5? Mr. MCLARNAN. No, that is in our region. Senator MONTOYA. So, it is in your region and that is for 1971? Mr. MCLARNAN. Yes, sir. Mr. SWINKELS. The total dollar value in the entire country for 1971 was $66 million and $16.5 million was in our region. Senator M0NT0YA. What about the contracting officers? Mr. SwINKELs. Well, can you be more specific in what you mean by what about the contracting officers, sir? Senator MONTOYA. Do you have anybody from your agency trying to induce these contractors to give subcontracts to small entrepre- neurs? Mr. SWINKELS. Through the 8(a) program? Senator M0NTOYA. Well, either through the 8(a) or the set `aside? Do you have that? Mr. SWINKELS. Yes, sir. These are our project development special- ists, and also procurement center representatives. However, we must bear in mind that large installations, and again I refer to McClellan Air Force Base because that is the `largest installation we have in our region, you have a number `of contracting officers and buyers and th'e representative deals with the small business specialist that is located at the installation and works through the small business specialist. PAGENO="0112" 106 Senator MGNT0YA. Who does the small business specialist work for, the SBA? Mr. SwIxicELs. He works for the Air Force, but that does not mean that precludes our representative from going pa st the Small Busmess specialist to cleat with the contracting officer or buyei~ if he has some questions. He does have that autliorit to do that, sir. Senator M0xT0YA. Well, at one time the SBA contracting officer was placed under the Department of Defense, if you will recall, and taken away from SBA, and we changed that, and brought him back to SBA. And now you call him a procurement- Mr. SwIxI~ELs. A procurement center representative. Senator MoxTorA. Yes, so, well. is he accomplishing anything? Mr. SwIxKELs. Yes, sir, lie is. Senator MoxrorA. You say you hare five procurement center repre- sentatives for this region? Mr. SwIxI~ELs. Five procurement center representatives. The one at McClellan Air Force Base is permanently stationed there, and the other four are our liaison representatives, two in San Francisco, two in Los Angeles, trying to cover liaison on some 48 to 52 installations within the State of California, Arizona, and Nevada- Senator MoxTorA. What. does the small business representative do? Mr. SWIxKELs. Our small business representative or procuremeiit center representative oii a liaison basis visits various installations as- signed to him to review procuremeiit that were ilaced on open bid, not the ones that have already been set-aside by that particular installa- tioii, because that job had already been done. It is his responsibility to review procurements that were iiot set-aside for that prime purpose, and if it is the type of procurement, and if it is a repeat item and suit- able for small business set-aside, then lie can request a joint set-aside on those procurements. Senator M0NTOYA. What do you mean by a joint set-aside? Mr. SwIxKEr~s. An agreement between SBA and that particular procuring agency. The two parties agree and sign an agreement form that this will be set aside on a joint set-aside basis. Senator MONTOTA. Do you have aiiy seminars in this region for small business? Mr. SWINKELS. Yes, sir. Senator MoNT0YA. When did you have the last one? Mr. SwINKEL5. Our 8 (a.) seminars, we just recently had four. Mr. Warren can answer that. Mr. WARREN. Yes. Actually the four that were recently held within our region, Mr. Chairman. where the SBA was simply a participant rather than an organizer of them. These were organized by GSA, and by the Department of Commerce. The SBA, of course, was invited to participate from the standpomt that they spoke of the 8(a) program concept. One was held in Sacramento, oiie in Oakland, and one in San Bernardino. and one in Phoenix, Ariz. Senator MONT0YA. What kind of response did you have? Mr. WARREN. Very bad, I will have to say. SBA took a lot of criti- cism, possibly some of it w-e deserve, and I think, in my personal opin- ion, probably most of it we did not. And I think the reason it was leveled on us in the way it was, no doubt, was because the individuals who felt the way they did are the oiies that expressed dissatisfaction PAGENO="0113" 107 probably and did not really understand the entire picture. And you cannot blame a man for at least expressing his views. Senator MONTOYA. Did you have good attendance? Mr. WARREN. On all but the Phoenix one. I think the Phoenix meet- ing was very poor from the attendance standpoint. I would say there were probably 30, maybe 40 people in total there. Senator MOXTOYA. Well, I have conducted quite a few of those sern- mars, and in quite a few places we have had very poor attendance, and I am not going to blame SBA for not attracting more people. It is up to the people to come as soon as t:hey read the notice in the paper. Mr. WARREN. Yes, sir. Senator MONTOYA. But, I think that is where the real fault lies, that small business people do not realize what SBA can do for them and SBA, naturally, with its small manpower cannot go out and seek these business people who can possibly service procurement contracts. Mr. WARREN. I think, too, another thing too, on these recent semi- nars the Department-I am not trying to shove the blame on somebody else or other agencies, this is not the point at all-but unfortunately I think the SBA had nothing to do with the press releases on this. They were all handled by GSA and the Department of Commerce. This was a cooperative effort. However, there w-as no, as I say, no arrows bemg pointed in any direction. But, these were, I would say, probably as well attended that any that have been held, and I think these four were about, oh, the 45th through probably the 49th meetings being held nationally. Senator MONTOYA. What has been the experience of SBA here with respect to loans to minority enterprises? Can you give me the statistics on this? How many loans have you made? Mr. MCLARNAN. I was assured by these gentlemen here that you were not going to ask me about the loan program, and I did not bring any figures. But, we are not ashamed of our figures and we can bring them to you. Senator MONTOYA. If you will. Mr. MOLARNAN. From my recollection, our minority figures are about 45 percent in numbers, and somewhere in the 30 percent in dollar amounts. But, it is certainly a tremendously larger percentage than those people represent. Senator MONTOYA. Can you give me a breakdown as to that, when you submit these figures, as to how many loans you have made to Spanish-surnamed Americans and black people, black business people? Can you do that? Mr. MOLARNAN. I do not believe that we keep track of them in that manner. We keep track of them as to whether they are minority or not, but whether we have the breakdown as far as loans are concerned about ethnic background, I am not certain. I think we have it, but I will cer- tainly give you every bit of information that you ask for. Senator MONTOYA. Well, give me the numbers of loans that you have made, and what your experience has been with respect to minority enterprises. Mr. MOLARNAN. Yes, sir, if we can do that, Mr. Chairman, on the part of the minority enterprises. I might say in general our record in minority delinquencies and col- lections is two or two and a half, maybe three times more difficult than 70-654 0-72-8 PAGENO="0114" 108 our regular 7(a) program, our regular lending program, and this is because we have gone out of our way, we have extended ourselves try- ing to assist people and we took a greater risk and we knew it when we did it. Senator MONTOYA. Do you have 10 percent participation in all of these loans, bank participation? Mr. MOLARNAN. Yes, nearly all of ours. We did have a few 100 per- cent, but. most of ours are 90 percent guarantees. Not in the minority, of course. That. is strictly SBA money. Senator MONTOYA. How many of minority have you made in dol- lars, and how many loans have you made and what is the dollar amount? Would you supply it for the record? Mr. MCLA.RNAN. Yes, sir. (The subsequent information was received and follows:) PAGENO="0115" SMALL BUSINESS ADMINISTRATION LOANS APPROVED TO MINORITIES, NATIONWIDE, FISCAL YEAR 1971 Direct Loan program Number Gross amount SBA Im mediate participation Guarantee Totals, by program share Number Gross amount SBA share Number Gross amount SBA share Number Gross amount SBA share Regular business loan 167 $8, 430, 000 $8, 430, 000 329 $17, 242, 300 $10, 499, 975 1, 627 $95, 820, 351 $84, 788, 190 2, 123 $121, 492, 651 $103, 718, 165 EEonomic opportunity loan 3, 818 51, 553, 080 51, 553, 080 49 828, 470 660, 663 1, 584 23, 301, 725 21, 859, 206 5, 451 75, 683, 275 74, 072, 949 Displaced business loan 27 1,540,566 1,540,566 3 118, 000 91, 500 1 6,500 5,850 31 1,665,066 1,637,916 Development company loan 154 11, 987, 820 11, 987, 820 4 1, 146, 716 785, 444 13 1, 767, 487 1, 565, 740 171 14, 902, 023 14, 339, 004 Subtotal 4, 166 73, 511, 466 73, 511, 466 385 19, 335, 486 12, 037, 582 3,225 120, 896, 063 108, 218, 986 7,776 213, 743, 015 193, 768, 034 Disaster 27,843 89,928,400 89,928,400 27,843 89,928,400 89,928,400 Total 32, 009 163, 439, 866 163, 439, 866 385 19, 335, 486 12, 037, 582 3,225 120, 896, 063 108, 218, 986 35, 619 303, 671, 415 283, 696,434 LOANS APPROVED TO MINORITIES IN THE STATE OF CALIFORNIA, FISCAL YEAR 1971 $2, 243, 700 2 $165, 000 $123, 750 247 $15, 838, 045 $14, 128, 211 274 $18, 246, 745 6,026,475 310 4,796,710 4,594,860 700 10,823, 185 529,000 6 529,000 713,400 7 713,400 9, 512, 575 2 165, 000 123, 750 557 20, 634, 755 18, 723, 071 987 30, 312, 330 2,423,200 620 2,423,200 11, 935, 775 2 165, 000 123, 750 557 20, 634, 755 18, 723, 071 1, 607 32, 735, 530 Note: The following are the lead guarantees to minorities, fiscal year 1971: STATE OF CALIFORNIA, FISCAL YEAR 1971 Aggregate Number amount of rent Nationwide 80 $9,818,831.20 California 56 1,317,600.00 Regular business loan 25 $2, 243, 700 Economic opportunity loan 390 6,026,475 Displaced business loan 6 529,000 Development company loan 7 713, 400 Subtotal 428 9, 512, 575 Disaster 620 2,423,200 Total 1,048 11,935,775 $16,495,661 10,621,335 co 529, 000 713, 400 28, 359, 396 2, 423, 200 30, 782, 596 PAGENO="0116" 110 FINANCINGS OF MINORITY SMALL BUSINESSES BV REGULAR SBICS AND MESBICS-FISCAL YEAR ENDING MAR. 31, 1970' [SBIC-A small business investment company, licensed by SBA, is privately owned and operated, and provides equity-type capital and long-term loans to sma!l business concerns. MESBIC-A minority enterprise small business investment com- pany that invests only in small business concerns with at least 50 percentof the ownership representing minority persons.] NATIONWIDE MINORITY FINANCINGS BV SBICS AND MESBICS IN FISCAL YEAR ENDING MAR. 31, 1970 Financings reported by- -- - Total financings by 331 regular SBICS 5 MESBICS SBICS and MESBICS 2 Minority groups (codes 0-5) Number Amount Number Amount Number Amount 0 Blacks 59 $2,317,217 50 $622,730 50 $772,110 1 Puerto Ricans 13 1,085 401 1 15, 000 1 15, 000 2Americanlndians 3 Mexican-Americans 2 105, 200 1 2, 000 1 2, 000 4Asians 10 433,962 2 135,000 5EskimosandAleuts Total 84 3,941,780 52 639, 730 54 924,110 1 Reporting period based on fiscal year April through March. Closeout reporting period for fiscal year ending March 1971 is August 1971. 2 In California State. Senator MONTOYA. What is your feeling about the 10-percent ba.nk participation requirement? Is that not an impediment, an insurmount- able obstacle? Mr. MCLARXAN. Of course, it. is a mild detei-rent, but actually- Senator M0NTOYA. What do you mean by mild deterrent? Usually it is a very serious deterrent? Mr. MCLARXAN. You know. I am a former bank president myself, and. of course, a bank would like to have a 100 percent guarantee in- stead of a 90 percent. Senator M0NT0YA. 110 percent. Mr. MGLARNAX. Yes. or more. But., actually whether it is minority lending or any other kind of lending. it is disservice to a man if you loan him the money where he does not even have a chance of making it. So, the fact that we ask the bank to take a 10 percent piece of the action, that does not stop them. The banks have been cooperative in that regard. We do have instances where people become very incensed because they do not get a. loan, but then you cannot explain to them that it would be a greater hardship to them than a help. Senator MoxToi-A. Well, here is what I am referring to, Mr. McLarnan, that some member of a minority will go to a banker who might be prejudiced, and we have People who are prejudiced in almost any activity in this country. Now, this person may be capable of running a. good business and he may be running a good business at the time, but he needs a small business loan and SBA tells him you go to the bank and get a letter from your banker for the 10-percent par- ticipation. The banker is prejudiced, or may be it. is because there is not because the banker is prejudiced, or maybe it is because there is not enough interest in participating in an SBA loan. Now, this happens many times. I know. So. what is the alternative? WTell, the alternative is that if SBA thinks this man is good. why should they not be able to make a 100-percent loan? I mean, give a. 100 percent guarantee on the loan ? That is the point. I am trying to make. Mr. MCLARNAN. That is a very good point, Senator. The only thing PAGENO="0117" 111 is that in most cases if we can get him where, as you said, he knows how to run a business, we can usually talk a bank into making that kind of a loan. Now, I do not say we do it in every instance, but we have been very successful in that regard, and we have not had as much prejudice for racial or ethnic cases as we have prejudices where the bank just does not want to take a chance on a man who has a weak loan situation when he knows that at tin'ies like this he can loan his money to absolutely safe borrowers. So, it is not an ethnic thing so much as it is just the case that he is going to make the loan to the man who is the safest borrower. Senator MONT0YA. I have no quarrel with the banker who refuses to make a loan to somebody that patently shows an incapability for repayment. I have no quarrel with the banker like that because he is not supposed to throw the depositors money away. I am referring to the case of pure prejudice. Mr. MOLARNAN. In the case of prejudice, here in California we have an overwhelming number of tremendously large chain banks, and the management of those banks have seen the light as far as this prejudice because of ethnic basis, and in most cases-now I know there are cases of prejudices, and let us not be misled by that, I know there are cases- but in most of the cases we have been able to go to the branch manager and say if that is the reason you are holding out on this loan, you had better get with it because the management, the head of this bank wants to make these loans, as many as they can, if they can reasonably get their money back simply because, for example, some of the banks are going into this MESBICs program, and some because they have seen their civic responsibility. So, with the exception of certain in- stances where I am sure there are many cases like that, but it is not nearly as widespread as some of the minority people feel, because it does not make any difference whether you are a minority or a Caucasian or what. If you are turned down by a loan you feel bad, you feel resent- ful, you feel hurt, and as a result, they blame it on a number of things, and, of course, the easiest one is to say I am, and they give their ethnic background and they say they did not make it to me because of that, when as a matter of fact, that might have been a factor in the case, but it is also a factor that he might have had a reasonably weak loan situation. Senator MONTOYA. I can show you areas of this country where the banks have not made a single loan to a black American, Spanish sur- name American. Mr. MOLARNAN. I am sure that is true, and I am sure that 10 to 15 years ago it was almost 100 percent true. But, there is quite program among the bigger banks here to eliminate that sort of thing. Senator M0NT0YA. Do you feel that there should be flexibility given to the SBA administrators whereby if they encounter a situation like this, which indicates a bank arbitrarily refuses and also there i~ a capability on the part of the potential borrower to repay that particu- lar loan, that SBA should be vested with the authority to make a 100 percent guarantee? Mr. MCLARNAN. I believe that, and also-I do not want to speak for the agency because I mean that is done by our central office, but I personally feel that we ought to have direct funds so that when we run into a situation just like the one you described, where the man can PAGENO="0118" 112 pay his loan back, and he does not have a bank of account, other than the one where he has been dealing with somebody who is obviously prejudiced, that we have sufficient direct funds in that instance to make that man a loan, so if he cannot get a banker to do it, the SBA will go on the loan. Now, if we had that flexibility, it would eliminate that problem that you are talking about 100 percent. Se~iator MONTOYA. Yes, I think so, and that is the only quarrel I have with the 10-percent requirement. That is the only quarrel I have with it. Mr. MCLARXAN. We like the 10 percent because it encourages the bank to get into the act with us. You see, after all, they are using 100 percent of their money. Until the time comes when we have to buy it back, and that gives us-we can spread our dollars many, many times further than the way it is under that program. Senator MONT0YA. What does this regional office provide by way of managerial-counseling services to small businessmeii to whom loans have been made? Mr. MCLARNAX. Well, the minute that a loan is made one of our SCORE representatives goes out, or a member of our management assistance programs goes out and talks with the. borrower, and in many cases lie also went out. before the borrower got the loan. We try to set up a working arrangement with them, and through the SCORE, and we also have a contact with the. society of Certified Public Accountants and other business groups here who will give us people to give aid and guidance to the small businessman, if lie will accept it. But., frequently we find that after the man has got his loan lie does iiot want to have anybody coming around advising him or telling him how to run his business. So, this is oiie of the minor complications that you have in this kind of a situation. Senator M0NTOYA. Well, what do you think should be done under those circumstances? Should we anticipate that a refusal might come and counsel him before the loan is made as a requirement? Mr. MOLARNAN. We not only do that., but we put it in our loan agreement that he will accept this counseling and guidance. But, whether they accept it or iiot, sometimes is a matter of practical appli- cation, and some do and some do not.. Senator M0XTOYA. Do you have an arrangement whereby CPA's can render a voluntary service Mr. MCLARNAN. Yes, sir, and the head of the society in this area was in my office last week working out further details a.nd they are cooperative. Senator MONTOYA. Do you have a pooi of business people here who might volunteer? Mr. MGLARNAN. Yes. We have how many in our SCORE program? Mr. SWINKELS. We have something like 140. Mr. MCLARNAN. 140 on our active SCORE roster, and we have names of others that we can solicit, from time to time. Senator M0NT0YA. Have you been using them? Mr. McL~~RNAx. Definitely, we have. I would estimate anywhere from 5 to 10 SCORE men are in our office everyday, and others are out in the field, going out. Senator M0NT0YA. They are volunteers, are they not? PAGENO="0119" 113 Mr. MCLARNAN. All of them, yes. Senator MONTOYA. Do they pay their own expenses? Mr. SWINKELS. Yes, sir. Mr. MCLARNAN. If it is within 50 miles, and we have a tenuous arrangement with them over 50 miles that we can give them 10 cents a mile and per diem or something to that effect. Senator, you asked about some of these courses, and I would like to, if I may, state to you that in management training in the last fiscal year we had 53 courses, eight conferences, 21 workshops, and 11 clinics making a total of 93 courses, conferences, workshops and clinics, and that is just our San Francisco office, just right here in San Francisco. In management assistance for the entire region we had 15,350 inter- views, 5,982 counseling cases, and we had a 1,616 management ability evaluations, we had 496 management assistance plans. So, with a staff like you have heard from Mr. Swinkels, you realize that somebody has been working. Senator MONTOYA. What is your total staffing in the regional office here? Mr. MOLARNAN. For the procurement? Mr. SWINKELS. The regional office, the entire region? Senator MONTOYA. The total staff for SBA? Mr. SWINKELS. The total staff in SBA procurement and manage- ment assistance is 28 professionals. Senator MONTOYA. And the total staff? Mr. MOLARNAN. 267, and I think we are sixth on the. list of 10 regions. In other words, there are five other regions who have sub- stantially greater numbers than we have, which is no criticism of them, but it just shows you we. are just working with a very limited staff in an area where there is an awful lot of work to do. Senator MONTOYA. Well, what about some of those regions? Do they have minority problçms such as this region has? Mr. MCLARNAN. I think yes. You see, some of the bigger offices like Chicago and New York, and Atlanta, and Dallas, they have not only minority problems but they have other problems. Senator MONTOYA. Now, do you have aiiy 406 money for consultation services? Mr. SWINKELS. Yes, sir. Senator MONTOYA. Do you use it? Mr. SWINKELS. Yes, sir; very much so. We have one 406 contract here. Well, we have a number of 406 grants but we. have one 406 con- * tract with a minority firm down in Los Angeles known as Ultra System. Senator MONTOYA. Now, what do they do? Mr. SwINIcELs. They offer management assistance to the minority firms. Senator MONTOYA. Do you make sure that they have the business capability and experience to render this type of counseling? * Mr. MCLARNAN. That determination is made in our central office, and until this new Administrator, we did not have any voice in the selection of the grantees. However, our new Administrator has indi- cated that we will be consulted as to the capabilities and also as to the past record of the grantees. We are very happy about that. PAGENO="0120" 114 Senator M0NT0YA. Well, I would hope that you would look into this because some of these grants have beeii made to people who give coun- seling when they have never been in business themselves, they have never achieved any success in business. They have just set up an orga- nization and applied for a grant, and they have been getting them, too. I think that is a mistake, that is a waste of the taxpayers' money. \~That about the surety bond legislation, what has been your exper- ience here with respect. to that? Mr. MCLARNAX. We were one of the two offices that carried the pilot program on that, and Mr. Blackledge has been in charge of that.. He will answer any questions you would like. Mr. BLACKLEDGE. Since the inception of the program on April 26, 1971, in Los Angeles as a pilot program, 45 bonds have been approved in region 9. I have no statistics for the other parts of the country. In August 2, 1971, the authority was delegated to our office to oper- ate throughout our region, and we became the second to be regionwide as a pilot, program. During the time since August 2, 1971, we have ap- proved 24 additional bonds, which would be part of the 45 mentioned earlier, for $1,712,195, averaging $71,341, as an average contract size. Now, of the 45 bonds that were approved, that. is, applications for a guarantee that were. approved, 22 bonds have actually been issued within our region for a total of $971,392.31. The reason for the lag is twofold. First, all bidders are not low bidders and then secondly, there is a lag. Many times a man is approved on an application to guarantee his bond, but lie does not request if for another 15, 20 or 30 days. It takes that long before lie needs the bond and actually has it. issued to him. So, these two are reasons. `We fomid one interesting case where after we approved the bond the contracting agency, which happened to be a municipality decided if someone is willing to boiid him they no longer require a bond. They required it first, and then found out. lie could get. it. I do not. know whether there was something else behind it or not. These were the facts apparent to us. As we go down through our statistics we find that since we have had the program, and we keep closer statistics than before August 2, we have issued 12, actually issued 12 bonds for $517,676, and the average size of the bonds that were issued was $43,140. The breakdown as to size, I think, might be of interest. Since Aug- ust 2, we have approved the following number of bonds up to $25,000, five; from $26,000 to $50,000, eight; froni $51,000 to $75,000, two; from $76,000 to $100,000, three; from $101,000 to $125,000, one; from $126,- 000 to $150,000, one. In excess of $150,000, four; making a total of 24 bonds that we have approved siiice we took control of the program. Senator MONTOYA. Have you had any defaults? Mr. BLAc.KLEDGE. `We have had no defaults yet, but we are too new in the program. WTe do have some maintenance contracts that are yearly, so it is to early for us to evaluate this. We do think that the quality is good. They have beeii little people, bu they have been people woh knew what. they were domg. aildi I am very pleased that. the ones that are coming seem to be t.hie type of ~ for whom t.hie program was pIOpOSedI. Senator MONTOYA. Do you provide bonds for service contractors ~ Mr. BLACKLEDGE. Yes, sir; amid I think as I look down through my data I believe that probably of the 24, 14 of them represent either serv- PAGENO="0121" 115 ice or supply contracts which have only a performance bond in con- nection with them, no labor and material payment bonds. Senator MONTOYA. Do you think that the present law is adequate for the needs in this particular area, or do you think that implementa- tion is necessary-~- Mr. BLACKLEDGE. The statute limits it to oniy performance, labor, and materials. I do not know. There might be some place to include fidelity and some other types, such as indemnity that many small people might have to come up with. Senator MONTOYA. Like what? Mr. BLACKLEDGE. A fidelity bond, suppose a man was a contractor to deliver mail, and he would be required to furnish bond for each of his employees. The present legislation did not envision this. Certain types of indemnity bonds, if you are going to have a contract in which you must put up an indemnity bond agreeing to replace any damage you might do in performing this contract, to other parties, and there might be a place for these two in the program. Senator MONTOYA. What else? Mr. BLACKLEDGE. I think these would be the two major ones. So far we have not had any. Maybe because our limit is very succinctly stated to people, and we have not had any request in excess of the $500,000 for individual contract that is supplied and allowed in the legislation. I do not know whether this means that there aie not any larger than that that need it, whether it means they have received the information and just never came to us. I do not know which is the reasoon. Mr. MCLARNAN. But, we have not had any requests for over $200,- 000, so the inference you might think was that the $500,000 was ade- quate at that time. Senator MONTOYA. Do you have any questions? Mr. JONES. Yes. Thank you, Mr. Chairman. For the sake of the record I would like to illicit some further in- formation, and perhaps Mr. Swinkels could provide this information. First, how do minority businessmen find out about the 8 (a) program? Do you have an outreach program to them or do they typically find out by word of mouth and come into your office? Mr. SWINKELS. The minority small businessman learns of the pro- gram through various types of seminars that we have had recently, through publicity in the newspapers, word of mouth, in contact with some of their competitors or friends. Some of them contact the var- ious installations, seeking government work and the small business specialist at that installation also gives them the information that this 8(a) program is available through the SBA. Quite frankly I do not think we are reaching all that we should be reaching. Mr. JONES. What further steps might you take? Mr. MCLARNAN. May I say that many of us are giving little talks, two or three times a week to a great many people in all stations of life. One of the disappointing things about this is that we have had meetings, I had over 250 at a meeting down the peninsula area, 4 or 5 months ago, all Spanish-speaking people, all very enthusiastic. I took my top SCORE people, I took my chief of procurement, fi- nancial processmg, every chief I had, and there were about eight of them sitting up there on the stage. I told in a 20 or 30 minute talk what we could do, and then each chief stood up and was re- PAGENO="0122" 116 sponsive to any questions that they might have. The audience was very interested, asked a lot of questions, and I do not. think u peicei~t from that group came in to the SBX office. Now, this is the discourag- ing thing about working with the minorities. It is true that we get a few that come in aiid scream and holler and want a lot of money, and have not any assets, and have not any background in a thing, but out in this greater bay area there must be 200,000 black and Spanish- speaking people, and we do not get a half of 1 percent of those people into our front door. In other words, w-e cannot help the people until we can talk with them, and this is a dilemma that we are in. The same thing is true of the blacks and of the Indians. We have a lot of Indians in this region. and you can go and give your talks, and we appear on radio and television, and we have done these, and you just read off the various meetings that we held. and yet there are people out there that are capable of being helped by the programs that we preseiutly have, and yet we do not get them in the frdnt door in the way that we would prefer. Mr. JONES. WTell. once a. minority contractor or minority busi- nessman hears about the program. and applies for this certificate of eligibility, what criteria do you apply in acting upon that. application? Mr. \\TARREN. Well, there are a number of things, of course, that we have to look at when we are dealing with a~ man's business plan. I assume this is what. you are referring to, Mr. Jones. We look at the length of time in business, his background of experience in the area lie wishes to pursue. We look at. the financial structure of his business, how much of it is commercial, what types of products does lie produce, what are the possibilities based on our own experience, of course, in the past, or t.he probability of getting him work in the field he is interested in pursuing. There are any number of things like that. There is no one thing. of course. that we say is a requirement. It is sort of dependent a lot on the individlual circumstances that he pi'eseiuts, andi the way he wants to go about pursuing this. If he has a. reasonable approach. andi a realistic approc.h to his busi- ness activities, there is really no reason at all why we would not ap- prove his business plan and make him eligible for the 8(a) p~~- gram. There is no criteria as such other than a percentage of owner- ship in the case of corporations. We do require that the minority owner have 51 percent control. Andi in the case of a partnership, 50 percent control. Mr. JONES. Would it be possible t.o estimate the average number of man-hours it takes to evaluate an application? Mr. WARnEN. Oh. I really cannot answer that.. Mr. Jones. directly. I think that in the general sense. probably, if youi want to relate it to hours, man hours of effort, probably 8 to 40. This is quite a range I realize, but there is really no way of telling. It. simply dependls on what is presented. Mr. JONES. What percentage of applicants are finally issued a certificate? Do you have any way of telling that figure? Mr. WARREN. By far the largest percentage are issued. At least 90 to 95 percent. Mr. MULARNAN. It is not as imposing or difficult. as it sounds when he recites it off. They have to tell you the story of their busi- ness, and that is about as easy as anything can be. If the fellow PAGENO="0123" 117 has been in business 2 or 3 years, he sets this information down, and it is not complicated, and as I say, I doubt if we reject more than 5 percent of the plans, if that many. Mr. JoNEs. What would be the average time between the appli- cation and the issuance of the certificate? Mr. WARREN. Well, again, this would depend on what is presented. Normally anywhere from possibly 2 weeks to possibly 3 months. Mr. ,JONES. And following the issuance of the certificate, approxi- mately how long would it be in the average case before he received an 8(a) award? Mr. SWINKELS. We cannot guarantee that he receives an 8 (a) award. We do not have a magic crystal baH that we can look il1to and say that we have this plan and give him this job. Mi'. JONES. What percentage of firms that receive certificates, ie- ceive awards subsequently? Mr. WARREN. 75 or 80 percent. Mr. SWINKELS. About 75 or 80 percent. Mr. WARREN. Excuse me, may I comment? This does not mean these people who have not received awards may not receive one to- morrow, or the next day. It simply means that they have not yet re- ceived one. Mr. JoN1~s. At the time that this certificate is issued, would it be possible, as was suggested in testimony earlier today from Mr. An- gello from the Bank of America, to have a meeting with the banker and businessman and SBA representatives to determine financial limits within which his 8(a) contract perhaps should be, and to ar- range a line of credit with the bank against future 8(a) contracts? Is that currently being done, and if not, would it be feasible? Mr. MCLARNAN. Well, we have a revolving line of credit with the Bank of America, and it is possible to set up a revolving line of credit in Angello's bank, and so there is nothing to stop it. In fact, it is being done. Mi. JONES. One last question about the marketing problem of some of the subcontractors mentioned. I)o you think that most of the contracts are, in fact, located by the minority businessman or by the SBA? I mean the 8(a) contract. Mr. SWINKELS. By SBA. Mr. JoN1~s. I see. Now, there was testimony from the NARTRANS Corp. to the effect that their contracts had all been located by vir- tue of their own efforts. I take it that is a very unusual case? Mr. SWINKELS. Well, they have the staff and the ability to go out and do so in the case of NARTRANS. As the gentleman mentioned earlier, they have their own people that are talking with the pro- curement agencies, which would not be true of the average small business minority firm where the fellow is actually wearing four hats, and he has not the time to go out there and look for work. Mr. JONES. Thank you. Senator MONTOYA. That will be all, gentlemen, unless you have anything else to add. Mr. MCLARNAN. Thank you for inviting us to attend. Senator MONTOYA. Thank you, and we will be in recess until to- morrow morning at 9 :30. (Whereupon, at 5 :45 p.m., the hearing was recessed to reconvene at 9 :30 a.m., Thursday, September 30, 1971.) PAGENO="0124" PAGENO="0125" 119 SMALL BUSINESS ADMINISTRATION'S 8(a) SUBCON- TRACTING PROGRAM-MINORITY ENTERPRISE THURSDAY, SEPTEMBER 30, 1971 U.S. SENATE, SUBCOMMITTEE ON GOVERNMENT PROCUREMENT OF TIlE SELECT COMMITTEE ON SMALL BUSINESS, San Francisco. Calif. The subcommittee met, pursuant to recess, at 9 :30 a.m., in the Cere- monial Courtroom, Federal Building, 450 Golden Gate Avenue., San Francisco, Calif., Senator Joseph M. Montoya (chairman of the sub- committee) presiding. Present: Senator Montoya. Also present: Joseph L. Ward, assistant. general counsel; and Keith A. Jones, minority counsel. Senator MONTOYA. The committee will come to order. This morning we have scheduled hearings with the following witnesses: Mr. Emory C. Curtis, vice president, Plan of Action for Challenging Times, from San Francisco; Also, Dr. Anthony Malo, assistant regional vice president, National Economic Development Association, otherwise known as NEDA; Mr. Jerry Hutton, representing the Office of Minority Business En- terprise, Department of Commerce, and Mr. Jay Leanse, Deputy Director, Office of Minority Business Enterprise, from Washington, D.C. We will proceed with Dr. Malo and hear what lie has to say. STATEMENT OF DR. ANTHONY MALO, ASSISTANT REGIONAL VICE PRESIDENT, NATIONAL ECONOMIC DEVELOPMENT ASSOCIA- TION, SAN ~rOSE, CALIF. Senator MONTOYA. Dr. Malo, do you have a written statement? Dr. MALO. No, just the one I sent to you, as a letter. I would like, if I may, to give a little background on NEDA. Senator MONTOYA. Well, will you first tell us for the record what your occupation is and what your connection might be with respect to your testimony. Dr. MALO. Sir, my name is Dr. Anthony Louis Malo, and I am as- sistant regional vice president of the National Economic Development Association, and of the regional office which was established in San Jose, March 1971. Our responsibility is as a firm, since we are con- tractors both of the Small Business Administration and the Depart- ment of Commerce, to help in several professional ways to obtain loans (119) PAGENO="0126" 120 and to start small operations in the marketplace. Now, by this, I mean the jobs that we perform primarily are the preparation of loan appli- cations which is normally called loan packaging. In this process we do some assisting in planning and in forecasting of sales. Also our responsibility to these firms is to, wherever possible, use available tools such as the 8(a) program to obtain profitable opera- tions. This means that we are going to aid them in obtaining markets for their Products and, hopefully, to get them into a profitable position as rapidly as we can. And in that area, we have come into contact with the 8(a) program. Now, at the outset, we are working with two types of firms. Although there are many ways to classify them, we simply classify them as start- ill) firms, new firms, and existing firms, expanding firms. Our responsibility, as an organization, is to help the Spanish speak- ing. All of our members are Spanish-Americans. We are all bilingual, and in some instances as much as quaclralingual. Whatever is neces- sary, we take on at that level. So, we are able to talk with the people, because we are members. Now, the second thing that I would like to point out in de\-elopmg the 8(a) program and our contact. with the 8(a) program is that when get down to the process of putting before these sources of funds an applicant who is a poteiitial profitable businessman, we are looking for all of the help we can get. Typically, our client, has either been refused by the bankers in terms of his inability to have a bankable loan or present a bankable performance. Senator M0XT0YA. `Would you excuse me just a minute? Off the record. (Discussion was had outside the record.) Dr. MALO. As I was saying, in putting our client before the banker or the source of funds, one of the important documents that we pre- pare with him is his business plan. Now, an important aspect and an important part of that business plan is a sales forecast. Now, as you know- Senator MOXTOYA. Do you have an economist in your organization? Dr. MAL0. I am sorry? Senator M0XT0YA. Do you have any economists; do you have any businessmen? Dr. MAL0. Yes, we are all businessmen. As a matter of fact, I, my- self, hold a doctorate in business administration and I am currently on the staff of the University of Santa Clara. My vice president, Mr. Rudolph Traveno, has been in the real estate and development business for some 20 years, and I think this in general is true of our offices throughout the country. There are some 14 offices at present. Senator MOXTOYA. That is the point I have been trying to empha- size, that these organizations should have people who are knowledge- able about business problems instead of knowledgeable about how to get a. grant. Dr. MAL0. Well, may I expand a little along that? Our responsibility is to work with those entrepreneurs. And they are really businessmen who are profit-oriented. There is no gift and there is no grant here. Our job is to ferret out those people who have an PAGENO="0127" 121 opportunity of setting sail for themselves as soon as possible. We are not talking about 3 years; we are talking about 3 months. That is what we would like to do. I was present at the hearing yesterday, and it seems to me as we went along it became increasingly evident that some of this help is longer- termed than what we consider a start. Our job here is to get them profitable as soon as possible. And how do we do this? Well, to put them before the source of the funds, but they have to be profitable. Now, there are three things- Senator MONTOYA. How long have you been in existence? Dr. MALO. NEDA has been in existence 1 year. Senator MONTOYA. I mean, in San Jose, your organization? Dr. MALO. Since March 15. Senator MONTOYA. And how many applications have you processed? Dr. MALO. Something in the order of 83. Senator MONTOYA. How many of these have beeii successful? Dr. MALO. About 82. Senator MONTOYA. That is very good. Dr. MALO. And the total amount of money we pumped into the economy is in the order of $3 million. Senator MONTOYA. How much in loans have you been able to secure for these people? Dr. MALO. $3 million. Senator MONTOYA. $3 million? Dr. MALO. That is right. Senator MONTOYA. What are the sources of these moneys? Dr. MALO. Well, in general, they are the bankers. The banks have been looking very much toward the 90-percent guarantee from the Small Business Administration. Senator M0NTOYA. Do all of these loans have a 90-percent guarantee? Dr. MALO. They do not. Senator MONTOYA. What percentage would you say, of the loans, have the 90-percent guarantee? Dr. MALO. I would say about in the order of 80 percent. Senator MONTOYA. Are SBA guaranteed? Dr. MALO. Are the Small Business Administration guarantees, that is correct. That means to the banker that their exposure is 10 percent. Senator MONTOYA. How much of these dollars represent new enter- prises instead of going enterprises? Dr. MALO. The new enterprises, I would say, are represented in about a half a million, something in this order, and the remainder are expanding enterprises, those who have gotten started and needed in- creasing amounts of funds. That would be the mix. Going back to the 8(a) and our relationship to the 8(a) contract. We have used this, of course, since we are trying to present the applicant to the source of funds in the best most realistic position that we can. We have used the 8(a) as a potential market in the sales forecast. Now, again, let inc underscore the fact that we are primarily direct- ing our applicants toward the commercial market. This is our re- sponsibility. These people have to be profit-oriented and market- oriented. Now, the 8 (a) `s then become an aid only, and at the present has represented a relatively small percentage, not because it is not avail- PAGENO="0128" 122 able but because it is not yet required. ~\`\Te think as we develop in the San ,Jose area, since it was only a fledgling operation here, I think we will be using 8 (a) more. Now, the point that I wanted to make is that. in these forecasts, where there is a great deal of uncertainty, we attempt to reduce that uncer- tainty by asking our applicant, wherever possible~ to come in with signed contracts, or letters of intent. This is where. we depend in- creasingly on the 8 (a.) program, where the 8 (a) looks like a good possibility. Now, what we have found recently, as changes in the program that we think are going to be. helpful to us, is that we will be dealing with the district, offices of Small Business and caii get a closer feel for the availability of these contracts. Now, let me say at the outset that our emphasis is primarily toward commercial business, and the 8 (a.) comes in as an aid to get things started, and beyond that we have used them a great deal in expansion. Senator MoxToY~. What kind of businesses are these about which you speak? Dr. MAL0. Those that. we are talking about., well, they vary any- where from a small one-man jewelry operation to electronics firms that have. t.o do with computers. In fact., we found that this combination, where some of the aid we can give them, the small computed companies can do a job and pick up some of this additional volume. Of course, our point of view is getting things into a profitable position and develop- ing the volume further so that. profit increases. This is our point of view. Senator M0XT0YA. You are Mr. Leanse. and you are Mr. Hutton? Mr. LEANSE. Yes. Mr. Hu'rroN. Yes. Sena.tor MONTOYA. Now, what kind of a grant does NEDA have from the Federal Government? Dr. MALO. It' is called a 406 grant., and, so far as we are concerned, the moneys that we are using now, since it is a nonprofit organization, are in starting off this, the loan packaging, and the second thing is to develop our own sources of funds: that is, the Spanish-speaking community. And in this area we have been particularly successful in San Jose, as I said, and we have been in business since the middle of March, and we have a legacy from the Los Angeles office. We have been able to almost. complete a savings and loan. WTe have the charter. \~\Te are now shopping around for the funds to establish our own source of capital. In the process in San Jose, there are two banks of Spanish speaking, andi they are a little less further along. They are getting together the organizers, and they have successfully obtained some funds already. Senator M0NT0YA. Do they have a charter already? Dr. MALO. No; no, not yet. The S. & L. does; the banks do not. Senator MONTOTA. Does the S. & L. have a State charter or Federal charter? Dr. MALO. Federal charter, a. Federal S. & L., and t.hey will be operable, hopefully, in November. Senator M0XTOYA. That will be the first one in Calif ornia; right? Dr. MALO. Well, no. There is the Banco del Pueblo, but that is a bank, and the San Fernando S. & L. PAGENO="0129" 123 Senator M0NT0YA. The Banco del Pueblo is a bank, and it is in Santa Ana. Dr. iMIAT~o. So, we will be operable fully in November, hopefully, and, as I say, because we can then begin doing the same sort of thmg that we do like any other private enterprise, obtaining funds and search- ing out the sources of funds, and then assisting wherever possible. The third area, I am delighted to say, which is the area I am most active in, we have established at the University of Santa Clara a course which will be supported by industry not only for the entry of inmority groups into the company at the lower levels but for the development of managers for the middle and upper levels. And this is to be started in January. Senator MONTOYA. Is this a credit course? Dr. MALO. Yes; it is a credit course, and it is at the graduate level and will be taught by people in the university who have been in in- dustry over a number of years. Senator MONTOYA. Well, are you going to require any kind of qualifications before a businessman can enroll in that course? Dr. MALO. Yes; they have to be a minority-whatever "minority" is; and I am not really sure what it is. Senator MOXTOYA. And what about educational qualifications? Dr. MALO. The educational qualifications are experience and the potential for growth. Senator MONTOYA. So, anybody can go in there if he has the capa- bility to learn? Dr. MALO. Exactly; that is right. Senator MONT0YA. Now, have you had any experience with bank- participation in these loans, with Spanish banks or banks that have Spanish-speaking management and ownership? Dr. MALO. Only to the extent that we have dealt with the branches, the branch managers who, themselves, are Spanish speaking, and we find that our applicants are attracted to this kind of manager, this kind of environment as it were. We are not really sure why, except that whenever we talk with them we like to deal through their bank, who- ever they have been doing their banking w-ith, and invariably, you know, they know- somebody personally, because as Latins we tend to personalize a lot of our business, and this is a fact. Senator MOXTOYA. That is correct. Dr. MALO. And working with this, I think it is important that we have sources of funds that are either managed or directed by people of this same culture. Senator MONTOYA. Does the university get involved in these minor- ity problems? Dr. MALO. Yes; they do. I think, as a small university, since Santa Clara has an undergraduate population of some 3,200, there are a lot of programs, especially in the law school, which are primarily for minorities. Senator MONTOYA. They are mostly legal-aid programs; are they not? Dr. MALO. No, sir; these are scholarships. In fact, at the minute, at the law school, there are $40,000 worth of scholarships a year avail- able for this. And beyond that, I think the area where we need addi- tional help, where we are trying to shore things up for NEDA, is in the graduate program because it is fine if you are a professional man 70-654 0-72-9 PAGENO="0130" 124 and you are able to perform, and that is a certain level of security, but as you go up the ladder in your organization, as it were, in business, I think this is the area where we have not really been quite so strong as we would have liked to have been, and we are looking for more opportunities at the management level. And the best way to obtain these, we feel, is to have the sponsoring organizations, at the outset at least, get the business ~eop1e to send minorities who look like they make some real sense, bring them in there, and help them develop; and, then, I think that maybe in the future we will be able to expand some of these programs. But, more than this, more important than anything I think, we want to get a track record, just as an applicant is evaluated at the outset at least by the track record, and we are kind of proud of NEDA. So, it is with our business people, and I think this is what we want to do. Senator MONTOYA. You mentioned a few minutes ago that you had been trying to get some funding for your organization, donations from business people and the community? Dr. MALO. That is right. Senator MOXTOYA. How successful have you been? Dr. MALO. Not yet, we have not been successful at all yet. Senator M0NT0YA. Have you tried? Dr. MALO. I will be honest with you: Not so much as we would like, because we are too busy doing the job in getting these people beforb us. WTe have some indication of interest, and these people have beeii the larger corporations in the area, and they are, quite frankly, the people with whom we have talked, and their position is: "Well, we are still not sure this is not a grant operation, a giveaway, and show us a little more, a little performance." But I think, in general, as we develop we have been able to turn these people around, not because we jumped up and down but simply by performance and results. Senator MONTOYA. Well, that is the challenge you are facing, to prove yourself; is that correct? Dr. MALO. Yes, and we have found that they have, in general in the San Jose area, quite an open mind, and, as we develop the amount or~ number of people who are going in and being profitable- Senator MONTOYA. That is why I am concerned about grants being made to these overnight operations that are set up to get those grants in the names of counseling business people of minorities, and they have been making those grants for quite a few years and many of those people do not have any knowledge of business, and still they pretend to give advice to people who start in business. And that is my greatest concern, because once we experience failures and lack of suc- cess in those fundings and those programs, then we waste a lot of taxpayers' money and the people in the community become very criti- cal of all of these programs, and then they do not believe anybody. Dr. MALO. That is right. We have found that, I think, Ben Hem- andez, the originator of our organization, started off, and we are con- tinuing, of course, with the idea that the best contacts for our people in the community are made at a professional level by professionals. We found that banks, for example, some of the banks who were re- putedly hard nose-I guess you can use that word-have turned PAGENO="0131" 125 around very nicely because we were able to show them at a professional level that we were not there to play games, that we were there to per- form and that the people who were coming in for loans were, in fact, profit oriented and had a record to prove it. And they have come along, and we are able now-as a matter of fact, the Bank of America has established seven branches who are pri- marily directed to work with NEDA for the small business loans for minorities. Senator MONTOYA. Do you advise these people, when they do not have the repayment capability, that they should not proceed with the loan application? Dr. MALO. Yes. And that is the most difficult part of our job. Senator MONTOYA. Yes, but it should be a part of your job; should it not? Dr. MALO. It is; and we do. For example, we found `a very busy ma- chine shop who is doing a land office business, but found that we was running shorter and shorter of capital. So, we came into it; and h~ asked for a loan. We came in to evaluate it, and we found that his capital was costing more than his return on sales, aiid it was in the order of 31/2 percent per year, and the faster lie operated the worst he was doing. I mean, the more rapidly he was going down hill. And, yes, we do this. This is part of our responsibility, to say: "Well, look, if you are iiot viable, there is no sense in proceeding, no sense in getting up youi expectations or your dreams, or hocking grandfather clocks. This is the end; there is iiothiiig we can do. Perhaps there are other organizations that can provide seed capital; we do not have any capital of our own." And in this area we have been helped by a number of organizations, ESO, EPA. In San Jose, these do have seed capitaL and those marginal ones, we are- Senator MONTOYA. Who is ESO and who is EPA? Dr. MALO. Economic and Social Opportunities, and the other is Economic Progress for All, and they are located in San Jose, and they have fuiids available for seed capital, equity capital. Senator MONTOYA. How are they organized, under Federal pro- grams? Dr. MALO. Yes, they are. Senator MONTOYA. Under what programs? Dr. MALO. I am iiot sure. And, so, they have become an adjunct in our efforts, because they have provided some seed capital, and with that seed capital we can sometimes make up the equity requirements. Senator MONTOYA. What has been your experience with the 8(a) pro- gram and with the Small Business Administration? Now, give us your experience on that. Dr. MALO. Well, the Small Business Admiiiistratioii has been help- ful in these areas. They have first of all-I have worked extremely closely with them, and they with us, from our inceptioii in San Jose. We were a shootoff of the Los Angeles office, and, as soon as we were estab- lislied in San Jose, the local Small Business Administration man came over to see us, and we sat down and exchanged ideas, and the way we were curreiitly working is that the Small Business Administration is sort of overseeing us in the sense that we have our applications, the ones that we consider acceptable for the Small Business people to obtain funds, and we discuss it with them on an informal basis. This PAGENO="0132" 126 saves a lot of time in formal proposals and refusals and in moving back and forth, and they are very interested in this. Now, the 8 (a) program which has recently been decentralized to the district level is also extremely pleasing to us. From our point of view, we can talk directly to the Small Businessman, for example, over in Oakland who is operating in this area, and we can talk with him and find out what is available, because, in the past, we have found that while we were interested in this 8 (a) contract. it. took a while to even get to it. There were a. large number of applications; there were a lesser number of opportunities, and we were just simply adding to the pile of applications. So, with this decentralization, we are able to monitor it more closely. So, I think that is the direction that makes some real sense, so far as we are concerned. Senator MoxToY~. Well, have any of your clients received any 8(a) contracts? Dr. MALO. Yes. So far, I know there are two, yes; and they are relatively new, and I cannot give you any results. I wish I could. Senator MOXT0YA. Have you encountered funding difficulties for these. people that have received 8 (a) contracts? Dr. MAL0. No. Everyone, so far, that we have dealt with, that is, the financial sources, the bankers or sometimes even the private sector, people who were willing to increase it., they look it as a support for the profitability. Now, there is, however, a caution-and I think this has been mentioned a couple of times-that when we have been seeking financing, the 8 (a.) contract has a tendency to stiffen you Up-in other words, to lose some flexibility and make you more dependent on Gov- ernment business. I am not sure that this is necessarily so. I think there could be a tendency because it is a contract, but our protest is, at NEDA anyway, to mix the two with the emphasis on commerce- in other words, at the marketplace on commercial business. Senator M0XT0YA. This is the way it should be, instead of having businesses become dependent on 8(a) contracts. Dr. MALO. That is right. Senator MONTOYA. That is a very dangerous thing. Dr. MALe. Our people, when it has anything to do with Govern- ment, you lrnow, they are always ready to get involved. Aside from the paperwork, there is a feeling that maybe their independence is somewhat constrained. We have found that the 8(a) contract, at this point at least, can be used as an adjunct in addition to the primary business which is to get a market for your product or service. Senator MONTOTA. How many people are in your organization? Dr. MALO. In San Jose? Senator M0NT0YA. Yes. Dr. MAI~o. We have three. Senator MONT0YA. Are you full time? Dr. MALO. Yes. Senator MONT0YA. All of you? Dr. MAL0. No. We have three of us who are full time, and, then, we have two graduate students from Stanford who are on scholarships from the Morrow Foundation who have been working with us full time in summer but who will be part-time assistants during the rest of the year. PAGENO="0133" 127 Senator MONTOYA. And are you also teaching at the university? Dr. MALO. Yes; I am teaching one course in management develop- ment; the minority course I was talking about, we are trying to get that going. Senator MONTOYA. Do you have a textbook on that? Dr. MALO. No; we use the regular management reading books, and what we then do is bring in special speakers to develop certain areas of interest to the businessman. Senator MONTOYA. Do you do it in a bilingual way? Dr. MAL0. Why, yes; I think we probably do more teaching outside of class, just sitting around talking about the problems, than we do in class. Lecturing is not particularly an efficient way, and we did not find lecturers who were proficient to the point of getting down to the nitty- gritty. At least, when you have 30 people in a class, it is a little diffi- cult. So, we do this to stir up some more thinking and development. Senator MONTOYA. Can you comment on the period of time for end- ing8(a) aid? Dr. MALO. Oh, yes. Now, I am going to look at it from the business- man's point of view. I would say that 8(a), in developing a market- oriented corporation or proprietorship, should be ended as rapidly as feasible. We want to use the 8(a) contract as a startup, as a backup, primarily, and not as the main business of the firm. We have found that it is extremely effective in obtaining funds. We hope it will con- tinue as such. We would like, however, to be able to bail out, as it w-ere, though on oui' own, as rapidly as we could after we become profitable, and I am sure that this is the case as we have been looking at a 3- month period where the applicant is then able to pay back. This is not always the case, and the institutions have stretched a little for us, but these are the goals we are seeking. Hopefully, we can come in profitable at the outset and continue, but that is- Senator MONT0YA. That is almost impossible; is it not? Dr. MALO. It almost is. Senator MONTOYA. Usually. And I think 3 months is impractical; is it not? Dr. MALO. Well, we have found that the people who are coming through our office in general are looking for that 3-month period, too. Now, we have been able to hit that. I would not say always, obviously. Senator MONTOYA. Well, in many businesses you do not realize a profit even the first year. Dr. MALO. That is right. And in the small businesses, the ones we have been talking about, at least to date, have been people who are quite knowledgeable and are willing, at the outset, to start small but profitably. I am talking about the proprietorship, the small partner- ship, the service organizations, and that sort of thing, manufacturing, wholesaling. Some of the larger groups, of course, may take a little longer. But, again, to date, our experience there has been expansion. Senator MONTOYA. What has been your experience in California with respect to ownership of businesses, say, like gas stations and garages by minorities? Dr. MALO. I do not know, in California. I know this, that in the institution- Senator MONTOYA. Well, are they coming into their own here in that particular field? PAGENO="0134" 128 Dr. MAio. In the gasoline stations, in the high-risk areas, we are particularly emphasizing the restaurants; we have a. large number of restaurants. Senator MOXTOYA. You have a large number of Mexican restau- rants; do you not? Dr. MALO. That is correct, and in this area. Senator M0NTOYA. What about the franchise a.re.a? Dr. MALO. Starting. To my knowledge, there is no great percentage of participation; no. Senator MONTOYA. Wily not? Dr. MALO. I do not know. Senator M0NTOYA. Cannot NEDA do something about this, go to the big companies? Dr. MALO. Yes; I think we can, just. as we did to the financial sources. Again, that might. be very well something we can do in the future. Senator M0NT0YA. Why not go to the Union Oil and Standard Oil of California, and all of those corporations, and see what they can do? Now, that is tile way to start. Dr. MALO. There is no reason in tile world. Now, we have found in some of the smaller applicants are People who have come in wanting to Start in tile oil business or gasoline business, gas stations, but they are high-risk business, and the normal, standard sources of funds do not want it; it is too risky. That is also true of restaurants and several others. Senator M0NT0YA. I do not. know why it is a high-risk business. I know in New Mexico it is not. Dr. Mxi~o. It is not.? Senator M0NT0YA. No. In fact., in New Mexico, we had a lot of Cubans come in there, a.ild they are miming quite a few stations already. Dr. MALO. It. might be an area for development here. Senator M0NT0YA. And they are doing a very fine job. They are tak- ing mechanics from the local vocat.ionai sc.llOols, aildi they have a me- chamc shop right next to their station and they are doing very well. Dr. MALO. Well, I am sure it is a potential here. Senator MOXTOYA. The same is true back East w-ith the blacks. Now, they are doing a very good job in the East, so why can you not do it here? Dr. MALo. I cannot think of any reason. Senator MONTOYA. And, of c.ourse, the restaurants are fine, but there could be too many restaurants, too. Dr. MALO. Right. Senator M0NT0YA. And that is the most dangerous business of all, running a restaurant. Dr. MALO. It certainly is. We have found this in Sail Jose especially, where we have relatively, a large conceiltration of Spanish-Americans, and there is a. turnover, and this is why, at least. at. this point-and I am speaking for NEDA-I think that pa.rt of our job at the moment -and we are certainly not staffed well, but I think t.hat part of our job should be following up. PAGENO="0135" 129 Senator MONTOYA. I think NEDA could perform a good function, because it is starting out with great dedication and great resolve, and I think they have the competency. Do you have anything else, Dr. Malo? Dr. MALO. I cannot think of anything right at the moment. Senator MONTOYA. Well, thank you very much. You made a very good statement. Now, we will now listen to Mr. Curtis and Mr. Hutton and Mr. Leanse. Now Mr. Curtis is the vice president of the Plan of Action for Challenging Times, otherwise known as PACT, Inc., of San Francisco. Mr. Jerry Hutton is the representative of the Office of Minority Business Enterprise, San Francisco, Calif., and Mr. Jay Leanse is the Deputy Director of the Office of Minority Business Enterprise in Washington, D.C. So, let us hear from Mr. Curtis first., and then we will take on the Government witnesses. STATEMENT OP EMORY C. CURTIS, VICE PRESIDENT, PLAN OP ACTION FOR CHALLENGING TIMES, SAI'I FRANCISCO, CALIF. Mr. CURTIS. Thank you, Senator Montoya. Senator MONTOYA. Do you have a statement? Mr. CURTIS. Yes; I have a small written statement.? Senator MONTOYA. Do you have copies of it? Mr. CURTIS. Yes. Senator MONTOYA. Well, if you will give us the copies we will make them a part of the record, and then you can go ahead and hit the high- lights of your statement, and we will ask you a few questions. Mr. CURTIS. OK. (The prepared statement submitted by Mr. Curtis reads in full as follows:) PAGENO="0136" 130 PACT, Plan of Action for Challenging Times, the firm which I am vice-president of, is a private non-profit organization that has been assisting the minority busine~s coirarunity in the San Francisco Bay Area for the past six years. During that period of time, we have been encouraged by the steadily increasing concern that the government has shown for the plight of the minority business conrnunity. Unfortunately, we have been discouraged by the inability of the government and the private sector to transform their concern into successful model programs that actually bring about minority economic development on a significant scale. The reason for the government s failure to effect significant change is that it has been concentrating upon assistingindividual minority business- nen~ The 8(a) program has been one of the programs operating in this manner. While there is no question that individual successas are necessary to amass a successful business coasiunity, there is the question of what is the best way to actually assist these businessmen, by helping them individually or by effectively altering the environment in which they all operate. For the minority business consminity to develop, it mast gain a reasonable share of the dollars that the P.S. government spends for goods arid services. It is no secret that the minority coiniauhity does not receive a significant share of these dollars now. It seems to us that the 8(a) program has the * ingredients to be able to nay a erich larger role in changing thi.s situation than it has to this day. To acconiplish more, however, those establishing policy guidelines for the program mast carefully define the 8(a) program as a tool to ~tchieve minority ceonemic development and not as a goal in itself, to be measured 1*~y the statistics it produces. We feel that the 8 ca) program should be geared to deliver a minijarLas fixed percentage of the government's goads and services dollar to the minority business corraaiity. 8 (a) should be thoi~ght of as a tool to assist govcri'irrent PAGENO="0137" 131 Page 2. agencies and the cooperating private sector in providing at least their fixed minimuni percentage of business to the minority co~runiinity. 8(a) should be a tool just as the SBA Management and Technical Assistance Program, the avlBF. effort and the efforts of organizations like PACT are employed as tools. In order to provide minority businessmen with the opportunity to supply a minimum fixed percentage of the government's needs, the responsiblity for successfully accomplishing this goal must he placed with the procurement sections of the particular government agency or department that has the contracts to be let. The responsiblity must not be placed upon those implementing the 8(a) program. At tho present tine, responsibility is divided. The agencies mist produce a list of potential 8(a) contracts, the SBA attempts to match the contracts With its list of qualified suppliers, and O?vfl3E is resppnsihi e for coordinating and prodding both agencies into action. As a result, each one of the principal actors can, and usually will, perform their role admirably- - but the results are not forthcoming. Under our proposal, all government installations that purcbnse more than a fixed aifoumt of goods and services would be required to have personnel responsible for ensuring that at least the fixed minimum percentage of govern nent business is mode available to the minority business community. These personnel would call upon all of the available resourcos and tools such as SBA, CMBE and PACT to assist them in reaching their goal. The 8(a) program would be just ~ne of these tools available to assist these government installations. PAGENO="0138" 132 * Page 3. This program would not be unique or revolutionary in any sense. At the present time, all government installations that purchase more than a fixed amount of goods and services must purchase some percentage from small business enterprises, as opposed to large business establish- ments. As a result, most of these firms have personnel assigned to their * procurement operations to assure compliance with the requirements. All that implementing the 8(a) program in this manner would do is make sure that minority entrepreneurs get a piece of the procurement pie that is now being split up pr~marily among older, more well established white concerns. - By placing the responsibility for minority contractors' involvement in the hands of the individual -government procurement officer and by defining the 8(a) program as only a tool to assist these officers in meeting their responsiblity, the government would be ceasing to concentrate solely upon assisting individual minority businessmen and beginning to implement the type of easy to introduce program that can effectively change the environment in which the minority entrepreneur operates, thus fostering his development in a highly cost-effective manner.. PAGENO="0139" 133 Mr. CURTIS. Well, I will go through some of the points I made in the statement. PACT has been working in this game of assisting minority busi- nesses in this area. for the past 6 years. During that period of time, we have been both encouraged by the steadily increasing concern that Government has shown for the plight of the minority business corn munity as well as the private sector's concern. Unfortunately, we have been discouraged by the inability of the Government and the private sectors to transform their concern into successful model programs that actually bring about minority economic development on a significant scale. Now, I will give a comment on a. general approach tha.t I think needs to be thought out and needs to be applied. One possible reason we believe for the Government's failure to effect a. significant change is that the primary and central focus is upon assisting the individual minority businessman. The 8(a) program has been one of the pro- grams operated in that manner. Now, while there is no question that individual successes are neces- sary to amass a successful business community, there is the question of what is the best way to actually assist these businessmen, by helping them individually or by effectively altering the environment in which they all operate. For the minority business community to develop, it must gain a reasonable share of the dollars that the U.S. Government spends for goods and services. It is no secret that the minority community does not receive a significant share of these dollars now. It seems to us that the 8(a) program has the ingredients to be able. to play a much larger role in changing this situation than it has to this day. To accomplish more, however, those establishing policy guidelines for the program must carefully define the 8(a) program as a tool to achieve minority economic development and not as a goal in itself, to be measured by the statistics it produces. We feel that the 8(a) program should be geared to deliver a mini- mum fixed percentage of the Government's goods-and-services dollar to the minority business community. "8 (a.)" should be thought of as a tool for assisting Government agencies and the cooperating private sector in providing at least their fixed minimum percentage of busi- ness to the minority community. "8 (a)" should be a tool just as the SBA management and technical assistance program, the OMBE effort and the efforts of organizations like PACT are employed as tools. In order to provide minority businessmen with the opportunity to supply a minimum fixed percentage of the Government's needs, the responsibility for successfully accomplishing this goal must be placed with the procurement sections of the particular Government agency or department that has the contracts to let. The responsibility must not be placed upon those implementing the 8(a) program. Senator MONTOYA. Now tell me what has been your experience with respect to management and technical assistance for 8(a) subcontrac- tors. Mr. CURTIS. We have been under contract to provide management and technical assistance, and it is an absolutely necessary function. It is one that really should be expanded in more communities in every way. We find that the minority businessman, in walking that treacherous PAGENO="0140" 134 path, that he needs assistance.. He needs assistance that he trusts, and in this way-I mean, just like with us. over the years operating, our programs really focus here in San Francisco; however, we get. clients from all over the State-all over northern Califorma. Senator MONTOYA. How much of a. cont.rac.t do you have? Mr. CIJRTIS. Our SBA contract that just ran out is $100,000. Senator M0XT0YA. And how much has- Mr. CURTIS. Plus, we have a contract, too-we have an OMBE afflh- a.te office, Office of Minority Business Enterprise, and all of these work together to provide all of the various services. Senator MONT0YA. How much of a contract do you have with OMBE? Mr. CURTIS. With OMBE, our cont.ract is $190,000. Senator MONTOYA. So, you have approximately $300,000 ? Mr. CURTIS. Right.. Senator MONTOYA. How many people do you have in your orgam- zation? Mr. CURTIS. Under the. contract. I think we have about-we have between 15 and 20. And now that. includes secretaries, and so forth. Senator M0NTOTA. How many businessmen do you have in your organization? Mr. CURTIS. Let me go through how the operation goes. We provide a loan-packaging service, and w-e Provide a business-information service, and we provide followup. and we provide what we call a business- climate development program in trying to pron~ote financing oppor- tunities and trying to promote business opportunities for clients. In our loan-packaging service we have t.liree loan packagers who work with the businessmen. Iii terms of loan packaging, I think that our statistics are something like out of seven w-ho tried to get loans maybe one of them would fit the bill that we would take to SBA or take to the hank. Senator MONTOYA. Do you counsel them in business? Mr. Cuwr~s. Yes; we counsel them in all aspects. The first part of what. we try to do for the businessman is-because once he comes there, there is one thing in his favor, that he is trying t.o get. into business- that we try to look at. his present position, to look at whether, you know, the possibilities of success are there. and w-hat. the things are that lie needs to put together so that. when lie finally gets, you know, through the thing, get.s the. loaii packaged, that lie does have a high probability of succeeding. Seiiator MOXT0YA. Yes; but. do you have any follow-up counseling? Mr. CURTIS. ~Tes Senator MONTOYA. That. is the part of the duties connected with your grant? Mr. CURTIS. That is part of the duties connected with the grant. And let me say that even before we had the grant., we had always tried to raise extra money. because we know that. this followup is the next and most necessary thing and that various other services are needed. Senator Mox'FoYA. Do you raise extra money? Mr. CURTIS. We do. Senator M0XT0YA. How much did you raise last year? Mr. CURTIS. Last year, we were iiot very successful. We raised about 20 percent of our budget out.side. PAGENO="0141" 135 Senator MONTOYA. That is $100,000? Mr. CURTIS. Maybe $60,000 or $70,000. We are trying this year- we have done something else, too. During the past year we have no- ticed the problem that Dr. Malo mentioned, the problem of financing, and we have almost completed putting together a venture-capital fund so that we can have some money that w-e are free to put into the busi- ness in terms of equity. Senator MONTOYA. How are you going to attract venture-capital contracts? Mr. CURTIS. How? Senator MONTOYA. Yes. Mr. CURTIS. How are we going to attract it? ~\Tell, so far, we have been successful. We have got about three different sources, three different foundations, that have come in with some moneys, and, then, we had a little bit, so we have about $250,000. Senator MONT0YA. In venture capital? Mr. CURTIS. Yes. Senator MONTOYA. How- mttch have you loaned ? Mr. CURTIS. We are just putting the pieces together now. Senator MONTOYA. Is that specifically outlined for lending purposes, or is there some administrative expenses to come out of it? Mr. CURTIS. That is part of our problem. We are going to have to raise some more money for administration. None of it can w-e use for adirninistration and that is one of the problems. Senator MONTOYA. So, you have approximately $300,000 from Gov- ernment seed money and $200,000 from grants, and $80,000 or $60,000 or $70,000 from privately solicited capital? Mr. CURTIS. Yes. Senator MONTOYA. Is that it? Mr. CURTIS. I am sorry, 1 did not quite get your last statement. Senator MONTOYA. You indicated that you had gone out and raised $80,000 or $70,000? Mr. CURTIS. That is for operating. The $250,000 is more specifically for venture capital. Senator MONTOYA. Well, you have got quite a bit of capital there? Mr. CURTIS. Yes. Senator MONTOYA. Now, tell me what kind of business-oriented capability do you have in your organization? Do you have that? Mr. CURTIS. We are a business-oriented operation; even though we are a private, nonprofit organization, we still have- Senator MONTOYA. Tell me about your qualifications and your back- ground in business. Mr. CURTIS. All right. In our organization, the President, Everet Brandon, who is not here, has been running the organization since 1963. It was formed in 1963, and he has been running it since 1963. His executive vice president- Senator MONTOYA. What are his qualifications in business? Mr. CURTIS. Business administration, UCLA. Senator MONTOYA. But he has never been in business? Mr. CURTIS. In addition to running this organization as a business, Mr. Brandon was the first black stockholder in San Francisco. Senator MONTOYA. OK. PAGENO="0142" 136 Mr. CURTIS. Senator. I want to say that from running a nonprofit organization, you have the payroll, you have that whole problem, the normal business problems that a normal business guy would have, the same problems like meeting the payroll, like today. Louis Barnett, our executive vice president, is a business major out of UCLA also. * Senator MoxToYA. Has he even been in business? Mr. CURTIS. Yes. In fact, he is one of the five organizers of the first black bank that started- Senator MONTOYA. Well, before that was he in business? Mr. CURTIS. Before that he had been in business, in the insurance business, in Oakland. Senator MONTOYA. In Oakland? How long has he been working for your organization? Mr. CURTIS. Four or 5 years-S years. Senator MONTOYA. How long was he in the insurance business? Mr. CURTIS. I do not know exactly. I think it was maybe 2 or 3 years, 4 years, something like that. Senator M0XTOYA. All right. Now, the point I was getting is: What kind of followup do you have with these minority entrepreneurs by way of giving them advice as to how to establish accounting proce- dures and how to conduct inventories and how to establish goals, price- wise and profitwise, within the inventories that they have and the capital that the sales would generate? Now, what kind of followup advice do you have and what kind of monitoring do you give these minority entrepreneurs through your organization? Mr. CURTIS. Because we have been operating we have developed very good contact in terms of assistance in tile business community in San Francisco, and because we have been operating with the history we have, we have good files 011 various margins that are required. In this area the Bank of America small business service provides a lot of information to us that we in turn use. We tell tile guy that tile margins are going to have to be for him to make it in his business. And, in fact, that, in turn, means that when tile businessman comes to us with his idea of what he is going to achieve, we have to put it down in realistic terms so that he can see, you know, because we do not want to put him in something he cannot do. Senator MONTOYA. All right. How many loan applications have you prepared; how many have you processed, and how many have been successful, and what is the dollar representation in the accepted applications? Mr. CURTIS. Right.. Let me do the last first. In the past year, we have secured a little over $1 million ill loans. Tile numerics as to tile number of applicants, I am not sure of that. And there i5 tile ratio. But, you imow, requests for assistance in loans to us versus those that we package and turn ill are something like 7 or 8 to 1. Senator MONTOYA. You figure that you have been able to obtain approximately $1 million in tile last year? Mr. CURTIS. It is a little over $1 million; yes. Senator MONTOYA. Well, that is a very poor return on a $300,000 overhead; is it not? Mr. CURTIS. It is when you look at it in terms of just that. The other part of it is keeping some of these clients in business. PAGENO="0143" 137 Let me tell you another thing we are doing with some of the same money. We have seen that problems exist in getting minorities into business, in a poor business climate, in a declining shopping area, in an area where insurance is high, where everything is high. We are trying to see if we cannot do something as a pilot program, do some- thing about changing that attitude, changing that business climate in which they exist. The street where we recently located our office is a minority shopping street; and what we are trying to do is that we are trying to develop what we call a business climate development on the street getting merchants together, getting them to use their lever- age to get the city to provide various services to uplift the area and get the city to provide better lighting and police protection. Getting 1)eOPle into business in an area where it is very difficult to do busi- ness is really kind of doing a disservice. However, when a person comes to you for this loan, if he can qualify for it, I think we are obli- gated to get him that so that lie has a business. Well, it ends up that lie has a job that he is working 12 hours or 14 hours on and not making much money, but still lie has his pride and he has his business, and what we are trying to do also is to change that climate. That is one thing that-well, maybe it is out of this committee's concern, but- Senator MONTOYA. Well, I think all cities are trying to do that, to provide better lighting in areas where there is constant crime, and I think Washington, D.C., pioneered this, and it is working very successfully in Washington. A well-lighted area is a deterrent to crime. Mr. CURTIS. Well, we are trying to go much further, much further than that, with the pilot programs we ai'e working on now. We are trying to go much further thaii that, to improve not only the lighting aspect but to get the business people together and get the property owners together and get them to physically fix their facades up so that they look better. We work with business people to improve their displays- Senator MONTOYA. Do you have a chamber of commerce in these minority neighborhoods? Mr. CURTIS. In this particular one, we picked just the smallest single section we could handle, and we organized the business community there. Senator MONTOYA. Are they doing anything toward your objectives? Mr. CURTIS. Yes, yes. We have, through this, just like one thing that is a common thing with us, where a street is dirty with trash, gone to the city to get more trash cans and they could not do it, and the business people went and bought some pretty little trash cans and put them there. That, in turn, triggered a reaction, and some of them have more pride, and some of them are fixing up their places better, and we are getting businesses to come back into an area that before had been dying. Senator MONTOYA. `Well, I notice in `Watts there are less businesses now, in spite of the enormous expenditures which the Federal Gov- ernment~ has made of approximately $3 to $4 million. There are less businesses now in `Watts than before the riots. Mr. CURTIS. That is a thing that you can see not just in `Watts but in various other places, in our community where the climate for doing PAGENO="0144" 138 business is just very poor. If you look at that. boarded up place, that one with shutters, looking almost like a jail, and some of the business- men in some of these situations are operating where they keep their front doors locked and what. have you, and just let customers in when they come up, and things like that. Senator MONT0YA. We have places in Washington, D.C., where the business places are locked during the clay, and unless they know the customer they will not open the door. Mr. CFRTIS. That is right. Now, when you get someone a loan to do business in that area, there is something else. You have an obliga- tion to do more than that; you have an obligation to try to do some- thing about that. situation he is in. the climate. It is more than just. lighting; it is almost a change of attitude to get some hope built back into the. property owners and into the business operations in the area. Senator MOxTOY~. You have to establish community pride. Mr. CURTIs. Now one of the things that. bothers us when w-e are try- ing to get HFD or someone else to do something about this is that FACE, the residential FACE program. ought. to be-and I think the legislation allowed it. to be-used for a commercial area. I think it should be possible to implement an official FACE program just on a strip, just. on a business strip, because then economics can come into play and help you. As it is now. we have to sell the property owners in our area on the idea that if von fix yours. we will get the other people to fix up. and so forth. and things will change. Senator MOXTOVA. Well, you are going to have a hard time doing that. Mr. CURTIS. That is very difficult.. Senator M0XT0YA. That is the story of America, although it is his- tory, and that is why we have some blight areas in the center of towns, because the local real estate owners were putting the revenue in their pockets and not improving the property, and they went along like that, and that is what has happened to our cit.ies. That is what hap- pened in New York, Cleveland, Chicago, and Los Angeles. Mr. CURTIs. But there ought. to be, just. like in the residential area with FACE, the low-interest rate money, with an incentive to the property owners to take advantage of that low-interest -rate money. There ought to be some similar one for these little commercial strips in our areas. There ought to be a similar program like that, and from our experience in working on this pilot program, that is the key. That is the key. If we could turn that key, we could unlock something. Senat.or MOXTOYA. Well, I would like to go into it a little more thoroughly, but I think you have covered a vast landscape on this one. I appreciate your testimony. Mr. CURTIs. Thank you. Mr. JoNEs. Mr. Curtis, I have just a few questions for you. What is the experience of PACT with the 8(a) program? Mr. CURTIS. We have not processed many 8(a) `s through our office. One of the problems is that there is this matching. you know, of oppor- tunities with clients. OK., I can get a. list of possible 8 (a) contracts from the Office of Minority Business Enterprise, and Jerry Hutton has done a very good job in providing these listings. Now, that is a poten- tial there. To find them, we will spend a lot of time, and then if we are going t.o pursue very, very diligently, we will be spending a lot of time just trying to find a PoSSible match out there, and then they will PAGENO="0145" 139 say we are not really doing anything because we only found one match or two matches that year, and this is why I think there is a divided responsibility. Someone has to have some responsibility just following on that. Mr. JONES. One of your problems then is that your clients simply do not do the kind of work that the Government ordinarily would be purchasing? Mr. CURTIS. That is correct; that is absolutely correct. You see, if I had a number of clients that would be easy. Now, there is potential out there to put the clients together, but that would take, you know, some effort in doing that, just focusing on that and that alone. Mr. JONES. Is there some agency that could help coordinate these Government needs with the needs of youl clients, sir, or is this a function that really has to be performed by PACT? Mr. CURTIS. Frankly, I think the responsibility is for 8 (a) and the Government procurement. They would best be put into the hands of the procurement people at the particular agency, because, if you are work- ing as a buyer in a particular agency, you really would not appreciate someone else over here telling you how you have got to buy or who you have got to use, because, after all, if you guys do not come in, then your boss is looking down your neck, and lie is not looking over across at another agency. The procurement people of the particular agency that needs products or services should bear the responsibility to get things done; and this is where I would like for them to feel that they can call the SBA or the Office of Minority Business Enterprise or PACT and say "I have got this thing; this guy looks possible, and could you help him to come up to snuff to meet what I need ?" Senator MONTOYA. Do you feel that perhaps OMBE and the SBA could perform more of a formal coordinating function with the pri- mary responsibility for seeing that minority enterprise has a certain fixed share. of the Government's business, or should this responsibility rest with the procuremeiit agencies themselves? Mr. CURTIS. ,Just like small business. Just like the small business procurement part of Government procurement. From working in larger companies, I know that there is a requirement that 40 percent of the Government contract dollar go to small business, and the large companies do it, give that 40 percent to small businesses. We are going to help find those businesses, you know, and nurture them; and then the small businessman, if lie is contacting a particular agency to get a contract, instead of going to SBA and OMBE, he goes somewhere else to get business. He is learning the facts that lie is going to have to know to run later on his own. He is at the particular agency where the contract is being let and the goods are being bought. Mr. JONES. Thank you. Senator MONTOYA. Thank you very much. Do you have an application for new funding; do you have funding for this year? Mr. CURTIS. We have an application in. Senator MONT0YA. You have not been funded? Mr. CURTIS. Our contract is up in October. Senator M0NT0YA. What is your application for? Mr. CURTIS. We have an application of the OMBE affiliate for new funding, the OMBE affiliate for refunding at the same level for Octo- ber 15. The contract ran out as of the first of July, and we carried the 70-654 0-72-10 PAGENO="0146" 140 operation on our funds up until now, and I would think that SBA was slow getting that money; so, we carried the operation. Senator MONTOYA. The same level as last year? Mr. CURTIS. The same level. Senator MONTOYA. You may be excused. Is Mr. Medina here in the audience? Mr. Medina is the chairman of the Latin-American Chamber of Commerce, of San Francisco. STATEMENT OF GEORGE MEDINA, VICE PRESIDENT, LATIN- AMERICAN CHAMBER OF COMMERCE, SAN FRANCISCO, CALIF. Mr. MEDINA. Vice President, Mr. Chairman at the outset, I want to say that I had occasion to talk to Mr. Ward a month ago, and at that time I related to `him the only input I could see that I could give here would be by virtue of the past experience and interest that I have had in the SBA, as you well know, and I have traveled extensively throughout the South as a representative of a Spanish-language news- paper. And from this experience, the only thing I could relate to you is in discussions I have had with people, business people, that I come in contract with on a day-to-day basis, one of the common things that keeps coming up is the lack of awareness of the existence of the 8(a) program, and this is one of the points I might be able to make some suggestions about how the knowledge of the existing program can be brought to the Spanish-speaking community. Senator MONTOYA. Fine. You may do so. Mr. MEDINA. Well, being in the business; as I say, of representing the interests of the Spanish language newspaper~- Senator MONTOYA. Do you own a newspaper? Mr. MEDINA. No; I do not. I have an agency that represents the Spanish-language newspapers. Senator MONTOYA. How many Spanish-language newspapers? Mr. MEDINA. Eleven. Senator MONTOYA. Are they all located in the San Francisco area? Mr. MEDINA. No; they are all from here to Texas. Senator MONTOYA. OK. Proceed. Mr. MEDIXA. And, as I say; the newspapers themselves are willing to cooperate in any way that they can to `bring the awareness of `the existence of the 8 (a) program to the people, and anything we can do in that regard-well, they are willing to do it., because every small businessman that these people help in the potential areas are potential customers for the newspapers themseJves. Senator MONTOYA. Have you informed SBA about that? Mr. MEDINA. Not recently. I brought the subject up `a couple of years ago. Senator MONTOYA. Well, would you inform SBA as to the attitude of the newspapers which you represent toward disseminating infor- mation? Mr. MEDINA. Yes; I will do that. To my knowledge. the SBA has relied on contracting the Association of Spanish-Speaking Busmess- men. The only one really organized, to my knowledge, in the areas I have worked in is the Mission Contractors Association, here in Saii Francisco, which is made up of a couple of big contractors and four or PAGENO="0147" 141 five small ones, `and I think that they are going to have to expand their effort. Senator MONTOYA. What is `the Latin-American Chamber of Com- merce? Mr. MEDINA. It 1:S located here in San Francisco. Senator MONTOYA. Is it very active? Mr. MEDINA. It `has been more active in the past year than in the 2 or 3 years before that. Senator MONTOYA. How maiiy members do you have in it? Mr. MEDINA. We have about 49 members with the potential of about 125. But, in regard to the membership, with the exception of two or three people, I do not kiiow that there would be any other potential or prospective recipient of 8(a) contracts, and this is another area that I want to bring up, and that is as to how do we qualify a potential or prospective busiiiess for an 8(a) contract. Senator M0NTOYA. Well, we had a hearing yesterday on that par- ticular point, and if interested businessmen submit an acceptable busi- ness plan to SBA, they will put them on a list which they keep in the office and as soon as there is an 8(a) contract available or in the offing they will match that contract with a suitable business firm. Mr. MEDINA. Yes. This is a point, for example, where you can ex- pand a little on, and, as I say, it would follow in essence the same sug- gestion about making the information available to the communities through your own media. Senator MONTOYA. WTell, what about if SBA would print some of this pertinent literature in Spanish and provide films in Spanish? Mr. MEDINA. This would help. Senator MONTOYA. But there is no language difficulty among most of these people; is there? Mr. MEDINA. Well, there is in some cases; yes. You see, in San Francisco, for example, the majority of the Spanish- speaking businessmen are other than Mexican-American--they are Mexican-American businessmen, but this is a cosmopolitan Spanish- speaking community, and by and large the merchants and business peo- ple are people who have come with skills that are from South Amen- can countries, you know. For example, one of the biggest contractors we ever had was a build- ing contractor, a gentleman that came here from El Salvador 20 years ago, and he used to do some very sizable contracts. But other than him and his brothers, there are only one or two other companies that I know of that would have competency to take any projects of any size. But one point that I wanted to bring up was the fact that in addi- tion to the lack of awareness of the existence of the 8(a) program at large, there is also a problem `that the contracts that `are available or the services that are in demand by the various governmental agencies- how do we get this information to the prospective contract recipients? Senator MONTOYA. Well, that is what we tried to uncover yesterday. We want to see if we can provide a better method of informing the small business community. Mr. MEDINA. We will be glad to bring up some suggestions about how this might be done. We can contact the SBA abou't it. Just from my own experience in talking to people- PAGENO="0148" 142 Senator MOXTOYA. Yes, and if you care to prepare a suggestion in writing, we will incorporate it in the record of this hearing if you send it to us in Washington Mr. MEDIXA. Two other points I wanted to bring up, Senator Mon- toya. I do not know whether they would be feasible or practical or even legal, but one of the problems of most businessmen that have been recipients of SBA loans is coming up within the initial payment pe- riods, and as I understand it, it. is 90 days, with the first payment. Now, to undertake a contract of any significance, it is going to require something to defray the initial payments for at least 6 months, in order to give these people a headstart. You see, a lot of these people have tooling up costs that prohibit them, you know, from successfully carrying out a contract or even a paying one if the projections they have made indicate they are not capable of taking it. oii, you know. Senator MOXTOYA. Well, that is another problem that we will have to face. But, usually, if a concern receives an 8(a) contract, they can go to the bank and get some advance funding on that contract. Mr. MEDIXA. Yes; but what money they get, the proceeds of the loan are taken up generally by the costs involved in the starting up of the project. A lot of these small companies that enter a project of any size have to take on additional people, and that ends up in a lot of money at the outset. Senator MOXTOTA. Well, if the firm has competency, capability, and the prospect of some business, SBA will participate in a loan with the bank. I think the funding can be arranged on that basis, but we cannot prescribe any definite or arbitrary criteria here. Everything has to be judged on the basis of the credit rating and capability of the individual. Mr. MEDINA. Yes. I know. I was in the consumer loan business for 5 years myself a long time ago, so I have some knowledge in that regard. I want to bring up a couple of points, like I says and these are points that have been raised by people I have taken an interest in contacting, and some have been the recipients of 8(a) programs and some of them have not. and, as I understand it, the SBA rendered whatever management assistance they required, either prior to get- ting the contract and/or during the life of the contract. Now, some people have suggested the possibility that private busi- ness people are in a common field, and successful type people that would have no fear of this person being a competitor until at least some distant time think this person would be a better persoii, in a better position, to give the technical and management assistance that they would require as opposed to the idea of getting the assistance from the SBA. Senator MOXTOYA. WelL the Office of Minority Enterprise has that. capability if they will do it, and the previous witness indicated that he had a very sizable grant for that purpose. Mr. MEDINA. Well, you know, honestly, Senator, I do not really know. I am aware of not. only PACT but other minority type agencies that are in the business of what we are doing, and I really wonder if, by virtue of longtime experience. in being in business themselves, if they really have the level of competency that it takes. PAGENO="0149" 143 Senator MONTOYA. Well, that is my great concern, too. Mr. MEDINA. And these are reservations that I not only have but the business people that have applied for SBA loans-and some have been recipients of SBA loans-also have. And you say that the Office of Minority Business Enterprise has the expertise and the knowledge and the competency to give the counseling, but I wonder if private business people would not be able to do a more objective job? Senator MONTOYA. Well, we have the program known as SCORE. I do not know whether you know about that. Mr. MEDINA. Well, I have been aware of it. Senator Mox'roYA. In this program executives volunteer to give advice, and I understand that the SBA has approximately 40 in the San Francisco area who come in and do volunteer work with small businesses. Mr. MEDINA. Well, you can have 400, Senator, but I am wondering about the sincerity and motivation there is to do the job required. Senator MONTOYA. Maiiy of these people are very sincere and very dedicated, and they work for nothing. They volunteer, and they want to keep busy during their retirement, and they have been very suc- cessful business people. Mr. MEmNA. Well, in respect to Latin Americans- Senator MONTOYA. But I agree with you, any advice imparted to the minority entrepreneur should be advice that comes from an experi- enced individual. Mr. MEDINA. Well, people that are actively engaged in a comparable business. Senator MONTOYA. Right. Mr. MEDINA. They could more realistically help these people make projections, you see, because there is no point in a minority taking on an 8(a) contract unless there is some assurance of a reasonable profit. Senator MONTOYA. I have been talking about that for two days here. I agree with you wholeheartedly. Mr. MEDINA. You see, if there is no assurance of a possibility of making a reasonable profit, there is really no point in giving these peo- ple contracts. If you just want to whet their appetites, they might use up the entire profits in getting the payroll that they had to undertake to meet the requirements of the project, and, then, what happens? They might go entirely out of business. Senator MONTOYA. Well, thank you very much, Mr. Medina. Mr. MEDINA. I would like to say that the Latin-American Chamber of Commerce is going to expand its membership in the Greater Bay Area for Latin-Amercan businessmen, and we would be glad to use that as a platform or as a means for the SBA and the various depart- ments of the Government that might have contracts available, 8(a) contracts available, to kind of see what we can do to bring them together. Senator MONTOYA. I wish you good luck on that ventur:' Mr. MEDINA. Thank you. Senator MONTOYA. Thank you very much. Now, we have Mr. Jerry Hutton and Mr. Jay Leanse from the Office of Minority Business Enterprise, Department of Commerce. PAGENO="0150" 144 STATEMENT OF JAY I. LEANSE, DEPUTY DIRECTOR, OFFICE OF MINORITY BUSINESS ENTERPRISE, U.S. DEPARTMENT OF COM- MERCE, WASHINGTON, D.C.; ACCOMPANIED BY JERRY HUTTON, REPRESENTATIVE, OFFICE OF MINORITY BUSINESS ENTERPRISE, U.S. DEPARTMENT OF COMMERCE, SAN FRANCISCO, CALIF. Senator MONTOYA. Who is going to testify? Mr. LEANSE. Well, we will cooperate on the responses to your ques- ~iO115~ Senator Montoya. Senator MONT0YA. Do von have any written statement? Mr. LEANSE. We do. I have submitted copies to your office in Wash- ington. Others are being xeioxed now. (The prepared statement submitted by Mr. Leanse reads in full as follows:) PAGENO="0151" 145 Testimony of Jay I. Leanse Deputy. Director, Office of Minority Business Enterprise U. S. Department of Commerce Before the Government Procurement Subcommittee Senate Small Business Committee - San Francisco, California September 30, 1971 I am Jay I. Leanse, Deputy Director of the Office of Minority Business Enterprise in the Department of Commerce. I am pleased to have this opportunity to testify on the efficiency and effectiveness of the 8(a) program. The United States purchases annually goods and services valued in excess of $50 billion. Of this amount, approximately $7 billion, or 14%, is purchased from small businesses and only $100 million has been identified as being purchased from businesses own,ed byminorities. This is less than 1/20th of one percent of the total Federal market. PAGENO="0152" 146 In 1968, the Small Business Administration began an experiment with its authority under Section 8(a) of the Small Business Act to accept contracts from Federal agencies which have been set aside for award on a negotiated basis to disadvantaged businesses. In a memorandum dated December 5, 1969, to the heads of all Federal departments and agencies, the President endorsed SBA's program, and requested each head to support OMBE, SBA and the Federal Task Force on Procurement to: -- Provide procurement opportunities. -- Supply management and technical experts. -- Help to set goals to measure progress. -- 1~ame a representative to pursue the program. OMBE's role has been necessarily secondary to the roles of SBA, which administers the 8(a) program, and the agencies which provide the contract opportunities upon which the program depends. We have acted as an advocate, a stimulator and, in some instances, a critic. Without apologizing in the least for our achievements, I can attest that the effort has not been easy. Agencies are prop- erly concerned about performance, quality control and delays. Procurement officers are being asked to step from the known to the unknown and to deal with criteria not directly related PAGENO="0153" 147 to traditional procurement objectives. Businessmen seek to preserve markets on which there has been a hold. Expertise is sought from agencies for purposes not directly impacting on the agencies' missions. These facts of life in the 8(a) program have caused problems and delays. Yet we stand firm in our commitment . The government's achievements on behalf of disadvantaged businesses to date in this.. effort are: -- In FY 1969, 30 contracts valued at $8.9 million were a~warded. -- In FY 1970, 197 contracts valued at $22 million were awarded. -- In FY 1971, 811 contracts valued at $66 million were awarded. -- The number of agencies which have awarded 8(a) contracts has risen from t~o in 1969 to twenty-five thus far in FY 1972. -- 33 Agency 8(a) Managers have been appointed. -- SBA's authorized staff for 8(a) activIties has been raised from 34 to 61. -- 30 regional procurement seminars were held in 1970. -- 41 regional procurement seminars will be held in 1971. PAGENO="0154" 148 -- An $8 million SBA fund f or 8(a) business development expense has been provided. -- Regulations have been promulgated by the General Services Administration tO become effective October 18, 1971 -- a. to require prime government contractors to use best efforts to give "maximum practical opportunity consistent with efficient performance" to minority owned companies to obtain sub- contracts; and b. in contracts in excess of $500,000, to require * prime government contractors to implement an "affirmative action" program to obtain minority subcontractors and suppliers. -- SBA has set a government-wide goal of $100 million in 8(a) contracts for FY 1972. OMBE applauds these gains and the substantial efforts of SEA and the Federal departments and agencies to continue and expand their efforts. The program not only attempts to correct an imbalance attributable in large measure to historical circumstances, but should significantly preserve and increase competition and market choices of the United States and its people, consistent with the objectives of the PAGENO="0155" 149 Small Business Act. In an expanding market, and given the dollar amounts we are dealing with, there is no threat that small business that is not minority-owned will suffer. In fact, the thrust of the program is to expand the percentage and amount of business done by small concerns generally by (a) breaking down large contracts into components, (b) increas- ing small business set asides, and (c) enhancing subcontracting opportunities. To build viable businesses, when all is said and done about capitalization, planning, production, management services, technical assistance, and the like, available and profitable markets arethe key building blocks~ Without sales, a business cannot succeed. The effort to see that market opportunities are fairly made available to minority-owned firms, and to make a market while disadvantaged businesses get established and develop their own markets, then, is directed at the very heart of the problem in fostering minority business enterprise. Clearly, there is a grave responsibility for the success of this effort that must be borne by contractors who benefit from 8(a) awards. Their striving to capitalize on available oppor- tunities, to build their competitive base, and to expand their markets is at once the foundation and the justification of the program. PAGENO="0156" 150 In FY 1972, the Department of Commerce expects to apply additional manpower and financial resources to furnish technical and management assistance to new or expanding businesses, and to bolster the Federal effort to strengthen minority enterprise. We intend to support 8(a) contractors, and in turn, we rely upon the use of 8(a) to supplement the markets of developing disadvantaged firms on a timely and helpful basis. Here, then, is the core issue. How can the 8(a) awards he made on an expeditious basis, with a minimum of cost (in terms of man-hours, delays, frustrations and dollars) to both the procuring agency and the minority businessman? I am confident that the program is maturing and that as govern- ment officials, businessmen and business development agents come to know and use the program, efficiency will increase. Expansion of 8(a) contracting to $100 million and beyond is dependent upon the growing experience of each. In two areas, we are seeking to overcome specific inefficien- cies: (1) the Federal Task Force on Procurement, under the Inter-Agency Committee on Minority Business Enterprise,is currently developing a program to educate the field personnel of all Federal departments and agencies about the purposes and procedures of the 8(a) program; and (2) in the area of contract negotiation, the SEA is considering implementing PAGENO="0157" 151 a procedure where the procuring agencies would initially approve the potential contractor, determine the extent of his capability and negotiate the contract directly with him, subject to SEA approval. We support both of these efforts, as eliminating substantial delaying factors and duplication. A third requirement which is essentially an education process -- is to improve means for identification of potential 8(a) contracts by the various agencies. An organized effort by each agency is essential to (a) increase the number and value of contracts made available to SEA, (b) break up larger contracts where feasible so small companies may perform part, Cc) provide ample lead time so a qualified contractor can take advantage of the opportunity and (d) work with the SEA, contractors and business developers to match suitable contracts and contractors, on a timely basis. Fourth, there is a real need for follow-up support of the 8(a) awards to maximize benefits. To state an example of the ideal, consider a minority-owmed business which is founded on the equity investment of its founders and several large corporations, and the debt financing of a local bank PAGENO="0158" 152 guaranteed by the SBA. Its market is underserved in its locality and is growing. With its own efforts, together with specific assistance as needed from the staff of its corporate investors, or supplied by a local business development organization funded by Commerce, the company develops its production capability.to serve initial markets available to it by reason of its start-up and initial interest in the venture. At this point the company's volume makes it uncompetitive, yet it has capacity and ability to compete, provided its market base can be expanded. Here, gentlemen, is the problem in minority business enterprise -- difficulty in the expansion of markets. Fledgling minority companies must prove, and reprove, themselves in the marketplace. The 8(a) program, together with the direct federal procurement program, is designed t~o assist companies having such potential at the time of their need. Follow up efforts to schedule Federal procurement to facilitate a solid build-up of competitively serviced business, both in the Federal and private markets, are required. We are not trying to develop dependencies. The efforts of all the procuring agencies are needed here, in such areas of working to make contracts timely and helpful rather than burdensome, and making known a contractor's capabilities to other agencies and prime contractors. Commerce intends to PAGENO="0159" 153 support these efforts with a private procurement program and marketing assistance available through business develop-. ment organizations and alliances of businessmen committed to the minority business enterprise program. There is no benefit in diverting business from one small business to the benefit of another: this would only defeat the purposes of the Small Business Act. Also, there is no denying that the best answer for market expansion for disadvantaged firms, or any firm for that matter, is to develop better products and give better service at competitive prices. We believe that the 8(a) program is essential in this development process. The habits of trade, now a restriction to the disadvantaged, when broken down and developed anew, as we hope the 8(a) program can induce1 will.greatly benefit the Nation and the Nation's disadvantaged in expanding commercial intercourse among people. PAGENO="0160" 154 Senator MONTOYA. Mr. Leanse, you are the Deputy Director of the Office of Minority Business Enterprise in the Department of Commerce? Mr. LEANSE. I am. Senator MONTOYA. How long have you been with this particular office? Mr. LEANSE. Seventeen months, sir. Senator MONTOYA. And how many employees do you have? Mr. LEANSE. Presently, we have 71 staff authorized, professional and secretarial. We have authorizations for 46 people in the field. Senator MONTOYA. In addition to the 71? Mr. LEANSE. In addition to the 71. As to the field staff, they have been affected by the current wage and hiring freeze. Senator MONTOYA. How many do you have in the field? Mr. LEANSE. We have five people who are in the process of being brought on the rolls permanently, but they have been suspended tem- porarily. We are carrying them as consultants presently. Senator MONTOYA. You do not have anybody in the field now? Mr. LEANSE. Yes; we have these five people. They are in the process of becoming permanent, but they are working temporarily now. Senator MONTOYA. Where are they located? Mr. LEANSE. They are located in Los Angeles and in Chicago, and in Atlanta, and Boston, and in San Antonio. In `addition- Senator MONT0YA. Is this new authorization for new funding just for this fiscal year? Mr. LEANSE. Yes. Senator MONT0YA. Did you have any last year? Mr. LEANSE. No; this came as a supplemental in June of fiscal 1971, and the process of recruiting began then, but it was delayed. Senator MONTOYA. And you have 71 in Washington? Mr. LEANSE. Seventy-one in Washington. Senator MONTOYA. How many blacks do you have in this minority enterprise section? Mr. LEANSE. The figures as of the 1st of September, there were 18 black men and women as professionals, there were three Spanish- speaking and one American Indian. Senator MONTOYA. One what? Mr. LEANSE. American Indian. Senator M0NTOYA. Now, what do the three Spanish-speaking people do? Mr. LEANSE. Well, each of them are in operating divisions of the Office, and although we are principally a staff operation, in the course of the last 2 years we have developed more and more operational ac- tivities as have been required by the demands of the community. Ramon Romero, who is the Deputy Director of the Business Oppor- tunity Development Division, is concerned with both policy and busi- ness resource development within the section. Moises Carrasco is on a newly created planning staff, having been a member of the community services section during the first year of his employment. He is now playing a role in the development of long- range planning for the Office as it relates to the supplemental which was just requested yesterday and on~ which hearings will be held starting Tuesday before the House Appropriations Subcommittee. PAGENO="0161" 155 The third person is a young woman, Elizabeth Sandor, who is my personal assistant and overall program manager. She is a very creative young lady and works as a- Senator MONTOYA. These are the three that you have out of the entire 71? Mr. LEANSE. Out of the 71; yes. Senator MONTOYA. Do you have anybody m the field here who understands the problems of the Mexican-Americans here in the West? Mr. LEANSE. One of the five people that we have in the field is Spanish-speaking. Senator MONTOYA. Where is he located? Mr. LEANSE. Just now lie is in San Antonio. Senator MONTOYA. Do you send him to Los Angeles once in a while? Mr. LEANSE. He has been in Lon Angeles. We do have another man being recruited for Los Angeles, a gentleman by the name of Vasquez who is being hired to be the link between the field and will have a supervisory relationship between Washington and the Office- Senator MONTOYA. Would you file for the record the contracts that you have with minority consulting organizations? Mr. LEANSE. At the present time, the Office of Minority Business Enterprise does not have program funds. The only contractural re- lationship that we have is as it affects the associate grant admini- strator of those grants made by the Economic Development Admin- istration within the Commerce Department to these business develop- ment or business counseling organizations. When these organizations become grantees of EDA for the purpose of assisting minority businessmen, they are identified as affiliates of the Office of the Minority Business Enterprise because of our program responsibility. Senator MONTOYA. And actually the funding comes out of EDA? Mr. LEANSE. Comes out of EDA. Senator MONTOYA. What about SBA 406? Mr. LEAN5E. The same thing applies. The NEDA offices are affili- ated with the Office of Minority Business Enterprise, even though they have received their funds through section 406 of the Small Busi- ness Administration. So, we have a program design that includes organizations so they may be funded by other Government agencies. We perform a coordina- tive function, both in terms of program reporting and evaluation. The other parts of the local community design, I would be very happy to discuss with you, because I think it is relevant to the discussions you have had this morning. Senator MONTOYA. Well, you must have a list of these organiza- tions- Mr. LEANSE. Yes. Senator MONTOYA (continuing). Since you are in a coordinating capacity. Mr. LEANSE. We do have. I can supply that for the record. Senator MONTOYA. If you will, and the amounts that each receive. And the ethnic complexion of each organization. Mr. LEANSE. Yes. Senator MONTOYA. All right.1 1 See information beginning at p. 249. 70-654 O-72------ii PAGENO="0162" 156 Mr. LEANSE. Now, the supplemental request that went to the Hill this last week is of a nature that it would provide very substantial funds both for community based business development organizations of the NEDA and the PACT variety. It would make provision for organizations similar to the association described by Mr. Curtis, that is, a businessman's association in a par- ticular geographic area. It provides fuiids for organizations of the type described by Mr. Medina as the Latin-American Businessmen's Association that would provide money for administrative functions that would allow these organizations to determine the degree of rele- vancy to the community. Senator MONTOYA. Are you doing anything with respect to these con- tracts to insure that the grantee organizations will have the kind of capability with which they can properly advise minority entre- preneurs? Mr. LEANSE. Yes; this is a two-pronged effort., Senator. Well, first the ability of the minority community to identify within itself those individuals who are qualified, who are qualifiable, who are established, who can utilize the resources that are available from the Federal Government, and, more importantly, those business organiza- tions that could avail themselves and really rely in the long term on the resources that are available in the larger business comnmnity: capi- tal in its various forms, market opportunities, and, perhaps more im- portant than any, the business lrnow-how. Now, this is commonly inter- posed by saying "business know-how," and where you compensate for the lack of business know-how, the lack of business heritage, is by pro- viding management assistance, technical assistance and various types of services. Well, we have come to what we think is the common-sense approach to what is a difficult problem, but without trying to complicate it `and make it something that is inconsistent with normal business prac- tic.e, we have sought out relationships with organizations like PACT and NEDA and others to arrange with them the fimetion of informa.- tion and outreach, some feasibility and financial planning and moth- toring of the business and/or the client that makes himself known and is sought out by this community-based organization. Now, this community organization does not have the capacity to, by itself, cause the banks to respond, to cause the Federal Government to respond, to cause appropriate corporations to make contracts, franchises and market opportunities available, or to necessarily com- mit to a fixed amount of management assistance based on a dollar value for accountants or an hourly commitment for a production manager who might be needed by minority businessmen. So, the community organization really provides the local interface with the minority community. Senator MONTOTA. But do they? Mr. LEANSE. They are, sir. Senator MONT0YA. At hearings I held in Watts last year we were concerned with the fact that the Federal Government spends millions of dollars with these consulting organizations, and they achieve few results, and I asked for results at those hearings. Mr. LEANSE. Well, the process is maturing; and this is not an apology, but it takes time to develop the process and to get the word~ PAGENO="0163" 157 out and get initial results which then serve as a basis for validating the processes that are sound and discarding the ones that are not. Senator MONTOYA. Well, that is the only concern I have, that there be meaningful advice given from a base of knowledge rather than a base of theory. Mr. LEANSE. Yes. The other part of this local design, the other component and the one we feel is extremely important, is to coalesce the private sector-the business community, the business know-how, the market potential and its money both in terms of venture working capital and other forms of credit-coalesce these interested people and these necessary sources of involvement. We are moving to create what we call "business resource centers" which would, in effect, function as a wholesaler, and in the major population centers at this country where there are minority populations of significance, where the established business community, the business power structure is, if you will, com- ing together to commit itself to make available these resources and, in turn, to respond to the needs that have been demonstrated by the community organizations. Now, it is not intended that this business resource center would supersede the community-based organization that is managed by members of the ethnic group in which the organization is located but rather would have a good working relationship so when a realistic business opportunity was available that the wholesaler business re- source center would let it be known to the community organizations, just as we would expect at the Federal establishment level through the presence in the community. Now, the Minority Business Opportunity Committee, which is a committee of the Federal executive board or Federal executive associa- tion where they are located, is the peer group where the members of the Federal Establishment should know what 8(a) contracts are available, who should be able to program their needs over a period of time, who should be able to make their needs known to the community orga- nizations and minority businessmen and to SBA so that. there is a rea- sonable chance that the goals that have been set will be attained. And it is interesting- Senator MONTOYA. What efforts have been made by your office to try to get this resource pooling concept going? Mr. LEANSE. Well, we have been in the process for the last 6 months of auditing our services or inventorying the services and commitments that are available in cities across the country. This is really- Senator MONTOYA. It is usually the big corporations that offer help of some kind, is it not? Mr. LEANSE. Yes; but the national commitments that were guar- anteed during the first year of the existence of the Office of Minority Business Enterprise could not be utilized or localized in an effective manner, and where there is great deal of interest-and there are a number of outstanding cases where major corporations haves assisted individual businesses, but these frequen~ly are businesses that are high visibility and they do not necessarily offer applicability to numbers of people in the community. So, we are at a stage now where the coalescence of this effort in the business community can be launched. We have one that has already been funded and two others in the process. PAGENO="0164" 158 Senator MONTOYA. How have they been funded? Mr. LEANSE. The first one is funded through the Economic Develop- ment Administration. Senator MONTOYA. And where does it exist? Mr. LEANSE. In Los Angeles. Senator M0NTOYA. And to what extent has it been funded? Mr. LEANSE. It was funded on a preliminary 6-month grant which commenced in March and will be renewed-actually will be reformed, because we have improved on the concept in the 6-month period, and we will insist that more services are made available out of this grant. than were originally contemplated in the first grant.. This organiza- tion will provide full-time aid, professional consultants to minority businesses throughout community organizations through MESBICs a.nd through banks. Senator M0NT0YA. What is the name of this particular group? Mr. LEANSE. The management assistance component is called MECLA, Minority Enterprise Coalition of Los Angeles. The principal grantee is the Management Council of Los Angeles which is the business establishments' organization to insure the avail- ability of capital, market opportunities, and management and tech- nical assistance. They have subcontracted-in fact, all of the money that was received by the Management Council goes through to MECLA, the Minority Enterprise Coalition, because the coalition group provides the technical assistance through its paid staff, but the Management Council's role is one of- Senator MONTOYA. Have you checked the composition of the person- nel to determine whether they have the proper type of technical know- how? Mr. LEANSE. Yes. If I can recall correctly, there are 11 people. There are five public accountants, one certified public accountant, an attorney and the other men have business specialties, but I am not certain what they exactly are or what exact specializations they have. Senator M0NT0YA. Are they permanent employees? Mr. LEANSE. They are permanent employees. Now, that is one part of the system also. We must utilize volunteers. Senator MONTOYA. What about SCORE? Mr. LEANSE. SCORE is good in some cities; not so good in others. Senator M0NT0TA. Are you correlating your work with what SBA is trying to do? Mr. LEANSE. Yes. SBA, Senator, is but one of the resources, and in terms of its design we look upon SBA as beiiig a banker, we look upon them as being a~ source of management assistance through the volun- teer set-up. The 406 funds are so limited that they really cannot buy too much technical, full-time technical, staff; so, we recognize we have to leverage the resources that are available. Senator MONTOYA. How about the role of the university? Mr. LEAXSE. That is an important component. Senator M0NT0YA. Do they come into this picture at all? Mr. LEANSE. Yes. One of the two communities in which we are nego- tiating for a BRC presently in a city where there is an alumni club made up of MBA's from Stanford, Harvard, and Wharton's School in Pennsylvania. These people vohrnteer. They have a small paid PAGENO="0165" 159 staff, but both the professional people and the alumni cooperate in assistance to minority businessmen. Senator MONTOYA. That is a good way for them to get practical ex- perience; is it not? Mr. LEANSE. The alumni are all seasoned people. We have a require- ment that people must be at least 30 years old and at least 3 years in business before they are allowed to take a place. Senator MONTOYA. Now, what are you doing through your office to try to perform the role of catalyst with respect to 8(a) contracts for minority small business enterprises? Mr. LEANSE. It is through the Interagency Committee for Minority Enterprise which was established pursuant to the Executive order of March of 1969. That Interagency Committee was established shortly thereafter. A task force on procurement was established in December 1969, headed by Administrator Kunzig of GSA. The administration of the 8(a) relation was determined to be the most valuable statute on the books, without looking for new legislative authority. From that time to this, the record of the improvements in 8(a) placements is very substantial. For the first year, some $8 million in funds and nine contracts were made available. In the past year, they were $66 million-plus in contracts and over 811 individual contracts, some 550 minority firms being the recipients of those contracts. Senator MONTOYA. Do you think that is adequate? Mr. LEANSE. Adequate? No; it is not. Senator MONTOYA. What do think should be our goal? Mr. LEANSE. Well, I would say as much business as the minority community can absorb ought to be our goal. I am not qualified to say what that should be at this point, because we do not know what the capacity is. In fact, the census that was recently completed allows for the first time a statistical base setting for the companies, their location, the services and industries in which they operate, the ethnic mix, and so on, and we are just at a point where we are utilizing that knowledge coupled with the experience of the last 18 months or 2 years in develop- ing it. There is a goal. I do not mean~ Senator MONTOYA. What you have now is a list of the existing businesses? Mr. LEANSE. Yes. Senator MONTOYA. You have them categorized as to what they can do? Mr. LEANSE. We have two types of information. We have this mi- nority census which was just completed-and I can supply that for the record if you would like. Senator MONTOYA. Are you in a position to provide a proper catalog for these procurement agencies? Mr. LEANSE. We are not, but in most of the cities in which there are- Senator MONTOYA. Why can't the Census Bureau do that? They have already conducted an inventory of these businesses. Mr. LEANSE. Well, the base period was 1969, Senator, and we are operating now at a time when through normal attrition and through business startups, the base market may not be adequate. We have to update it now, and this is being done in the following manner: The PAGENO="0166" 160 minority business opportunities conimittees are developing catalogs in their communities iii cooperation with the community organiza- tions, and, finally, there are a couple of firms which are for profit that are developing catalogs of information. In addition to that, and as an overview, the General Services Admin- istration is putting together lists of companies that have been compiled as a result of procurement conferences. Senator MONTOYA. Why cannot all of this work be integrated Mr. LEANSE. It can. Senator MONTOYA. Why isn't it? Mr. LEANSE. Because the developmeut of the information is really a loca.l requirement because of the range in it and the necessary updating. Senator M0N'roYA. WThy can there not be a central clearinghouse to develop the catalog? Mr. LEANSE. We are the clearinghouse, and they bring us the infor- mation. Since we have not had program funds we have not been in a position to request specific types of information be made available or a particular form of data. collection be utilized, and we are finally at a point where we can set down a standard method of data collection that would allow for free interchange between field and central office. Senator M0NTOYA. How about computerizing this effort? Mr. LEANSE. Again, it is a question of funds. Senator M0NTOYA. Well, you have a. lot of funds here; $40 million, did you sa.y? Mr. LEANSE. We are hoping to get $40 million. Senator MONTOYA. That is a lot of money. Mr. LEANSE. Yes. Senator MONTOYA. In fact, the Senate just approved it yesterday, I believe. Mr. LEAN5E. Well, I would hope so. I know that Congressman Rooney was going to hear it on Tuesday. Senator MONTOYA. Now, what kind of groups, advisory organiza- tions, do you have representative of the entire country under the Office of Minority Business Enterprise? Mr. LEANSE. Well, the commitments that. we have received during the past couple of years have proven to be effective from the American Institute of Certified Public Accountants. Senator MONTOYA. You have a. na.tional board, do you not? Mr. LEANSE. Are you referring to the National Advisory Council on Minority Enterprise? Senator MONTOYA. Yes. Mr. LEANSE. Yes. Senator MONTOTA. How many members do you have on that? Mr. LEANSE. Eighty-five. Senator MONT0YA. How many Spanish surnames do you have on thatboard now? Do you have a list? Mr. LEANSE. I do not have a list with me, but I can supply that for the record. Senator MOXTOYA. Well, you had three, about two or three, at the inception. Mr. LEANSE. Two or three at the inception. And, originally, there were 64 members, and 21 were added, and of the 21, I believe five or PAGENO="0167" 161 six were Spanish speaking and all of the 21 were minority-group people. Senator MONTOYA. Would you furnish a list? Mr. LEANSE. Yes, I will. Senator MONTOYA. Now, your statement has been made a part of the record, and if you will please proceed and highlight parts of your statement. Mr. LEANSE. Yes. I would like to make note of the fact that $50 billion is spent annually for goods and services by the Federal Gov- ernment. Approximately $7 billion of this amount or 14 percent is purchased from small businesses, and this past year less than $100 million-actually $66 million has been identified as being purchased from minority-owned businesses. This is less than one-twentieth of 1 percent of the total Federal market. Senator MONTOYA. One-twentieth of 1 percent? Mr. LEAN5E. Yes. In the past year, two major problems have been identified as being a deterrent to effective utilization of the 8(a) process, and attention is presently being given to these through the Interagency Committee on Minority Business Enterprise. The first is to communicate the policies and directives that are necessary to implement the use of 8(a) at regional offices and district offices of the SBA and of the participating agencies and departments. There are some 25 agencies and departments that are currently par- ticipating in this effort. Senator MONTOYA. Is it your intention to try to get these field representatives into the procurement agencies to see what they can do on behalf of minority enterprise? Mr. LEANSE. The field people of the Office of Minority Business Enterprise? Senator M0NTOYA. Yes. Mr. LEANSE. Well, the role of OMBE-and in it Mr. Hutton plays this role very effectively, and we should highlight the work being done in San Francisco by him as the executive secretary of the Mi- nority Opportunity Committee, the meeting place of all the Federal executives in the various cities, and this is the place where local information is disseminated, goals are set, and pressures are brought to bear. Mr. Hutton is a national hero. Twenty-five percent of the 8(a) contracts that were awarded in fiscal year 1971 were awarded~ in region 9. Senator MONTOYA. Right here? Mr. LEANSE. Right here. And it has been because he has been both salesman, cajoler, adherent to bring people to the awareness of the opportunities that are here. Senator MONTOYA. Well, you must have a very good working rela- tionship with SBA then? Mr. HUrrON. Indeed, we do. Mr. LEANSE. We would hope, Senator, that two things be given at- tention in the next few months. Senator MONTOYA. Maybe he ought to move the Office of OMEE from Washington to San Francisco. Mr. LEANSE. I think we have learned a lot from w~hat has hap- pened here, and we hope to generalize this experience. In fact, we started a meeting on Monday where OMBE field representatives and the chairmen of these business opportunity committees will be meeting PAGENO="0168" 162 to exchange ideas and learn from one another the experiences over the last few years. Senator MONTOTA. How many people do you have in the San Fran- cisco region? Do you have a.ny, except for field representatives? Mr. LEANSE. No. Mr. Hutton, he is only interim. He is a Commerce field representative who was loaned to OMBE until our recruiting can be completed. Senator MONTOYA. Well, we will tear from him now. Mr. Hu'rrox. Since sitting do~ n here this morning, Mr. Lea.nse and I have worked out. a. joint arrangement. He has a formal statement that. he will submit for the record, and I have some observations that I would like to share with the committee. Senator M0NTOYA. What is your background, sir? Mr. Hurrox. I have been in t.he Federal civil service for 20 years. I have a B.A. in economics and political science and an M.A. in public administration. Senator MONTOYA. What was the job you had before you caine to OMBE? Mr. HUTTON. I have been with the Commerce Department as a business specialist for a year and a half. Prior to that, I was a person- nel specialist for the Federal Aviat.ion Administration, and prior to that I was a radar and computer technician for the Federal Avia- tion Agency, and I got. out of school about 3 years ago. Now-, since time is short, I would like to he blunt, brief, and to the point. I have a.bout three pages that I would like to read. The analysis of the 8(a) program in terms of its administration by the Small Business Administration implies that it is a program that is routinely and easily implemented. Such is not the case. Every ac- tion is fraught with value judgments, political considerations, pol- icy issues, and other subjective factors. In addition to these variables, there are the usual hardnosed business e'ements that. deal with the structure, competency, solvency, and viability of the firm. It will be assumed, in these comments, that the use of the 8 (a.) mechanism can be a. powerful tool in bringing minority firms int.o the mainstream of American business. WTith this stipulation in mind, I shall proceed to an examination of those factors which inhibit pro- gram implementation. Before getting into program obstacles, it is important to note that a significant and positive progress has been made in the program to date. In fiscal 1970, 253 contracts for $22 million were awarded to minority firms. In fiscal 1971 these figures had climbed to 811 contracts and $66 million. Now, as to t.he program obstacles. As I see it, the biggest prob- lem in expanding the 8(a) program is the failure of the Federal agencies and departments at the local level to identify sufficient 8(a) requirements to the Small Business Administration. If the agencies fail to identify 8 (a.) candidates to SBA, then SBA has nothing to administer. Cooperation from the Post Office Department has been very sparse in our region during fiscal 1971. Certain military installations have been reluctant. to participate in the administration's program in a meaningful way. Other civilian agencies have also been slow to respond. PAGENO="0169" 163 Detailed data on our experiences with these agencies and installations is readily available in our office. Another problem area is the short leadtime that is frequently at- tached to a contract that is being offered. `With respect to the Small Business Administration itself, there are, as viewed from the perspective of the minority entrepreneur, a num- ber of problem areas. For example, what is the dividing line between a disadvantaged firm and a firm that is competitive? At what stage in a firm's development should 8(a) contracts be terminated? `What size contract can a particular firm perform satisfactorily? Should not SBA help to develop large, viable minority firms? Most minority entrepreneurs feel that SBA takes a very conservative posture on each of the above questions. RECOMMENDATIONS In our area, `Western United States, the SBA has many minority firms with approved business plans on its rolls for which it can find no contracts. This comes about, as alluded to before, because of the unwillingness of the contracting officers to get involved with new and unkown firms when he can continue to deal with known and proven firms. The best way to change this situation is for the regional director or the commanding officer to become an advocate of the President's program on minority business enterprise. More specifically, each agency head at the local level should be held directly respon- sible for the success of the program with respect to what his agency can contribute. This situation can come about when the Washing- ton headquarters' offices provide clear and definitive guidelines to their field personnel. I might remark that in the past 3 or 4 months I have visited almost every single agency in northern California, both military and civilian, and even at this late date I find not only regional directors and com- manding officers but contracting officers that are not familiar with the provisions of the 8(a) program. Of course, it is not the duty or re- sponsibility of the regional director to be familiar with the intimate details of it, but there is still a lot of unfamiliarity with the program. If maximum and orderly business development is to take place, con- tracts must be identified with sufficient lead time so as to permit the formation of corporate instruments which are capable of contract per- formance. This will necessitate the identification of these requirements at the programing of engineering level. Many contracts have been turned down by the Small Business Administration because they have been handed to them with just a few days lead time. Others have not been offered because the offering agency feels that SBA cannot process it in time. This is a problem area that needs special attention. A frequent statement by Federal agencies is that they can find no minority firms who can perform on the types of contracts that .they have to offer. This problem-if it is a problem at all-can be allevi- ated by the use of the knowledge and expertise to be found in com- munity organizations such as the Urban League, NAACP, OMBE affiliates, local development corporations, minority business and trade associations, the National Business League and other groups involved in minority economic development. PAGENO="0170" 164 And what I am suggesting here is that if an agency has a particular job and they do not know of anybody who can perform on it, they might get in touch with the different community-based organizations to see if they know of entrepreneurs who have this sort of productive capacity. Specific contracts for the 8(a) program are identified by SBA and the offering agency coming to an agreement on a specific require- ment that they think the minority business community can handle. It is widely felt by the minority business community that neither the Federal agency or the SBA has a good picture of the productive capacity within this community. Consequently, ma.ny contract oppor- tunities are never offered. In my business, to many agencies the stereotype offerings are the ones that are usually advance janitorial, ground maintenance, where- as, in fact, they have a lot of productive capacity in other more sophisticated areas. I might say that these are offerings made in good faith but we do kiiow of other capabilities. OTHER OBSERVATIONS There has been a lot of publicity given to the 8(a) program by the U.S. Department of Commerce and the General Services Administra- tion. This has generated a great deal of interest in the minority busi- ness community. At the same time, there is a widespread feeling that local Federal officials have not gotten behind the program. The meas- ure of this failure to support the President's program is the paucity of 8 (a) requirements that these local officials have identified to the SBA. Many agencies have no active 8 (a) contracts in force. The net result of this failure of local officials to implement the pro- visions of the Presidential memorandum of December 5, 1969, is to undermine the efforts of the administration as it goes about the task of making it possible for small disadvantaged firms to enter the main- stream of American business. My basic position is that. we can do a lot more with existing re- sources if local Federal officials would give wholehearted support to the program. Senator MONTOYA. You have made a very fine statement. Mr. Hurrox. Thank you. Senator M0NTOYA. And I think you are a very dedicated public servant. You have worked very hard, from what you tell us here. Now, you mentioned that the Federal officials at the local level are not cooperating. I think it is patently clear they are not cooperating, to the extent that they should, because the share of the procurement pie is very small. Now, the Department of Agriculture, in rural development, has a task force and they call it "TAC," and they go out and take inventory of the rural areas and the resources, and they come up with an economic plan. Now, why cannot. we have sort of a TAC approach in procurement, whereby all of the procuring agencies have one representative on a local TAC board to make sure that minority enterprise is getting a share of the procurement pie in these agencies and try to alert the PAGENO="0171" 165 commanding officers of the military installation of the Presidential memorandum and their responsibility in this field? Now, this is the only way that we are going to get out of this business of one-twentieth of 1 percent. Now, we might consider this as a recommendation to the Congress and to the administration, and I hope you can evaluate this and see if we can come up with something. Mr. LEANSE. This is a very good suggestion. Senator MONTOYA. Have you encountered difficulties in ascertaining the capabilities of minority enterprises in this particular region in which you serve? Mr. HUTTON. This was a slippery ball of wax for us a year ago. We think we have pretty good handles on it now, and we would hope, as Jay suggested a little while ago, the limiting factor in our acquisition of contracts should be our productive capacity rather than what we have got now. But, in response to your question as to the identification of poten- tial here, the Federal Executive Board, or the Minority Business Op- portunity Committee of the Federal Executive Board, has just come out with a directory of minority vendors. This is not retail-this directory-but it is industrial aiid commercial firms, businesses who do business with other firms, aiid we have some 220 or 230 entries there. Each firm has a w-hole page devoted to itself. It lists the officers, legal structure, when incorporated, productive capacities, and other data that a contracting officer or purchasing agent w-ould need to know. Senator MONTOYA. Is this for the Pacific coast? Mr. HUTTON. Just for the San Francisco Bay area. Senator MONTOYA. Are you doing that in other areas? Mr. LEANSE. This is one of the efforts that has been completed. Senator MONTOYA. Is this a pilot program? Mr. LEANSE. Well, each of the minority business opportunity coin- mittees wa.s given the charge to create such a directory. There are only 10 or 12 of them out `of the 40 cities, but community organizations are doing it in some places. Senator MONTOYA. Have you furnished this to the SBA? Mr. LEANSE. They just came off the press. Mr. HUTTON. We are going to print 4,000 copies, and they will be directed to every contracting officer in every public agency, to' all pur- chasing agents in the privalte sector in addition to SBA. Senator MONTOYA. Has any effort been made to get the contracting officers into a meeting? Mr. HUTTON. I belong to a number of group's where-one group in particular-we have a contracting officer and small business special- ists, and we meet monthly. Senator MONTOYA. I mean the contracting officers in the particular respective procurement agencies such as the different military installa- tio'ns here. Mr. HUUrON. Yes. And as a matter of fact we had a meeting just 3 days ago, but the problem is really bigger than the contracting officer. This problem has to be shared by our management, regional director, and a commanding officer and Washington counterpart. It is hard to put `this responsibility on `the shoulders of the contracting officer. This man is legally and technically narrowly trained, and his behavior is PAGENO="0172" 166 not going to be changed with a memo. However, if he gets support from his superiors, this changes things and change comes about. I would like to give you an example. The National Park Service, in their fiscal 1972 offering gave SBA their entire offering for eight, some 44 contracts at. $4.2 million and gave this to SBA, and we had a lot of lead time on all of these contracts. OK. This is an example of 100-percent participation, and if we could get just 5 percent of this kind of cooperation from all of the other agencies, the program would really be off and running. Senator MONTOTA. You would be in tall cotton, then. Mr. Hurrox. We sure would. But we have other agencies in the bay area that do $50 million, $100 million worth of work locally from whom we do not have ally contracts. Senator M0NT0YA. WTell, thank you very much, gentlemen. Mr. JONES. With your permission, Mr. Chairman, I would like Mr. Hutton to elaborate just a bit further on his statement, if he would. Mr. Hutton, you stated that the biggest problem in expanding the 8(a) program is the failure of the Federal agencies and departments at the local level to identify sufficient 8(a) requirements to the Small Business Administration. A little bit earlier this mornnig, Mr. Curtis of PACT suggested that perhaps if the procurement agencies were themselves made responsible for insuring that fixed percentages of the procurement requirements would be satisfied by minority business firms, that this problem might be alleviated. Do you have any comments on that? Mr. HurroN. Yes. I would like to react to that. First of all, if we had enough Federal contracts to fill the capability out there, probably SBA would not be able to handle it with its present workload. The SBA is working night and day in this program, and it is very appar- ent that they have a very bold and imaginative and aggressive program. As I go about, from Federal agency to Federal agency the one thing I hear-and I will not earn any "Brownie" points with SBA by saying this-but many of the contracting offices will suggest that if they had control over the program they could expedite it and do their own selecting and they do think they could do a. much larger volume of business. I am not so sure this is so. Mr. Jom~s. What additional information would the procurement agencies need if they internally set a goal? Why could they not try to achieve it under the present circum- stances? Mr. Hurrox. Well, what the suggestion is that maybe at this time this is not really the basic problem. The basic problem is just the un- willingness to venture into this new area. Mr. LEANSE. Mr. Jones, yes, I think that both of these statements are correct. They are not mutually exclusive. The Federal agencies are setting goals and the goals will be substantially increased this year over the last. Many of the agencies are asking for the opportunity to expedite their own processes by prior selection of minority vendors and taking the initial steps in the procurement process, and then ask- ing SBA to ratify it, especially if it involves the use of the premium contract accounts. PAGENO="0173" 167 Mr. JONES. I understand that, informally at least, the goal of $100 million for 8(a) contracts has been set for the current fiscal year? Mr. LEANSE. That is correct. Mr. JONES. Do you feel that establishing a goal of this kind is going to be effective, or is there a possibility that contracts which might oth- erwise have been let to minority firms anyway might simply be trans- ferred into the 8(a) program? Mr. LEANSE. You mean competitive contracts? Well, I think it is possible~ but I really do not know that there is the possibility now of really identifying minority contractors through the normal bid process. Mr. JONES. I see. I think one of the problems Mr. Curtis was ad- dressing himself to was the general procurement requirements and not just the 8 (a) procurement requirements, and I think he would be in favor of setting a general goal for minority procurement and not just 8(a) goals. Has such a general goal been established? Mr. LEANSE. No, there is no goal established, but the need for stimu- lating minority businessman to bid, either through Small Business set- asides or Government contracting opportunities in general, is one of the items for discussion. It is soniething that we have not talked about this morning, that under the $2,500 purchase category, this is an area where some of the areas are beginning to use activity, especially at the local level, opportunities for concessions on Government installations is another initiative that is underway. The directory of minority consult- ing firms which has just recently been published by our office and has been distributed throughout the country provides another source of information to possible contract opportunities. Mr. HUTTON. I would like to make this observation while we are go- ing along in this vein, and that is that I am in favor of establishing goals, and those goals should be measured in terms of contracts awarded. Mr. JONES. How? In numbers of contracts or dollar value? Mr. HUTTON. Well, dollar value. Let us put it that way. Right now, a lot of our goals or efforts are measured in terms of seminars held, brochures given out, and other general things. This is a necessary and preliminary stage, but I think we are past that now and we are ready to deliver. Mr. JONES. Well, who is responsible for achieving this $100 million goal? Is the responsibility parceled out among the procurement agencies or is it simply a responsibility of the SBA and OMBE? Mr. LEANSE. The goal was established through the procurement task force and the Interagency Committee, and various agencies have obligated themselves to make offerings available, and SBA, in turn, has agreed to staff up to be able to handle this workload. One of the limitations- Senator MONTOYA. Let me ask you this question: If the agencies got together and collectively established a goal of $100 million, was there a parceling out of percentage responsibility to each of the agencies repre- sented there? Mr. LEANSE. Well, if what you are asking, sir, is : Were some agencies told they were not doing enough? PAGENO="0174" 168 Senator MONTOYA. Yes. For example, now, what did the Department of Defense commit? Do you know what G-SA's commitment was, and so forth? Did they commit anything? Mr. LEANSE. Yes; yes. Senator MONTOYA. Now, have you got a record of it? Mr. LEANSE. I do not have a record of it. Senator MONTOYA. Who has? That is the way to gage them next year. Mr. LEANSE. Yes. Of course, without measurements, the goal really does not have any effect. Senator MONTOYA. Will you furnish that? Mr. LEANSE. I will attempt to get it, sir. I cannot promise. I have never seen that.. All I have seen is the goal itself, but I will endeavor to thud it. I would like to mention, too, that there is another limitation. In the last 2 years each of the agencies who made 8(a) opportunities avail- able indicated a willingness to pay a. premium for those goods and services-if it was necessary, that is, in SBA's judgment t.o do so. This past year, with the congressional action on a $8 million fund to allow SBA to pay the differential, the agencies are now absolved of that responsibility, and, as a consequence, the $8 million nets, almost nets, contracts in substantial excess of $100 million this year. In fact, in the first 60 days compared with the first 60 days of fiscal of 1971, there are more than twice the number of contracts in dollar value that have been negotiated, so the process is working. It has been institu- tionalized, and the momentum should carry it very substantially. Mr. JONES. Mr. Hutton, you, in your statement, also mentioned that the SBA has many minority firms with approved business plans on its rolls for which it can find no contracts. Yesterday, witnesses from SBA testified that they were able to find contracts for approximately 80 percent of their certified firms. Are you questioning the accuracy of that figure? Mr. HurroN. Yes. I had certainly noticed that variance in our testi- mony, and-w-ell, we will have to get together with SBA on that amount of difference that we have. But SBA is on our Minority Business Opportunity Committee here, which is a Subcommittee of the Federal Executive Board and they are very persistent, and their continuous complaint is that they have a large number of qualified 8(a) firms on their list and not enough contracts, and they have specifically and directly urged that the MBOC exert its coordinative function and moral influence to induce other agencies to participate in the program. So, maybe our differences are just a matter of that, but I am under the impression they do have a large number of 8 (a.) contractors who do not have contractors. Mr. JONES. Mr. Chairman, could we ask Mr. Hutton to see if he could supply more definite information on this for the record? Senator MONTOYA. If you will. Mr. Hurrox. I certainly will be happy to. Senator M0NT0YA. Thank you, sir. Mr. JONES. Thank you. Senator MONTOYA. Thank you, gentlemen. You may be excused. PAGENO="0175" 169 (The subsequent information was received and follows:) U.S. DEPARTMENT OF COMMERCE, OFFICE OF THE SECRETARY, Washington, D.C., November 11, 1971. Hon. JOSEPH M. MONTOYA, U.S. Senate, TT7ashington, D.C. 20515. DEAR SENATOR MONTOYA: During the hearings held by the Select Committee on Small Business in San Francisco on September 29th and 30th, you asked Mr. Jerome 0. Hutton how many firms in Region IX had approved business plans filed with the SBA, and how many of them have current contracts under the 8(a) authority. Mr. C. D. Ryan, Chief of the Procurement and Management Division, of the San Francisco SBA Office, advises that 158 business plans have been approved in Region IX and that 68 of the companies approved do not presently have a current active contract under the 8(a) program. Sincerely, DAVID S. BROWN, Chief Counsel, Office of Minority Business Enterprise. Senator MONTOYA. We have Mr. Hernandez, Mr. IRamirez, and Mr. Taylor here. You may proceed, and we will try to finish with you. Let the record show that Mr. Hernandez is with the D. and H. Wood Products Co. of San Jose, Calif. Mr. Ricardo D. Ramirez is with R. D. Ramirez Construction in South San Francisco, Calif., and Mr. John T. Taylor is with Tayko Industries of Sacramento, Calif. Now, do you gentlemen have a written statement? Let us start with you, Mr. Hernandez. STATEMENT OF MIKE HERNANDEZ, D. & H. WOOD PRODUCTS, SAN J~OSE, CALIF. Senator MONTOYA. How long is your statement? Mr. HERNANDEZ. Just one page. Senator MONTOYA. All right. Your statement will be made a part of the record, and you may proceed to highlight it. Mr. HERNANDEZ. As an 8(a) contractor, I feel that the program has been very effective in getting me started in business, but the sustaining work needed to continue the business has been too difficult to obtain. In other words, we started with an 8(a) contract, and our obj ect is to keep working, but after finishing the first contract, we had to cut back. It is my considered opinion that 2 to 3 years of sustaining 8(a) support is required to create a stable business, and while I have been successful in obtaining private sector business on a competitive basis, and have been awarded two other supply contracts resulting from open advertised bids, the volume of business that is set aside for 8(a) is too small and too spotty to maintain a productive plant. My business requires a minimum of $15,000 a month to support the facility and any meaningful working force. This volume of private sector work takes time to develop. Our only 8(a) contract allowed us to employ a working force of 20 Mexican-Americans for approximately 5 months, and then we were forced by lack of business to cut back to an average of less than six employees. In the past 4 months, since completion of the 8(a) con- PAGENO="0176" 170 tract we developed $51,000 in other sales which is 21 percent of our volume. The 8(a) contract amounted to 79 percent of our work. Our overall profit on the 8 (a) contract was much less than we an- ticipated due to a sharp rise in lumber prices during the contract de- livery period, so that we were not able to build any substantial profits into the business. We need more work and have been constantly calling our contact at SBA and at the same time pursuing both private sector and Government bid work. The fact that we have developed a substantial volume of work from the private sector shows that we have become efficient and competitive. We do have a small pending-contract proposal with SBA for 8,010 pallets, but this is too small to make our business stable; it is to be spread out over 4 months and is less than 1 month's work for our shop. The 8(a) program needs more work available to the contractors, and at D. & H. where we have hired hard core labor, every layoff means that our employees must fall back on some other Government supported program such as welfare, where no productive work is ac- complished for the money spent. D. & H. has only been in operation since January 1971, and with less than 9 months in business, it is of course not stable enough to be considered a viable business, but we are making progress and are look- ing forward to becoming a successful business in a few years. I want to stress the help given to us by Mr. Ryan and his staff at SBA, who made it. Possible for us to enter into this business w-hich we feel will become very successful in a relatively short time. Senator MONTOYA. Mr. Hernandez, what kind of work does your firm do? Mr. HERNANDEZ. We are in woodwork, and we have been mostly producing pallets for the Government and for the private sector, warehouse pallets and different types of wood pallets. Senator MONTOYA. And what else do you produce? Mr. HERNANDEZ. `We also produce some cabinetwork and some prefab cabinet doors, special type doors. Senator MOxTOYA. Are you performing any work for construction firms? Mr. HERNAXDEZ. Not. right now. `We have one contractor that we do a little bit of work for but. riot substantial amounts. Very little. Senator Mo~roYA. What kind of cabinetwork is it; is it high grade, sophisticated cabinetwork? Mr. HERNAXDEZ. We will take whatever comes along. Senator MONTOYA. You have the capability to do it? Mr. HERNAXDEZ. Yes. We will take anything, apartment buildings, or whatever. Senator MOXTOYA. How- long have you been in business? Mr. HERNAXDEZ. We have only been in business a little over a year. Senator MONTOYA. And during the course of the last year 79 percent of your work was from 8(a) contracts? Mr. HERNANDEZ. Yes; one 8(a) contract that we got from the Gen- eral Services Administration. Senator MOXTOYA. Do you have an SBA loan? Mr. HERNANDEZ. No, sir. Senator MONTOYA. You operate w-ith your ow-n capital? Mr. HERNANDEZ. Yes, sir. Senator M0NT0YA. Are you a corporation, partnership- PAGENO="0177" 171 Mr. HERNANDEZ. There is a partnership of two of us. Senator MONTOYA. `What is your capital structuring? Mr. HERNANDEZ. You mean by that, the facilities? Senator MONTOYA. Yes; what is the value of your equipment, and so forth? Mr. HERNANDEZ. `Well, we have a shop that is valued at about between $45,000 and $50,000 with equipment and material. Senator MONTOYA. And your automatic equipment is included? Mr. HERNANDEZ. Yes, that is included, and the only automatic equip- ment we have is actually just. the air guns and the rest of the machines and saws and compressors. Senator M0NTOYA. And you aie operating under an 8 (a) contract at the present time? Mr. HERNANDEZ. No, sir. Senator MONTOYA. You have no contracts? Mr. HERNANDEZ. No, sir. Senator MONTOYA. Is it up in the air? Mr. HERNANDEZ. One is in the process for 8,010 pallets but we have not received it yet. Senator MONTOYA. You have had to discharge 14 of your 20 em- ployees? Mr. HERNANDEZ. Yes. Senator MONTOYA. Do you feel that GSA is in a position to give you the work now so that. you can develop a continuity of operation? Mr. HERNANDEZ. Yes; I believe we could obtain some more work from GSA and that we could keep the rest of the crew busy. Senator MONTOYA. Would you contact SBA, Mr. Hernandez, about the problem and see what they can do, and I hope they will do some- thing for you. Mr. HERNANDEZ. Thank you, sir. Senator MONTOYA. Now, you mentioned that 8(a) should be resorted to for approximately a 3-year period. 1)o you feel that you can develop the kind of stability under 8(a) contracting over a 3-year period and then go on your own? Mr. HERNANDEZ. I believe, 2 or 3 years. It depends on the size of the contract. If we were to get another contract the same size as the first one we got, which is $185,000, I am pretty sure we could go out on our own, but if we get a small one, $8,000, we could produce that in 1 month's time, and it is really not sufficient. Senator MONTOYA. What else can they give you by way of an 8(a) contract? Mr. HERNANDEZ. We are constantly bidding on open contracts with General Services Administration and other agencies, but since we are not set up with the highly automatic equipment, we sometimes cannot compete with the other companies. We are just a little bit higher, always, than the rest of the pallet manufacturers around the area. Senator MONTOYA. Do we have a GSA man here? Would you come forward, Mr. Ireland? Mr. IRELAND. Yes, sir. Senator MONTOYA. Are you acquainted with this contract? Mr. IRELAND. I think Mr. Snodgrass is more acquainted than I am. Senator MONTOYA. Bring up all the angels here. We want to talk with them. 70-654 0-72-12 PAGENO="0178" 172 Is there any way that you can give this man a little continuity in his operation and give him 8(a) breathing? Mr. SNODGRASS. We have a problem with respect to woodworking and palletmaking---woodworking in general and pafletmaking in particular. We have the problem of three firms making pallets in the bay area, Mr. Hernandez' firm being the third firm. And if my infor- mation is correct, the business was started, initiated, oii the GSA contract. I had a personal reluctance, when we were dealing with SBA re- garding the contract, because of the fact that we had two pallet manufacturers in the area., and, in addition to that, we had two pallet manufacturers in the Los Angeles area. Now, at the time the 8 (a.) program started, quite a few firms started out with woodmaking, shipping crates, boxes, and pallets. That was 3 or 4 years ago. We buy the pa.llets on demand from using agencies. The majority of them use woodworking materials, and the pallets in particular were used for shipping to Vietnam. Now, as our activities in the Far East taper off, so do our requirements for materials to go over there. Senator MOXTOYA. Are you overstocked with pallets now? Mr. SN0DGRA55. I would say there is no question about it. Now, I do not know why Mr. Hernandez-you mentioned that you are presently looking at 8,000 pallets out of our office? Mr. HERNANDEZ. Yes. Mr. SNo1x~RAss. I can find out what the status of that is. Senator MONTOYA. But if he has assurances from your agency for 8,000 pallets, it is just a. problem of when lie produces them this year and if it helps him immediately; and if your requirement over a year's period is such that you need them, then perhaps you can have a meet- ing of the minds. Mr. SNoi~u~ss. I am sure of that. If the negotiation is already in progress, it is a question of time, of when. Mr. IRELAND. I think I can do something about that. Senator MONTOYA. Yes. Well, is there any other work that you can give to his firm which would fit into his capability under 8 (a)? Mr. IRELAND. Well, let us take a. look at it. Senator MOXTOYA. Yes; I wish you would, and I w-oulcl sure appre- ciate it if you would look at the other enterprises around here and see if you can 8(a) more of your work. Mr. IRELAND. We will certainly do that. Senator MONTOYA. Thank you. Mr. SNODGRASS. If I may interject a point? The pallets are offered to SBA. Senator M0NTOYA. What is that? Mr. SNo~RAss. Our 8(a) contract requirements in most cases are offered to SBA, and in most cases, with the exception of construction, SBA determines who gets the contract. Senator MONTOYA. Well, the SBA people are here, too, in the room, and they are listening to this. I would sure hate to see a small minority enterprise discharge its employees when the Government through procurement can insure some kind of continuity and retention of those employees, and that is all I am pleading for. Thank you very much. PAGENO="0179" 173 Mr. SNODGRASS. We can pay attention to Mr. Hernandez. Senator MONTOYA. Yes. Thank you. Will you be in touch with these gentlemen, Mr. Hernandez? Mr. HERNANDEZ. Yes, sir; I certainly will. We will keep in constant contact with them so we can see what the progress is with the 8(a) contracts. Senator MONTOYA. Yes. All right. Mr. Hernandez. Mr. Ramirez? STATEMENT OF RICARDO B. RAMIREZ, It. B. RAMIREZ CONSTRUCTION, SOUTH SAN FRANCISCO, CALIF. Mr. RAMIREZ. Well, I do not have a written statement. Senator MONTOYA. You do not need a statement. Just start telling us your story. Mr. RAMIREZ. Well, I would like to say that I think the 8(a) program in the construction industry, like I am engaged in, is very helpful, and I think it is one of the best things I think that has happened to minority contractors. Senator MONTOYA. What kind of contractor are you? Mr. RAMIREZ. Well, I am a general engineering contractor. We do underground work, and earthwork, and concrete structures, anytJTlrng to do like that-cuiverts, and so forth. Senator MONTOYA. Well, you state here "electronic equipment re- pair, overhaul calibration and testing service." Mr. RAMIREZ. I beg your pardon? Senator MONTOYA. I am reading the wrong statement. Pardon me. It is "drainage, wood repair, grading." Is that what you do? Mr. RAMIREZ. Yes, sir. Senator MONTOYA. In other words, heavy equipment work, construc- tion work. Mr. RAMIREZ. Yes, sir. I think that as far as procurement, it is an area I think could be improved on in the 8(a) program. For example, I have done three 8(a) projects. When you talk about procurement, maybe you have to go back a little bit further and talk about my work with the SBA. I have had, I think, the people that I worked with and found very willing to work with me, but I think that they are not really- Senator M0NTOYA. Getting all the work that is available. Is that what you are trying to say? Mr. IRAMIREz. No, I do not think they are competent to understand the construction industry enough to be able to procure the jobs from individual contractors. For example, when you say "engineering con- tractor," you could say "a road work contractor," and that is all he does is road work-a drainage-type contractor, or he does pipelines, but he does not do paving, for example. Senator MONTOYA. In other words, they do not have any individuals there who can discern what applicability or capability exists among small business enterprises to do the work; is that right? Mr. RAMIREZ. I will give you a good example. I have done three 8(a) projects. Now, in my firm, I have most of the people that work for me Mexicans. We do pipelines, and I have done three 8(a) projects, and for all of the three 8(a) projects I have done paving. This has PAGENO="0180" 174 done several things for the company. No. 1, I have to employ other people than what I have, and they do not become Mexicans, they become whatever I can get to do the job. And the equipment I have `snot fit for the job. Senator M0NTOYA. So, you have to go out and rent it? Mr. RAMIREZ. Therefore, I have a rental factor. The profit is not as great or the equity in the equipment that I do have is not exercised, nor do I obtain any more. I think this is one area that should be im- proved, and I think the only way it can be improved is to get some- body in the procurement end of it that is aware of what one company specializes in or what he can do. Senator MONTOYA. Well, do you feel that there is work that ca.n be "8 (a) -ed" to you within your capability? Mr. R.A~ri~z. There must be. I mean. I know of a few jobs. Senator MONTOYA. How did you get these 8 (a.) contracts? Through SBA? Mr. RAMIREZ. Yes, sir. Senator MONTOYA. And they are the ones that picked you out? Mr. RAMIREz. Yes, sir; I met one fellow. Senator MONT0YA. Have you contacted the procurement officers in the Federal agencies? Mr. RAMIREZ. Yes. I have ha.d one example or one case that did a little bit of squawking, and I guess t.his is wha.t brought a.bout these other jobs which I have not got as yet; I have not got the plans for them yet, but I am supposed to get them in the near future. I had a job that I did on myself for t.he Navy, and I was the subcontractor on that job, and I had problems with the job, and I went to the base to see what I could do to solve the problem. While I was there I met a fellow by the name of Montoya-who was the procurement officer for construction. Senator M0NT0YA. What Montoya was it? What was his full name, Larry Montoya? Mr. RA~rIREz. Lieutenant Commander Montoya. I do not know the first name. Anyway, he told me about a job. He asked me if I was a 8(a) contractor, and I told him "Yes," that I was, a.nd he told me about a job t.hat was coming up that. could go 8(a). Well, I asked him if I could get this job~ and lie told me that it was too complicated for 8(a) contractors, which was not so. He got this opinion from, I guess, various talks or associations with the SBA. So, I think there could be a. little bit more of an improvement in the procurement end of it, although I think, as a whole, the intent of the 8(a) program is really one of the best programs. Senator MONTOYA. That is what we are trying to do and that is why we are having these hearings, to try and develop a better coordi- nated effort to insure 8(a) contracting to minority enterprises. PAGENO="0181" 175 Mr. RAMIREZ. I might say one thing more, Senator. I guess every- body is aware of this, at least contractors, that the volume of the work that the contractor does pertains to his best livelihood, but 90 percent of the minorities, whether they are Mexican or other, whatever they are, there should be a little bit more effort into this. In other words, if a minority firm has, for example, a $50,000 a year from 1 year, and all of a sudden, because of an 8(a) program, the volume of work that he has picked up and he has been able to boost it up to $300,000, then the management, being able to efficiently manage that volume of work and efficiently put it through an account- ing system is very important. For example, you can get a guy that does $50,000 worth of work and he is barely making it, but maybe he can get $100,000, but then all of a sudden he gets a few 8(a) jobs for $500,000, and he could go broke because he had too much work and could not handle it. I think there also should be a program set up for contractors or any businessman that schools them in management and makes them aware of how im- portant accounting is, and this SCORE is no good as far as I am con- cerned. It may be in other areas, but not where I have had dealings with them. Senator M0NT0YA. How do you get your advice? Mr. RAMIREZ. Well, I was very fortunate. I received through the Merrill Foundation. It is a program that-I do not know, but it is a Palo Alto, and I received a student from Stanford, which is from the accounting department, from the business school, and he is in there taking care of the books, and he handles it very well. But I have also created a pretty good friendship with large contractors in the area where I am at, so when I have management problems or questions, I can go to them and they help me. But there is nobody-I would like to say this-there is nobody that can answer those questions for me at the SBA. Senator MONTOYA. Well, I understand what you mean. Mr. RAMIREZ. This is something where, if you give a fellow too much work, he is going to go busted if he does not handle it right. Senator MONTOYA. Thank you very much, Mr. Ramirez. Mr. Taylor? Mr. TAYLOR. I do not have a prepared statement, Mr. Chairman. I do have a copy of a synopsis of the last 2 years work. (The document follows:) PAGENO="0182" 176 TAYKO IINDU~TRIIE~ (~o~) o ELECTRONIC EQUIPMENT REHABILITATION o FIELD ENGINEERING SERVICES 8604 ELDER CREEK ROAD o INSTALLATION AND MAINTENANCE SERVICES SACRAMENTO: CA. 95828 TAYKO Industries, located at ~6O4 Elder Creek Road, Sacramento, CA, is a sole proprietorship organization, specializing in electronic equipment repair, overhaul, calibration and test services to either U.S. Government or commercial customer acCounts. TATKO Industries is owned and operated by its founder and proprietor, Mr. John (1. TAylor, of Mexican descent. Operating from its base of specialized services to the electronics industry~ TAYKO is also capable of remote location, field engineeriz~g efforts, involving installation, operation and maintenance at customer installations. In addition to the above capabilities, TAYKO has the necessary skills to administer and implement any Government contract containing strict requireS ments in the auxiliary functions of quality control, property administration, security, and contract administration. TAYNO has extensive experience along these areas since their key personnel, together with the founder, were success~. fully administering large dollar value Government contracts for a large defense contractor prior to the ~tapin..offh1 to form TAYKO Industries. In this regard, TAYKO Industries possesses a current Defense Department Facility Clearance rating of SE~FT and has Government~approved Quality Assurance as well as Property Control programs. The following contracts have been performed by TAYKO Industries as a first~-.t1er subcontractor for Unitec Industries, Inc. Total Go~t~4~nc Contract No. Pegovered Dolj~ SMAMA FQ4606~.6~D~0542 69SEPO5-7C~AYl4 $ 44,363.18 FO4606~6~..D~O607 69s~o5~69Nov2l $ 5,109.00 SMAMA F04606..68..D.'0623 69s~'a5..7c~AY18 $ 15,065.00 SMMIA F04606~'6~-.D..0626 69s~'05..70JAN2l $ 5,205.00 F046~.D-.06l7 69s~o5..690CT27 $ 3,470.00 PAGENO="0183" 177 Total ~~enc Contract No. Period Covered Dollar Amount SMAMt F04606..68.D.0630 695EP05..70N0V27 $ 51,566.50 SMP~M!~ P04606..6&..D..0641 69S~'05.~7oNoV27 $ 23,733.25 SMA~L& F046o6..69..D-.0375 69sI~o5..7~R09 $ 16,240.00 The £olloaing contracts are being/have been performed by T~YK0 Industries as a prime contractor. Total ~Aenc Contract No. overed ~r~t SNA!~Lk F04606-7o..M..0687 690C~)1..-69DEC17 $ 593.82 Lamp, Hi~..Intensity SM!LMA P04606..70..D-.0103 70FE~39..71AUG11 $ 26,274.20 Repair of Relay SWJAk F04606-70..~C...0690 70FEB13~.71APR14 $ 20,053.87 Mod Kit for FRT-~49 SMAM~ F04606..70..M..1870 70AR08...7C~AT14 $ 529.34 Lamp, Hi..Intensity SM!~NA F606..70~.C..0863 70APR21..~71APR14 $ 79514.50 Thrget, Radar SMAMA F04606..71..M..0480 70SEP23..700CT27 $ 724.86 Lamp, Hi-~Inteflsity SMANA F04606..71...?~0694 700CT23...70N0V27 $ 108.64 Spring, Hel. Tension SMAMA F04606..71...D..0OS0(8a) 730EC03. $ 393,393.88 Overhaul of Auxiliary Power Plants (V32D..2) 1 year Mather AFE FO4612-.71~.G.0252 71J1JN18..71SEF24 $ 14,948.00 Repair of Sewage Treatment Plant SNAMA F04606..72..D..0043 71S~14.. $ 936,259.52 Overhaul of Generator Sets (MP~15, ~i6) 3 years ~NXKO feels their past experience qualifies them to participate in gas1 diesel engines or aotcr-.drivon generator repair/overhaul contracts to include rigid testing to contract specifications. Contract No. FO4606..71-.D-~0O80 is for the overhaul of Auxiliary Power Plants used in aircraft and has been awarded for PAGENO="0184" 178 one year with two one-year options for FY72 and FY73. The estimated dollar values are $393,393.88 for FY71, $263,423.72 for FY72, and $260,562.68 for FY73. TAYKO's facilities are located in a modern industrial complex and consist of a i6oo sq. ft. office and a free-standing 12,000 sq. ft. shop building, featuring all-steel constructions two high.~capacity overhead trolley cranes, 440 volt 400 ampere industrial wiring and an unobstructed, drive-through capability. These prime units are located on approximately five acres of rock-surfaced propert~y, allowing adequate room for future growth. TAYKO currently has 32 employees, ranging in skills fran certified mechanics and welders to electronic technicians, machinists, engineers, and packaging specialists. Several of our employees are highly qualified in fields other than their present position requires at this time. PAGENO="0185" 179 STATEMENT OF roIrN G. TAYLOR, OWNER AND PROPRIETOR, TAYKO INDUSTRIES, SACRAMENTO, CALIF. Mr. TAYLOR. I would like to start out by saying that I agree whole- heartedly with Mr. Ramirez and his determination that perhaps there are not enough sufficiently qualified personnel in SBA to deal specif- ically with the type of firm that has a specialty. Senator MONTOYA. SBA is a lending agency primarily, and they have a very meager funding for entering into contracts with consult- ing firms who, in turn, are supposed to give advice. I have been trying to find out about the competency of some of these consulting firms during hearings in this committee and the Subcommittee on Economic Development and I are very much dismayed by the competency of some of these consulting firms. Mr. TAYLOR. Yes, sir. But to go just a step further, SBA in one re- spect obtained the contracts for us, and this particular competency begins at the very inception or stage of the negotiations for that par- ticular award. At that particular time the competency comes in, because there is no other competition to determine a fair contract price. Most pro- curing agencies will want to establish a so-called reasonable price for that particular effort or that particular work. In order to establish the reasonableness of this particular price, firms are usually sub- jected to an audit from various governinenta~ agencies. On the other hand, a lot of procurement people from the procuring agency or cus- tomer misunderstand a reasonable price for the so-called lowest pos- sible price. When you get down to the actual negotiations, sometimes there is no actual basis for establishing this particular reasonable- ness of price, and at this time SBA should be conversant enough with the procurement regulations to at least provide some contingency for either wage or material escalation or any other contiiigencies that may arise during the course of the contract. Senator MONTOYA. In other words, what you are trying to say is when you go to the contracting officer to try to negotiate a price you are strictly at their mercy because you want that contract so badly? Mr. TAYLOR. In one respect, yes, sir; because I think they have a tremendous amount of leverage they can apply. A firm may have been waiting for this particular moment for months, and- Senator MONTOYA. And you want the SBA to have the kind of com- petency where they can stand in betw-een you and the contractor and say what is reasonable and what will insure you a reasonable profit? Mr. TAYLOR. That is correct. Although in our past experience we had a very competent negotiator, the fact is that the groundwork prior to our particular negotiation required an audit from three different agencies. They came in and quite frankly stated that we were adver- saries and they also regarded SBA as an adversary. They were about to disapprove the determination of our shop overhead and other so- called nonallowable costs, and when they got through with their red pencils we, really, did not have much margin for profit when you discount or allow for interest expenses. We pay just about 10 percent for our business loans, and we are only allowed a so-called 10 percent profit, and it does not leave much more for contingencies. Senator MONTOYA. Do they now allow interest expense as a matter of policy? PAGENO="0186" 180 Mr. TAYLOR. It is not an allowable cost, no; no way. Senator MONTOYA. It is a. policy; is it not? Mr. TAYLOR. Right., under Federal procurement regulations adver- tising and other so-called expenses that other commercial businesses normally incur, are prohibited. Senator MONTOYA. The oniy place they allow it is in cost-plus con- tracts? Mr. TAYLOR. That is correct, but., again, SBA, it. seems to me, ought to have some other a.uthority to determine the type of contract to be negotiated. The thing we are concerned with is the fact that a lot of times these so-called allowable costs are not made available to the prospective sub- contractor to put down when lie establishes his shop overhead. The big boys have the experts on their staffs, and so on, in this particular field. For instance, advertising is not an allowable cost, but. if you advertise for job positions and so on, it is an allowable cost. These are not par- ticularly loopholes except that. they do provide a more realistic picture of the costs that you a.re going to incur during the length of the contract. Senator MONTOYA. I think you have brought out a very important point that has not come int.o the hearing up to now, and that is, that SBA should be the advocate for you. Mr. TAYLOR. I believe we did very well at the actual negotiation table, for we had very staunch support.. In the meantime, though, we were locked into a so-called fixed price in our partciular case for 3 years, and we had to provide our own method to take care of any possible material escalations, *and so on, and we had very little help from SCORE or public accountants, or anything, because our business is so specia.lized in this parL.icular field. We are overhauling auxiliary power units to aircraft. specifications, and t.here are a lot of cha.nges, amend- ments, and modifications t.hat result after the contract has been awarded. All we normally get. from SBA. after the award of a contract, if a particular specification is being changed, is a form letter from SBA, together with about 10 copies, saying in effect, "Read the actual modification of the contract, if you find no error, sign it and return it within 10 days." Nowhere in the form letter does it say "Read it and if you think it is a disadvantage to you do not sign it; let us renegoti- `ate." It is a very auspicious-looking document, and they give you 10 copies to sign in 10 days. Once you sign, you may have whittled away your profits for the next 2 or 3 years. Senator MONTOYA. You have been doing very well with the Govern- ment agencies, have you not? Mr. TAYLOR. Yes. We were fortunate enough to have had previous experience as a subcontractor. Most of our staff, including myself, have managed contracts of this type for larger businesses. Senator M0NTOYA. What is your educational background, Mr. Taylor. PAGENO="0187" 181 Mr. TAYLOR. Mostly night school at college-I have been in elec- tronics since I was 18, I was with RCA, and then with a larger firm in middle management before finally going to this. It was primarily all Government-oriented. Senator MONTOYA. Well, thank you very much, gentlemen. We ap- preciate your coming over. We will now recess until 1 :30. (Whereupon, at 12:25 p.m., a recess was taken until 1 :30 p.m., this same day.) AFTERNOON SESSION Senator MONTOYA. The committee will come to order. This afternoon we are going to hear from ~a panel of people in the procurement agencies of the Government. If you all will, come forward, gentlemen. First is Col. Robert W. Cochran, Director, Procurement and Pro- duction, Sacramento Air Material Area, McClellan Air Force Base, Calif.; also Mr. Robert A. Allstead, Chief, Procurement Division, Office of Deputy Chief of Staff for Logistics, 6th U.S. Army, Presidio of San Francisco, Calif.; Capt. D. G. Aitken, Supply Corps, U.S. Navy, Officer in Charge, Naval Regional Procurement Office, Naval Supply Center, Oakland, Calif., and Mr. Robert J. Ireland, Regional Director of Business Affairs, General Services Administra- tion, San Francisco, Calif. Have you designated any lead-off witness You may lead off, if you will. And will you identify yourself for the record? STATEMENT OF CAPT. DOUGLAS G. AITKEN, SUPPLY CORPS, U.S. NAVY, OFFICER IN CHARGE, NAVAL REGIONAL PROCUREMENT OFFICE, NAVAL SUPPLY CENTER, OAKLAND, CALIF.; ACCOMPA- NIED BY ROBERT M. GILBERTSON, SMALL BUSINESS SPECIALIST; AND LT. COMDR. RAY N. BEEMAN, 1R., DIRECTOR, PURCHASE DIVISION Captain AITKEN. Yes, sir. I am Captain Aitken, Officer in Charge of the Naval Regional Procurement Office at Oakland. I believe you have my lengthy statement, Senator, and at your discretion I will be pleased to either read it or incorporate it in the record. Senator MONTOYA. It will be made a part of the record at this time, and you may proceed to highlight it2 sir. (The prepared statement submitted by Captain Aitken reads in full as follows:) PAGENO="0188" 182 Statement of Captain Douglas G. Aitken, Supply Corps, USN before the Select Committee on Small Business United States Senate at San Francisco, California, 30 September 1971 Mr. Chairman and Members of the Committee: I am Captain Aitken, Officer-in-Charge, Naval Regional Procurement Office, Oakland, California. I am pleased to have this opportunity to meet with you and submit a statement concerning our efforts and accomplishments in behalf of small business and the related matters in which you have indicated an interest insofar as they are applicable to my office. While we note that the emphasis and thrust of this hearing is directed toward the 8(a) program, we feel that it would be of interest to the committee to know something of our over-all small business effortS To this end, we have available certain sta- tistics regarding our purchase volume and small business participation for fiscal years 1970 and 1971. - My responsibility includes carrying out the objectives of the Navy's Small Business Program. I am assisted in this by my Small Business Specialist Mr. Robert M. Gilbertson and by my Director of the Purchase Division, Lieutenant Commander Ray N. Beeman, Jr., both of whom are with me today. It has been our policy to increase the participation of small business in our procurements by all available means. We will outline these efforts and results for you and be pleased to discuss related matters at your discretion. PAGENO="0189" 183 We provide purchase support over $2,500 for Pacific fleet ships and overseas bases, and shore activities in the Twelfth Naval District~ Our office generally is a quick-response type activity, buying materials, equip- ment, and services of a wide range and nature for immediate and nonrepetitive needs. We buy few items for stock and have infrequent research and develop- ment requirements. Examples of our purchases include: (1) Repair Parts for a generator on a Military Sealift Command ship which sails tomorrow. (2) Special Sand for sandblasting ships in drydock. (3) Special Steel in small quantities for Mare Island Naval Shipyard projects. (4) Overhaul of 12 large winches of a Navy supply ship. Our first chart today (Table I) is our total procurement picture in millions of dollars for fiscal years 1970 and l97L During FT 1971, our total procurement business dropped slightly, to $28.4M. Our total awards to small business was virtually unchanged, thus slightly increasing our percent of award dollars to small business. Our small business set-aside awards decreased only $~lM, which is comparable to the decrease in total awards, thus resulting in identical percentage of set-asides for the past two years. We are proud to have more than achieved our assigned goal of small business participation for both FY 1970 and 1971. In the area of small business subcontracting, all of our prime contracts over $5,000 contain the mandatory `~Utilization of Small Business Concerns' clause. Our opportunities to participate through major contracting in the Small Business Subcontracting Program including make-or-buy determinations PAGENO="0190" 184 are virtually nonexistent due to the small size of our contracts. Our next chart shows our awards by claimant program as applicable to our office. These figures are available only for contracts over $10,000. As you will note in all claimant programs but A-3 our percentage to small business dropped. However, the drop in actual dollars to small business was virtually offset by the large percent and dollar gain to small business in the A-3 program. There is a two percent overall difference. We have an excellent working relationship with the San Francisco - Regional Office of the Small Business Administration. I have personally visited with many representatives at that office and Mr. Gilbertson, my Small Business Specialist, has been there many more times. Mr. Walter Dorn, the Procurement Center Representative (PCR) of the SBA visits our office at least every two weeks for several hours~ All are most helpful in assisting with our Small Business Program by providing sources and determining whether sufficient small firms are available for a given commodity or procurement to warrant class, joint, or unilateral set-aside actions, We have cooperated fully in the Section 8(a) Program for subcontracting through SBA to minority- owned firms. PAGENO="0191" 185 Our present program for identifying a possible 8(a) purchase consists of finding repetitive requirements that can be directed toward the goal of developing and sustaining a business while it gains the skills and strength to become fully competitive. To date, this has taken the course of annual type contracts such as the printing of station newspapers, the construction of special type wooden crates, and key punch services. We have awarded fixed price contracts for reupholstery services and for machine shop work, but we have not had the repeat type requirements for these services that would give continuing support. The next chart shows our record in this regard. Some of these contracts were initiated by us; but whatever the source, we have had outstanding cooperation with the SBA. We are constantly working with them to locate new opportunities for the Section 8(a) Program~ In cases where we have repetitive purchases of the same or similar material or services, we consider making class set-asides~ For example, packing and crating of household effects is a class set-aside and currently we are getting sufficient small business competition in our geographic area to warrant continuance. We also have a class set-aside for special boxing and crating; f or repair and renovation of classroom electronics instruction equipment; for care of remains; for work benches and minor steel construction; for ships brows on rental basis; and for several others. Most class set-asides are jointly made with SBA, but some are unilateral. We can recall no cases in FY 1970 or 1971 of small business nonrespon- - sibility determinations based upon lack of tenacity, perseverance, or integrity. PAGENO="0192" 186 For your information, our Small Business Specialist devotes full time to the program and reviews every proposed procurement fcr Section 8(a) possibility, unilateral small business set-aside determination, or the addition of small business firms to the solicitation. We make full use of the Department of Commerce Business Daily to publicize our solicitations and awards. We maintain a bid, room with a display of current solicitations, Commerce Business Dailys, and abstracts of previously opened bids~ Bids are opened here and the Small Business Specialist has his office here. Our buyers and Small Business Specialist visit small business and Section 8(a) contractors to become better acquainted with available facilities. We have participated in Small Business Symposiums and Conferences to make our requirements and purchasing procedures known. We believe we have an active and multi-faceted Small Business Program but one always subject to improvement. We are ready for your questions, comments and suggestions~ PAGENO="0193" 187 PROCUREMENT IN THE UNITED STATES BY THE NAVAL REGIONAL PROCUREMENT OFFICE OAKLAND, CALIFORNIA FISCAL YEARS 1970 - 1971 (in millions of dollars) 1970 1971 Total Awards to All Firms $29.2 $28.4 Total Awards to Small Business $12.1 $12.0 Percent of Small Business to Total 41.4% 42.4% Snail Business Set-Aside Awards $ 3.4 $ 3.3 Percent of Set-Asides to 11,6% 11.6% Total Awards Small Business Goal 31.5% 40.1% Actual % Accomplished 41.4% 42.4% NOTE: "Total Awards to All Firms" does not include intergovernmental purchases, purchases from nonprofit institutions or contract niodificationsless than $10,000 TABLE I 70-654 0-72-13 PAGENO="0194" 188 CLAIMANT PROGRAMS FISCAL YEARS 1970 - 1971 (in thousands of dollars) 197 0 1971 Total to Percent Total to Percent All Firms to SB All Firms to SB A-3 Ships & EquipS $11,675 1L9 $10,945 24~8 A-7 Electronics & Communications 1,016 62~7 1,998 33~8 S-l Services 3,581 7l~7 2,768 59.1 C9E Other Material 6,737 66.6 4,491 58.4 All Other Programs 921 46.2 693 42.9 TABLE II PAGENO="0195" 189 SECTION 8A PROGRAM AWARDS TO SMALL BUSINESS ADMINISTRATION Fiscal Year 1969 1970 1971 Number of Contracts.* 1 5 H 7 Total Value $ 18,305 $133,300 $201, 904* Material or Service Special Crates For Aviation Parts Data Processing Key Punch Service Special Crates For Supply Center Shipping Station Newspaper for Shipyard Bus Transportation Machine Shop Services Station Newspaper for Naval Station $ 69,673 33,400 35,925 39,216 9,401 16,090 7,600 $201, 904* TABLE III PAGENO="0196" 190 Captain AITKEN. Thank you, sir. As is evident from the procedure and from the witnesses who have proceeded me, it is quite evident that your emphasis is on the 8(a) program alone, so I would be pleased to discuss certain portions of my statement which relate to the 8(a) program. We have charts here, which I will flip quickly to the 8(a) portion thereof, showing our accomplishments at the Naval Regional Procure- ment Office at Oakland. As you can see, we have a number of 8(a) contracts during this past fiscal year, 1971, and a few in 1970, and in 1969. Senator MONT0YA. Would you state what the total procurement under your jurisdiction was in 1969, 1970, and 1971? Captain AITKEN. Senator, I do not have those figures on that chart, but in 1971 we had $28 million, and our total for the 8(a) awards during 1971- Senator MONTOYA. Just a minute. For the record, I want to state that the total awards to all firms for 1969 were $58.6 million; for 1970, $29.2 million, and 1971, $28.4 million. Captain AITKEN. Yes, sir. Senator M0NT0YA. Is that correct? Captain AITKEN. Yes, sir; that is correct. Shall I proceed, Senator? Senator MONTOYA. Yes. Captain AITKEN. Those figures that you just read from the chart are the total awards to all firms by my office during those 3 fiscal years. Senator MONTOYA. Yes. Captain AITKEN. And the other chart which we have displayed on the 8(a) program represents the total dollars awarded in the 8(a) program. Senator MONTOYA. Now, may I read that into the record? In 1969 it was $18,305? Captain AITKEN. Yes, sir. In 1970, the total was $133,000 and in 1971 it was $201,000. Senator MONTOYA. That is quite a small percentage of that pie; is it not? Captain AIT1~N. Yes, sir. It represents about three-quarters of 1 percent of our total dollars during the year 1971, and I have not com- puted it for the past 2 fiscal years. Senator MONTOYA. Why is the sum so small? Captain AITKEN. Well, we are getting started in the 8(a) program. I think we have a good start, Senator, and we are proud of that record as well as we are proud of the 42 percent that we awarded to small business generally during this past fiscal year. Senator MONTOYA. Well, in 1969, you took one step; in 1970, you took five, and in 1971 you took seven. Is that what you call progress in the Navy? Captain AITKEN. That is progress; yes, sir. And we believe in the coming fiscal year we will have many more of the 8(a) contracts. Senator M0NT0YA. Well, I am disappointed at the progress you have made. Have you had any seminars with your contracting officers? You are the contracting officers; are you not? Captain AITKEN. Yes, sir. We have contracting officers in our office. I am one, and Commander Beeman, our director of the purchase divi- PAGENO="0197" 191 sion, and Mr. Robert Giibertson also, from my office; we have a num- ber of contracting officers in our office. We do have meetings with industry, and Mr. Gilbertson, our small business specialist, has taken part in some of these and has talked to and interviewed many of both small business and 8 (a) personnel, and while they are interested, we have not had a great deal of them calling upon our office to look at our bid boards, however. We have encour- aged- Senator MONTOYA. Have you established any meaningful liaison with the Small Business Administration? Captain AITKEN. Yes, sir. Senator MONTOYA. To apprise them of what 8(a) potential exists in your contracting? Captain ArrKEN. Yes, sir; we certainly do. We have regular meet- ings with the Small Business Administration PCR man who comes to our office frequently and reviews our requirements and, together with our Small Business Specialist, selects certain of our contracts for 8(a) performance. Senator MONTOYA. Well, to what do you attribute the smallness of the total number of contracts and the total of dollars in those con- tracts? Captain AITKEN. The nature of the business we have in our office, Senator, I believe, is the best answer to this. We buy a wide variety of materials and services of a one-time nature, mostly on a quick- response-type request from shipyards, ships and overseas base, and they are generally of a nonrepetitive nature. I believe it is the repeti- tive business which is needed in the 8(a) contractor's field. Senator MONTOYA. Do you have janitorial and building maintenance services contracted out under 8(a)? Captain AITKEN. We do not contract for that, Senator. Senator MONTOYA. You use your own in-house personnel? Captain AITKEN. No, sir. But those services are contracted for by another office, not ours. Senator MONTOYA. Well, do you have supervision over that type of contract? Captain AITKEN. No, sir. Senator MONTOYA. Do any of you gentlemen? Who is that contracted out by? GSA? Captain AITKEN. No, sir. That is done by our construction facilities, Navy personnel. Senator MONTOYA. Well, then, they are probably letting that out outside of the orbit of 8(a)? Captain AITKEN. Actually, Senator, I do not know who gets those contracts, and I do not know whether it is 8(a). Senator MONTOYA. Well, if those contracts were 8(a) they would be reflected here? Captain AITKEN. No, sir; these are only from our office and would not reflect there if they were 8(a) from another office. Senator MONTOYA. What do those contracts reflect; what kind of contracts are they? Captain AITKEN. Well, on the lower part of the chart there, the material and services, the seven that we had during 1971 are listed and all of those, with one exception, are repetitive type requirements. For example, they are all annual contracts existing for 1-year periods PAGENO="0198" 192 except for the one-machine-shop service contract; like the special crates for aviation parts, any special crates which are required during that 1-year period, are made by that 8(a) contractor. And the next we have is data processing and keypunch services. Any keypunch service which we have for that particular organization is done by that 8(a) con- tractor during the 1 fiscal year. Senator MONTOYA. Then, let me ask you: Do you have any other type of repetitive needs in your organization that are not reflected here? Captain AIT1ci~x. Yes, sir; we do. Senator MoxTorA. How much would you say in terms of dollars? Captain AITKEX. There are another-oh, two or three items that are being analyzed and will have been discussed with the Small Busmess Administration through this fiscal year as a potential increase to our program. We have more of these annual requirements. Senator MOXTOYA. How many of the requirements have you referred to SBA which are not reflected here in these awards? Captain AITKEN. I believe that all we have discussed and offered to SEA and that we have worked out with them are reflected here with one exception. They were unable to find an appropriate 8(a) con- tractor to provide service, and it was not therefore contracted. But most everything we have offered them have been reflected here. Senator MoxTorA. Do you participate in any meetings, seminars or other types of sessions with other Federal agencies with respect to 8(a) contracting? Captain AITKEN. No. Mr. GILBERTSOX. I will answer. I participated, just last month, in one in the city of Sacramento and one in Oakland. Senator M0XTOYA. Had you participated before? Mr. GILBERTSON. I have participated in one before in San Francisco about a year before. Senator MONTOYA. And had you- Mr. GILBERTSOX. My predecessor did several of these. I do not recall just where they were. Senator MOXTOYA. What was the nature of that meeting? Mr. GILBERTSON. These were a seminar set up by, I think the last one, I think-by General Services Administration, and all branches of the Federal Government were participating and had people there to answer questions and to get information out to those minority busi- ness people that came to these meetings, answering their questions and trying to guide and steer them into ways of getting 8(a) contracts or in getting Government contracts, period. Senator MONTOYA. Did you have any executive sessions among your- selves to establish a plan of operation as to how you could best recog- nize these people? Mr. GILBERTSON. Well, at these particular meetings; no, sir. Senator M0NT0YA. Have you at any time? Mr. GILBERTSON. No, sir; I have not. The Small Business Council meeting of northern California, we did enter into this area and discuss problems generally that have to do with small business and the 8 (a) program. Senator MONTOYA. But within your organization, have you sat down with your contracting officer, with your procurement people and established any goals with respect to the 8(a) contracting or with respect to letting small business have a share of the procurement pie? PAGENO="0199" 193 COmmander BEEMAN. Yes, sir, Senator. Every requirement that comes into our shop. And I might add that we are unable to predict what is going to come in because we are regional, a big office, and every requirement is screened by Mr. Gilbertson, and if he recommends that it either be a small business setaside or a 8(a) contract, then he comes to me and we all discuss it and determine whether or not it is applicable. Senator M0NTOYA. Do I understand you to say that the ~201904 represented for the year 1971 constitutes the amount of recommenda- tions made by this gentleman? Commander BEEMAN. Yes, sir. I emphasize again that these are an- nual contracts and all of them do not expire in the same month. As they expire and are for renewal we look at them. We have some 25 categories listed that are going to expire in the next few months that we will be referring in to the SBA. Senator MONTOYA. Has he turned in any recommendations that you did not accept? Commander BEEMAN. No, sir. Senator MONTOYA. This is the extent of his recommendations? Commander BEEMAN. It takes the three-man review board to over- ride his recommendation. Senator MONTOYA. Has he ever been overruled? Commander BEEMAN. No, sir. Senator M0NT0YA. So, I take his total recommendations amounted to $201,904? Commander BEEMAN. For this preceding fiscal year; yes, sir. Captain AITKEN. Plus one referred to SBA for which there was no suitable contract. Senator MONTOYA. Do you notify SBA of your prospective require- ments in advance, or do they have to come to you after you announce, perhaps, that you were going to put out for bids certain things by way of procurement needs? Captain AITKEN. No, sir. We announce to the SBA considerably in advance of the time we go onto the street with our requirements. In other words, before we go out for bids we consult with the SBA on these requirements and those which we are generating in the annual contract fields to determine if they can find a suitable contractor. I might add that some of these 8(a) contracts have been at our own instigation and some of them were on a cooperative basis with SBA. We enjoy a very fine relationship with them. Senator MONTOYA. What kind of technical instruction or education do you make available to small contractors with respect to your re- quirements? Captain AITKEN. We have no means of informing the local popu- lace directly of our total requirements. However, all of our require- ments- Senator MONTOYA. I do not mean that. I mean-first of all, let me ask this question: Do you have a list of the small contractors in the area? Captain AITKEN. Yes, sir. Senator MONTOYA. Do you have a list catalog by capability? Captain AITKEN. By what they produce and what they can do? Yes, sir; those who have indicated an interest in Government business. Senator MONTOYA. All right. PAGENO="0200" 194 Have you, in the course of outlining your procurement needs, ever notified the particular individuals with specigc capabilities that they can come in under section 8(a) and become involved in such a contract? Captain AITKEN. Our bidders' list, as it is known, comprises of go- ing firms who are already in business, and they are solicited for our requirements as we generate them. We do not have a list of 8(a) organizations who are potentially businessmen or who are attempting to establish businesses. Senator MONTOYA. Then, your answer is confined to a list of the small business capabilities rather than those who might have 8(a) eligibility? Captain AITKEN. Yes, sir; that is right, in our office. However, we do rely on the SBA to assist us in locating the SBA firms or, I mean, the 8(a) firms. Senator MONTOYA. But you testified a few minutes ago that the only thing you have referred to SBA is the $201,904 in contracts and the other one that they could not find any capability for. Captain AITKEN. Yes, sir. But I should enlarge by saying that the SBA representative who visits our office frequently reviews, at his discretion, any and all of our procurements before they go to the street for bids. Senator MONTOYA. All right, now, let us be frank about this with- out having this interpreted as being critical. Now, you enter into many types of contracts and you have many types of procurement needs. Now, does the SBA man know everything there is to know with respect to his duties concerning every type of procurement need that you service as a contracting officer? Captain AITKEN. Yes, sir; in general, he does. We have many re- quirements, of course, which we receive the request for today and awards are made tomorrow, for the repair part of a ship to prevent disruption of overhaul, or sailing date, and this sort of thing. `V\Te have requirements for which we must purchase immediately, but these are one-time requirements for parts for a particular generator, or some- thing else for which an 8(a) contract is just not suitable. For our ongoing annual type repetitive needs, such as these here and the others which we mentioned as referring to SBA for this fiscal year and in the process of doing now~ the SBA representative is aware of; he knows of our requirements. He knows which ones these are. Now, I do not know as he has seen everyone of them. I cannot state to that. But he knows generally what our requirements are. Senator M0NTOYA. Wrell, are you in a. position to determine with complete candor and objectivity what kind of profit a small entre- preneur can realize from a contract you are willing to award to him under the. 8(a) program? Captain AITKEN. Not precisely. We know approximately what price contracts should be awarded normally, because of past history. Most of these things we have bought before, for several years, and we know about what the price should be. Senator MONTOYA. Do you take into account the inflation that is taking place Captain AITKEN. Yes, sir. Generally, the price increases slightly each year but not necessarily. PAGENO="0201" 195 Senator MONTOYA. All right. In a construction contract, what kind of a fluctuation do you allow, or what kind of inflation do you allow for a construction contract, let us say? Captain AITKEN. Well, let us take any kind of contract, because we do not deal in construction contracts. Any one of these would serve your purpose, I would assume. These are awarded, except our 8(a), on an open bid basis, and on invitation for bids normally advertised, and the low bidder being, whoever he is, a qualified producer, and a recognized responsible busi- ness contractor, will get the award-the low bidder will. But, of course, in the 8(a) situation, the 8 (a) contractor gets the award. Senator MONTOYA. But you did not answer my question. Captain AITKEN. Maybe I did not understand it. I am sorry. Well, I cannot say what price increase we would allow from year to year in our normal course of business, because a great deal of it is by formal advertising, and the low bidder gets the award even though it is a con- siderable increase in price. If we had good competition and fair com- petition and the price goes up, that is unfortunate. Senator MONTOYA. Well, in other words, you do not tell the 8(a) contractor: "We are going to let you have this contract for what we allowed last year on similar contracts?" Captain AITKEN. No, sir; we do not negotiate with the 8(a) con- tractor. The SBA negotiates with the 8(a) contractor. Senator MONTOYA. Yes; I know, but the SBA seeks your advice as to what you might accept? Captain AITKEN. Yes, sir. We tell them what the previous price was, and then it is up to them to negotiate if they can. Senator Moic UOYA. What I am getting at, Captain, is I want to find out if there are some pitfalls here in which the small entrepreneur can fall by placing complete reliance on your figures and the figures which you, in turn, give to SBA, because there has been testimony adduced here that when they get the final contract figure the small business contractor has not been able to realize a profit. Captain AITKEN. Well, I think that the price at which these con- tracts, these 8(a) contracts listed here, have been awarded, has been, to~ my knowledge, certainly not lower than the going contract price for that service in the past several years and perhaps slightly higher. Senator MONTOYA. Well, I know, and that is what I am speaking about, about the inflationary impact that has taken place. You see? Are you making allowances for that? Captain AITKEN. I am sure there is an allowance for it. There is no attempt to actually maintain those prices at last year's levels. Senator MONTOYA. That is what you indicated. That is why I wanted to clear the record. Do you revise your figures and allow for inflation? Captain AITKEN. I see your point, Senator. We do allow for some inflation and some increases. Senator MONTOYA. That is what I have been trying to elicit from you. Now, where a default appears imminent, what does the contracting officer or the agency do to prevent it? Captain AITKEN. We work with the inspector of the material, whatever it is to be delivered, and with the Small Business Admin- PAGENO="0202" 196 istration-assurning it is the Small Business Administration that is involved-and try to correct it as much as we possibly can, the de- ficiencies, either delivery, technical, financial, or whatever the problem seems to be. We try as best we can to work with SBA and the Defense Contract Administration service, if that is the organization that in- spects the material, to try to get the contractor back on the right track, because it is to our advantage t.o take delivery of the material or the service from the contractor. It is never to our advantage to default and go to someone else. Senator M0XT0YA. WThat, about advance payments? Captain AITKEN. WTe have not had any advance payments. Senator MOXTOYA. You wait until lie finishes the contract? Captain AITKEN. There are partial payments. Senator MONTOYA. Progress payments? Captain AITKEN. Well, they are not, technically-there are some progress payments, but in most of these it amounts to partial pay- ments as the service is completed on the month or week or whatever period of time he provides the service. Senator MOXTOYA. Do you allow the individual to use his entitle- ment to the unpaid portion of the contract as a means of getting money from the banks? Captain AITKEN. Oh, that is up to him, Senator, between him and the SBA; if they caii make such an arrangement with the bank, that is fine. Senator MONTOYA. But will you give him certification as to what he is entitled to? Captain AITKEN. If lie asks for it; yes, sir. Senator MONTOYA. On which the bank can rely? Capt.aiii AITKEN. We can do that. Senator MONTOYA. Have you ever done it? Commander BEEMAX. Not on an 8 (a). We have many contracts that have been assigned to banks and we pay directly to banks, but not under 8(a). WTe have not. had that situation arise there. Senator M0NTOYA. Can an assignment be made on an 8(a) subcon- tract? Commander BEEMAN. I am sure the statute provides it. Senator MONTOYA. Have you ever advised any 8(a) contractor he can do it? Commander BEEMAN. I do not recall having direct contact with anyone yet. Senator M0NT0YA. Well, they do not know who to come to, or how to come to you? Mr. GILBERTSON. Yes; these people do, because we have gone out and talked to them. They know who I am. Senator M0NTOYA. Yes, but they do not know that you can assign. Have you ever told them? Mr. GILBERTSON. `Well, in these particular types of contracts here for these amounts of money, like those crates which is $69,000, an esti- mated cost for a total year, where the air station that orders these special boxes may order 10 or 12 of them and lie delivers them in a week and lie gets a. receipt. and he can take that down to the cashier aiid get. his money right then and there. Senator MONTOYA. For 10 crates? PAGENO="0203" 197 Mr. GIIJBERTSON. Yes; but he cannot get the $69,000 until he per- forms the work. Commander BEEMAN. We cannot guarantee that much, because it is just an estimate. Senator MONTOYA. That is what I am trying to get at. The big con- tractor has a fixed contract? Mr. GILBERTSON. In the machine shop service where that is for $16,- 000, a fixed price contract for immediate delivery, say within 35 or 40 days, he could have taken that contract to a bank, and they would have factored it for him, as the term goes, I believe. Senator MONTOYA. There has been testimony here during the course of these hearings where these people have been at a loss to get.funding for their contracts, and they apparently did not know that they could get a certificate from you indicating how much of the contract was un- paid and that they could borrow against it. They are unaware of that. Now, I understand the difficulty for contracts that are based on requisitions as need arises. I do not think any bank would lend you money on that basis. Mr. GILBERTSON. This is one of the problems. If you are going to have contracts that have continuity where we can do this year after year and not just set a guy up in the area and then pull the rug out from under him and tell him we do not have any more contracts to award. This is one of the areas where we do have problems. Senator MONTOYA. Unless, of course, you estimate your needs for the year and tell him, "This we are sure of during the course of the year, but we are not going to order everything right now." Mr. GILBERTSON. That is precisely what we are doing now. Senator MONTOYA. And here is another problem that arises. A busi- ness has an 8(a) subcontract-and there was an example of this here at the hearing, where they had 20 people under an 8(a) contract-and the contract does not have enough continuity to justify the long-term employment of its people. Is it not better, if you know your needs for the year, to tell the small entrepreneur that you have already certified for an 8(a), "All right, you have 23 people. We know that we are go- ing to need x number of items this year so you can start producing them and keep your work force engaged and can better make plans at the end of your production for the continued employment of these people." Commander BEEMAN. That is a very desirable thing, Senator, if we can get that type of grip on it. We frequently do not know how firm these requirements are. It depends on how many ships operate out of this port here. Senator MONTOYA. Well, that is what I am trying to find out. Commander BEEMAN. It is an unpredictable thing. I agree it is a problem. Senator MONTOYA. That is what I am trying to find out. Can you do this in some instances? Commander BEEMAN. Not on most of the things. Senator MONTOYA. I can understand that on special crates, for instance, you probably could not. Commander BEEMAN. That is right? Senator MONTOYA. Unless you gage that on what you have used as an average through the years. PAGENO="0204" 198 Commander BEEMAN. Historical data is just about what we rely on; yes, sir. Mr. GILBERTSON. One of the problems with these contracts is the funding by the activity ordering these things. When they give us this estimate we do not put any real money into that. Funding comes out with the ordering document that tells this guy to go ahead and build 15 of these crates. Well, then, if the activity does not really need these crates they are not going to put their money into it very quickly and stack them up. S Senator MONTOYA. Yes. I understand that. But can you do this in other procurements? Captain AITKEN. There are a few, as we may have mentioned be- fore. We have several similar situations which we are now exploring for additional 8(a) contracts but then these are not guaranteed for continuancy for the year. We award the contract saying that "when- ever we have this requirement we will order it from you for this year." Senator Mo~roYA. Well, we are appearing here more or less as an advocate for the small businessman. That is why we are trying to alert you to the problems that they face and, hopefully, we hope to arouse your sense of conscience and see if we can get some cooperation from the procurement agencies to alleviate these problems for the small business people. That is all we are trying to do. Now, we have other witnesses. Mr. JoNEs. Mr. Chairman, at this point I would like to ask Captain Aitken just a few additional questions. Senator MONTOYA. Let me finish with the others and we will ask ques- tiol1s altogether because I have to go at three, and I will leave you here to ask any questions. Now, let us see what the Army has done. Mr. Allstead. STATEMENT OF ROBERT A. ALLSTEAD, CHIEF, PROCUREMENT DIVISION, OFFICE OP DEPUTY CHIEF OF STAFF FOR LOGISTICS, 6TH U.S. ARMY, PRESIDIO OF SAN FRANCISCO, CALIF. Mr. ALLSTEAD. Mr. Chairman, you have my statement, and, if it can be accepted for the record, I will talk from the supplements I have added. Senator MONTOYA. It will be made a part of the record. (The prepared statement submitted by Mr. Alistead reads in full as follows :~ PAGENO="0205" 199 * STAT~IT 3Y A. ALLSTE/'.D r:OCL:~T OFFICEG., OFFICE OF ThE ~EPtiTY CNIEF OF STIFF FOR LOGISTICS, IEP.UQUARTERS SIXTh U.JTEO STATES ARY PRESIDIO OF SM FRANCISCO, CA 0412C SENATE SNALL BUSINESS COW~ITTEE 2D-33 SEPTEMBER 1971 CENTLE EN: THE SIXTH UNITED STATES ARMY I PLEMENTATION OF THE PRESIDENT'S PROGRAM FOR COWTRAC1ING WITH MINORITY BUSINESSES HAS DEEM ONE HUNDRED PERCENT CONSISTENT WITH THE PROVISIONS OF SECTION I, PART 7, PARAGRAPH 1-705.5 OF THE ARMED SERVICES PROCUREMENT REGULATION~ THIS REGULATION CONTAINS AUTHORITY, POLICY AND PROCEDURES FOR CONTRACTING WITH THE SMALL BUSINESS ADINISTRATION FOR SUPPLIES AND SERVICES TO BE PROVIDED BY SMALL BUSINESS MINORITY FIRMS. SIXTH ARMY INSTALLATION CONTRACTING OFFICERS lIVE BEEN ACTIVELY ENCACED. WITH REPRESENTATIVES OF THE SMALL NUSIRESS ADMINISTRATION IN I BENTIFYI:C PROCUREMENTS. SUITABLE FOR NINORITY BUSINESS ENTERPRISES. RAPPORT WITH TIlE SWILL BUSINESS ADNIUISTRATIQN 115 BEEN EXCELLENT. PAGENO="0206" 200 REPRESENTATIVES OF TIlE .SNALL BUSINESS I;DNII!ISTRATIOU H/WE WORKED WITH SIXTH ARNY COHTPJ~CTING OFFICERS. SINCE TUE INCEPTION OF THE PROGRAN. THIS. CLOSE RELATIONSHIP HAS PROVEN VERY FRUITFUL. EVEN WITH LIMITED RESOURCES, ADVANCES HAVE BEEN MADE BECAUSE OF. THE TENACITY AND PERSEVER- ANCE OF THE SMALL BUSINESS ADMINISTRATION REPRESENTATIVES MD THE CONTRACTING OFFICERS TO ACCOMPLISH A RECOGNIZED ESSENTIAL PROGRAM. SIXTH ARMY CONTRACTING OFFICERS HAVE BEEN ENJOINED TO EXPEND EVERY EFFORT FOR INCREASED IMPROVEMENT IN THE PROGRAM IN THE *FUTURE. PROGRAM PROGRESS AT SIXTH US ARMY INSTALLATIONS WILL BE MONITORED WITH THE ASSISTANCE OF THE SIXTH ARMY SMALL BUSINESS *~J~ ECONOMIC. UTILIZATIOIU ADVISOR TO INSURE A CONTINUANCE OF THE CLOSELY ESTABLISHED RELATIONSHIP WITH SBA FOR OVERALL PROGRAM. INPROVENENT.. PAGENO="0207" 201 SUPPIB'ENT TO THE STATEVENT PI~VID~) BY T'lR. F~JBERT A1 ALLSTEAD PF~JCURENENT OFFICER, OFFICE OF THE DEPUTY CHIEF OF STAFF FOR LOGISTICS, HEADQUARTERS SIXTH WITED STATES APJ~i~' PRESIDIO OF SAN FRANCISCO, CA 914129 SENATE SHALL BUSINESS OJ~IUEE 29 ~J SEPTE1~BER 1971 ATIACHED EATA SHEETS DEPICT THE 8(A) PRJGRAN EFFORT BY THE SI)(TH U. S. AR~W DURING P( 1971 AND 72 TO EATE. AN INFOi~4TION SHEET DISCLOSING A DECADE OF ALL SNALL BUSINESS DOLLAR AWARDS BY FISCAL YEAR IS ALSO INCLUDED FOR YOUR INFORHATION. IT IS OPINED THAT OUR EFFORT TO FOSTER THE DL\LOP~'Eff OF THE SHALL BUSINESS PFOGRAM HAS BEEN SUBSTANTIAL EASED ON TOTAL DOLLAR AVAILABILITY. THE VALUE OF LOCAL PURCHASE TRANSACTIONS ACCOIPLISHED IN SIXTH U. S. AR~D( IS CONSIDERED RELATIVELY t~1INW.4L WHEN CQMPARED TO LARGE P~GR4M PROCUREI"ENTS ACCC~PLIS~ED B? MILITARY CO1~T~JDITY MANAGEF~ WHICH RESULT 111 EXPENDITURES OF BILLIONS OF DOLLAF~. A1TACHED ARE: SHEETS # 1. 8(A) AWARDS TO SEA FY 71 # 2. 8(A) ACTIC~S NOT AWARDED FY 71 # 3. 8(A) ACTIONS IDENTIFIED FOR S~A FY 72 # 4. VALUE OF SMALL BUSINESS AWARDS Fl ~/71. PAGENO="0208" SIXHI U. S. AP~?( 8(A) A~/ARPS TO SMN.L B~8!IJESS NT11iIISTPATIOU F? 1971 LW~~IOR WIFALU&~LR ~~HllhJ~L NIDFE LNIITSCPP!NG 71-C-0228 EIIJSHH OT~TRJL SPN FH8t~C!SW, CA CAH3ER ELECTRIC (B., 71-C-Q~1 FLORESCENT LIGICE OAKLAND, CA FIXUJFE NDIE[BW~(E IXL NDNUF/\CWRING co. 71-C-ND71 CWThND3 ALTEPATICUS OAXIJNTO, CA LEE'S PATIOL 71-C-0300 SECURI1Y GUARD SAN FRDNCISCO, CA SERVICE PARr'S REREE 1)TBEOZ SEASIEE, CA 71-C-A666 FERJSE ~OLLECTICU IIJREON IJRPEERIES 71-C-A739 DRAPES SAIL FRARCISCO, CA TOTAL 5327,1112 YALIE CATEHEALAPI) 5110,0W 21 MAY 71 7,258 1MAY71 28,0)0 1JUL71 69,3711 22 JIri 71 CECffP1~~L~LEE FFP FFP FEO'PIFS FFP t~D 88,l'il ~1.JUfl71 FFP ~9LG:EL~~ 11JW71 PEQ'PIFS PAGENO="0209" SIXTH U, S. Af~W 8(A) ACTICHS NOT PHARDED TO S~LL BUSINESS /HflINISTPATICO - FY 1971 PFOPOSAL NUSBER FEOUINEI~H{[ FEP.SC~i FOR REJECTTOII 71-R-CIJG7 3) MAR 71 1PAIR MATER SYED~I1 PFOPOSED PRICE TO HIGH SPA REJECTED 71-R-C1J81 26 MAY 71 PRINTING PRJFOSED PRICE TO HIGH SPA REJECTED 71-R-OO&) 1 JLH 71 TEED OTEFR)L SPA COUt]) NOT FIND C~ffPACTOR W/STAIE ECOLOGY LICENSE 71-R-013) 20 lAY 71 JANITORIAL SERVICE COUlD ORDER OBTAINED BY PACIFIC COAST CEEEC UTILITIES SERVICE RESTRAINING SPA FF011 AWARDING TO MINORITY CCHTRACTOR hIDER 8(A) 71-R-O131 20 MAY 71 JANITORIAL SERVICE COURT ORDER OBTAINED BY PACIFIC COAST PRESIDIO OF ItRITEREY UTILITIES SERVICE RESTRAINING SPA FF131 AWARDING TO MINORIT( CCIITRACIOR INtER 8(A) ESTIMATED VALUE $33QM57 2 PAGENO="0210" 204 SIXTH U1 S1 ARIY 8(A) ACTIONS IDENTIFIED FOR POTENTiAL AWARDS P( 1972 PEOL1IREPE~ff INSTALLATION OF ELECTRICAL EQUIP(~'ENT SENER P11? SERVICE WINDOW WASH lUG SERVICE RUG CLEPMNG SERVICE IHOOFING BOX LWCHES PACKING a CRATING REPLACEf~Bff OF TRAFFIC CONTPOL SIGNS a POSTS REPLACE DOORS ON WAREHO1~ES REPLACE EXTERIOR DOOR ADNINISTPATI\~ BLDGS a 1~SSHALLS TOTAL $571i,369.CO PAGENO="0211" 205 SI)cnl U. S. MI! \$1UE OF SIXTH U. S. MI! MARTS TO 52RU BISITESS F1135 F! 62/71 EL~ E1i~ EL~ EL6~ EL91 ELOZ EL91 ELTH ELZO ~J1 IUTAL *(9 ~fl~)5) VALLE OF ABIARDS $18,591 $24,278 $28;275 $28,332 $28,778 $32,702 $110,756 $36,OJO $35,303 $39,028 $312,043 (IN THOISPNDS) POTENTIAL LOLLNS $29,669 $54,990 $58,626 $60,151 $63,733 $74,638 $81,586 $73,190 $73,526 $84,968 $654,587 AVAILABLE TO TIE PPOGRNT PERCENTAOF OF 62.7 44.1 48,2 47.1 45.2 43,8 910 49.2 48.0 45.9 47.6 /\OIIEWIBfI * STA[T OF 01 RtALL D8SIUESS AGIIE'.98Eff P1063/Ill "OPEPATICH E0)STER", OCTOPEP 1971. PAGENO="0212" 206 Mr. ALLSTEAD. Thank you, Senator. I have attached data to the statement as a supplement. We have awarded six contracts during fis- cal year 1971-72 to date concerning the 8(a) program, and there is a sheet with the supplement disclosing the percentage of all small business dollars awarded by fiscal year which is included for your information. We have also provided a list of the total dollar availability and the value of local-purchase transactions. This amount in the 6th U.S. Army is considered relatively minimal compared to our program procurement accomplished by military commodity managers which result in expenditures of billions of dollars. I refer you to sheet No. 1 which depicts the awards for 8(a) `s dur- ing the past fiscal year 1971. This represents six firms, two in Oakland, three in San Francisco, and one in Seaside, Calif., for a gross total of a third of a million, to be exact, $327,412. Senator MONToTA. How much? 120, 127? Mr. ALLSTEAD. No, $327,412. Senator MONTOYA. Yes. Out of how much procurement? Mr. ALLSTEAD. Our gross procurement for the fiscal year was in the neighborhood of $92.5 million. However, sir, you have to remember that a good 60 percent of this we have absolutely no control over be- cause we buy from Federal Supply Schedules which are provided to its by the GSA. We also buy resale subsistence on purchase notice agreements which are provided by another agency over which we have no control, and we have utility procurement which, as you know, in the State of California is pretty much Southern Oalifornia Edison and Pacific Gas & Electric Co., big business. Senator MONTOYA. Then, how much of a percentage of the procure- ment pie has been placed into the 8(a) program? Mr. ALLSTEAD. Relatively small, Senator; one-third of a million is a very, very small amount in consideration of the other total dollars that go into the small business program. That is depicted in the attachment. Senator MONTOYA. This is probably one-third of 1 percent of the total? Mr. ALLSTEAD. I would say so, the last fiscal year for small business. Looking at the whole picture, we did 45.9 percent of the total dollar availability of some $84.9 million for $39,028,000. Now, for the entire decade since the Army program Operation Booster started in October of 1971, out of $654.9 million, the 6th U.S. Army was able to direct 47.6 percent of that, or $312,043,000 to small business. And I can assure you, sir, that in this total there were many minority firms involved. So, although we cannot identify them, they were involved, and that was before the 8(a) program. Senator MONTOYA. So, you really have been going down since fiscal year 1968? Mr. ALLSTEAD. So very true. This, again, is charged to the dollar mix we have and the availability of funds that are supplied to our class 1 installations which buy. The Department of the Army, as you know, has been on tight restrictions on funding of late, and this is represented here. PAGENO="0213" 207 Senator MONTOYA. Well, you had almost the same dollar allowance for procurement over these years. Mr. ALLSTEAD. Yes, sir. Senator MONTOYA. Since 1963 you have been going up, and in fis- cal 1971 you had your best year in procurement dollars, and still you went down from 48 percent to 45.9 percent. Mr. ALLSTEAD. That is correct. Senator MONTOYA. To what do you attribute this? Mr. ALLSTEAD. These dollars are generally windfall dollars that come in the last quarter of the fiscal year. We cannot control them. This is one of our big problems in procurement. We wish we could. This is one of the cl1ronic problems I think of all of us in the procure- ment field. Senator MONTOYA. What do you mean by "windfall dollars at the end of the fiscal year"? You have so much balance and you just hurry to the store and get what you need? Mr. ALLSTEAD. Not necessarily; not necessarily. Senator MONTOYA. So that you will show a zero balance at the end of the fiscal year? Mr. ALLSTEAD. This stems from the top down and from the bottom up, whoever might have a tight rein on the purse strings. The in- stallation commander keeps a certain amount of money just in case, and this goes right on up the line all the way to the Department of Defense. Senator MONTOYA. And, so, 8(a) gets left out and SBA gets left out, and then- Mr. ALLSTEAD. Not necessarily. Senator MONTOTA. And you go to the big contractors? Mr. ALLSTEAD. One of the big things at the end of the fiscal year, of course, would be construction-type contracts. We have been directed that all of our constructional repair, utility-type contracts would be set aside for small business. This was done by regulation. Senator MONTOYA. Well, did you know that the small business share of the procurement pie has been going steadily down? Mr. ALLSTEAD. I understood this; yes, sir. Senator MONTOYA. And I mean across the vast spectrum of the Fed- eral Government. Mr. ALLSTEAD. Yes. Senator MONTOYA. And we are trying to do something about it, to reverse it. Now, we are also trying to get the attention of the pro- curement officers with respect to 8(a) contracting. Now, what kind of policy do you have with respect to 8(a) contracting? Mr. ALLSTEAD. Our policy emanates from the Department of Defense right down to the Department of the Army and the Army Command Headquarters, and it is defined in the armed services procurement reg- ulations. We, of course, implement these policies through regulation and command guidance as necessary and as permitted at this level. Senator MONTOYA. Do you have a small business representative in your agency? Mr. ALLSTEAD. Yes, sir; Mr. Adam Mello. He happens to be back on the east coast currently attending a conference at the Continental Army Command Headquarters wherein they will address the 8(a) program. PAGENO="0214" 208 Senator MONTOYA. Now, are you in constant touch with the SBA people? Mr. ALLSTEAD. Yes, sir. Senator MONTOYA. And do you find any lack of cooperation from SBA people? Mr. ALLSTEAD. Definitely not. And, in fact, they overwhelmingly give us their cooperation to such a point that it is very hard to receive them at all times at the class 1 installations. The installations in Cali- fornia and in other States have experienced the best of cooperation. We realize that this program is just being generated here in the 6th Army. If you will note on sheet 1 all of the awards were made in the last quarter of the fiscal year. Currently, we have identified over a half a million dollars worth of procurement in the 6th Army for 8(a). There are others being identified as I am sitting here. These consist of such things as installation of electrical equipment, sewer pipe service, window washing, rug cleaning service, roofing, preparation of box lunches, packing and crating which is a large item, replacing of traf- fic control signs and posts~ replacement of doors on warehouses, re- placement of exterior doors, administrative buildings and mess halls. This is only a start, as far as I am concerned for this fiscal year. We should be able to do much better this year over last. I am very confi- dent we will. Granted we were slow starters in the Army, but out of the Continental Army Command, and I am speaking of all of the States, there were only 12 8(a) contracts awarded this last fiscal year. We awarded six of them. Senator M0NT0YA. You awarded six? Mr. ALLSTEAD. Yes, sir. Senator M0NT0YA. And what was their total? Mr. ALLSTEAD. The total was $5.3 million, but there was one contract that was well up into $3 million awarded at one installation. I am not quite sure whether it was at Fort Rucker or at Fort Benning. That was in the 3d Army. Senator M0NT0YA. An 8(a) contract? Mr. ALLSTEAD. Yes, sir; quite a substantial contract. Senator MONTOYA. And this year you are only up to $327,000? Mr. ALLSTEAD. No, sir. We are at a figure of $574,000, an estimate as of this time. Senator MONTOYA. No, but for 1971 you show here- Mr. ALLSTEAD. That is the actual awards for fiscal year 1971. Senator M0N'roYA. 8(a) awards, $327,412? Mr. ALLSTEAD. That is correct. So, we have that one-third of a nil- lion out of the one-half million dollars total. Senator MONTOYA. Well, that is what. I am trying to get at.. I mis- understood you. I thoug~ht that you `had $3 million in 8 (a) contracts. PAGENO="0215" 209 Mr. ALLSTEAD. No, sir; only a third of that. Senator MONTOYA. Only `a third of that? Mr. ALLSTEAD. Only `a third of $1 million; yes, sir. Senator MONTOYA. How can we improve this situation? Mr. ALLSTEAD. We are striving to do so. We recently had an oc- casion to talk with contracting officers in person or by phone con- cerning their efforts to date, and we have implemented a letter, rather an endorsement to a letter, of accolade that came down through than- nels from the Small Business Administration to the Army, and hence to the Continental Army Command and they have encouraged us to do more, and we, in turn, have enjoined the contracting officers to in- crease their activity in this `area. This is being `done currently, and we will be pursuing this as often as it is necessary to get these going the way we should get them going. Senator MONTOYA. Thank you very much, sir. Mr. ALLSTEAD. Thank you, sir. Senator MONTOYA. Colonel Cochran. STATEMENT `OF COL. ROBERT W. COCHRAN, DIRECTOR, PROCURE- MENT AND PRODTJCTION, SACRAMENTO AIR MATERIAL AREA, McCLELLAN AIR FORCE BASE, CALIF.; ACCOMPANIED BY MRS. KATHRYN SCRELD, SMALL BUSINESS SPECIALIST Colonel COCHRAN. Mr. Chairman, you have my prepared statement, `and if you would care, we would be de'lighted to just `highlight it. Senator MONTOYA. Your statement will `be made ~ part of the record, sir, at this point, and you may proceed t'o tell us what the Air Force has done. (The prepared statement follows:) PAGENO="0216" 210 STAT~NENT BY COLONEL ROBERT W. COCHRAN, DIRECTOR, PROCUR~CENT AN]) PRODUCTION, SACRAMENTO AIR MATERIEL AREA, MCCLELLAN AFB, CALIFORNIA BEFORE SUBCOMMITTEE ON GOVERNMENT PROCUR~NENT SENATE SMALL BUSINESS COMMITTEE SEPT~BEN 30, 1971 Mr. Chairman: It is a pleasure and an honor to be afforded this opportunity to discuss the Sacramento Air Materiel Area's participation in the President's Program for the Hardcore Unemployed pursuant to Section 8(a) of the Small Business Act. I have with me toda~y Mrs. Kathryn Scheld fr~ our Small Business Office. It is our hope that this discussion will provide a clear understanding of how Sacramento Air Materiel Area in 1968 met the challenge of President Johnson's new socio.economic program and moved forward with a unified positive approach to fully support the program. Our initial reaction to the President's proposal was one of concern that we should consider supporting our nation's cc~plex defense mission with hardcore labor and skills. However, recogniz-~ ing that c~plete understanding of a problem is the primary PAGENO="0217" 211 ~o ~ ~ ~ zirh(~d On a ~ project ;o learn eve jthi~ po~nibie about the pant~ ar~ futUr3 lor-~ mace pl.nnia~ for the pro~rc~n. We with the Dcpa~ent of Con~'arcc who wan given overall rponni- bil~~y for the pro~maa; the Dope eat of Labor who wan 5iven the renpozinibility for training end cplo~r~cnt elancate; and the Saul Busiacen .~~inintraticn (SBA) under whose authority we wore direc;ed to contract with the hardcore entrepreneur. We then met with Ivkjor General Veal, Conrander of the Sacramento Air ~fat~riel Area, and top management personnel ~or the purpose ~f updating them on the Hardcore program in general, its origin, peculiarities, approach, what we hoped to accon~lish and how the pro- cram related to our mission. General Veal directed uhat M~er:~i Mann~ement and Procurement perso~inel work as a team in identffyiacc potential candidate items and negotiating with the SBA and she minority owned, or disadvantaged entrepreneurs, it proposed as subcontractors. The Sacramento Air 1~hteriel Area Small Business Specialiss was PAGENO="0218" 212 assigned as program coordinator. It was with this top level management attention that in April 1968 we opened informal discussions with the SBA on a planning requirement for the Inspection Repair As Necessary and modification of T-.33 aircraft to be used in support of the United States Air Force and Military Assistance Programs. The procedure in previous years for processing this requirement had been competitive negotiation with contractors having facilities to accommodate the complex maintenance, repair and inspection of military aircraft. However, since the incumbent contractor was a struggling minority owned concern, it was decided that we would approach the SBA with regard to the feasibility of writing an 8(a) contract to help this firm become a viable small business concern. As a result of numerous meetings with Mr. Cliff Ryan of the San Francisco Small Business Administration Office, the SBA approved the Company's business plan qualifying them for awards under the Section 8(a) Program, and accepted the proposed PAGENO="0219" 213 planning requirement for negotiation under that program. Since we were pioneering this new concept of contracting, we recognized that many "gray areas" existed and it would be necessary for us to take the initiative and "cross bridges" as we came to them at our working level if this contract was going to be awarded in time to meet Air Force operational requirements. Therefore, our next step was to conduct an informal two-part Informational and Preproposal Conference with the president and general manager of the coanpany (Aerospace Services, Inc., Oakland, California); the Navy administrative activity personnel; the SEA representa- tives and Sacramento Air Materiel Area Procurement personnel. The first part of this meeting was devoted to explaining the Hardcore Program to bring all potentially involved parties up to date on available information to insure that no misunderstanding existed. The contracting officer emphasized that if this program was going to succeed in both mission and implementation, it would take team work, cooperation and extra effort on the part of all PAGENO="0220" 214 parties concerned. The second part of the meeting was conducted along the lines of a normal bidders conference coupled with a general explanation of Air Force program and mission requirements. We did not issue SBA a request for proposal, but instead, provided them with an informational procurement forecast, price history, specifications/technical data and the proposed contract format to which the subcontractor was to structure and price his proposal. The actual solicitation, pricing and negotiation aspects of both the price and subcontract remained administratively a Sacramento Air Materiel Area responsibility. The Air Force contracting officer, coordinating with SBA, prepared the subcontract solicitation, negotiated the requirement and prepared the con-. tractu.al instruments including all related documentation. Because of the hardcore newness and pressing Air Force mission requirements to meet production schedules and State Department commitments, following negotiations and contract signature at PAGENO="0221" 215 the local ltvel, we handearried the documents to Washington to assist in obtaining inter.agency signatures and answer any questions which niight arise. We have a high feeling of acccmplish- ment in that this requirement was processed and accepted without change through the entire review cycle. The total value of this requirement, including options, was $758,b56.OO for a quantity of 51e aircraft. The program's implemen- tation, continued agency cooperation and subcontractor performance in meeting both mission and hardcore requirements were satisfactory and quality standards consistently met or exceeded contractual production schedules. This was the first of fifteen Sacramento Air Materiel Area contracts totaling $14,227,885.00, to be negotiated with the SEA pursuant to Section 8(a) of the Small Business Act. We have itemized these fifteen contracts on attachment one to this state- ment. As you will note, the contracts cover critical requirements, such as Airborne Integrated Monitoring System Modification Kits PAGENO="0222" 216 for Sacramento Air Materiel Area supported aircraft and repair of MB..18/19 Generators. We are proud to have been a leader in furnishing support of the Hardcore Program and of our accomplish- ments to date. As of 30 June 1971, we have eleven active contracts which contribute 814% of the active contract dollars provided to the program by the Air Force Logistics Command. The Air Force Logistics Command contribution has amounted to 38% of the Air Force total; so in effect, Sacramento Air Materiel Area's accom- plisbnient as of 30 June 1971 is equal to 31% of the total Air Force contribution. Overall performance on all of the contracts has been satis- factory. The Tayko Industries contract F014606-71-D-0080, for example, is currently two months ahead of schedule with excellent quality performance. To assist in the identification of items suitable for 8(a) contracting, our technical personnel have made n~erous facility capability visits to potential Section 8(a) suppliers, such as, PAGENO="0223" 217 New Watts Manufacturing Company, Los Angeles, California; Fort Peck Tribal Industries, Poplar, Montana; Tayko Industries, Sacramento, California; AVI Manufacturing Company, Gardens, California; and Quantum Associates, Oakland, California. We currently have four additional requirements under consideration having a total estimated value of $153,386.00. Many problems and deterrents to efficient and effective support of the program were experienced. Through the unified efforts of the SBA and the Department of Defense, with a great* deal of credit due Mr. Cliff Ryan of the SHA, Headquarters, Air Force Logistics Command and Headquarters, United States Air Force, the majority of those problems have been reøolved. For example: (1) Authority has been delegated to the field level for approval of items to be considered for 8(a) as veil as approval authority on both prime and subcontracta; (2) The requirement for preaward survey on the prospective subcontractor has been waived; (3) SM has been granted authority to fund price differentials PAGENO="0224" 218 necessary to support the program; and (4) Statistically, 8(a) contracts are now reported as small business awards and credited to the total small business awards of the purchasing activity. Our success in the 8(a) program was not easily achieved nor does it stem from a unique or magic formula of identifying items and matching 8(a) subcontractors. Rather, it is the result of having a proper attitude; the expenditure of a large number of hours of advance planning by our Materiel Management personnel in identifying items; cooperative flexibility of our contracting personnel in negotiating and finalizing the contracts; the conscientious support of the SM; constant surveillance by cognizant contract administering activities; an awareness of contractor problems and being effectively responsive in assist- ing as necessary in problem resolution; and top management support at all levels of Headquarters, United States Air Force; Headquarters, Air Force Logistics Coemand; and Headquarters, Sacramento Air Materiel Area. These people have worked together PAGENO="0225" as a close knit team to achieve the President's goal of replacing the waste and failure of unemployment with the productivity of meaningful work. 1 Atch List of Contracts PAGENO="0226" 220 ~W'A S~'cORr (F lIE Pc~S1rFNr'S HA~)CO~ PR~GRN1 (SECTION 8(A) OF liE ~%~J1 1~JSDFSS ~T) ______ QY1TR~T ~P r~it o~ ~ ~~I~CES, INC F(YfIJ6-68-D-0673 IFWR4TOR ~PAIR $1~g3,OOO, 28 J1I~ 68 ?L~ J~~IF FY4O6-69-C-1052 ~Q $ F~O8S, ]2 P~AY 69 ~~~ICES~ INC F~R~7O-C-O13S T-33 IPP~I $519;778, ~ N~ 69 ~~~IcEs. INC Ff~O6-7O-T~-(~l35 OEWRAThR I~PIMR $958,873. 28 NIW 69 1)8 H IIIJUSWIES FCY48IF-71-041)33 F-100 A(F~ DP~ $l'i2,173. 28 SEP 70 L(~ PIffLES, (XIF OIJTE CABLE ASSY INC FCY~R]6-71-C-Oi2'1 F-ill) ~lI KITS S ~,O15, 26 SEP 70 INC. FY6-71-C-013 F-iOO MI) KITS $ 95,265. 26 OCr 70 F(YiffJ6-71-D-OO8O ~j~P1~1~JXTLLIATh' $393~3~i. 3 DEC 70 ~CE~CES, INC F(Xi9J6-71-C-O33~i T-33 IPN~ $qiO,1EO. ~N 71 ~~F~J~ON F~J6-7i-C-O&~ F-iO0 AI~ ~1I) KITS $2k9A34. 3 ~Y 71 PAGENO="0227" 221 ~FR1PT (F 1W PIFSII)FPff'S W~X~mE P1~XR~1 _______ ci~r~cr rn~ ______ ~A~ATES &-71-C-0856 1-39 PJ~ ?i1) KITS $iJ7,~O, 3) JJN 71 ~E~IcES, INC FtYc6fl6-71-fl-0166 ~-1&'19 GEIERATOR I~PAIR $3]3,000, 23 APR 71 ~TP~ O6-71-'~-C~O1 T-33 AIMS KITS s2m;367~ 30 JUN 71 F~599-71-C-08g7 T~~Aft $ 5~792, II MAY ~ F0q699-71-c-oggR ~ 0JI~ $ ~,863, II MAY 71 PAGENO="0228" 222 Colpnel COCHRAN. First of all, I would say it is a pleasure to be here and to tell you of our accomplishments. I have with me Mrs. Kathryn Scheld who is from our Small Business Office. Needless to say, our initial reaction to the President's proposal was one of concern that we should consider supporting our Nation's complex defense mission with hard-core labor and skills. After meeting with appropriate people we briefed the commander of the Sacramento Air Materiel Area, General Veal, and all of the top staff. The purpose, of course, was to outline the program, its origin, its peculiarities and come up with a local approach. General Veal di- rected that the Direct.orates of Materiel Management and Procure- ment personnel to work as a team, to have team management from the standpoint of assisting in selecting the candidate items. It wa.s with this top-level management attention that in April 1968 we opened informal discussions with the SBA on a planning requirement for the inspection-repair of the T-33 aircraft.. We met with Mr. Ryan of the San Francisco Small Business Administration Office, and he approved Aerospace Services, Inc., who had a business plan qualifying them for an 8(a) award. The total value of this requirement, with its option was about $758,000 for a quantity of 54 aircraft. The program implementation continued with agency cooperation and subcontractor performance in meeting both missions of hard-core requirement and satisfactory quality standards consistently meeting or exceeding contractual production schedules. With all of the con- tracts we have in being right now we do not have a poor contractor. Senator MONTOYA. Have you encountered any problems because of price differentials? Colonel COCHRAN. Yes, sir; we have. In fact, I have a procurement now that has been returned to me by SBA. It is about a $50,000 procurement, and SBA has not been able to get their contractor down to a fair and reasonable price. Senator MONTOYA. Well, are you aware that under the new law there is provision for a.bsorbing price differentials? Colonel COCHRAN. Yes, sir; I am well aware there has been approx- imately $8 million set aside for this. I am `also well aware that of the procurements we have made in the past we have paid differentials of 10 to 14 percent. In this, as you should know, we take into considera- tion, the inflationary increases. Also, we take into consideration that the skills these people were required to hire wouid not give them the productivity that you could expect out of a going contractor. But at the present time, price differential other than the $50,000 procure- ment mentioned previously, has not presented a problem. I am going to, when we get back, take a Took to see whether the SBA could even be given additional time to place this $50,000 procurement with some other company. Now, the reason it has been returned is because there can only be a certain length of time that we can let SBA have for procurement. We cannot let it go forever because it is a. firm requirement. But, on the other hand, we may iiot be going too low on assets be- cause 50 percent of this procurement we did set. aside for small business, so we do have some assets coming in. Senator MONTOYA. Now, who surveys a prospective 8(a) firm be- fore an award? Colonel COCHRAN. I am sorry, sir? PAGENO="0229" 223 Senator MONTOYA. Who does the surveying of the capabilities of a prospective small business entrepreneur? Colonel Cocm~N. The SBA. However, Mr. Chairman, we will assist them if they so request. We will assist them with technical people. Senator MONTOYA. Do they usually request you to do so? Colonel COCHRAN. No, sir. Senator MONTOYA. You take their word? Colonel COCHRAN. Yes, sir; unless I happen to know something differently. Senator MONTOYA. Do you trust SBA that far? Colonel COCHRAN. I trust them if I know of nothing to the contrary to support not trusting them. Senator MONTOYA. What is your opinion as to determining when an 8(a) firm is competitive and needs no further help? Colonel COCHRAN. I cannot answer that. Senator MONTOYA. You have never reached the judgment or evalua- tion on that point? Colonel COCHRAN. No, sir; because this is accomplished by the SBA, sir. Senator MONTOYA. What is the total procurement out of your estab- lishment, McClellan Air Force Base? Colonel COCHRAN. This fiscal year, we anticipate about $154 mil- lion, and that would be excluding our overseas procurement and intragovernmental. Senator MONTOYA. And out of that $154 million, how much of it will be under 8(a)? Colonel COCHRAN. At this particular time, Mr. Chairman, I can- not answer that other than I would say this, that we will give `the maximum amount we possibly can to 8(a), commensurate with good business practices. Senator MONTOYA. Let us go to last year when you had an `actual experience. How much was the total? Colonel COCHRAN. Last year we did $2 million and our annual was $191 million, which would be about 1 percent, a little over 1 per- cent, sir. Senator MONTOYA. A little over 1 percent? Colonel COCHRAN. 1.1, sir. Senator MONTOYA. Well, you are doing better than the other services percentagewise, and dollarwise, I guess. How many contracting officers do you have? Colonel COCHRAN. I have it broken down by buyers and contracting officers, Mr. Chairman; 150. Senator MONTOYA. And how many do you have assigned to the 8(a) contracts? Colonel COCHRAN. We do not have any of them assigned specifically to 8(a) as such other than when a contract is awarded by 8(a), then It guess I could give you that number. It would be approximately 11. Senator MONTOYA. Well, who makes the determination that certain contracts are subject to being let under section 8(a)? Colonel COCHRAN. This is pretty much a joint effort with the SBA and ourselves. And let me clarify this, because, No. 1, any contract that we award to 8(a) I must make sure that the procurement package is a good one, and it does not require a company to have engineering capability to any great extent. Also, we are interested in selecting those PAGENO="0230" 224 items that have some continuity, that will run for some period of time because if you are going to hire people ofF the streets that are unskilled it takes time to bring them up to speed. So, the selection is one of keep- ing that type of criteria in mind. Mrs. SOHELD. May I say something? Senator MONTOYA. You may testify. Mrs. SOHELD. Mr. Chairman, I think perhaps you might be refer- ring to who reviews the requirements to see if they are appropriate for 8(a). We have now, within procurement but organizationally assigned to the commander, seven people in our Small Business Office. Three are full-time small business specialists who review all of the requirements over $2,500, and these are the three people, in conjunction with the full- time procurement center representative from the SBA, that identify and process the 8(a) potentials within procurement. Senator MONTOYA. You have only one SBA representative attached to McClellan; do you not? Mrs. SCIIELD. Yes, sir. Senator MONTOYA. How can lie go over $191 million of procurement? Mrs. SOHELD. $191 million does not represent a tremendous num- ber of purchase requests. For example, I believe we coordinated pro- curement packages during fiscal 1971 of a little over 4,000. You might be interested to know that out of $191 million small business was in- vited to be bid on only $57 million and they were awarded $28 million of that. As you are aware, SMAMA supports the F-ill aircraft. During fiscal 1971, $71.7 million was obligated against that program. The bal- ance that was not offered to small business was awarded for such things as aircraft modification; repairs as necessary to the T-39, and C-121 and other aircraft we support; and ground electronic systems. Small business only gets in on a little bit of the replenishment spares for ground electronics. Senator M0NT0YA. What is your capacity in the Purchase Office? Mrs. SCHELD. I am a small business specialist. Senator M0NT0YA. And what do you suggest should be done to es- tablish a more meaningful liaison between the contracting officers in McClellan and the SBA people so as to bring about a better share for 8(a) contractors? Mrs. SCHELD. I would like to think that we at McClellan are not unique and that there are other installations like ours. I feel that we have a very good relationship with the SBA, that our contracting of- ficers have confidence in and a good working relationship with the SBA. We have found no instances where there seemed to be person- ality conflicts or lack of confidence. Senator MONT0YA. Well, I am not speaking of that; I am speaking of the fact that we are not getting enough dollars out of that procure- ment pie for 8(a) contractors and whether there is a lack of emphasis at McClellan on this program; or whether there is a lack of under- standing of the President's directive. Mrs. SCHELD. I do not believe there is. I know that we have imple- mented even such things as display boards displaying the work that is being done by the 8(a) companies; (for example, the work being done on the 8 (a') contract. by Aerospace Services Inc. with photo- graphs showing their capability) and also emphasizing the success of PAGENO="0231" 225 the 8(a) contractors we have been dealing with. We do not find too much reluctance---- Senator MONTOYA. Well, I think McClellan deserves two gold stars because of that, but I want to give you more gold stars. Mrs. SCHELD. Thank you. I would not like you to go away feeling that we think we cannot do better, that we cannot increase our awards under 8(a), because everybody can do better. There is no question about that. We are trying diligently everyday to brief our requirements people who have their fingers on the real pu]se of what is available for the 8(a) program. Senator MONTOYA. Well, I have been conducting these hearings with respect to small business procurement since 1965, and I know that if procurement officers dedicate themselves as they did 4 or 5 years ago when we started these hearings and when the administration started asking them to do better for small business, that they can do more. Let me put it this way. There is a lack of warmup to 8(a), and that is why we are conducting these hearings, to see if we can give 8(a) a little more "charisma" and draw the procurement officers closer to the 8(a) program. That is all we are tr~in~ to. Mrs. SCHELD. Mr. Chairman, you might be interested in the break- down of our 8(a) contracts as to when they were awarded, and we have told you we awarded a total of 15. We awarded one contract in fiscal 1968, which was the beginning of the program. Senator MONTOYA. Yes, June 28. Mrs. SCHELD. $493,000. In fiscal 1969 we awarded one contract, $66,000. Senator MONTOYA. That was a year later, wasn't it? Mrs. SCHELD. Yes. It was during that time that everybody was try- ing to get their feet on the ground and really work out some of the problems, and we had many problems. I am sure you are aware of all of the problems we had out in the field, that now have been corrected. At that time we were required to send every 8 (a) candidate up to Washington for approval. Since then, approval authority has been delegated to the field and we have overcome that one. There was also a requirement that a preaward survey be performed on the 8(a) con- tractor. We threw up our hands and said: "The SBA says they are all right, and they must be all right unless we know something to the contrary, so let us not waste that time." That requirement has been waived. Senator MONTOYA. Well, you had three contracts in 1969 and four in 1970. Mrs. SCHELD. Yes, for $1.3 million in fiscal 1970, and in fiscal 1971, I do not have the number of actions here, but the dollars were $2.1 million. Senator MONTOYA. Well, you had this for fiscal 1971, seven con- tracts? Mrs. SCHELD. Yes, but my point being that we had $1.5 million in fiscal 1970, $2.1 million in fiscal 1971, and we hope to exceed that for fiscal 1972, although our total dollar awards to U.S. industry is estimated lower. PAGENO="0232" 226 Senator MONTOYA. Percentagewise? Mrs. SCHELD. Yes, for 1972, than we actually accomplished in 1971. So, it may be a little bit harder to increase 8(a) awards this year. Senator M0NTOYA. Do you think that discussions and seminars be- tween contracting officers and other Federal agencies in this region would be of some help? Mrs. SCHELD. I think anything you do to motivate people, get the word out, emphasize, make them think, is good. Senator MONTOTA. I am afraid that many of the contracting offi- cers are oriented toward doing it. the easiest way, giving it to some- body with proven capability. Mrs. SCHELD. That is a natural tendency, I guess. Maybe because it is inherent in the responsibility of the contracting officer that he bears a heavy burden since he answers not only to the 8(a) program and the small business setaside program but he also answers to the GAO. Senator MONT0YA. Well, there is another thing. There are some other ingredients that contribute to this, and that is the desire of the pro- curement officer to show good performance. Mrs. SCHELD. Yes. Senator MONTOYA. And savings, and so forth? Mrs. SCHELD. I would like to point out, however, that some of our lucrative 8(a) contrac.ts came right, from the contracting officer. Be- cause of his rapport with the requirements people, he learned of the requirement and came to us. This was on the AIMS modification kit, the very first one, the F-100, which led to the T-33, the T-39 and the other AIMS kits you see on the chart there. That potential came right from a contracting officer. Senator MONTOYA. What has been your experience with respect to 8(a) contractors? Has it been good? Mrs. SCHELD. Very good; very good; excellent. We feel that we have contributed in making some of them so successful that they are no longer considered eligible for 8(a). Colonel COCHRAN. In fact, Tayko, who testified here this morning, is 2 months ahead of schedule. Senator MONTOYA. Wefl, that speaks well for these people. Mrs. SCHELD. WTe are very proud of the fact that they have suc- ceeded and we like to think that maybe it is due to a. little extra effort on our part and the part of our engineers who went out and really held hands with these people in some instances. PAGENO="0233" 227 Senator MONTOYA. Are you in the position to give these people some help if they request it? Colonel COCHRAN. Yes, sir. Senator MONTOYA. Now, I know that I have asked the Post Office Department and GSA to give some help to 8(a) contractors and they have willingly done this, and I know of an instance where an Indian Tribe had a contract under 8(a) and they were behind schedule and they were starting to lose money on the contract, and I got the Post Office Department and the GSA and the business community in Al- buquerque to come in to their aid and they are back on pay dirt now. Now, how important is DMM in this picture? Colonel `COCHRAN. Extremely important, sir. Senator MONTOYA. Well, do they enter into the coordinated effort at all? Colonel CoCHRAN. Yes, sir; in fact- Senator MONTOYA. Could they do a better job? Colonel COCHRAN. I am sorry? Senator MONTOYA. Could they do a better job? Colonel COCHRAN. Well, anytime we are not getting what we think we should get, we always say we should do a better job. Yes, sir. Senator MONTOYA. Maybe we ought to get them in and see how they can better help you to give you advance notice of your needs, and so forth, so you can get prepared. Mrs. SCHELD. It never hurts to motivate. Mr. JONES. Mr. Ireland from the General Services AdministratioD was not able to testify earlier. Mr. Ireland's statement will be in- cluded in full in the record as will the other two prepared statements that were submitted today. (The prepared statement and supplemental information submitted by Robert J. Ireland reads in full as follows:) PAGENO="0234" 228 STATEMENT OF ROBERT 3. IRELAND. REGIONAL DIRECTOR OF BUSINESS AFFAIRS GENERAL SERVICES ADMINISTRATION REGION 9 BEFORE THE SUBCOMMITTEE ON GOVERNMENT PROCUREMENT SENATE SELECT COMMITTEE ON SMALL BUSINESS Mr. Chairman and members of the Subcommittee, my name is Robert 3. Ireland, and I am the Regional Director of Business Affairs for Region 9 oi the General Services Administration, located in San Francisco. It is a pleasure to appear before you on behalf of Mr. Robert L. Kunzig, Administrator of General Services, and Mr. Thomas E. Hannon, Region 9 Administratoi ta te~tify concerning the effectiveness and efficiency of the section 8~a) program being administered by the Small Business Administration. The General Services Administration has contributed measurably to the dramatic increase in section 8(a) contracts over the past few years. * Government-wide, there were only 30 such awards in fiscal year 1969 for a total of $8. 9 million. These increased to 196 awards for $22.2 million in fiscal year 1970, and 811 awards for $66. 1 million in fiscal year 1971. President Nixon's goalof $58 million for fiscal year 1971, announced to a meeting of the "Black Caucus" or~ May 18, 1971, was exceeded by more than $8 million. GSA's performance during the same period shows an even higher rate of increase--from two awards totaling $346, 676 in fiscal year 1969, to 53 awards for $3. 4 million in fiscal year 1970, and 236 awards for $15. 4 million in fiscal year 1971. Our awards in fiscal year 1971 constitute PAGENO="0235" 229 about 29% of the Government's total, and about 23% in dollar amount. For fiscal year 1972, the President's Federal Procurement Task Force on Minority Business Enterprise, which is chaired by Mr. Kunzig, has es- tablished a Government-wide goal of $100 million, of which GSA's share is to be $22 million. We are confident that our c~ontinuing and expanding' efforts will lead to further growth in the section 8(a) program, and smoother operation. Five 8(a) contractors have been placed on GSA's Quality Approved Manu- faoturer Program, the first 8(a) firms to be so recognized for ex~ellent quality control, timely deliveries, and meeting all specification require- ments. At our suggestion, the Small Business Administration is. including in its monthly status repa~ t of 8(a) ôontracts a listing of all minority firms that have been approved by SBA as eligible and capable of participating in the 8(a) program. ` Recognizing that the lack of ready cash is a serious problem for many - minority firms, a simple but effective "fast pay' procuedure has been established for minority firms having GSA 8(a) contracts. Through the cooperation of the Office of Administration and various 8(a) policy managers in GSA, invoices on these contracts are paid ahead of the ten-day discount invoices, Immediately after an 8(a) award, a letter is sent to the firm providing a single telephone contact point in GSA to call concerning any pay- rnent problems that may arise, PAGENO="0236" 230 In calendar year 1970, 30 Federal Procurement Seminars for Minority Businessmen were held; 41 more are being conducted this calendar year by GSA. Attendance has averaged about 125. We have extended the activities of our Business Service Centers located in 12 major cities to emphasize counseling of small businessmen on Federal contracting. Upward of 150, 000 businessmen were counseled at these Centers in fiscal year 1970. In the last half of fiscal year 1971, "circuit i~iders" from our Business Service Centers visited 69 cities to seek out minority and other small businessmen as suppliers, and performed 839 significant counseling actions. We have developed a GSA booklet entitled "Partners in Progress" `which has had a wide distribution, and we have produced a 27-minute film under the same title for showing to private groups and -during public se±vice television time. Two Minority Businessmen's Invitational Conferences for minority business- men have been sponsored by GSA and the Federal Procurement Task Force on Minority Business Enterprises. Attendance at these conferences included leading entrepreneurs and consi4tants and top-level Federal officials involved in the 8(a) contracting program. Forty-five minority business leaders attended the Western conference at the Western White House; 75 attended the East * and Midwest conference at Warrenton, Virginia. Arthur F. Sampson, Commissioner of GSA's Public Buildings Service and Chairman of the National Task Force on Minority Business Concessions, PAGENO="0237" 231 recently was given the task of locating minority-owned concessions that could operate in Federal buildings. Nine concessions have been established already. Task Force members have indentified more than 100 cities nationwide which may be suitable for the, placement of business concessions. This listing has been distributed to OMBE and SBA so that prospective minority entrepreneurs can be located and matchec~ with appropriate concession opportunity. In addition to the activities of our Business Service Centers already mentioned, as a result of the efforts of Administrator Kunzig and Berkeley G. Burrell, Vice Chairman of President Nixon's Advisory Council for Minorit~r Business, a counseling center has been opened in Seattle, Washington, desigi&ed to help minority businessmen get Federal contracts. The center is operated by the United Inter -City Development Foundation of Seattle, and is staffed by volunteers. Four Federally-funded Texas organizations have agreed to es- tablish voluntary Federal Procurement Counseling Centers and to assist GSA in counseling businessmen from minority and other economically disadvantaged groups in doing business with the Government, through arrangements made by the Business Service Center in Region 7. Another voluntary counseling center is scheduled to be opened in Pittsburgh, Pennsylvania, in October 1971. These are examples of the type of activity which we believe justifies our con- fidence that the future promises even more effective and efficient operation of the section 8(a) program. PAGENO="0238" 232 Virtually every stock item purchased by GSA through its Federal Supply Service is available for 8(a) con~tracting. These items are listed in the Federal Supply Catalogs, copies of which are .avajlable to the Small Business Administration and to small businessmen. The small businessman selects those items that he is capable of manufacturing and notifies SBA. SBA advises GSA, which screens out the items obtained from mandatory sources of supply such as Federal Prisons Industri~s, Blind Made Products, and the Government Printing Office. We also check the inventory position of the items and advise SBA of our findings or furnish them with the estimated quantity available for procurement under section 8(a). 8(a) contracting operation for stock items are centralized under the Socio- Economic Policy Staff of GSA's Federal Supply Service, located at the Crystal Mall Building 4, Washington, D. C. Eaôh GSA regional offic~e performs the 8(a) functions on service contracts available for 8(a) contracting. When required by SBA, GSA personnel join SBA in the negotiation of 8(a) contracts. Our Public Buildings Service identifies potential construction contract work, generally in the $2, 000 to $100, 000 price range, which might be performed by small business contractors. Noncomplex projects, which are not critical as to time for completion, are recommended to the Small Business Administration, SEA, on the other hand, identifies firms with the capability and experience to perform the work and through such additional experience to become prospective competitive bidders on future contracts. Contract PAGENO="0239" 233 administration procedures under section 8(a) are the same as for any construction type contract with the exception that )id bonds are not required. Follow-ups are made concerning employment wage rates, progress toward completion, and compliance with specifications. GSA's Public Buildings Service, Federal Supply Service, Property Management and Disposal Service, and Transportation and Communications Service also select service contracts for award to sthall business firms under the 8(a) program. Such contracts include services for automated data processing; office machine, automotive and other equipment repairs; ground n~iaintenance, pest extermination, and concessions in Feleral Buildings. Opportunities for such contracts are identified on the basis that the contractor selected by .SBA can, with appropriate technical and other assistance, be expected to perform satisfactorily. And experience gained upon completion of an 8(a) con- tract should then enable the minority contractor to bid competitively on future contracts. Although we derive a certain satisfaction in GSA from accomplishments to date in the section 8(a) contracting program, our methods and procedures are under constant evaluation, and we are always receptive to new and imaginative apporaches and means of further improvement. This completes my genera]. statement. I will be happy to respond to any question which the chairman or memers.of the Subcommittee wish to ask. PAGENO="0240" 234 UNITED STATES OF AMERICA ~ a a GENERAL SERVICES ADMINISTRATION * Region 9 _______ 49 Fourth Street October 4, 1971 San Francisco, California 94103 Mr. Keith A. Jones Minority Counsel Select Committee on Small Business United States Senate Room 424 - Senate Office Building Washington, D. C. 20510 Dear Mr. Jones: Attached is the statistical breakdown on 8(a) activity for GSA Region 9 as requested at the hearing (Subcommittee on Government Procurement) in San Francisco on Thursday, September 30, 1971. Sincerely, Regional Director of Business Affairs Attachment Keep Freedom in Tour Future With U.S. Savings Bonds PAGENO="0241" GENERAL SERVICES ADMINISTRATION REGION 9 8(a) PERFORMANCE - FE 1971 TOTAL PROCUREMENT 8(a) CONTRACTS TOTAL AMOUNT PROM SMALL BUSINESS -~ AMOUNT PERCENT NUMBER AMOUNT PERCENT OF TOTAL PROCUREMENT PERCENT OF SMALL BUSINESS PROCUREMENT 5115,393,000 $56,863,000 49.37. 40 $3,429,000 3.0267. 6.1417. PAGENO="0242" 236 Mr. JONES. It is not necessary for you to read your statement or go through it at this time, Mr. Ireland. If you have any additional in- formation which you would like to add to it, please feel free to do so. STATEMENT OF ROBERT F. IRELAND, REGIONAL DIRECTOR OP BUSINESS AFFAIRS, GENERAL SERVICES ADMINISTRATION REGION 9, SAN FRANCISCO, CALIF.; ACCOMPANIED BY MR. SNODGRASS Mr. IRELAND. All right; fine. I think I will lead off by saying that since we participated in this program, GSA and region 9-region 9 encompassing the States of California, Nevada, Hawaii and, just recently, we acquired Arizona-we have awarded 56 contracts totaling $5,623,000. In 1970, that is, fiscal 1970, we awarded 53 contracts total- ing $3.4 million. I am speaking for the Nation now. The region 9 share of that $3.4 million was $1.305 million. So, we did 38 percent of the total GSA 8(a) activity here-and actually, it was all in Cali- fornia with the exception of, I think, of one small contract in Hawaii. Last year, fiscal year 1971, nationally, there were 236 contracts let by GSA that totaled $15.4 million. Our share of the $15.4 was $3.492 mil- lion, and that comes to about 22 percent. So, percentagewise we have come down but dollarwise we have more than doubled. Mr. JoNEs. Do you have a chart or schedule illustrating this that you could submit for the record, Mr. Ireland? Mr. IRELAND. I can, and I will; yes. Mr. JONES. Just for the sake of an easier format. Mr. IRELAND. Right; fine. In fiscal year 1971 more than 6 percent of GSA's Region 9 small business dollar went to the 8(a) program. $56,863,000 were awarded to small business. This represented 49.3 percent of the total which was $115 million for fiscal year 1971. Mr. JONES. Six percent of your total small business purchases were through the 8(a) program? Mr. IRELAND. Yes; that is correct. Well, I have a lot of statistics here, but maybe time would be better served if I just skip over most of them and tell you a little bit about our concessions' program. Very recently, our Public Buildings Service was directed to set up minority business concessions in Federal buildings throughout the country. And in this building, you have a travel agency on the first floor-you may have noticed it on the way up-and a flower shop on the second floor. We have scheduled for opening in other regional Federal buildings 14 additional concessions before the end of the fiscal year. This is kind of a. departure from 8(a), but it is something new and innovative with us. IVe are opening one in Sacramento on Friday. A week from tomorrow, we are opening one in Los Angeles. We are mov- ing along pretty fast. WTould you care to ask inc some questions at this point? Mr. JONES. I do have one question, Mr. Ireland. From the figures you have submitted, approximately 3 percent of the total GSA requirements in this region have been purchased through the 8(a) program, which is somewhat higher than the like percentage for the military procurement agencies who have just testified. Would you ascribe this difference to any particular reason? PAGENO="0243" 237 For example, are your requirements of such a different nature that the 8 (a'~ program is easier for you to participate in? Mr. IRELAND. I would say that the requirements have something to do with it. By the same token, the Defense Supply Agency buys similar items. I guess they are not here today, and I do not know what their record is, but if you wish to ask me why we have done a better job than some, I think it is pretty simple. We have pretty forceful and strong direction from Washington. Mr. Kunzig, our Administrator, is determined that this program is going to work. Mr. Snodgrass, on my right here, was hired within the past year to help out in this program and he spends his full time as a minority busmess counselor. He has counterparts in five of our other regions where there are high minorit.y concentrations. Mr. Snodgrass is a very dedicated individual. And I am not saying that because lie is sitting here, but because he is. He works late. He has an extremely good rap- port with the minority community. He is on the phone with the SBA four and five times a day, and this is the kind of dedicatioii that it takes. But the dedication, of course, is one thing and getting the direction from Washington is something else. I am sure there are a lot of dedi- cated people here in this room that would do better if they were told to do so. They all have certain rules and regulations they have to fol- low. By the same token, if they get direction from Washington and the wherewithal to do it, I think you are going to see a tremendous improvement in the program. Mr. JONES. Thank you, Mr. Ireland. I do not wish to prolong the hearing very much longer, nor do I want at this point to ask many more questions. I would observe that the record which Mr. Cochran's statement re- veals about the Sacramento area is quite commendable. It seems they have done quite an excellent job so far. They have done better both in percentage terms and dollar volume than the Army and Navy pro- curement agencies here in this area., and I think there may be a number of different reasons for this. It could simply be that the Air Force has a headstart on this program and that the Army and Navy would soon catch up. On the other hand, it could be significant differences in the nature of the requirements or perhaps in the information that is provided to the different procure- ment agencies, information about the source of possible 8(a) contrac- tors or in the comprehensiveness of the information in regard to the minority contractors in the region. There could be different. criteria in the selection of the contractors which were available for 8(a) programs. Also, as suggested by Mr. Ireland, there could be differences in direc- tion from Washington in the different agencies, or perhaps staffing and organizational procedures would dictate the difference in the amount of 8 (a') procurement each agency would have. As the chairman mentioned earlier, we are having hearings on the national level going into the minority enterprise programs of the SBA in Washington on October 20. I think it would be very helpful for the committee if we could have statements submitted by the representa- tives of the Army and the Navy here today describing which features of these possible differences between their programs and the Air Force PAGENO="0244" 238 program would cause the difference in performance over the past 3 years. This is simply so that in judging the efforts of the SBA and the Office of Minority Business Enterprise, we will be able to make helpful suggestions to those organizations as to what they can do in interacting with the procurement agencies to improve this program. Mr. ALLSTEAD. I think it is obvious to the Army and Navy here that the reason the Air Force has shown such an excellent picture is that we are in the housekeeping business and they are in the materiel procure- ment business. WTe do not do this. Mr. JONES. So, you think basically it is a difference in requirements? Mr. ALLSTEAD. Yes, sir; directly. Mr. JONES. Well, perhaps you could expand on that. I do not. under- stand. Mr. ALLSTEAD. Well, suppose a procurement is similar, as I say, to housekeeping. WTe buy the supplies necessary to maintain the installa- tion, maintain the ships, perha~s in the Navy which is a case perhaps the captain can speak for, but ours is painting the buildings as op- posed to big electronic components in aircraft, spare parts, and things of that nature which go into many, many more hundreds of thousands of dollars than our small programs. Mr. JONES. That would perhaps explain the difference in the total dollar volume per contract, but why would that indicate a difference in the availability of 8 (a) cont.racts generally? Mr. ALLSTEAD. MTell, only because this type of procurement that the Air Force has lends more toward 8(a) than ours does. We have custo- dial type, ground maintenance, erosion control. We are getting into construction, and, as far as buying subsistence, medical items, weapons perhaps, or repair parts, things of that nature-and this is very, very menial. This is about the scope of our operation, and we do not get into the supply business from the standpoint of supplying great numbers of spare parts to large units. We are in that at the installation level on a supply requisition basis. The Army Materiel Command is. The large program managers are. The Department of Defense Supply Agency gets direcfly involved in this. The Army Materiel Command on the west coast is located right across the bay in Oakland. It is unfortunate that they could not have been here. I believe that this would have been quite clear. Mr. JoNEs. Well, I guess I still do not understand why the type of housekeeping contracts which you have would not be appropriate to some of the minority business contractors. Mr. ALLSTEAD. Well, they very definitely, very definitely are, and we are developing these, but they are not as readily "developable," shall we say, as the large type of spare parts and requirements that the Air Force might require of these minority contractors. We just do not have that type of procurement. Mr. JONES. Well, let me ask it this way: Are there any other factors which might lead to a difference in per- formance in this area? Mr. ALLSTEAD. There are. Mr. JoNns. For example? PAGENO="0245" 239 Mr. ALLSTEAD. Subsistence for resale, troop issue. Large costs for installations such as Fort Lewis, Fort Ord, which maintains the troop training activities. The subsistence account is quite substantial: de- pendents on base are dependent upon the commissary store for their subsistence requirements, resale, and this goes into the hundreds of thousands of dollars every month. The total I believe in San Francisco alone at the Presidio is in the neighborhood of $1 million a month, and project this to Fort Lewis and Fort Ord and add troop issue on top of that, that is a substantial amount of money at fiscal year end that runs up into millions of dollars. Mr. JONES. Captain Aitken, do you have anything further to add to that? Captain AITKEN. Well, I have been listening closely to the Army's statement on this, and I would have to agree generally. I believe that it is the nature of the requirements in our case which would keep us from attaining, say 1.1 percent as the Air Force has versus our three-quarters of 1 percent as we have. It. is the nature of the re- quirements that we buy-and I probably am repeating, but of a sporadic, undetermined nature. For example, when we had our nuclear cruiser Long Beach at Mare Island Shipyard for overhaul, it was determined necessary t.o have a certain group of machinery repair parts or machinery overhaul which was not anticipated earlier. It was necessary for us to contract immediately-and there is only one. firm in the United States who can do this particular job, and that was the firm that built the ship, and this is approximately a $1 million contract. This is one contract which was executed very quickly and must be done now. There is no small business, no 8(a) contract possible for this type of work. It is not one which is anticipated, which we knew about. We did not know about it even a week before, nor did the ship. We have other contracts of that nature where we must overhaul winches for a supply ship at sea or it comes into port and must have a dozen winches overhauled on a crash basis. There are only a few companies up and down the west coast which have the very heavy machinery necessary to do this type of a job. This is the nature of our work, and that would be in the neighborhood of half a million dollars a job. Mr. JONES. `What percentage of your total procurement is of that nature? Captain AITKEN. A great percent of them a.re. Those two alone, for example, account for about $1.5 million of our $28 million total yearly procurement. There is one chart here which I might show you just to illustrate the up-and-down i~ature of the small business versus large business awards. If you will refer to the top chart, Mr. Jones, the blue line or the red line, either one, represents the monthly variance in our small business versus our harge business awards. As the line goes up our per- centage of dollars for small busines increased for that month, and there are many dips in that line which indicate a single contract which was awarded during that month. Mr. GILBERTSON. One contract. Captain AITKEN. Which we could do nothing about. PAGENO="0246" 240 Mr. GILBERTSON. But this, you see, is the accumulative averages here that balance this thing out. Now, this is awards to small business, and this would include minor- ity businesses as well, and the 8(a) contracts that we have awarded also are in there. But it will average out, but we really do not have any handle on this thing. We would not have made our goal if it had not been for $1.5 million in contracts that went to small business in the month of June. Mr. JONES. Do you have these charts in your statement? Mr. G-ILBERTSON. They are part of the package, but that chart. is not. Mr. JONES. If you have this chart in a convenient form, would you submit it for the record, please ? Captain AITKEN. Yes, sir; we will do that. (The subsequent information was received and follows:) PAGENO="0247" 241 NAVAL REGIONAL PROCUREMENT OFFICE NAVAL SUPPLY CENTER OAKLAND, CALIFORNIA 94625 IN REPLY REFERTO: AS:ew 1 Oct 1971 Honorable Joseph M. Montoya United States Senate Chairman, Subcommittee on Government Procurement Select Committee on Small Business 424 Old Senate Office Bldg. Washington, D. C. 20510 Dear Senator Montoya: As requested, the enclosures are forwarded for entry into the record of the proceedings held on 30 September 1971 at San Francisco concerning the Small Business 8(a) Program. Sincerely yours, aptain, Supply Corps, USN Officer in Charge End: (1) Graph of Monthly Small Business (2) Graph of Year-to-Date Small Business PAGENO="0248" DIRECT PRO~UREMEt4T~.rEI~C~NT SMALL BUSINESS To TorAl. ~~~yi1 -~1~ ~ ~ ~ ~ i4' ~ ~ : ~ ~ i:~L ~ 1T~L_'i_______ -- ~ - L~_ -H: ~ _~:~i~ ~ ~- ~ -- _ - - ~ ~ - ~ ~ -~ V ~ r~ ~ ~IJIL~±L~~I' ~ ~ -~-~ ~ `if! 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Mr. Jones, one other thing I failed to point out: We get statistical data fed back from the Department of the Army pre- pared by the data processing center in Washington, and, as I said, housekeeping is our job, and under 10 U.S.C. 230483 of the 17 sections that permit procurement people to negotiate, this is the small purchase area. Last fiscal year there were some 143,185 actions totaling $27,- 560,000, actions less than $2,500. Now, SBA is not too much interested in these very small actions. They look at stuff in the area of $10,000 or more. Here is one of the clues- Mr. Jo~ns. Earlier today, we had testimony from a gentleman from an organization called PACT who suggested that the 8(a) program or the minority business procurement program might be improved by giving more responsibility to the procurement agencies themselves for fulfilling certain fixed goals, expressed in a percentage amount or a fixed dollar manner. Would any of you gentlemen care to comment on that suggestion? Mr. SNo~n~&ss. I would like to, if I may. I think it is a very good idea for one reason and one reason alone, that it would require the Washington level official at the head of an agency to designate or to give the authority to the local purchasing activity to carry out the program. Now, the question of what the goal would be is another question. For instance, our total goal-and these figures have been kicked around during the past 2 days, and I do not like to play the numbers thing, but you almost have to when you are talking about goals-is a $100 million commitment. Of that commitment-and the question arose earlier as to who set goals and what agency determines what the goal would be-well, Robert Kunzig set the GSA goal at $22 million or 22 percent of the total procurement for 8(a). Our region set a goal for itself at $5 million. At present, we have awarded over a half a million dollars worth of 8(a) contracts. We have $1.2 million scheduled for negotiation and another $3.6 million in the planning stage. Mr. JONES. You are speaking of fiscal 1972? Mr. SNODGRASS. Fiscal 1972. So, at present, our region has $5 million of the total agency share of $22 million, and we have, at present, identi- fied in excess of that $5 million goal. Mr. JONES. You feel this is helpful in spurring you on? Mr. SNODGRASS. Of course, and I think if every agency, let us say- let us say we all have a goal. Somewhere along the line a goal has to be committed, either to the task force by someone in Washington, SBA or other Federal agencies at the Washington level. The question is designating, accepting, or offering goals at the `procurement level from the base installations, or regions, that have the `ability to identify the requirements; and ascertaining the capability or the businessman in the community to perform that work. And finally, developing the capability of SBA to tie the whole thing together in the form of a contract. Now, I think that these goals could be boosted and extended if the program gets the thrust that it needs. Well, we know what it takes. That is why you are here. So, I think we will-you know what the hearing recommendations' will be. It is quite obvious that we need both the commitment at the `Washington PAGENO="0251" 245 level to get this thing done and get it down to the region and then the commi'tment of the original contracting officer or the procurement of- ficer; it is very simple. Mr. JONES. One of the crucial points in the 8(a) process is the deter- mination by the procurement agency of the contracts which will be forwarded to the SBA for consideration for the 8(a) program. Would it be helpful for representatives from OMBE and SBA to participate with the procurement agencies at a somewhat earlier time, during the time in which the requirements are, in fact, being reviewed, in case there are certain minority business firms which would be capable of satisfying a requirement that might be overlooked otherwise? Mr. SNODGRASS. If I could `address myself to that? Prior to the Oak- land Federal Procurement Seminar on September 3, there was a meet- ing held between various Government agencies and minority repre- sentatives of the bay area economic development coalition compris- ing approximately 22 different organizations, both minority and non- minority that are involved in the total bay area economic picture This was with regard to minority enterprise. For instance, PACT was there, and Jerry Hutton of OMBE was there. Also the Department of Justice, Community Relations Service; Department of Commerce, Washington; HEW from Washington; and Mr. Ireland, and Mr. Mathias from our Social Economic Policy Staff, GSA, Washington. Now, the purpose of having this meeting-those were the Federal people `and the local people were PACT, the San Francisco Local De- velopment Corporation, a group from Oakland called the Men of To- morrow, etc. Mr. JONES. No military procui'emeiit agencies represented? Mr. SNODGRASS. No-which may speak for itself. Commander BEEMAN. I did not know it was there. Mr. SNODGRASS. I will address myself- Mr. JONES. Were they invited? Mr. SNODGRASS. Right, they were not invited. But they have been in- vited in the program. The purpose of the meeting was to forestall the possible picketir~g or disruption of the seminar; hence, the Washington representation. Now, the concern of the coalition was that we were having another procurement seminar to talk about the 8(a) program and the seminar would be over and the minority business community would be faced with the same situation that we basically have now, which has improved but it is still not going to satisfy the requirements of the program. So, it was agreed by Don Mathias from the Socio-Economic Policy staff, representing Administrator Kunzig, the chairman of the task force, that a proposal would be developed by the coalition and the Federal agencies who have had the most involvement in the 8 (`a) program, to try to resolve some issues. One was to establish a goal, either dollars or percentagewise, based on the total small business procurement. There were a number of other questions that came up, but primarily everyone agreed that a proposal would be developed and submitted through channels to Washington and that the proposal would be that GSA, in the Bay area, would become the pilot agency to set up the mechanism to identify a minimum of 5 percent of the Federal small business dollar procurement to be referred to SAB, a minimum of 5 percent. PAGENO="0252" 246 Mr. JoNEs. You mean just for the GSA procurement? Mr. SNODGRAS5. As a pilot to see if it is, in effect, possible, which, of course, everybody knows it is. So that was the first proposal, the 5 percent identification. The second was that a monitoring system be established to determine whether or not agencies had fulfilled that commitment. Now, no demands were made. It is sketchy at this point as to how the proposals would be implemented *and it was recommended that the OMBE affiliate who was attempting to assist. SBA in identifica- tion of 8(a) requirements would be the monitoring factor. We have got a number of other proposals, but, basically, the two problems of identifying and attempting to insure that these procure- ments would be offered would, in fact, be offered after identification, were the proposals. Those are the two basic problems. Then, if that mechanism works, you could see what effect it would have in raising everybody's participation where possible, to a minimum 5 percent. Now, of course, other agencies, some agencies. can do better because of the procurement activity that they have. This report will probably leave here in draft form to Administrator Kunzig's office the middle of next week. So, possibly, it will then be made an agenda item of the Federal Procurement Task Force for the next meeting. Mr. JONES. Could this information be furnished to the committee whenever appropriate? Mr. SNODGRASS. Yes, it could. Mr. JONES. Thank you. (The subsequent information was received and follows:) SAN FRANcIsco LOCAL DEVELOPMENT Conp., November 24, 1971. SENATE SELECT COMMITTEE ON SMALL BusINEss, Old senate Office Bvilding, Washington, D.C. (Attn: Mr. Joseph L. Ward). DEAR MR. WARD: Attached is the proposal referred to by Mike Snodgrass during the hearings conducted by the Committee in San Francisco, in September, 1971. If additional information is required, don't hesitate to call me. Sincerely, GEORGE KELSEY, President. PROPOSALS FROM BAY AREA EcoNoMIc DEVELOPMENT COALITION On Wednesday, September 1, 1971, a meeting of San Francisco Bay Area minority organizations/businessmen (representing the Bay Area Economic De- velopment Coalition) was held with high-level federal officials from Washington, D.C., and local regional federal officials. The purpose of the meeting was to arrive at specific ways and means of imple- menting the various federal programs (specifically the SBA. 8(a) program) designed to assist disadvantaged and minority businessmen. The immediate stimulus for the meeting w-as the announcement of a Federal Procurement Seminar in Oakland on Friday, September 3rd. More specifically, the local minority business infrastructure wanted to communicate to the sponsors of this seminar that what was needed was genuine and equitable access to pro- curement opportunities-not just more brochures, pamphlets, forms and talk. Stated another way, it was (and still is) the hope that these federal officials would not merely hold the seminar and then return to their respective agencies and not follow-up with an affirmative action plan. The timeliness of this meeting is self-evident when it is pointed out that the federal government spends ten billion dollars annually in the State of California PAGENO="0253" 247 in the procurement of goods and services from the private sector and only one tenth (1/10) of one percent of this business is done with minority entrepreneurs. So-our intentions, as representatives from various segments of the minority business community, were not to just complain but to offer positive suggestions so that all of us might better carry out the various programs that were discussed during the Procurement Seminar held in Oakland, and the many more that were held throughout the country. The original transcript of this meeting was about fifty pages long. In this short letter I shall highlight some of the major issues raised. They include: 1. The failure of many agencies (especially DOD) here at the local level to get involved in the 8(a) program. 2. The great difficulty of getting business plans approved by SBA in order to qualify for participating in the 8(a) process. 3. Use of the Facility Lease Clause of Section 700 of ASPER by minority entrepreneurs. 4. The method of assignment of 8(a) contracts to entrepreneurs by SBA. 5. A major agenda item (not covered in the meeting because time ran out, but included in this synopsis because of its importance) is the need of more affirmative leadership and more substantial performance by the local Chairman of the San Francisco Minority Business Opportunity Committee. At the local level, many agencies have little or only token input into the 8(a) program. For example, the Corps of Engineers spends many millions in the West- ern Regions and the Pacific. Yet, they can find no 8(a) requirements "suitable" for minority entrepreneurs. This same response can he said for many DOD agencies. Our recommendations are that agencies and departments, at the regional level, designate their Deputy Administrator (or other similar high-level officials) as the individual who is to be held responsible for the implemeiftation of this pro- gram within his own agency. His functions wou1d be to work closely with his own procurement staff, his own regional director or CO, minority entrepreneurs, the Minority Business Opportunity Committee of the FEB and all others involved in minority economic development. The goal would be a minimum of 5% of the total small business procurement requirement offered to SBA for 8(a) consideration. It is specifically recommended that the above efforts be coordinated, moni- tored and given a sense of direction by the local OMBE Representative, Mr. Jerome 0. Hutton. Further, it is recommended that he make detaPed periodic reports on the progress of the above program to the Chairman of the San Fran- cisco FEB, the Secretary of Commerce, Director of OMBE, Washington and local MBOC members. It is our understanding that the implementation plans for the above are now in their final stages. It was strong'y felt by minority participants that SBA and other lending institutions should establish by industry some minimum criteria for business plans. It is felt that many are being rejected for subjective and capricious reasons. This is especially true with regard to three year projections. It is specifically suggested that the Inter-Agency Task Force at the Washington level officially authorize and encourage the use of the Facility Lease Clause of Section 700 of the ASPER for minority contractors. The assignment of contracts to entrepreneurs by SBA was a lively topic because SBA has many more approved business plans than it has 8(a) contracts. The particular issue was that SBA should devise some impartial way of assigning these contracts. (This problem could be minimized, however, if we got more meaningful particiation by local agencies). The MBOC of the San Francisco FEB has an initial function in the imple- mentation of the Administration program in minority enterprise. While the leadership of the FEB has been affirmative, supportive and goal-oriented, much improvement is needed in the performance of the Chairman of the local San Francisco MBOC. We have tried to deal with this problem over an extended period of time for the past eighteen months by personal conferences with the Chairman and with specific recommendation. However, it seems as if minority business development is not one of his priorities. We have raised this issue else- where and perhaps steps are now being taken to resolve this problem. PAGENO="0254" 248 An interesting observation that I feel compelled to comment on is the senti- ment expressed by one of the `~Vashington level officials who felt that he had no real authority that he could exert on their contracting personnel. Rather, he felt that he could only "romance" their program and buying people into letting minority entrepreneurs have a fair crack at some of the procurement oppor- tunities. The point that I am trying to establish is that top management, both at the Washington level and the regional level, must become prime movers if the procurement program is to be a success. It cannot be left to the complete discretion of lower level technicians-namely the buying people. In conclusion, let me say that we met in good faith and with good will with the aforementioned federal officials. We shall continue to work with them in an effort to bring forth concrete results in terms of contracts aw-arded. The contractural opportunities are there and we have the productive capacity to perform. The program will be very effective here if local Regional Directors and Command- ing Officers decide to become involved in a meaningful way, that is, deliver con- tract opportunities for minority businessmen. As a member of the San Francisco i\IBOC, the Bay Area Economic Develop- ment Coalition plans to issue periodic progress reports on the status of minority economic development in our area. Senator MONTOYA. I certainly want to thank you, gentlemen, for coming up and giving us your time and elucidating us on your new de- termination and your new mission, which is as infant as 8(a). But we are going to have some hearings in Washington to try to get those in the national picture into the testimony so that we can find out wheth- er there is going to be a national coordinated effort in 8(a) contract- ing. And I want to say to all of the people here that I certainly enjoyed these hearings, and we come here in the spirit of cooperation, trying to help other people, not to badger witnesses or hurt anybody's feel- ings. And if I have done that, I apologize, but I did not intend to do so. The hearing is now adjourned. (Whereupon, at 3:45 p.m., the hearing was adjourned.) PAGENO="0255" 249 APPENDIXES APPENDIX I ExHIBITs PROVIDED BY THE OFFICE OF MINORITY BUSINESS ENTERPRISE, U.S. DEPARTMENT OF COMMERCE PAGENO="0256" ~- C, .9 ~ .9 U- C.) 250 CCC) bC-C C,) 0 -9 -9 CD 0 -9 -9 C,) a. C~) C,) CI) = >- 0 5 0 C.) 0 0 CD 0 = 0 -9 S S = C,) 9 9 E -9 E 0 E E PAGENO="0257" 3 - 3 100 - 5 5 100- 3 3 100- 3 3 100 6 4 66 1 17 1 17 3 3 100 8 7 87 1 13 8 5 63 37 5 1 20 1 20 1 20 2 40 12 3 25 6 50 3 25 19 17 89 2 11 3 3 100 14 11 79 3 21 6 5 83 1 17 3 3 100 6 6 100 4 3 75 1 25 3 3 100 5 5 100 4 4 100 7 7 100 7 0 0 7 100 6 3 50 3 50 10 10 100 3 3 100 14 14 100 5 5 100 6 5 83 1 17 5 5 100 4 4 100 10 9 90 1 10 12 9 75 3 25 5 4 80 1 20 6 4 66 2 34 4 4 100 227 149 66 52 23 3 1.0 23 10 -I C C © `F -I Prnfes- Affiliate sienals Black Spanish speakingf Percent nr brnwn Percent Indian Percent Other Percent Albuqeerqse, NEOA Atlanta, NBL Baltimnre, Mnrgan State Bnstnn, SBOC Chicagn, CEOC Chicagn, NEOA Cincinnati, OYM Cleveland, Greater Cleveland Grnwth Oallas, OAME Oenver, CEOA Oetrnit, ICBIF El Pasn, NEOA Indianapnils, urban League Kansas City, BEU Kansas City, NEOA Lns Angeles, IMPAC Lns Angeles, TELACU LnsAngeles.NEOA Memphis,NBL Miami.NEOA Newark,MEOIC NewYnrk, P.R. Fnrun New Ynrk, Capt. Fnrmatinn New Ynrk, BLEOCO NewYnrk,NEOA Philadelphia, EOTC Phnenis.NEOA Pittsburgh. BJO Richmnnd, NBL San Antnnin, NEOA San Franciscn. PACT Seattle, United Inner City Oevelnpwent Fnundatinn Washingtnn. O.C., MEOCO Washingtnn, O.C., S000C New Haven.GNHB-PMA Tstal affiliate prntessinnal staffing 0-' PAGENO="0258" OFFICIAL LIST-NATIONAL ADVISORY COUNCIL ON MINORITY BUSINESS ENTERPRISE Name Title and business Address Phone Allison, Julius L Executive director, National Legal Aid & Defenders Associa~ion American Bar Center, 1155 East 60th St., Chicago, Ill 312-HY3--0533 Arnaz, Desi President, Desi Arnxz Productions 1040 North Las Palmas Ave., Los Angeles, Calif 714-755-1523 Barr, John A Dean, Graduate School of Management, Northwestern University 339 East Chicago Ave., Chicago, Ill 312-649-8388 Beindo, John National Indian Leadership Training 227 1 ruman NE., Albuquerque, N. Mex 505-265-7957 Bevis, Herman W (Retired senior partner) Price, Waterhouse & Co 60 Broad St., New York, N.Y 212-422-6000 Beyer, Robert Managing partner, Touche Ross & Co 1345 Avenue of the Americas, New York, N.Y 212-425-5300 Bolden, Darwin W Executive director, Interracial Council for Business Opportunity(ICBO)... 470 Park Ave. S., Suite 300, New York, N.Y 212-889-0880 Brinkley, Rawn Executive director, Notional Assaciation of Accountants 505 Park Ave., New Yark, N.Y 212-PL9-3444 Brooks, Robert A President, Harbridge House 12 Arlington St., Boston, Mass 617-267-6410 Burcham, Lestur A Chairmaii of the board, F. W. Woolworth Co 233 Broadway, New York, N.Y 212-277-1000 Burrell, Berkeley G President, National Business League 4324 Georgia Ave. NW., Washington, D.C 202-7266200 Carrion, Rafael, Jr President, Bunco Popular de Puerto Rico GPO Box 2708, San Juan, P.R 839-765-98)0 Cantu, Vidal Executive vice president, City Service Furniture Corp 1502 Hidalgo St., Laredo, Tex 512-722-6331 Cardenas, John Secretary-treasurer, Loue's Specialties Work, Inc 330 Dakota, San Antonio, Tex 512-533-5166 Casiano, Manuel National executive director, Migration division, Department of Labor, 322 West 45th SL, New York, N.Y 212-245-0700 Commonwealth of Puerto Rico. Clay, John H Businessmen's Development Corp 325 Chestnut St., Suite 910, Philadelphia, Pa 215-MA7-1995 Dehlendorf, Robert 0., II President, Arcata National Corp 2750 Sand Hill Rd., Menlo Park,Calif 415-854-5222 Dellums, C. L International president, Brotherhood of Sleeping Car Porters 1717 Seventh St., Oakland, Calif 415-893-0894 Fernandez, Ben President and general manager. Research, Inc 19913 Blackhawk St., Chatswortti, Calif 213-360-2268 ~ Fluor, J. Robert Chairman of the beard and chief executive officer, Floor Corp 2500 South Atlantic Blvd., Los Angeles, Calif 213 -AN2-6111 Friedman, Bayard Senior vice president, Fort Worth National Bank Post Office Box 2050, Fort Worth, lox 817-334-8111 Goodlne, Joseph W President, North Carolina Mutual Life Insurance Co Mutual Plaza, Durham, N.C 919-682-92'il Gomez, Jose CarIes President, Publisher of El Informador 1510 West 18th St., Chicago, Ill 312-421-7701 Gonzalez, Richard Manager, Industrial Relations Department, Assembly Division, Ford 8900 East Washington Blvd., Pico Rivera, Calif 213-692-6911 Motor Co. Grady, Paul D Chairman of the board, National Life Insurance Co Columbus,Ohio,addresstobe used: Post Office Box 35, Kenly,N.C 614-228-4711 Guice, Garland Director, Chicago Economic Development Corp 162 North State St., Suite 600, Chicago, III 312, 368-0011 Graham, Donald M Chairmanoftheboard,Continenfal IllinoisNational Bank &TrustCo... 231 South LaSalle St., Chicago, Ill 312-828-2335 Gullander, W. P President, National Association of Manufacturers 277 Park Ave., New York, N. Y 212-826-2100 Haas, Walter A., Jr President, Levi Strauss & Co 98 Battery St., San Francisco, Calif 415-421-6200 Hertz, David B. (Dr.) Director, MeKinsey & Co., Inc 245 Park Ave., New York, N.Y 212-MU7-360 Hurley, Francis T., bishop (the Most Auxiliary bishop of Juneau Post Office Box 1307, Juneau, Alaska 206-583-0150 Reverend). 907-586-1513 Johnson, John H President and publisher, Johnson Publications, Inc 1820 South Michigan Ave., Chicago, III 312-CA5-1000 Johnson, Samuel C Chairman of the board and president, S. C. Johnson & Son, Inc 1525 Howe St., Racine Wix 414-632-1611 Johnston, Paul A President, Glen Alden Corp 1740 Broadway, New York, N.Y 212-JU6-1900 Jones, Jenkin Lloyd Editor and publisher, Tulsa Tribune Post Office Box 1770, Tulsa, OkIa - 917-582-1101 Keim, Robert P President, the Advertising Council 825 Third Ave., New York, N.Y 212-758-0400 Keys, Brady President, All Pro-Chicken 3021 Banksville Rd., Pittsburgh, Pa 412-341-7470 Kiewit, Peter Chairman, Peter Kiewit Sons', Inc 1000 Kiewit Plaza, Omaha, Nebr 402-342-2052 Kirven, Joe W President, ABCO Building Maintenance Co 2828 Forest Ave., Dallas, Ten 214-428-8388 Lafontant, Jewel Stratford (Mrs.) Stratford Lafontant, Gibson, Fisher & Cousins 69 West Washington St., Chicago, Ill 312-AN3-4882 Lawler, John Administrative vice president, American Institute of Certified Public 666 Fifth Ave., New York, N.Y 212-LT1-8440 Accountants. PAGENO="0259" Marriott,J. Willard, Jr President, Marriott Corp 5161 River Rd., Washington, D.C. 2020L62700 MacNaughton, Donald S President, Prudential Insurance Co. of America Prudential Plaza, Newark, N.J 201-336-4401 Marshall, Rev. Arthur, Jr Metropolitan A.M.E. Zion Church 3008 Lucas P1., St. Louis, Mo 314-JE3-0316 McClellan, H. C. (Chad) Chairman of the board, The Management Council for Merit Employ- 404 South Bixel St., Los Angeles, Calif 213-481-7246 ment, training and research. McKersie, Robert Bruce Professor of industrial relations, University of Chicago University of Chicago, Graduate School of Business, 5836 South Green- 312-MI3-0800 wood Ave., Chicago, Ill. Mercure, Alex State program director or executive director, home education liveli- 933 San Pedro Dr., SE., Albuquerque, N. Mex 505-265-7951 hood program, HELP Inc. Meyer, Albert C Senior vice president, Bank of America 650 South Spring St., Los Angeles, Calif 213-683-3875 Miller, G. William President, Textron, Inc 10 Dorrance St., Providence, R.I 401-521-3500 Morrison, Clinton Chairman of the trust committee and director, First National Bank of 120 S. Sixth St., Minneapolis, Minn 612-334-4141 Minneapolis. Nielsen, A. C., Jr President, A. C. Nielsen Co 140 Broadway, New York, N.Y 212-RE2-2100 Palmer, H. Bruce President, National Industrial Conference Board 845 Third Ave., New York, N.Y 212-PL9-0900 Pappas, Thomas A President, C. Pappas Co., Inc 450 Summer St., Boston, Mass 617-542-4210 Parker, H. Lawrence Partner, Morgan Stanley & Co 140 Broadway, New York, N.Y 212-RE2-2100 Phillips, Lawrence 5 President, Phillips-Van Heusen Corp 417 5th Ave., New York, N.Y 212-689-3700 Pierce, Samuel R., Jr Partner, Battle, Fowler, Stokes & Kheel 280 Park Ave., New York, N.Y 212-YU6-8330 Roche, James M Chairman of the board, General Motors Corp 3044 Grand Blvd. West, Detroit, Mich 313-556-3521 Rockefeller, Rodman President, IBEC 30 Rockefeller Plaza, New York, N.Y 212-C17-3000 Rodman, Charles G President, Grand Union Co 100 Broadway, East Paterson, N.J 201-796-4800 Rodriguez de Jesus, Juan Administrator, Economic Development Administration P.O. Box 2350, Son Juan, P.R 106-809-765-1303 765-2900 ~ Rust, Edward B President, State Farm Insurance Co 112 East Washington St., Bloomington, Ill 309-967-6123 c.r~ Salgo, Nicolas M Chairman of the board, Bangor Punta Corp 405 Park Ave., New York, N.Y 212-758-6900 c~ Sandoval, George President, Sandoval Distributing Co 651 West Rillito, P.O. Box 50465, Tuscon, Ariz 602-622-2831 Scontsas, John Vice-President, Colonial Trust Co 295 Main St., Nashua, N.H 603-889-1141 Silverman, Herbert R Chairman of the board, James Talcott, Inc 1290 Avenue of the Americas, New York, N.Y 212-956-3000 Simon, John Gerald President, Taconic Foundation 745 Fifth Ave., New York, N.Y 212-758-8763 Slaiman, Donald S Director, Civil Rights Department, AFL-CIO 81516th St. NW., Washington, D.C 202-293-5270 Sneed, Donald E., Jr President and chairman of the board, Unity Bank & Trust Co 416 Warren St., Roxbury, Mass 617-445-0300 Stone, W. Clement President, Combined Insurance Co. of America 5050 Broadway, Chicago, Ill 312-275-8000 Stuart, Robert D., Jr - President, Quaker Oats Co 345 Merchandise Mart, Chicago, Ill 312-222-7111 Sviridoff, Mitchell Vice president. Division of National Affairs,the Ford Foundation 320 East43d St., New York, N.Y 212-573-5000 Sullivan, Leon H. (Rev. Dr.) Pastor, Zion Baptist Church Northwest corner Broad and Venango St., Philadelphia, Pa 215-BA3-5460 Terry, Jesse President, Terry Manufacturing Co Post Office Box 648, Roanoke, Ala 205-863-2171 Thompson, William S Associate judge, District of Columbia Court of General Sesssions 451 Indiana Ave. NW., Washington, D.C. Thorpe, Otis President, Thorpe & Associates, Inc 866 Hunter St. SW., Atlanta, Ga 404-524-5816 Tullis, Richard President, Harris Intertype Co 55 Public Sq., Cleveland, Ohio 212-861-7900 Vasquez, Hector Executive director, Puerto Rican Forum, Inc 156 5th Ave., New York, N.Y 212-691-4150 Veiga, Frank Veiga-Robinson Mortuary 3601 East lstSt., Los Angeles, Calif 213-728-0534 Weingarten, Robert Senior vice president, Scheinman-Hochxtin & Trotta, Inc 111 Broadway, New York, N.Y 212-964-6630 White, Wilford, L., Dr Director, Small Business Guidance and Development Center, Howard Post Office Box 553, Washington, D.C 202-387-1369 U niversity. . Wilson, Kendrick R.,Jr Chairman of the board, AVCO Corp 1275 King St., Greenwich, Cone 212-552-1800 Wood, Arthur M President, Sears, Roebuck & Co 925 South Homan Ave., Chicago, Ill 312-265-2500 Wyly, Sam Chairman of the board, University Computing Co 1300 Frito-Lay Tower, Dallas, Tex 214-350-1211 PAGENO="0260" PAGENO="0261" 255 M ~NORDTY-OWNED BUS~NESSES: 1969 MB-i Issued August 1971 U.S. DEPARTMENT CF COMMERCE Bureau of the Census ir PAGENO="0262" 4t~'1 4 4 I Ce "4t~s o~ ~ U.S. DEPARTMENT OF COMMERCE Maurice H. Stans, Secretary James T. Lynn, Under Secretary Harold C. Passer, Assistant Secretary for Economic Affairs BUREAU OF THE CENSUS George Hay Brown, Director Joseph R. Wright, Jr., Deputy Director Walter F. Ryan, Associate Director Milton Eisen, Deputy Associate Director GENERAL ECONOMIC STATISTICS DIVISION Shirley Kallek, Chief Library of Congress Card No. 78-176278 SUGGESTED CITATION U.S. Bureau of the Census, Minority-Owned Businesses: 1969, MB-i, U.S. Government Printing Office, Washington, D.C. 1971 256 ACKNOWLEDGMENTS The 1969 report on minority-owned business enterprises was preparea unoer the direction of Shirley Kallek, Chief Os the General Economics Statistics Division. in this Division, Lawrence Lyons, Acting Chief of the Special Proiects Branch, supervised all phases of publication planning, development of ~iecifications, data editing, and final table review and was assisted by Mary Marton and Johnny Monaco. General staff guidance was provided by Roger Bugenhagen, Assistant Chief of the Division. The project represents the fulfillment of program objec- tives of both the Census Bureau and the Office of Minority Business. William Rock, Chief, Minority Enterprise Infor- mation Center of the latter office was the major liaison and contributed materially to the solution of the many con- ceptual problems. The multipurpose needs for factual infor- mation on minority-owned businesses were recognized by a number of agencies which underwrote the cost of the proiect These included the Small Business Administration, Depart- ment of Housing and Urban Development, Office of Eco- nomic Opportunity, the Department of Labor, aed the Economic Development Administration. Charles H. Alexander, Frederick Mohrman, and Mason Nottingham of the Department of Commerce's Office of Budget and Program Analysis are due special acknowledgment for their helpful assistance in this phase of the endeavor. Within the Census Bureau, the successful completion of this project was due to the cooperative staff work of many individuals. The Systems Division, under the direction of Sol Dolleck, prepared the necessary systems and procedures. Special mention should be made of the fine efforts of Andrew Grieco, assisted by Robert Willner, who developed and supervised the electronic computer programs and Maxwell Jeans, assisted by Sandra Katis, who designed the quality control plans and procedures. Overall systems guid- ance was supplied by Samuel Schweid and Eugene Wendt. Processing of the reports was performed in the Jeffersonville Census Operations Division, Jeseph P. Arbena, Chief, and Reese Hellmer, Assistant Division Chief, assisted by Bernard Kinney, Chief, General Operation Branch. Clerical processing was supervised by Harold Garwood, Chief, Special Projects, assisted by Hazel McCartin. Preparation of the manuscript for typing and editorial assistance was provided by Frances Bresnahan of the Admin- istrative and Publication Services Division. This project depended upon the helpful cooperation of the staffs of the Internal Revenue Service and the Social Security Administration. Thanks are due to William J. Smith, Jr., and AlexSintetos of the Internal RevenueService and to Herman Pasteaa of the Census Bureau who coordinated these activities. Special acknowledgment is also due to the many businesses whose cooperation has contributed to the publica- tion of these data. For sale by the Superintendent of Documents, US. Govern- ment Printing Office, Washington D.C., 20402, or any Department of Commerce field office. Price $1.50. Stack Number 03o1-229e PAGENO="0263" 257 M~NORffY~OWNED BUSiNESSES: 1969 MB-i Contents Page Introduction 1 Summary of Survey Results 2 Definition of Terms 6 STATISTICAL FINDINGS TABLES 1 Selected Statistics for Minority-Owned Firms by Industry: 1969 7 2 Selected Statistics for Minority-Owned Firms by Geographic Areas: 1969. 68 3 Selected Statistics for Minority-Owned Firms, by Industry Division and Geographic Division: 1969 75 4 Selected Statistics for States With 500 or More Minority-Owned Firms by Industry Division: 1969 83 5 Selected Statistics for Minority-Owned Firms by Selected Standard Metropolitan Statistical Areas: 1969 108 6 Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969 114 7 Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969 142 8 Selected Statistics for Minority-Owned Firms, by Industry Division and Receipts Size of Firm: 1969 152 9 Selected Statistics for Minority-Owned Firms, by Industry Division and Legal Form of Organization: 1969 167 APPENDIX. A Survey Methodology 175 B Report Form 177 PAGENO="0264" INTRODUCTION In 1969 approximately 322,000 business enterprises having total receipts of $10.6 billion were minority-owned. One-half of these were black- ownisd-163,000 with total receipts of $4.5 billion- and 100,000 with receipts of $3.3 billion were Spanish-speaking minority-owned firms. The Spanish- speaking groups included firms whose owners were of Mexican-American, Puerto Rican, Cuban, and Latin American ancestry. The remaining 59,000 firms, with receipts of $2.8 billion, were owned by other minor- ities including American Indians and Orientals. 258 Of the total minority-owned firms operating in 1969, 90,000 were employer firms (i.e., having one paid employee or more). These employer firms account- ed for 82 percent of total receipts of all black-owned firms, 84 percent of the total receipts of Spanish- speaking minority-owned firms and 88 percent of the receipts of firms owned by other minority groups. Consequently, annual business receipts of minority. owned enterprises averaged $99,000 for employer firms in 1969 compared to an average of $7,000 for firms without paid employees. Table A shows compar- able averages for each of the minority groups. TABLE A. Comparison of Average Receipts for Minority.Owned Firms With and Without Paid Employees Item Total Negro m~~?t~y All minority-owned f irms: . Number 1,000.. 322 163 100 59 Receipts million dollars.. 10,639 4,474 3,360 2,805 Firms with paid employees: Number 1,000.. 90 38 33 19 Receipts million dollars.. Receipts per firm $1,000.. 8,934 99 3,653 95 2,814 86 2,467 131 Firms with no paid employees: Number 1,000.. 232 125 67 40 Receipts million dollars.. Receipts per firm $1,000.. 1,705 7 821 7 546 8 338 8 The volume of business conducted by minority- owned business enterprises in 1969 represented a small fraction of total business activity. Receipts for this seg- ment of the business community, totaling $10.6 billion, accounted for 0.7 percent of the 1967 receipts of $1,498 billion reported by all firms.' The 322,000 minority-owned businesses represented 4 percent of the total number of enterprises. The relationship of the tAlthough a direct comparison of receipts of minority-owned businesses in i~e~ to total business receipts can only be made for 1907 (the last year for which total business receipts dana are available), it is believed thst approximately the same relationship between minority- owned firms and total firms ecisted in 1989. number of firms and receipts of each minority-owned enterprise group to all firms is shown in table B. This study presents the first comprehensive statisti- cal data compiled in this area. It focuses on the economic characteristics of the principal minority groups, Negro, Spanish-speaking, and other racial minorities. Wherever possible, the Spanish-speaking group has been classified in terms of ownership by those of Mexican-American, Puerto Rican, Cuban, and Latin American ancestry. The report covers the in- dustrial activity, geographic location, employment, receipts, and legal form of organization of minority- owned enterprises in total and of each principal minority group. Measurement of these characteristics is shown in detail in the Statistical Findings, tables 1 to 9. PAGENO="0265" 259 TABLE B. Comparison of Number of Firms and Business Receipts of Minority-Owned Firms to Total Business Activity Industry division Firms (1,000) Number of all firms1 All minorities Negro Spanish speaking Number Percent of of all firms firms Other minorities -~ Number of firms Percent of all firms Number of firms Percent of all firms Number of firms Percent of all firms ALL INDUSTRIES, TOTAL. Contract construction Manufactures Transportation and other public utilities Wholesale trade Retail trade Finance, insurance, and real estate Selected services Other industries and not classified 7,489 856 401 359 434 2,046 1,223 1,803 367 322 30 8 24 5 97 22 101 35 4.3 3.5 2.0 6.7 1.2 4.7 1.8 5.6 9.5 163 16 3 17 1 45 8 56 17 2.2 1.9 .8 4.7 .2 2.2 .6 3.1 4.5 100 10 4 5 2 33 8 29 9 1.3 1.2 1.0 1.4 .5 1.6 .7 1.6 2.5 59 4 1 2 2 19 6 16 9 .8 .4 .2 .6 .5 .9 .5 .9 2.5 Industry division Receipts (m illion dol lars) Receipts of all firms1 All minorities Percent Receipts of all receipts Negr o Spanish speaking Percent of all receipts Other m Receipts norities Receipts Percent of all receipts Receipts Percent of all eceipts ALL INDUSTRIES, TOTAL. Contract construction Manufactures Transportation and other public utilities Wholesale trade Retail trade Finance, insurance, and real estate Selected services Other industries and not classified 1,497,969 92,291 588,682 106,040 213,196 320,751 86,670 61,858 28,481 0,639 947 650 395 939 5,178 539 1,464 527 .7 1.0 .1 .4 .4 1.6 .6 2.4 1.8 4,474 464 303 211 385 1,932 288 663 228 .3 .5 .1 .2 .2 .6 .3 1.1 .8 3,360 300 212 115 275 1,689 109 507 153 .2 .3 (z) .1 .1 .5 .1 .8 .5 2,805 183 135 69 279 1,557 142 294 146 .2 .2 (z) .1 .1 .5 .2 .5 .5 (z) Less than .05 percent. 1Based on data from IRS statistics of income for 1967. SUMMARY OF SURVEY RESULTS Industry Characteristics Minority-owned business firms were heavily con- centrated in retail trade and service activities. As shown in table B (and in greater detail in table 1 of the Statistical Findings), there were 97,000 minority- owned retail-trade firms with gross receipts of $5,178 million and 100,800 minority-owned firms in selected services with gross receipts of $1,464 million. These two types of business activity accounted for 61 percent of all minority-owned firms and 62 percent of their receipts. Data presented in table C indicate that the business activities of each minority group also reflect a similar pattern. Black-owned firms obtained PAGENO="0266" 260 TABLE C. Comparison of Industry Distribution of Business Receipts for All Firms with Minority-Owned Firms Industry division Business rec~ir~s ~ rms Business receipts of minority-owned firms Total minority- owned firms Black- owneu firms Spanish- speaking owned firms Other minority- owned firms ALL INDUSTRIES Contract construction Manufactures Transportation and other public utilities Wholesale trade Retail trade Finance, insurance, and real estate Selected services Other industries and not classified 100.0 6.1 39.3 7.1 14.2 21.4 5.8 4.1 2.0 100.0 8.9 6.1 3.7 8.8 48.7 5.1 13.8 4.9 100.0 10.4 6.8 4.7 8.6 43.2 6.4 14.8 5.1 100.0 8.9 6.3 3.4 8.2 50.3 3.3 15.1 4.5 100.0 6.5 4.8 2.5 10.0 555 5.0 10.5 5.2 5Based on business receipts data from IRS statistics of income series for 1967. 58 percent of their receipts from retail and selected service trades. Firms owned by Spanish-speaking minorities received 65 percent of their total receipts from these two activities while other minority groups reported 66 percent of their total receipts from the same sources. The 10 industry groups accounting for the largest dollar volume cf receipts are m.immarized for each minority group in table D. Geographic Location California with 64,200 minority-owned firms having gross receipts of $2,451 million recorded the largest number of minority-owned businesses in any State. (See tables 2 and 4.) This number included 14,700 black-owned firms with receipts of $388 million; 25,600 firms with receipts of $878 million owned by Spanish-speaking minorities; and 23,900 firms having receipts of $1,185 million owned by other minorities. The location pattern of minority-owned businesses by States differed for each minority ~roup. Table 2 indicates that 34 percent of the Negro-owned firms with 34 percent of the receipts (56,000 firms with $1,537 million in receipts) were concentrated in Cali- fornia, Texas, Illinois, New York, and Ohio. Spanish- speaking minority-owned firms were located principally in California, Texas, New York, Florida, and New Mexico. These five States, with 62,000 firms and $2,025 million in receipts, accounted for 62 per- cent of the total number of Spanish-speaking minority-owned firms and 60 percent of receipts. As indicated in table 2, the largest number of minority-owned firms were located in the Pacific Division but this is not true for every minority- ownership group. For example, table 2 shows that the largest number of black-owned firms were in the South Atlantic Division-47.000 firms with receipts of $1,051 million. The preponderance of black-owned firms in this division was reflected in all types of activity as shown in table 3. Spanish-speaking minority-owned enterprises presented a different pattern in that over 56 percent of the firms and 58 percent of the receipts were located in two divisions- the West South Central and Pacific. The two divisions combined accounted for the largest proportion of activity in almost all industry divisions. With few exceptions, average receipts for firms with paid employees, while differing significantly by in- dustry division, did not show extreme variations by geographic division within the industry group. Similar data by industry categories are also shown in table 4 for States with 500 minority- owned firms or more. Selected data ard shown in tables 5 and 6 for Standard Metropolitan Statistical Areas (SMSA's). In the East and Midwest, most minority-owned businesses were heavily concentrated within the largest SMSA in a State. The New York SMSA, for example, recorded 88 percent of the number of minority-owned firms in New York State and 89 percent of the minority-owned business receipts. In the Southwest and West, on the PAGENO="0267" 4 261 TABLE 0. Ten Most Important Industry Groups of Minority-Owned Firms Ranked by Receipts: 1969 - Not applicable. other hand, there was far less concentration of Size of Firm minority-owned business in any single SMSA. The Los Angeles SMSA included only 46 percent of the total number of minority-owned businesses in California and The distribution of minority-owned firms by employ- 40 percent of the receipts. A comparison of SMSA's ment-size class, shown in table 7 indicates that over 71 containing the largest number of minority-owned percent of minority-owned employer firms have fewer businesses with the total of minority-owned businesses than five employees but account for only 40 percent located in the respective States is shown in table E. of total receipts. code SIC Industry group Rank Firms (number) Receipts (million dollars) Rank I I Firms [(number) Receipts (million dollars) All minority-owned firms Black 22,492 1,493 2 11,268 438 12,086 1,181 27,318 953 5,479 939 13,527 584 22,890 549 53,252 532 1 4 3 7 6 5 6,380 14,125 1,660 6,412 13,477 33,906 631 360 385 278 284 288 9,113 18,589 15,118 159 125 96 - - - 4,296 13,548 9,469 74 55 50 4,164 10,988 13,140 - 282 229 222 - 8 9 - 10 2,359 7,252 - 104 140 134 - 133 speaking Other minority 54 55 58 50 59 17 72 721 723 724 15 42 65pt. 63 07 54 55 58 50 59 17 72 721 723 724 15 42 65pt. 63 07 Food stores Automotive dealers and gasoline filling stations Eating and drinking places Wholesale trade Miscellaneous retail stores Special trade contractors Personal services Laundry and dryclesning plants. Beauty shops Barber shops General building contractors Trucking and warehousing Real estate Insurance carrier Agricultural services Food stores Automotive dealers and gasoline filling stations Eating and drinking places Wholesale trade Miscellaneous retail stores Special trade contractors Personal services Laundry and drycleaning plants. Beauty shops Barber shops General building contractors Trucking and warehousing Real estate Insurance carrier Agricultural services 1 2 4 3 6 5 7 8 10 9 6,378 4,087 7,518 2,300 3,800 6,683 10,701 1,122 3,312 4,079 1,164 2,933 3,900 373 315 265 274 125 172 123 21 45 33 68 61 65 1 4 2 3 5 7 6 9 8 10 4,846 1,619 5,675 1,519 3,315 2,730 8,645 3,695 1,729 1,570 641 3,716 3,219 682 235 328 279 181 94 121 64 25 13 74 79 54 PAGENO="0268" 262 TABLE E. Relationship of Minority-Owned Firms in Selected Standard Metropolitan Statistical Areas to tOe State: 1969 5 Standard metropolitan statistical area All_minority-owned_firms Percent SMSA to State SMSA State ~ Number Receipts ($1,000) Number Receipts ($1,000) Firms Receipts Los Angeles-Long Beach, Calif.. San Francisco-Oakland, Calif... New York, N.Y Chicago, Ill Detroit, Mich Houston, Tars Philadelphia, Pa.1 San Antonio, Tex Miami, Fla Washington, D.C. -Md. -Va San Jose, Calif Sacramento, Calif New Orleans, La Cleveland, Ohio St. Louis, Mo.2 29,404 12,722 15,598 11,927 6,140 7,392 7,062 5,030 4,760 8,690 3,108 2,046 3,218 3,478 3,241 989,550 506,252 453,457 430,369 256,705 202,919 174,773 160,504 155,681 146,332 117,392 111,801 109,086 101,550 100,295 64,165 64,165 17,677 13,844 8,112 37,284 8,815 37,284 12,557 - 64,165 64,165 7,898 10,117 4,481 2,451,229 2,451,229 511,345 504,257 319,765 1,079,629 233,735 1,079,629 365,826 - 2,451,229 2,451,229 263,220 257,518 117,560 45.8 19.8 88.2 86.2 75.7 19.8 80.1 13.5 37.9 - 4.8 3.2 40.7 34.4 72.3 40.4 20.7 88.7 85.3 80.3 18.8 74.8 14.9 42.6 - 4.8 4.6 41.4 39.4 85.3 - Not applicable. `Includes Burlington, Caixien, arid Gloucester counties in New Jersey. 2lncludes Madison and St. Clair counties in Illinois. While the receipts per minority-owned employer firm averaged $99,000, receipts per firm increased significantly with the number of employees engaged. For example, minority-owned firms with 100 employ- ees or more had average receipts of $5,383,000 as compared to $55,000 for firms with less than five employees. Although the number of minority-owned firms with groun receipts of $500,000 or more represented lean than 1 percent of the minority-owned businesses, their receipts accounted for 24 percent of the total. (See table 8.) In manufacturing, the receipts of 211 minor- ity-owned firms having $500,000 or more in receipts amounted to $301 million or about 46 percent of the total manufacturing receipts for minority-owned firms. Approximately two out of every three of these larger manufacturing firms were Negro-owned. Legal Form of Organization Mont minority-owned firms operate as sole propri- etorships. Table 9 shows that 264,000 or 82 percent of minority-owned firms were sole proprietorships. In total, this group accounted for 54 percent of gross receipts. Sole proprietorships were heavily concen- trated in the retail trade, selected services, and trans- portation industries, representing 60 percent of retail trade receipts, 64 percent of service receipts, and 67 percent of transportation receipts. In manufactures, on the other hand, where about one out of every 10 firms was organized as a corporation, this form of legal organization accounted for over 50 percent of the gross receipts. The corporate structure was also used extensively as a legal form of organization by larger firms. The average receipts per employer firm for all PAGENO="0269" 6 263 minority-owned corporations was $446,000 as com- pared to partnership receipts of $132,000 and sole pro- prietorship receipts of $67,000. This pattern is consistent among the various industry groups. DEFINITION OF TERMS Firm-A "firm," as the term is used in this report, is a sole proprietorship, partnership, or corporation organized to perform an economic activity and was in operation during any part of 1969. The activity may be the only occupation of the participants or may be a secondary activity for an individual who holds a full- time job working for someone else. A single firm may operate one place of business or more, such as a chain of laundries; or have no fixed business location, such as an independent electrician. Receipts-Receipts include the gross value of all products sold, services rendered, or other receipts from customers during the year, less returns and allowances. Value for sales and services are given whether or not payment was actually received during the year and, therefore, receipts do not indicate a cash flow. No ad- justment has been made for the costs involved in operation of the business and all figures are at a gross value, before deductions, other than for returns and discounts. Employment, -Employment data presented in all tables are for paid employees, full-time or part-time. Employment figures do not include proprietors, partners, or owners who work in the business but are not paid a regular salary. Also excluded are family members or others who work full-time or part-time but are not subject to withholding taxes. See the survey methodology section of this report for a full explana- tion of the source of the employment figures for this study. Industry Classification-The Standard Industrial Classification (SIC) System, prepared by the Office of Management and Budget was used to classify firms for this report Data are presented at various industry levels, one, two, three, or four digits. This study covers all industries listed in the SIC system with the ex- ception of the following: 01, agricultural production; 40, railroad transportation; 801, offices of physicians and surgeons; 802, offices of dentists, dental surgeons; 803, offices of osteopathic physicians; 804, offices of chiropracters; 8099, health and allied services, n.e.c.; 81, legal services; 86, nonprofit organizations; 89, miscellaneous services; 91, Federal Government; 92, State government; 93, local government; and 94, international government PAGENO="0270" 264 7 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969 PART A. All Minority-Owned Firms - ~!o~2~ ~) !~2~L 2-'!!122a' `~ L~1 (fl~2~ c~~l b~lldi:g:t:,3 4,164282,474 8,116 253,27851562,537 29,196 12 Pl00010g, 528616g, 417 000d1510016g. -. 2,022 91,775 2,853 80,00441211,35011,771 9 2,41: 31,::: `780 22,871 2 58 2,13: 15:932 7 01488277 gl00iog 7075 29 4,301 1234,2665171 4 35 9 202 18127 p90d06t8. 14 11,414 (0) `(1) (0) (1) (n) (1) 204 07415 7111 pl600 .. 21 3,758 (0) (n) (0) (1) 1 (o) (1) ~ :: :~::: } 1,2209:23818138 ~ : } 179 45 PAGENO="0271" 265 8 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART A. All Minority-Owned Firms (obo) ($1,000) (obo,) (obo) ($1,000) (boo ($1,000) (ob) ($1,000) ($1,000) 0Ar0~A~00S--~ot1ood (0) (0) (0) (0) (0) (0) (0) (0) (0) `(0) (0) (n) `(0) (0) `(0) (0) (D( (0) (0) (0) (0) (0) (0) (0) (0) (o) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (o) (0) (o( (0) (0) (0) (0) (0) (0) (0) (0) PAGENO="0272" 266 9 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART A. All Minority-Owned Firms (~=s~-) (01,000) (o~bo~) (00500) (01,000) 00000' 0i,ooo' `,oob~y) (01,000) (01,000) C010001j10111y1000010001. ~ 1,0 o,ugu 00~ 72,9:3 471 r,-oigb: f:~-~o,d00g 13,3ne 35 (o( ):( ID) (o) (0) (o) 478 1(0 5011100270$ 31lOlpOI't 1117011001011. 003 19 n) ` . D) (1) CD) (DI (DI 071111201100 by Oodooloy... 22,818 6 (n) CD) (D) (1) (D( (DC PAGENO="0273" 0 U agaaaaaaa a a a a2 2 a a ~*aaaa2~ ~a~Ua~aa : ~: : : aa~: ~: : a a a a a: a :a~a:aa~ haa:'~aa~ :~ : :aaa: : * a : 22: a : a : ~: : : a a a a a a~ --~-~- a (.* ~.* (* ~ ~. U~UUU UU ~D - ~~:; *~(~ Cl) CD C) CD Cr, DC C, > 0 2a 0 0 a a CD 0, CD PAGENO="0274" - ~ ~ :~~::~ ~ ~~:: ~ *~ -~ ~_~! *~ ~ *~ ~ !± ? ~ *~1~ ~_!i_ -~ I ~ -~ i ~i_ ii~-~ -~ ~ (_~__` ~ ~ - ~ Cl) CD CD C, CD 0. Cl) DC ~ > 0 I! cx I-. PAGENO="0275" 269 12 TABLE 1. Selected Statistics for MinorityOwned Firms by Industry: 1969-Continued PART A. All MinorityOwned Firms (,o~,,w,) ($1,000) (~o~b~) (~o~th~) ($1,000) ($1,000) (o,,,w,) ($1,000) ($1,000) 653 Ag~~~t$, ~ ~d ~g~3 92 6,670 ~ PAGENO="0276" U) CD CD ci U) 0) o CD a ci ~1~ 3 Cl) a. (0 (0 a a a a aaaaaaaa a aa a aa aaaaaaa_aaaaa~aaaaaaa aaaaaaaaaaaaaaa~~ a a 1 a a a a a a *a~~ ~aa.~a~aaa~a3a ~ a~.~aa a a a a aa~ a.aaa: a: aaa a aa: ~aaa: a: a: : a: a a a a a a a a a: : a: a~a~a: : : a: a: : a a: a aa a a : a a a a a I :aa~aa~a ~aa:~aa::aa: a:aaaa: : aa:~: ~ :aa::aaa ~ ::~: a a: a : : : ~: : aaa~: : a: : a : a : : a: a a a a a r a aaaaaaaa a aaaaa a aa a aaaaaaaa a~aaa a a aa aaa aa a a a a a 1 a a ~ a a ~ a a .. ~ a a a a a a ~aaaa a~a a a aaaaaaaaaaaa ~aa a a aaa aa a a a a (.- -~ - ~ ~. a a ~aa~~a ~~aaa ~ a~ U 8 a a (C) PAGENO="0277" 271 14 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART A. AU Minority-Owned Firms C0d8 I0d~t7y (58-) ($1,ooo) (~s7-) (857) ($1,000) (7857-) ($i,000( (o~o~5o~) ($1,000) ($1,000) (1) (1) (1) (8) 83 3 (0) (o) (1) (u) 1 38 (1) ~: (8) ~::~ 7 :: (8) (0) (Dl (8) (1) F 562 (1) (8) (8) (u) 1,148 (1) (8) (8) (8) (o) (8) (8) (u) (8) (8) PAGENO="0278" 272 15 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: l969-Continued PART A. All Minority-Owned Firms k (00003?) ($1,000) ~m (000500) (o~b8,) ($1,000) )000b8,) ,~ ($1,000) (o~bo,) if ($1,000) ($1,000) $059918, 200 joolo, 09118g88. 215,417 5805,288161,0581612 9 8 07 Agoloolso,s $830108 *00 0005199 5,8 59118,950 1,107 4,061 87, 5744794,752 31,376 7 07- Agl10910911102,0008$, 000 011902980.. 61 2,736 19 53 2,515 3 128 42 ` 430 6 PAGENO="0279" 273 16 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969 PART B. Black-Owned Firms (ooobso) ($1,000) (oosbso) (608109)) ($1,000) (60010,,) ($1,000) )ooobs,) ($1,000) )$i,000) Tso,~s,0, tils, ss~b1s, ,,o,,io so,~k 453,026 44 (0) `)s) )o) )o) 1 (0) )D) 1,743 20,318 175 (5) )s) )D) )o) 1,568 )o) (o) tt,-36t88621 ,tsol s,,otioo. 14 1,118 10 )o) `(86) (1) )s) ` 4 `(10) (o) 0,-ososotli 2,11150866 4 285 3 )o) )s) )D) )o) 1 )s) )o) G1s~~ sod g1~s1sg so,-), 11 1,575 9 )s) )s) )s) )s) I )s) )o) W,sokisg sod dsoollt101 50,6 19 `823 13 )o) `)D) )o) )s) 6 )s) (0) 203 Csoo,d, 8000-sd, sod 8670500 fOodo..:..: 6,721 ~ 205 5,k,,y psodoo 12 `865 10 )o) `(0) )o) (0) 2 (0) (0) 208 B,os~~gss. 19 12,367 16 )o) `)o) )o) (0) 3 )D) (0) 232 M,o'~ sod boy,' 70~ot~htog~. 11 0,534 10 )o) (10) )o) )o) 1 (0) (0) 2 )o) 1 )o) )o) )o) )o) - - - 2339 Wo,,s'~ sods)~~s,' oot,861,~86, o.s.â, 9 )D) 9 (0) `(o) (1) )o) - - - p,odo,ot, 121 14,239 56 )o) )D) (0) )o) 65 sI (0) 242 S,so111~ sod ylsolog s111~ 89 19:741 82 )o) sI )D) )o) 7 )o) )s) 2421 Sgootll, sod plsoiog 0111,, gss,o1 83 17,273 76 )o) sI Is) Is) 7 Is) sI PAGENO="0280" 274 17 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART B. B)ackOwned Firms (5u) `So,ooo) (~bu) (ubu,) ($1,000) (.0511) (01,000) (,,0bu.) ($1,000) ($1,000) 011boo,k, ply.ood, 162 o~l.tud p,odoot. (e) (D) Cs) (D) (D) i (D) (u) Soodoo ooot~1oo1~ (DC (D) (D) Ce) nC - - - 1.0110.11,60000 eood p.odoo 10,265 (e) (D) )u) CD) 526 (DC (DC Doo,,50ld folIo,, 5,560 (DC CD) (e) )D) 2 Ce) CD) 1.'phol,to.od hoooobold foloitooD::.: 1,609 (DC `(DC Cu) (u) x (e) (u) lloooo,hold 76601161,, o,~.k 401 (DC (o) (DC (DC 1 (DC (u) 07810, to,olto,o (D) (e) (e) (u( (DC - - - PoSh. boShOing 000015690. 0) - - - - u (o( u( (u) (e) (DC - - - Poolpoihi. (e( 18 166 5 42 2 )u) (u) P~pD1 Dod ,211,d p.odootl, 0.0.0 ` (u) - ` - - - n )e) 1h,okbook., ,ood bookbthdioog. 652 Ce) `)e( CD) Ce) 4 (DC Ce) F,b,io,ted ,t,0,oto,il ,teDl p2oth0t~. 6,144 (DC (0) (eC (DC 2 )e) )e) 4,369 (0) (DC CD) CD) 2 (DC Ce) Soon, 0100100 poodoot~, bolt,, coo... )e( (DC Ce) Ce) Ce) - - - ODt,l ~te~iog 5,090 C~) (DC (DC (e) 1 (DC (DC Mot,1 1D00i0D~, 5.0.0 3,610 (0) )e) (DC Cs) 2 (e) (D( pDOthlOt1 (oC 29 883 6 177 1 (DC Ce) PAGENO="0281" 275 18 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART B. BlackOwned Firms (704b07) ($1,000) (767b~) ($1,000) (o~boo) (oo~tho~) ($1,000) (6,8767,) ($1,000) ($1,000) 5 718 4 (0) `(8) (u( (8) 13 591 11 (0) (8) (0) (0) 17 15 35 1,006 06 3 2 33 (u) (u( (8) (u) (0) (o) )n( (0) (u) (u) (8) (D) 18 10 5,030 48 10 1 (8) )u( `(8) (u( (8) (D) (D) (u( 7 25 `236 387 5 s (8) (8) (u) (8) (8) (1,) (8) (0) 4 10 8 4 23 33 4,404 15,652 4,670 1,037 2118,4352 14,125 9, 3 9 7 3 0 22 25131 (u( (8) (u) (o( (u( (8) (8) (u) (u) (8) (8) `(8) (8) (u( (u( (0) (n) (8) (u( (8) (8) `(D) (u( (u( (8) (u) (u( (8) (7) (u) `(0) (8) (8) (8) (u( (u) (u( (u) (7) (8) (8) (8) (7) (8) (u) (8) (8) (8) (7) (0) (8) (8) (u( (8) PAGENO="0282" ~H~H J Ufl Ii ~JH w L 8 a 3a~8 ~ 8 - ~ a 28j 8 82 a a a~ :~::~::~8: :a::3:aa~:a:: ::~3 :3:::::.. : :::: :.?: C) 0 w ~1~I a. a. C (0 0) (P C-) a 3 3 3 8 8 a a ~ a~ a 88 - ~ a 8 8 2 .a~a: : a 8 a a a ~~aa - ~ -I- ~ ~-~) 8 888 -~ a a -~8 ~ (_~ - a a - a -- - a a ~ a ! ~ (0 PAGENO="0283" 0 ~ ~ U) CD CD C, CD Cr, C, CD 0 ~ 0 CD 0. ~*T1 C- 0. (0 a., (0 S(~~5*;*5(~~555 ,-~S-' ~ ~_~S_J ~*ffl S ~ PAGENO="0284" V ~ a: a : : : a a :a~aa'a~ a a ~ ~a :~:a~~ Cl) CD CD 0. Cl) hr 0~ 0. CD a) C) a a: ~ :aaa U a :: a :::: a : : ::~: 1%) PAGENO="0285" U) CD CD C, CD 0. U) C) 0 CD * 0 o CD 0. 0~ 0. (0 a) (P C-) U a aaaa h aa:aa ~ a n~ a a aaaa a aa a a aaaaaaa a a a aaaaa a a aa~i aTa ~ 1F **- ~aa~ ! a a. ~ a a~ I h~I a a a aa~a h,aa a a a a a~a~a~ a a~ ! PAGENO="0286" 280 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART B. Black-Owned Firms 23 (o~bso) (05,000) (7~b00) (o~bs) (01,000) (900590) (01,000) (o59,) (01,000) (01,000) 8Opt. Eo2pit&12,s93l0&1,&03d7l~l 809pt. 9~o~to,i~, ooo~100o2ot, 00d 5o95~ 591 28,425 207 3,301 25,090 19 121 384 3,335 9 823 ~o5oo1!, ~od j001o~ 001100s~. 1.15,001,! 100 19070529907 0,01205.... 12 1 ID) (u) 2 - (1) - )s) ~ (19) - (n) - 10 1 (n) )o) (D) )o) 829 SoOsol, &34 60002910715 gg11~1o22, 9.2,0, 15 `(0) 8 (o) `)u) (o) (9) 7 (n) 01) 07 Ag?Ioslts05 221-6102 god 007919g. 1,377 30,001 3801,071 24,601 4 65 907 6,300 6 074 07- Osotlog, t,&pplsg, ~222 p8060gltIOS.. Ag,Ioslts,sl 2,071005, s.,.k 8 30 69 1,348 1 9 (u) (9) (u) (is) )o) (o) (o) (o) 7 21 (is) (u) )o) (u) - 92p00010t1 "is. (is) Yltth,90 to 10000 d1~o1o~1og 11,9105 108 1001910421 007p2OI05. PAGENO="0287" 87 87 7 87 27 87 97 927 9 9 8 7 7 9 8 2 9 9 ~ ~ %::::~ n::: 79::: 8 29: : 7 : :7: 7 :7: 7 :7::::7 :2::::~ :7::::~ :7::: :7: 7 :9: 9 :9: 7 :9::::2 :9:.::2 :9::::7 :9:.::7 :9::. - :9: . * : 3 :2: 92::::9:7::: :2::: :2:::: :7::: 2 :7:: 788888 2827~ 2882 287 93 7- 7 8c~ n7 r~ ~ 782729888 ~- 78 ~~-2$ ~~82 222778 772 222 -~ ~2 7- 22 88 2728 888 -i;.~ r~ ~ 828898 792272 7~~28 2~~~82 879292 98 ~3 7- L~ $8228~ 8229h 7888d 8899.~7- 2 8 cn CD CD 0. C,, -~ C, > UC ~ 2 0 o~ CD 0 9 0~ (0 0, (0 PAGENO="0288" 282 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firms 25 =u~) (Oi,O~o) (~~) (51,000) (000500-) (01,000) (0=500) (51,000) (51,000) (0) (0) (e) (0) (0) (0) (0) (0) (o) (0) (0) (e) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (e) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) PAGENO="0289" 283 26 TABLE 1. Selected Statistics for Minority.Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (n~b07) )$i,00n) (021) (o~~blp) ($1,000) (o~b1!) ($1,000) (6050) ($1,000) ($1,000) 00909212 nook, 191*1 Opsol*h 395 25,441 207 (0) (0) (1) )o) 178 (n) (n) P0*1-to 816*0 2 `)o) - ` - ` - - - 2 (0) (0) OthIl C*oto~1 0 Sooth 09211026., 3 (o) 3 )o) )o) )n) )o) - - - 00111i8g, tot&1 Sp&ol7, - - 19 `316 3 (D) (1,) )o) )o) 16 )n) )D) 6*910*9 18 (1) 3 )o) (n) )o) )n) 15 (o) (0) P02,89 810*9 1 )n) - - - - - 1 )o) )D) } 188 1 8 188 3 63 - - - Spsoislo 10 388 9 (0) (o) (o) (o) 1 (o( )o) ~ (2) ~ )D) ~ (n) Spsol*h 14 1,496 12 (o) (o) (o) )o) 2 )o) )o) 61816*0 14 1,496 12 (o) (0) (o) (0) 2 )o) )D) totnl Spsol*h 30 (o) 22 )o) (o) )n) )n) 8 )u( (o) 6o9o&o 26 1,200 18 (o) (D) )n) )o) 8 (n) (D) 1-08289 RIono 1 )o) 1 (1) (0) (o( (1) - - - Opnoish 2 (0) 2 (0) )o) (0) (ro) - - - 62910*9 2 (0) - 2 )D) (1) (ro) (0) - - - totnl SpSoI!1, 1,592 38,314318 (n) )o) (0) (1) 1,274 )o) )D) Oth*o O*oto&1 91 Sooth 091210*9.. 33 406 6 )o) `(6) (1) )o) or boll00,*, 099*1 Ipsoish 36 808 5 )o) (0) (o) (o) 31 )o( (ro) 011, Opsoish 5 (ro) 1 (16) (o) (0) (o) 4 (o) )o) Pood sod kiod,sd p~odoot*, 891*1 ~&8i09 217 37,400 196 1,842 37,035 9 189 21 365 17 2.18 poo00ot., 199*1 8p&ol*h....... 22 11,552 21 (o) (o) (n( (o) i (D) (2) 70-654 0-72-19 PAGENO="0290" 284 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms 27 (o~boo) (01,000) (00-) (00,-) (01,000) (oo~beo) (01,000) (00000,-) (01,000) (01,000) CD) (DC CD) (n) CD) )D) Ce) (DC Ce) CD) CD) Ce) Ce) CD) Ce) CD) (DC Ce) CD) Ce) CD) CD) (DC CD) Ce) CD) Ce) (DC (DC CD) (DC CD) (DC Ce) Ce) CD) CD) CD) CD) (DC CD) (0) CD) (D) )o) CD) Ce) (DC (0) CD) CD) (DC CD) CD) CD) (0) CD) (DC CD) (DC (DC CD) (DC CD) (DC (0) CD) (DC (0) (DC Ce) (DC (DC CD) (DC CD) (DC CD) CD) (DC CD) CD) CD) CD) CD) (DC CD) (DC CD) CD) Ce) PAGENO="0291" 285 28 TABLE 1. Setected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (,~sobo,) ($1,000) (bobs,-) (,oo~bo,-) ($1,000) (sooobo,-) ($i,000) (ooobo,-) ($1,000) ($1,000) 10111 spIt ish.................... 11 1,195 9 (8) (6) (0) (u) 2 (6) Mooiooo.... 7 428 165 99521124 2 (u) (0) 0719110 sot opoolflod............ 1 767 , 1 (D) )o) (6) (6) - - - 6.0.0.~ tolll 0710110 10 (6) 17 4072,03824167 1 (6) (u) Oplolob 681 opootflod 7 381 6 . 1 (o) (Di p70d2881, 19111 6716116 162 0,501 95 (0) (6) (6) (6) 67 (6) (6) Spooilh sot ~pos611od 27 1,300 16 (6) (6) (6) (6) 12 (6) (1) 0277..::::: 19 575 3 82 2 193 32 10611 tp591lh 10 1,326 - 8 (6) (6) (6) (0) 2 (u) (1) 01811816. 2 2 (8) (6) (6) (6) - - - Poosto RIsos. 1 - 1 (D) (6) (6) (8) - - - Othop 6061711 27 SoOth 26771616.. 3 163 2 (2) (D) (Di (8) 2 (Di (8) ~ ~ 927 11 ~ 927 4 : Sp&oi;h..,.......................... 9 ~ 9 ~ ~ ~ : ~ Moololt. 44 (6) 402715,2877132 4 (6) (8) Poooto 01615. 2 (8) 2 (8) (8) (8) (D) - - - S71911h lot oposiflod 3 365 2 (0) (8) (8) (0) 1 (0) (0) PAGENO="0292" 286 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms 29 1 0 ondnno1~onos__ 0000 plOd ninyons (nOD-) (01,000) (,n.bn,-) (nnOD,-) (01,000) (o00bn,-) (01,000) (ODnbnn) (01,000) (01,000) p00000D1,1D11DS~1h (0) (0) (DI (DI ID) (D( (DI (DI (D) )D) 0) Cu) In) In) (DI (n) to) )n) (0) 0) In) (n) (DI (DI (DI (DI In) In) (DI (n) (DI (a) (n) In) ID) (DI (DI (DI ID) (DI (n) ID) ID) ID) (DI (0) In) (DI (DI In) ID) ID) ID) In) In) (DI ID) (n) ID) ID) ID) nI ID) (DI (DI uI ID) In) In) (DI (DI In) ID) ID) (DI ID) ID) ID) (DI ID) ID) ID) ID) ID) ID) ID) (DI ID) ID) ID) ID) ID) ID) ID) ID) ID) PAGENO="0293" 287 30 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (o0ob~,) ($1,000) (,o,ob.~-) (oobo-) ($1,000) (o~b~) ($1,000) (o~bo~) ($1,000) ($1,000) Poiotiog &od p~b11~h1og..Co~tio~d Cooo~0,i11 polotiog, ~o,~pt litho- totti Sptoish (0) (0) (D( (0) (0) (0) (0) (0) (0) (o( (o( (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (D) (0) (0) (0) (0) (0) (0) (0) (0) (o( (0) (0) (0) )o) (0) (0) (0) (0) (0) (D) (0) (0) (0) (0) (0) (0) (0) (o( (0) (0) (0 (0 (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) )D) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (D( (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) )o) (o) (0) PAGENO="0294" 288 31 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firms (239b97) ($1,000) (700200-) (200200-) ($1,007) (200b00-) ($1,000) )200b00-) ($1,000) ($1,000) 58 28 [ } 995 14 2) (2) (2) (2) 24 226 9 c,b*o. 336 1 (2) (2) (2) 2) 2 Sp*ol*0 ,`.09*p*Olflsd 0) 1 (2) (2) (2) (2) 3 39 13 ~ ~ 900 6 100 1 } 66 8 94*t*2 0*0*, 909*1 Sp*oI*h (2) - - - - - 1 `o) (e) 6*910*0. (0) - - - - - 1 (2) (D) p?OthlOt*,90t*lSp*01*h 2,763 30 (n) (8) (2) (2) 4 (2) (D) } `886 { 2 (2) `(2) (0) (0) - - - 99901*0 096 *p*olfi*d 5 21 433487 1 (2) (2) 600299*9*1*082, 969*1 Sp*~1*h 2) 12 (0) (2) )e) (2) 2 (D) (2) 6*91010 599 )o) (2) (2) (2) 2 (2) )e) P4*999 21o*o (2) 1 2) (2) (2) (8) - - - Op*ols" (2) 9 (2) 2) (2) (2) - - - Po*pto Rio*o (2) 1 to) (2) (0) (6) 69901*0 oot *79017123 (2) 1 (2) (2) (2) (2) - - - p,-o30ot*, 0.9.6., 669*1 Sp40100... 939 9 to) (2) (2) (6) 2 (2) )o) 6*910*0 2) 8 39 675 5 84 1 (8) )o) Sp*ol*h 091 *p*7291*d (2) 6 (2) (2) (2) (2) 1 (2) (0) 6*912*0. `(2) 3 (2) `(2) (2) )o) - - - Sp*ol*h 769*790191*2 (2) 2 (2) (0) (2) (2) - - - 8*9*1 *9*lplog, 909*167171*2 (2) 2 (2) (2) (2) (2) - - - 69910*0. (0) 2 (2) (8) (o) (2) - - - ~:: ~ 654 2,069567 1 p007106*, 996*1 Sp*oi!'o 0) 4 (0) (0) (2) (2) - - - 9.951240 2) 4 (0) (2) (2) (0) - - - p99d106*, 609*16797100 2) 6436287103 1 (2) (2) 553 5 (0) (0) (2) (2) - - - 6790190 296 *79017196 2) 1 (0) (0) (0) (2) 1 (0) (0) P4.poo 812*7. , } { 1 (0) (0) )o) (2) 1 (0) (2) Cob*o. - - - - - 1 (2) (0) Sp*oI*h 096 *790191*2 179 3 (0) (0) (0) (0) 4 (0) (2) PAGENO="0295" 289 32 TABLE 1. Selected Statistics for Minority.Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (totbD,) ($1,000) (oo,.bo,-) (Dotbo,-) ($1,000) (toobo7) ((1,000) (totto,) ($1,000) ($1,000) `:: a'::: :: 30 2:: M8toltookIDg ,toohi,,8!y, totol Spoolth CD) 8 34 527 4 68 3 (0) (0) (o) 2 Ct) Cs) CD) (0) I (o) (o) Coboo. 323 a (0) CD) CD) (n) 2 (D) SpoSIsh tot IpDCI618d CD) 3 (0) (0) (t) )o) - - - CD) 9 (0) (0) (0) (0) - - - Pos,to ROost. (0) 1 (o) (0) (0) (o) - - - Sp261sh tot sploifIld (8) 1 (0) (5) (t) (o) - - - 1180t71011, totol SpotiCo 3,65154 CD) (Di CD) (0) 45 (0) CD) 701,80 61026. ) 1 (~) (o) (0) (s) 2 (0) Cu) robot. - - - - - a (0) (0) - 831 { 2 37 817 9 204 ~ 80611 Sp6918h (8) (o) (0) (o) CD) - - - 8831629. (D) 4 Co) Cu) (o) (0) - - - 63611 Spooloh (0) - - - - - 1 (0) CD) 8831061. (6) - - - - - 1 (0) (0) 60601 Spotlsh (0) 3 CD) (DC (1) (t) - - - 8801026. CD) 1 Cu) CD) (0) CD) - - - tlooo. (o) t (o) (0) (0) (0) - - - Otto CItt,-oi o. Oooth doo,-iooo.. (0) , (t) (0) (D) (2) - - - oo,d 83ppil88~ totol Sp061th 1,192 8 (D) CD) (0) (5) 10 (D) (0) Coboo 2 (DC (0) (0) (0) - - - Dths,- Cott,ol os Sooth 208,1926. . 616 - - - - - 1 (o( CD) Spotith oot 878618189 _J - - - - - 2 (0) (D) 81831629. 4,736 17 (0) `(8) (0) (0) o P68710 Rjooo, (D) 1 CD) Ct) (0) (D) - - - Cobol 276 o CD) (8) (0) (0) t (8) CD) 9tto~ Cott~o1 Os- Sooth 908,1629. CD) I (~) CD) CD) Ct) 1 CD) CD) Spoolsh 1,363 8 Ct) CD) (Di (0) 2 CD) CD) Stooioot. 662 4 (D) CD) (2) CD) 1 CD) (0) Cobot. °( 1 Ct) CD) (0) CD) - - - Othst CDttsoi 07 Sooth 2o~sioot. J 701 1 CD) (0) (0) Ct) 1 (0) (8) Spotish tot sploltiod - 2 Ct) (5) Ct) CD) - - - totol tpotlsh 537 6 CD) CD) (0) (0) 1 (5) CD) ~ C )t) CD) 1 it) CD) PAGENO="0296" 290 33 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms )sssss) )Ss,ms) )ssws~) )ssw) Osess) )~sssl (Oases) (ssswaa-) (Os,500) (teens) 55555 - - - - - ~ } ens { } as a { a ee 1,457 (5) (5) (5) 7 (5) e) 587355 1 (5) 15) (5) - - - 5 (e) 555155 1775 Snssslses.. (5) - - - 5 5) Is) Spss1~ 5) 5) 5) (e) . (5) )~) (5) - `L Ceslnjsslsyssdsselnss, 551718's 554 `5) (5) fl' 5 (5) (5) 575 (5) 5) (5) 5 (5) 5) (5) Is) 5) - - - 5517515575855517584 (5) (5) (5) - - - ~ } { E ~ { } PAGENO="0297" 21 21 21 21 1 1 2 2222 121 21 2 1 2 1 2 2~:: 2~: :2 2::22~::2 : 2 2 :~ 2~: ::~ ~ :2 2 2 22 U~H 2 :-~ 2::~2~:: 2W:: 2 : :~ 1~: : I :2 I HI~IH :I1~I 1~ 1 ~ 1~ 1I~ I ` . ~2 ~28 ~-~J L~J .~ 2 LI ,~. ` ~-J .~ Cl) CD CD C, CD Cl) -~ C) a 0 a CD CD 0 ~ 0~ (0 C, (0 C) PAGENO="0298" 292 35 TABLE 1. Selected Statistics for Minority~Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (52057,-) (01,000) (666.01,-) (06661,-) (06,000) (00051,-) (01,000) (020b00-) (01,000) (01,000) t0521 Ip060sh (o) 41 334755 ID) (D) booboo. (0) 41 333756 (0) (o) 101,1 Sposlsh (0) (0) (0) (0) (0) , (6) (0) 001110 016,6. `313 (0) (0) (0) (0) `(0) (o) Cobos. oos (0) (D) (o) (0) (0) (0) F 423 ~ ~ ~ ~ Cobos - (0) (0) (D) (0) 1 sot ,pooIloo3 166 (0) (0) (0) (0) 61111111,005 ollosItod by lodo,tsy, 101,1 Iposlsh (o) (0) (o) (o) (0) (0) 0th,, 10051,0 (0) (0) (DI (0) (o) (0) po,,to 010,6. 121 (0) `(0) (0) (0) ID) )D) 0500s Costsol os Sooth 20050026.. 445 (o) (0) (0) (D) lot~1 Sposlsh (0) (o) (o) (D) (0) (o) )o) 552 D) (0) (0) (0) (0) (DI 0,005. (0) (0) (0) (1) (0) - - Sposish sot 130601013 1,400 (0) `(0) (1) (0) (0) (D) TOss, `53 to61,, 10521 Sp2so~h (D) (D) ID) (D) (D) - - booboo. (0) ID) (0) ID) )o) - - Po,,1, Risos. (0) (0) (0) ID) ID) Cobos. (DI (DI (0) (D) (0) - - ohbslo,, s.s.k., 105,1 Sposlsh 0) 17 1,855 3 373 (0) 1) booboos. 2,702 )o) (o) (o) (o) 22 (0) (D) boost, 010,6. ID) - - - - 0 (0) (0) Cobos 430 (0) (0) (0) ID) 3 09 6 Othoo CDOtO21 ot Sooth Aoosio,o.. (0) - - - - 2 )o( ID) Sp051sh 501100021173 344 (0) (DI (DI )o) 3 0) )o) PAGENO="0299" 36 293 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Span)uh-Spenk)ng Owned Firmu `"Inn) 101,000) )n"Inn) )nllnn) 101,000) (0,1") ))n,uuu) )o~unn) (01,000) 01,020) ci o `enu 4 In) `In) In) In) 4 In) In) o n In) In) In) In) - - - 2 In) In) In) In) - - - 3 11, 2 In) In) In) In) n In) In) n,non `In) `In) In) In) n `In) In) n;nnn In) `In) In) )n) 3 In) lIon In) `)n) In) In) I )n) In) 1,031 In) In) In) In) 1 In) In) nnun )n) `In) )n) In) n )n) In) In) In) )n) )n) In) - - - In) - - - - n In) In) In) In) In) In) In) - - - In) In) In) In) In) - - - n,nnn In) In) In) In) n In) In) In) In) In) In) In) - - - In) - - - - n In) In) `In) In) `In) In) In) - - - In) In) In) In) In) - - - n,non In) In) In) In) n In) In) In) 23 1, 4Th 4241 n In) In) In) In) In) In) In) - - - 2,010 In) In) In) In) n In) In) In) - - - - n In) In) nI In) In) In) In) - - - In) In) In) In) In) - - - )n) - - - - n In) )n) 11,111 nI In) uI In) 2 In) 2) 1,211 In) In) ID) In) n In) In) 1,471 uI nI In) In) n In) In) 40,213 In) nI In) In) 1 In) In) 31,131 In) In) In) In) n In) In) In) nI In) In) In) - - - In) In) In) In) In) - - - `In) In) `)n) 1) In) n no 3 In) In) In) nI In) - - PAGENO="0300" 294 37 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (a,a1~) (01,000) (,~ba,-( ~s~-) (01,000) (aOl,-) (01,000) (~b,-) (01,000) (01,000) (I) (a) (a) (a) a) :a (a) (a) (a) (1) (e) a) (a) (1) (a) (a) `(a) (a) (Dl (a) a) (a) (a) (0) (a) (a) (a) a) (a) (a) (0) (a) (a) (0) (a) a) a) (a) (a) (a) (a) (a) (a) (a) a) (a) (a) (a) )e) (e) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) a) (a) (a) (0) (a) (a) PAGENO="0301" 38 295 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firmn (o~obo1) )$o,ooo) (oo~b~,~) (,oo,bo,) ($1,00Q) (,o~bo,~) ($1,000) (o~,obo,) ($1,000) ($1,000) (Dl (0) (0) (0) (0) (D) (0) (Dl 1,105 (D) `(D) (0) (0) `(0) (0) (0) (0) (0) (0) (0) (0) `(0) )D) (0) (o) (0) (0) (0) (0) (0) (0) (o) (o) (0) (0) (0) (0) (0) (0) (Dl (0) (0) (0) (0) (0) (o) (0) (0) (0) (0) (0) (0) (0) )o) (Dl (0) (Di (0) (0) (0) (0) (0) (0) (0) (Di (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) `(0) (0) (0) (0) ID) (0) (0) (0) (0) (0) (D) (0) (0) (o) (0) (0) (0) (0) ID) (Di `(0) (0) (0) (0) (0) (0) (DI (D) (0) (Di (Di (0) (0) )D) (o) (Di ~1 (0) (0) )o( (0) (0) (D~ (0) (0) (Di (0) (0) (DI (0) (0) (0) (0) (o) (0) )D) (Di (0) (0) (0) (0) (0) (0) (0) (0) (0) PAGENO="0302" 296 39 TABLE 1. Selected Statistics for Minority.Owned Finns by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firms )9b07) )Os,ooo) )D8914,) )D10b8,) (01,000) (9=107) (01,000) )D=b07) (01,000) (01,000) 1,177 (D) Cs) (2) (n) 1 (D) CD) 8.92,1000 CD) CD) (DC CD) CD) - - - 00149 CD) - - - - 1 CD) CD) Sp8ol8h Dot 8p8oDf18d (DC )D) CD) CD) CD) - - - 9891089 452 )D) (0) (DC Cu) 2 Cu) CD) Oth07 C89t,81 9,. Doo~th Oo.,.Do00.. CD) )D) CD) CD) CD) - - - DPDDD81O Dot 878016123 CD) CD) CD) (DC CD) 2 (0) CD) tDtD2 Dpoo1~l, 1,247 CD) CD) CD) CD) 3 CD) CD) 0831020 926 CD) CD) CD) CD) 1 CD) Cu) 02082 321 CD) CD) CD) CD) 2 CD) CD) 9281081 4,651 )D) CD) CD) CD) Dl CD) CD) P18,00 01013 - - - - 1 CD) CD) CobDo CD) CD) CD) CD) CD) CD) Dp~oD3h DOt 872016130 715 CD) CD) CD) CD) 3 CD) CD) 000128118 1,108, DOt 61DDDot80 by Dodost,y, Dot61 Dp~09!b 73,813 1,329 96,920 4 207 301 6,893 22 929316 t,~d8, t,D.D Dp8D81 1,689,443 91,999 1,481,081 4 91 16,946 204,350 12 60161 Dp201!10,, D2,147 122 20,886 3 100 126 1,261 DO 99141 Dp20030 8,957 295 8,539412749 421 9 38112,9, tDt8l Sp820181 CD) 38 1,203 2 71 1 CD) CD) P13,99 01690 CD) CD) CD) CD) CD) - - - Dp2llD3h Dot 872611123 CD) CD) CD) CD) CD) 1 CD) CD) PIlot, g1D93~ 800 8811p9p89' 869888, 9960031 2,701 )D) (0) CD) CD) 3 CD) CD) I92oiooo CD) 59 2,282 0 86 2 CD) CD) Dp6018h Ott 37201,020 CD) CD) (DC CD) CD) 1 CD) (DC Dp8013h CD) CD) CD) CD) CD) 1 CD) CD) CD) - - - - 9 CD) CD) Dpo_0o16h Dot 472611180 CD) CD) CD) (DC CD) - - - PAGENO="0303" 40 297 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (o,o~bol-) ($1,000) )0o15o1( (o~obo1-) ($1,000) (oo~bo,) ($1,ooo( (lob,) ($1,000) ($1,000) (0) (0) (0) )o) (1) (u) (0) (0) (1) (0) Cu) (0) (0) (0) (0) Cu) `(0) Cu) (0) (DC (0) (0) (0) (0) (0) (0) (0) Cu) Cu) )u) 0) )D) )u) 0) )o) )u) )u) )D) (0) 0) )D) 0) (0) 0) 0) (0) )u) )u) 0) )D) )u) 0) (0) )u) )D) )u) PAGENO="0304" 3$ ____________________ 32$ 22 22 22 ~ 22~~ 22 ~ 22 322 22~ 2 ~ 3 2 $ 2 3: : : 2 3::: 3~: : 3 3~: : : : : : : 3:: 3 3 3 8 8 8 8 8 -~ 8 3 ~ 3 3 0 3 U) CD CD C) CD a" U) Er 0 0 0 CD 0~ "Ti 0" a" (0 to PAGENO="0305" r*%) Cl) CD CD C, CD a- Cl) C, 0 0 a CD 0~ ~11 2 a. a- (0 C) (0 ` hh ..~-- r~ ~ `~ ~ . 0 3 PAGENO="0306" 300 43 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firms (000) (01,000) )sotb00) )b~,.) ($1,000) )sotb00) ($1,000) (s~b07) (2~67~) ($s,ow) tot.1 Spsol*', 169 (~) Cs) Cs) Cs) 3 Cs) Cs) *t~t1o*o 120 4 )s) (5) Cs) sC 2 Cs) Cs) Sp*ol*h Sot *p~o12140 48 2 )s) Cs) 5) )s) 1 )D) )D) ~ : s'::: : u: ~ : :: Po07to ROo,o 5) 3 4 `173 1 58 1 sC )s) 0th,~ C,ot,,1 o~ Sooth Ao,,lo,o,. Cs) - - - - - 1 )s) Cs) Sp*ol*h lot *p~oi8i*d Cs) 9361,0794520 1 )s) )s) Co*tot !t000!, tot*1 Sp*oI*h 880 26 51 70922713171 13 Fo,,1,,* *~d 7o~ *hop*,totsl Sp*ol*h, )D) - - - - - 4 )D) Cs) l,tlo*o 5) - - - - - 5 5) )D) 0th,~ 0,0t001 o~ tooth 408610*0.. 5) - - - - - 5 5) )s) Sp*ol*h sot *55516124 )s) - - - - - 2 5) )s) t0t,1 97*01*0 7,673 781274,7322612752001 11 999,1 05*01*0 )s) 2 )S) )D) Cs) )s) )s) )s) M,ols,o (5) - - - - - 2 Cs) Cs) Po,,to Rls,o Cs) 1 Cs) Cs) Cs) CD) - - - cob*o Cs) - - - - - 1 Cs) Cs) Sp*ol*h Sot *pSoIfl,d Cs) 1 Cs) Cs) Cs) Cs) 1 Cs) Cs) PAGENO="0307" U) cD CD C, CD Cl) 0 0 0) CD o 0. ~~T1 0< 0. 0< (0 (P C) I. ,,~ ~ ~ ~ ~ ~ ~ 00' ~ 000 ~ ~ §~ 0~00 ~ 0 g ~: : g~ : ~H ~:: g:~:: :~:~:: : .~:~::::0:~::,::~ :::::~:::::~ :~:: g 000~ 0* 0000 00 0000 0 000000~ 0 00 r~m 0 : ~ - 00 0' 0 0000 0000 00 0000 ~ 0~0 0000 00 00 00 00~~-00'-~ 0000000000 0~~1'~ 0' ~ ` *` :~ ~ PAGENO="0308" 302 TABLE 1. Selected Statistics for Minority.Owned Finns by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms 45 (o~*,-) )Os,ooo) (o~b~-) (0001,-) (01,000) (9000°) (01,000) (0000°) (01,000) (01,000) Cob&o. 223 20,1,27 (2) (2) (0) } 59 } a: (o) (0) )o) (0) ui (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (0) (2) (2) (u) `(2) (2) (2) (2) (2) (2) (2) (2) (2) )o) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (o) (2) (2) (s) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (o) )D) (2) (2) (2) (2) (2) (2) (o) (2) (2) (o) (2) L 21 ~- ~:: is) (2) (2) (2) (o) (0) (2) (2) (n) (2) (2) (2) (2) (o) (2) )u) (2) (2) (o( (2) (2) (o) (1) (o) ui (2) (2) PAGENO="0309" a 0) U) CD C, CD 0. U) -U > U) C) -` 0 on CD 0 ~ `C a. C `C (0 (0 g ~ g2 22~ 22~ 22~~ a,: : a~!nara a,: °~-` a,: a,,: a a: a d: o~: 2 1 : ~:::`:2:: 2:: ` :~ ..a:2.:::a.~. a:2~2.2 .. . ~_~_tt -,, a ~ : ~ - ,,,, ,,. ,- ,, a :1. ~ L~d~ a~~Ia ~-s r~ ~ aacc a~ ~ di C di PAGENO="0310" 304 47 TABLE 1. Selected Statistics for Minority-Owned Finns by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms )s~bD,-) (01,000) (00589-) (=729-) (01,000) )D7bD,-) (21,000) )obD,-) (01,000) (01,000) totli ~p8tD8h ` 7,86S 109,767 1,114 2,399 60,279 2 CD) 6,751 20,408 CD) 4781940 5,998 63,856 740 2,42940,6152(0)5,248 23,341 CD) 0952,- Sp&ol8h 1,87745,811374 970 39,664 3 (D) 1,503 6,147 0) D&Dklog, t,t41 Sp&015h 1,240 6 CD) (D) )D) CD) 12 (D) Cu) P029-to 61040 62 { - - - - - CD) CD) 00589 1 CD) (0) CD) CD) 2 CD) CD) 09-2.9185108 8920S2DD4 514 2 (0) (DC CD) CD) 1 (DC CD) 4801040 2,17149 CD) CD) )D) )u) 33 )~) C~) P02990 0008.9 109 - - - - - S Cu) CD) 19-85320 tot sp~o171sd - 1 CD) CD) )u( )o) 7 04 5 1980645 1,61339 CD) CD) CD) CD) 5 CD) CD) 1,49438 CD) (DC CD) )u) 2 Cu) CD) . 6.( : : : : : ~ 6 2 7085625 534 4 2) (0) (DC CD) 3 )D) CD) 8811040 134 4 (0) CD) CD) CD) o CD) )u) M2IID,o 549 . 7 CD) CD) )o) CD) 26 CD) )o) P0s,-to 9-53uo - - - - - 1 CD) )o) 5p801!h DOS 8p20t7120 5 5) CD) CD) CD) 0 5 2 P029-to R4D80 46 2 CD) (DC CD) CD) 3 Co) CD) 08029 P0ot,-&D o,-Sooth 8o29-IDDO.. 100 2 OC DC CDC CD) 81 (DC (DC P08,-to DID80 13 1 (1) CD) Cu) CD) 2 CD) (0) 90580 - - - - - 5 CD) (DC 09520 52019-81 21 Sooth Ao29-ID&o.. 2 (0) CD) CD) CD) 11 22 2 P02,-to D1049. (DC 1 )D) (0) (D( (Dl 1 CD) CD) 5090.185 hot 29-2019-153 (2) 3 CD) (1) )D) )D( 12 (5) CD) 1920P&002D8P9-62PS, 90981 09-49120 220 2 CD) CD) CD) (u( 48 CD) CD) D~uDo&o 126 2 (0) CD) (DC (5) 9 CD) (5) PAGENO="0311" 48 305 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (,o,,th~,-) ($1,000) (ooobo,-) (oob~,) ($1,000) (o,l,~~) ($1,000) (o~b~-) ($1,000) ($1,000) b10k~0,1!~d ~ tot~1 0p1,&t1~1 bolld@o,, tot&1 Sp&o1~h. - - (0) (0) (0) (0) (0) (0) (D) (I) 0) (0) (0) (o( (0) (I) (o( (0) (0) (o) (o( (0) (0) (0) (o) )o) (0) (0) (I) )o) (I) (0) 0) (0) (0) (0) 0) (I) (0) (0) )s) (0) (0) PAGENO="0312" :, ~ ~ ~ ~HH~ W~: ~ :: 3':3-:3 :3:3:~ - -3: -:3 -~-~ -~-~-~ ~ :3 c n ~- : 2: 22 I t ~ -~ ~-~i ~jj :3~~3:33:3:3: . ~,~~3':3 - ~ Cl) CD CD C~ CD 0. Cl) -1 0 :3 0 CD CD 0. :3 0. (0 0, (0 (0 PAGENO="0313" (ii 0 7 7 7 7 C C C 37 377 37 7 7 37 77 3 7 7 33 3 C - 3 3 3 3 3 3 3 3 ~ ~r ~ * ~ U----- -- ~- -- -- C ~ -- -- C 7 ~J , `~-~ . ~--.-*;~, r~ -- r~ - ~7 ~, * C, 0 3 3 U) CD CD C) CD U) C) 0 0 o CD 0. ~I1 0* 0. (0 a., C) PAGENO="0314" 308 TABLE 1. Selected-Statistics for Minority-Owned Finns by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms 51 )~bo,-) (Si,07o) (o~~bo,-) (o~otho,-) ($1,000) (00000-) )$s,ooo) (o~~bo~-) ($1,000) ($1,000) 007 JO 33 (0) )o) (0) (0) 0) (0) (0) { ~! } 40 } (0) (0) (D) (0) )o) (a) (0) (0) (1) (0) (0) (0) (0) (a) (0) (0) (0) (0) (0) (0) (0) (0) (0) )o) (1) (0) (0) (0) (0) (o( (1) (0) (0) 33 31 } 170 (0) (0) (o) )o) (0) (0) (o( (0) (0) )e) )o) Ce) )s) (0) (s) (1) (0) (e( (D( PAGENO="0315" 52 309 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry; 1969-Continued PART C. SpanishSpeaking Owned Firms (o0b~l) ($1,000) (,o~boo) (o~oth~o) ($1,000) (o~bo0) ($1,000) (oo~b~) ($1,000) ($1,000) (0) (0) (D) (0) (0) (0) )o) (0) )o) (0) (o( (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (o) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (o( (o( (0) (0) (0) (0) (0) (0) (0) (o( (0) (0) (o( (0) (0) (0) (0) (0) (0) 0) (0) (0) (0) (0) (0) (o) (0) (0) (0) (0) PAGENO="0316" U) CD C) CD 0. U) 0 0 a CD 0. `1 0. CD 0) CD ~y j r~ ~- 0 3 U' U) PAGENO="0317" ~~ull ~ ~ ~ ~~ud ~~uli ~ ~ f ~ ~ I . ($~ ~ ~- .. C~) 0 3 3 U' U) CD CD C, CD (I) C~ 0 0 0 CD ~1 0. (0 0, (0 PAGENO="0318" U 2 1 2. 8. ~. ~. 88 ~. 8.~. 2 ~:~i ~2:~:2 2::2 ~ 8 2 8: 8~~2 82 -~ ~, S :::::: t:: :::::: Ff, I .. ~ 822228 588S2~ ~ i- ~ ~.. cn CD CD C, CD 0~ U) ~Cn -~ C) i 2. 0 S OQ CD 0 (0 0) (0 a Cl' U, PAGENO="0319" 313 56 TABLE 1. Selected Statistics for Minority*Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (~oo~b~) (01,000) (oo,~b1,-) (,oo~b~) ($1,000) (ooth~) ($1,000) (o,,~b1,) (01,000) (01,000) (0) (0) (0) (D) (0) (0) (0) (0) (0) (0) (0) (0) (0) `(0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (D) (0) (0) (0) (o) (0) (0) (0) (0) (10) (0) (0) (Dl (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (o) (0) (0) )D) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) 232 } (0) (1) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) (0) PAGENO="0320" 3 32~ a a a a a a a a a a a a a ~~HH ~ a T__._ I I I I~i~ C-) 0 a 3 a a Cl) CD CD C, CD 0. Cl) C) 0 0 a CD 0. -n 0 0. (0 0~a CD cJ~ I Cli PAGENO="0321" 315 58 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART C. Spanish-Speaking Owned Firms (0085o,) ($1,000) (ooobo,~) (ooobo,-) ($1,000) (ooobo,) ($1,000) (ooobo,) ($1,000) ($1,000) 10111 Spooi~h 31 714 )~) )~( (u) (9) )~) (Dl 8,01010. 15 338 (0) (u) (u) (0) (u) (u) Sp101~h 001 ~poo1f1sd 11 178 (1) )u) (0) (u) (u) (8) Sp1oi~h 1 (8) - - - - - 1 (Di (0) 8801980 1 )u) - - . - - 1 (Di (0) totol 88091810 3 )e) - - - - - 3 (u( (0) 81781080. 1 (e) - - - - - 1 (D) (e) Co5&t~. 1 (D) - - - - - 1 (u) (u) Sp800810 808 880007117 1 (to) - - - - - 1 (to) (0) totol Sp195lto 10 425 9 (u( (u) (0) (to) u (u) (to) 88tlooo 5 231 4 (0) (Io( (D( (to) 1 (to) (to) P0o~to Ditooo 4 (to) 4 32 189 8 42 - - - COoS,,, S (to) 1 (to) (to) (io( (0) - - - too., 10th 8p&tol~h 10 (u( 9 )D( )to( (to) (to) 1 (u( (u( 8891080 2 (0) 2 (u( (to) (to) to) - - - Coboo 2 (to) 2 (to) (u( (1) to) - - - 09080 Coottool op Sooth Asoplto,,o.,. a (o( 2 (to) )u( (to) (u( - - - Spooloh 8001 hp1Cif183 4 131 3 )to( )u) )e) (to) 1 )D( (u( P008710 RICo,,. 29 `212 1 0) (101 )o) (o( 28 `)u) (o) SpotoIsOo toot spo008lod 93 461 2 to) )to( )e( (to) 91 )D) )e( Sp&oI~h 606 8p601flhd 2 1 1 totol SpI0185 0,900 169,200 1,800 7,900 135,800 5,100 29,400 70-654 0-72-21 PAGENO="0322" 316 59 TABLE 1. Selected Statistics for Minority*Owned Firms by Industry: 1969-Continued PART C. SpanishSpeaking Owned Firms (ts,00o) )~~o~) (05,000) (50050) (01,000) (50050,) (Oi,ooo) COleus) Aolusl huoboedoy ooeuieuo, toSol (0) - (n) Cs) 090,, C,oty&5 S0hA~s1e4t.. D) - (D) (s) Sp09100 topotiOlod (o) - (0) (D) 5509000 (i) 495 (D) )D) spoolob ~s oposiflod (o) - (o) )o) PAGENO="0323" 317 60 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART D. Other MinorityOwned Firms (012001') ($1,000) (sooblo) (s'oboo') ($1,000) (o,o~bo~) ($1,000) (slobs,) ($1,000) (00,000) (u) (0) (s) (D) 54 (0) (5) (D) 20 (s) `(D) Cs) :: 2,790 3 5 (5) 3,581 24 44313,148 4 2 (s) (s) (s) 28 2 Is) (5) (5) )s) (5) (0) (5) (5) (D) 8 (s) (5) (5) 49 (5) (s) (s) 21 (5) (5) )s) 18 5 (s( (s) (5) Is) (5) (5) 2 is (0) (5) `Is) Cs) (5) (5) (5) (0) (D) (5) (s) (5) (5) )s) (5) (5) (5) (5) F 1,170 412 6,516 (s) (5) (5) (5) (s) (5) (5) (5) (5) (s) (5) (s) Cs) (s) (5) (5) (s) (5) (s( (5) (5) PAGENO="0324" 318 61 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART D. Other MinorityOwned Firms (b~~) (01,000) (ooob,s) (00000!.) (01,000) )oooboo) (01,000) (00005!.) (01,000) (01,000) 251 0o,s,hold foool 9,006 13 (2) (1) (2) (2) 1 ~1) (1) 2515 0211 8988 sod bld!poiog,. (0) 3451,612 15537 1 (D) (0) 251- Ooosshold foooitooo, o.s.k (D) 2 (D) (1) (0) (D) - - - 259 O15OB11BO200B psotit ioos sod 01660028 1,273 11 (0) CD) (1) (1) 19 (D) (I) 273 Book! (2) 2 (2) (2) (o) (D) 9 (1) (1) 274 Book pobllshthg (2) 1 (1) (1) (2) (1) - - - go~phio 3,191 10 (D) (2) (2) (1) (1) (~) 2752 C~,oo1s1 poioliog, lilhogosphio.. (2) 12 105 2,594 9 216 2 (2) (1) 275. Coo~2o,1s1 p0101109, o,s,k (2) 1 1) (2) (2) (D) - - 278 Bl2okbook5 sod bookbiodiog (2) 2 (2) (1) (2) (D) 1 (I) (0) 341 0,6si 0208. (2) 2 (2) (0) (2) (2) 1 (2) (0) 345 Sosoo 030h102 pooth,ots, tolls, 210... (2) 3 (2) (1) (2) (2) - - - 346 0,611 $bsopiog5. (2) 4 (2) (2) 2) (2) - - - 347 01681 82001088, 9,2,0 3,004 10 (0) (2) (2) (2) 1 (2) CD) poo01ots, (2) 1 (2) (2) (2) (2) 1 (2) (2) pood~o~s (2) 1209354100 1 (1) (2) 34- 00boio40od os1s1 ptodo,1~ o.s.k 718 7 (2) (2) (2) (2) 12 (1) (2) Lo02 4010 2 41. Loosl sod iotl700b$7 6080911, 0.8k.. (2) (1) (1) I (1) )u) (1) PAGENO="0325" as U) cD 0. U) C, o ~. 0 0 0. ~cT 0. CD 0~s (P C) a ~:: : iU :i~:~ ~ ! ~` ,-~ ... ., ,.` ~J -~ r~ . PAGENO="0326" 9 9999 9 9 2 2 2 : : :1 : ~ -~ 8 89 8 9 9 -: ~ 9- ,-.-` - 89 8 ~998$98$9~ 9 9 3 9 %~ ~ "~3 8 9 ~9 i i . ~ i~8 -~ -~ 9 -~ -~ 89: U) cD CD C) CD 0. C') a; C) :~, 0 o ~ 5 0 0. (0 0) (0 (1) 0) (A) PAGENO="0327" 321 64 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART D. All MinorityOwned Firms (o,obs,) ($1,000) (ooobso) (o~ob3,) ($1,000) (ouobso) ($1,000) )O20b71) (01,000) (01,000) R2t511 t75d60.000tt768d 57 ?~ottuo* sod 00s.foooi.htog..too~... 428 44,727 220 1,000 42,098 4 184 199 2,829 13 971 urotsus. sod hossfursishlogs. 126 18,435 93 591 17,993 6 193 33 442 13 5712 rurottuos 88 11,000 59 372 11,239 6 189 29 421 15 5713 Floor ,oo.riog 5090ss 21 1,754 20 Ce) (o) (0) (0) 1 Cl) sC 8714 Oospsry sod ,ph~lstsry store.. 7 713 7 26 713 4 102 - - - 5713 Chios, 919.90608, sod setsloosoe store.. 5 4,216 3 (0) (0) (0) (0) 2 (0) (0) 5719 MisosIlsosous hoosfuroishioge $tOrss. 5 192 4 (0) (0) (0) (0) 1 (0) (0) 572 Household spplisoOsstOr2s 82 7,601 41 124 8,818 3 166 41 783 19 573 Radio, 0915019160, 206 781516 stOrse.. 138 16,772 79 252 15,968 3 202 59 804 14 5732 Radio sod tsleois106storse 62 13,858 36 04 13,838 3 247 6 120 20 5733 #Susto store. 11 1,244 9 2 573- 02db, tslsoi.boo, sod ousio 58 2,130 0 93 684 13 57- Furoiturs sod hoo8forolshbsgs store., 58 Estiog sod drbokbog plsoe.. 5,873 327,722 3,778 22,304 302,675 6 60 1,897 25,047 13 59 Riso.llsoeou.rstsil st6oes. 3,315 181,131 1,407 4,818 159,236 3 113 1,908 21,895 11 501 Orugstorss. sod proprietsey stors,,., 283 39,716 234 1,308 38,695 6 165 49 1,021 21 892 Liquor store. 350 41,656 271 812 38,484 3 142 88 3,172 38 593 kotique store. sod seooodhsod stores. 92 2,287 18 64 1,817 4 101 74 470 6 594 360k sod .tstioosry *torss. 23 1,856 16 63 1,651 4 103 7 205 29 5942 509k stOres. 11 (0) 9 46 1,111 3 123 2 Cs) Cs) 5943 Otsttoosry 58685.. 10 644 7 19 540 3 77 3 104 35 894- Sook sod sostbooery .too.s, o.k.. 2 Cs) - - - - - 2 (0) (0) 393 Sportbss good . stores sod kioyole shop. 104 7,587 49 172 7,013 4 143 ss 574 10 596 Fsro sod gsrd.s supply etoo.e 133 18,280 118 495 16,072 4 139 17 208 12 3962 Osy, grsio, sod fssd .toru. 34 4,838 33 1 5969 Tsos sod gsrdeo supply stores, 388- Furs sod gsrdeo supply .tooes, sib 48 3,603 32 14 597 Oeoolry stores. 234 7,58177184 5,577 72 2,004 13 398 Fuel sod Los deslsr.. 24 1,127 12 22 083 82 142 15 599 Rstsil stores, 0.8.9 2~041 60,272 601 1,603 48,267 77 14,003 10 5992 Florists. 368 13,886 147 457 11,029 70 2,268 10 5993 Cipr .tore, sod stood. 29 813 10 27 306 31 307 16 5994 Neos desl.r sod ores itsods 9 474 7 3995 Hobby, toy, sod gsos shop.. 8 470 5 3996 Cssers sod photogrsphio supply storss. 7 2,370 7 33 5,370 330 - 5997 Gift, ooo.lty, sod souosoir .hop... 134 9 366 107 362 9038 84 330 20 5999 6b.s.llsoeousrsts 11 storss, 0.5.0, 1,486 32,683 316 688 21,820 68 10,803 9 59- Rstsil .torss, o.s.k 22 2,780 13 113 2,873 206 04 10 Fi,,sooe,io,ursoou,sodr.sl 558595~ toosl 6,329 142,060 807 3,200 115,744 4 143 3,522 26~3lO 3 60 Rsokisg 9 20,384 7 (5) (0) Cs) (DC 5 Cs) Cs) 81 Cr.ditsgssoiss oth.r tkso bsoks 33 10,543 18 304 10,438 19 654 17 83 9 814 ?sr.oosl orsdit isstitutioos. 10 3,206 7 139 3,190 23 456 3 16 3 815 Suits... sr.dit institutions. 8 3 3 10 3 818 Loss oorr. spoodsots sod brokers. 1 ` - - 61- Credit s~eroiss, o.k 16 6,978 8 138 6,919 28 1,384 1$ 39 3 82 esourity, crssodity, broksr, sod .sroic.s. 835 5,198 30 162 4,048 5 135 825 1,130 2 822 8.cruity broker. sod d.sl.rs. 378 4,747 24 151 3,841 6 160 354 906 2 62- Cos~odity brokers sod ..rvio.s. 77 451 8 11 207 2 35 71 244 3 83 Xosursooeosrrisrs. 54 2,236 3 sC Cs) Cs) Cs) ss Cs) (SC 64 To.ursso.s~ssts, broker.,ssd ssroio*s. 5,519 2,9,997 11,844 2 84 1,333 8,153 8 8.. footsots. at sod of tsbl.. PAGENO="0328" a. aaaaa aaaa :~ ~ 41a raaa aaia U) CD CD U) C) z1 0 o ~ 0. CD 0) CD U ~ U ,~ ha a a a a ~a~.'Ha :~a~::':,,a :~ ~: .~ ~ ~ ~ ~ a a a.. .--~, ~ a aaaa a~sa~a a~aa ~-,- a a a a a a a a a a a ~a-~a a a ~aaa , .. `~,-. ,a~aaa aaa a~ a, a a a a aa a aaaaaaaa ~aa a a -~ a a a ~. a a a a . a a ~~1~~ aa a ~` .,a~ h §aa :-~-- I ~, ~hha a aaaa a a aa a aaaaaaaa a~aaa,~aa a a a a a a a a aaaa a r~m , , ~. ~- `-`i. aa ~- a a a - 0) (SI PAGENO="0329" 66 323 TABLE 1. Selected Statistics for Minority-Owned Firms by Industry: 1969-Continued PART D. Other MinorityOwned Firms (obo) ($1,000) (ob00) (7100) ($1,000) (obo) ($1,000) (17) ($1,000) ($1,000) 763 00th, 017k, 7td jo71y 0p01 (1) (0) (5) (0) (1) Is) )u) (0) (1) `(1) (5) (0) (0) (1) )D) (1) (u) (u) (0) (1) (0) (u) (0) )u) )u) (1) (0) (1) (0) (u) )o) )u) (u) (o) (0) )o) (0) (1) 68 (0) (u) (u) )u) (1) (0) (0) (D) )u) (1) )u) PAGENO="0330" 324 TABLE 1. Selected Statistics for Minority~Owned Firms by Industry: 1969-Continued PART D. Other MinorityOwned Firms 67 ~. ~: oDDS,) )Os,000) (o~s.,) ~:: )o~9~) )Oo,ooo) ;~ (o~o.,) ~:. )Oi,00o) (o~b.) D~01 ($o,ooo) ;~ )to,ooo) 8072 150th loto,iss. 132 2 (0) )s) 75 1 (0) (s) `(s) (5) (s) (s) (s) (s) 57 ~ ID) (~) (D) )D) 809~t. Ssoo&t,,1s, Doooslssosot, &od 1735! 90 2,204 15 228 1,530 15 103 84 724 9 821 824 829 5151805887803800097807500701! ~Dho91~, &od j7010I 9175903! C0703!p097899! &od ooo&tloo&1 sohool 501701! &od ~7oo&91oo,1 55901998, 9.9. 25 1 12 15 493 988 1,019 212 24 3 12 13 (o) 0) (0) (5) )o) CD) (1) (1) (o) (D) (0) (s) (0) (0) (0) ID) 2 5 1 2 (1) (D) )o) (0) (o) )o) (o) (5) 1897.5805! 8s~0. )D) Vttt7osld to so017 dO.olo.Iog flgoooss fos 9o32o27o17 909p&01s8. PAGENO="0331" U) CD C, CD U) 3, )~ 0 0 0. 3 DC 0~ C, 0 3D C, *0 C) :3, CD C:, to C, to PAGENO="0332" -4 (n CD a U) DC C, 0 -U ~ > 0 ;~ wg 0 20- C) CD 0 DC C, CD DC (0 0~~ C) S 41 %82%%~ %2%%5-%28~ 852% %2%%%%8%5~ 2%22%2~ %2%~ 828522 4%-%5%5 28-88~ 88 %541%~' 2522:h~ 22% 8~% ~%5%)55 8558 8-: 8245582 1 288 ~~1: 28 851 8 41 2 8 2 2 8 5 8 8 8 28 8 ~ %~8--~ 2 88h8 88822 8$%8%%%8~ ~%8%-~ 858% 88882% ~%~2 58 ~ 8 ~8 22 5 28882% %588%8~%8 %h8% ~8288 2 ~%~%8~ %%%~82#8 285828 828% 2 ~8~85%~ 5- 8 282228 228888288 88228 8828% 828282882% 2822222% 82828% 8288 288222% 2 888888 882822825 2228% 28228 282888885% 82228828 %5~8%2 8888 88~~ ~%~858~ 8 ~8h5%~ - ~ 2% ~ 2%888~ 8288 8-8~5 2282% 8 58 85-2#888~ 882~8 %%8~ 8-~2 82222288 ~282%% 88%h~ 2228 88$~ 8 a) (0 PAGENO="0333" 9 8 8 829 9898 882989 952 992952 892958 99298~ 99295~ 88 89295: 8~2 H 8): : 9 8~: : 9:2 :`< 9~: 8 - 8: 9:3 :`~ 93 8: 9 9: : 9: :3 9 9: 9 9: :9: : : :3 0 8 9 ~- ~ ~- 58 ~ 1~ ~: : ~ ~m ~ 8 98 2- 9 Cl) CD CD U) CD C) 0 C_) ~ 0 0 U) o3 9 cn CD C) CD CD CD C) `.0 PAGENO="0334" 328 71 TABLE 2. Selected Statistics for Minority.Owned Firms by Geographic Areas: 1969-Conhnued PART C. Spanish-Speaking Owned Firms o~b~o) (11,000) obo,-) (oo~b.,-) (11,000) (,006.,) (51,000) (o00bo,-) (Ss,ooo) (as,000) 9111006, tttsl 8p00186 553 18,035 185 677 14,391 3 75 358 3,444 9 255 7,941 53 285 6,141 3 76 162 1,603 11 Psolto 71856. 16 1,164 7 20 880 3 140 5 94 9 Cob 23 587 3 6 480 2 183 20 87 5 0168,' C818t51 to 8,otb A~s,1s.o,,,,.,.,.,,,, 17 3~0 5 1 6~ 2 32 12 55 5 6;snlsb !ot spIcIfisO 002 8,216 87 355 8,812 4 78 163 1,312 7 Wlssoosto, ttt.1 8psol~6 222 4,705 53 131 3,218 2 81 165 1,485 5 91489651, 72 1,888 18 83 1,424 3 75 53 851 11 0768! 8pat1~'~ 270 2,720 34 78 2,792 2 53 118 528 8 tOo 6111065189 by 5858!, 10751 Ipsols'o 3,000 67,200 2,200 3,600 60,100 2 67 1,800 7,100 4 2,100 78,700 1,000 2,700 74,600 3 73 1,000 1,807 2 016or 8p8618'O 0,000 10,210 000 200 1,200 1 28 800 5,307 7 Wotl,so.,,.,,.,,.....,,....,.,.,,.,.,,.. 1,403 41,337 830 1,406 35,016 2 53 773 8,375 8 0tb~o 8750186 121 3,318 32 214 2,685 7 84 74 633 7 Miooostt., tot.1 8psot.h.....,.,...,........,. 124 2,842 27 68 2,032 4 78 97 720 8 sos, tttsl 8psolsh........................... 107 1,770 31 84 1,324 2 43 78 448 6 StilsoutI, totsl 8pso186 271 8,035 72 355 8,527 3 85 182 1,528 8 Othso 8786156 11 803 3 106 787 33 272 8 26 3 Cooth 056015, totsl 1;stl.h 7 211 2 (0) (0) (0) (0) 5 (o) )o South Oskot., tot.1 lpsolsh 18 92 3 (0) (2) (0) )o) 12 )o) 0 001111001180,00 81919, ttt,1 6~so1s' 600 22,000 400 600 20,000 2 50 200 2,000 10 Not *lloo00sd by Ststs, toolS tbyol!0 1,000 130,600 1,300 6,600 110,100 02 1,400 11,500 8 PAGENO="0335" 329 72 TABLE 2. Selected Statistics for Minority~Owned Firms by Geographic Areas: 1969-Continued PART C. SpanishSpealoing Owned Firms (o.o.04,) ($1,000) (ooobo,) (o~o~bo~) ($1,000) (oo~b6,) ($1,000) )o%3.b6.) ($1,000) ($1,000) Aok..o.,,, tot,1 1p~i~h 77 1,794 25 110 1,432 4 57 52 382 7 Id8bo, totol Sp8o1~h 111 2,152 24 so 1,580 2 85 87 582 105 2,084 23 sI (I) (0) (5) 82 (5) (5) 0th~, 69801.0 8 88 1 (0) (5) (Di (Dl 8 (51 (5) 3,949 118,008 1,288 4,320 88,048 3 78 2,883 20,022 9 0th~ 6p,61.h 36 986 12 37 779 3 68 24 187 8 Ms810.o. 188 3,865 49 (5) (5) (5) Is) inn (ii (ii 08080 Sp.oi.h 5 70 2 (s) (5) (5) (ii 3 (5) (5) M.s19~o. 176 7,780 61 Is) (Di (1) (ii 118 (5) (5) oto., Sp.01.0 18 238 2 (5) (ii (ii (Di 18 (Di (ii M.s1o.~o. 2,600 29,400 400 1,000 17,400 3 44 2,200 12,000 8 8.81028. 27,840 1,030,900 9,448 43,500 687,918 8 94 18,095 142,928 8 82,0109896, tot.1 6p~61.h 392 11,131 88 348 9,063 4 107 307 2,068 7 18 `268 4 `168 1 56 12 `87 9 018996, tOtsi 8p.ti~h 188 3,687 49 114 2,788 2 89 137 899 7 8.912.6. 176 3,822 46 (s) (Di (0 (5) 130 (5 (0 06091 8p961.h 9 166 2 )o) (Dl (5 (Dl 1 (2 (0 8.. 69066969.28964 05 t&b18. PAGENO="0336" 330 TABLE 2. Selected Statistics for Minority.Owned Firms by Geographic Areas: l969-Contjnued PART C. SpanishSpea~ing Owned Firms 73 (o~b~.) ($s,ooo) (b~,) ($5,000) (~b~) ($5,000) (o~b~,) ($o,ooo) (ds,000) P oto Rlo&s. 494 430 19,659 19,908 141 160 578 665 16,592 14,547 4 4 118 91 333 271 3,047 2,361 9 9 - F.2p7.829t. ~s,9. (0) Wlthh.ld 89 ot,ld 01s918810.g flgoo-8! Os, IpOlsld',&l os~p&s0... PAGENO="0337" Cl) cD a Cl) C, 0 0 ~ 0 *0 C, 0 CD 0~~ (P C) C) U] H H -1 HH~~hH~ HH~HH' HHi' H H H H H H ~ H~HHH~ H H ~HH~HH HH~ H I L~ I I I I H I L~. H H LH~ ~~HHHH H H~H~H H HHHHHI HHII H I H H H H H H PAGENO="0338" U) CD CD 0. U) DC CD ~*0 ~ a 0 2CD 0. 0) (D~ C. 0. 0 DC 0. 2: 6: ~: : : : 2 ~ _______________ 6 ~822 6 ____________________ 2 6 636262622 23883222262 666666822 3 C~i 26862223622 2362623222 26363623326 01 PAGENO="0339" U) CD CD C) CD a C') DC j~ i:~. v 0 o ~ ~: ~. I-. ~ CD CD m a 0* a C 0 C 0 DC a CAD `-4 ~-~--~-,-~ ;~2~;~t~-g ---_(~`--,`--._`- ! ~ a 3 ~-:.g~ ~9i~ ~ 2 !~D 2 S--- 2 -~`-~ 2 2 2 ~-.-~-2 - PAGENO="0340" Cl) CD CD U. Cl) DC ~ ~` DC ~ o (OCD a)D. ~ 0 U. a. D 0 DC a. ~ ,~ -~ - ~-`~-~-`.~ -~--~ u~~_~___ ~-~(-~ -~ -~";-- - ~ PAGENO="0341" U) 0 0 a- U) 0 CD ~, o ó corn a. a. 0 0 a) a. ~~i~ii~h *~ !__!_ ~ n~ ~ `~ L Ii ;-~ ~ ~ ~.w ~ -~ g !__!__ ~i~I~in -~ PAGENO="0342" 8 8 88 8 I a a a a 8: 8:82: 8 2~:2: 8 22:82: 8 22:82: 8: 88~88~ 8 8: 22:88 8 88 8 8 8 88 8 8 82 21 8 8 ~ 2 `~2 8888~8~8a8 2 8288828828 a 888a~8~a8~ 8 882~8~88~ 8 8818~8a22~ 8 8828888888 88 - 882 88 8 8 8 8 2 8 2 ~ ~-2 88888288288 88888888282 2882~8~2a~2 8288882888: 8:8:8228888 8 8888828888 8 8882822882 8 8828~8a28a 8 8888:88888 a 8888~aa88: 8 888888888288 28 8 8 - 88888888828 S888~8~88~8 88228888888 888288288:: 8a::::2:a:: a 882 C,, CD a C,, -u CD,., ~ a~ ~* CD -~ * DO U) 2. D3 :3ô 3 0 3 g.!fl 0' C,. 0 CD 0. 228:22:222 a 8828~a~a2~8 CD PAGENO="0343" Cl) CD CD C) CD a Cl) DC -a 0 U I-. = CO CD ~ a 0~ a C 0 C 0 DC a 03 03 0 0 B PAGENO="0344" 88588888 99$ 8 8 8 8 8: 889889: 8: 8 9: 999999: 8858885858 8858888888 : :~ 9 : : Cl) CD CD C) CD 0. Cl) 0) CD.. ~ j~ ~ c' 0 0 Dl ~ 5< 0 ~-`~ 9 (0)0 0)0. 0~ 0. D 0 0) 0. -~ 5< -5-- 98 9 9 9 9 8 9 555_ 9 8 9 8 88 ~ ~ 2 8 8 88~88~~ 8 8 8 8 8 2 CO o ~OO ~ Co 0 a CD a. `1 3 0* `C V C `;~, g e~Ctt2C~C~CCCCE C ~ - ~CC C;-- ~ I ~: C C~CC CCC C C CC CCCCCCCCCCCCCC C C : P~i~ . C ~ C CC C C C C C C C CCC CCCC CCtC~CCCCCCC C 2;;z2;~;; V ~* ! PAGENO="0348" a a a: a: a a aa~aa~aaaa?aa-~ ~ ~~aa:.:a a: `: a: ;aaaa~aaa aaaaaaa aaaaaaaaa ~a~;a.aaa aaaa~aaaa ~a~aa~aaa aaaa?aa~ aaaa?~aaa a: :~: : a: a: ~: aaaaaaaaa a -~ a a a ~ ~ ra~m~ ~ a a aaa ~a~a a a -~a.a,aa~aa a ~ baa a a a;aJ~a~a ~H ~ - a~a~aaa~ a a a 3 cn CD C, CD 0~ (1) CD 0. -~ Co * Cal 1.00 0*1 ~ 0 a CD 0. -n 3 ______ a a Cal PAGENO="0349" 2959252 952 8522? 25? 598193922 2 528823128 8522825? 851282582 598828129 28585 8 ~,t 9 258822922 2 22859.~2~9 8 2 5 81 8 2 5 2 8 5~829~9 8 p928828 8 28228829 929528888 - - - - 28hh928 88hh159 ~ - 58 I - -- --` I ~8I~I85h 2 522229588 1 28t~82282 8 882828~82 2 2 52 1! 8 2 2 2 1 P~~289 ~~2I! 882 2 P 2 ~ 992889182 2 289288228 8 988882882 2 822282282 9 9 299912229 2 ~`U2 -- -- I 58 I 82 ! Cl) CD CD C, a U) 0) -n -¾ Co ~ ~u1 a ~ a `P9 3 ~o go 0 g 0 CD 0. -TI 3 0~ `C Un PAGENO="0350" a: a: a: aaaaa~a a a a:.. a: a: ~a: : a: a ~~u1 agaa.aaaaa a aaaaaaaaa a aaaaaaaca a aaaaaaaaa a a - ~ J~ -~ ~ -~ aaaaaaaaa a aaaaaaaaa ~ .. a a a a a a a a a a ~ -~ ~ a a ~ ~a ~ a ~ ~a~a~aaa~ aaa~aaaa aa~a~aaa~ ~ aa~aha~a ~ aaaa~aaa - a aaaaaaaaa -~ a -" aaaaaaaaa a ~ -~ a a aaaaa~aaa a a aaaaaaaaa aaaaaaaaa a a a aaaaaaaaa a aaaaaaaaa ~ a~aaaaaaa a ~aaaa~aaa a a ; ~ agaaaaaaa a aaaaaaaaa a aaaaaaaaa a aaaaaaaaa a aaaaaaaaa a aaaaaaaaa :;*~a aaaaaaaaa a aaaaaaaaa a aaaaaaaaa a aaaaaaaaa a aa~aaaaaa - a a a aaaaa-.a~a a a U) tb (D C) a U) 0) 0. -~ ~ ~ ~U) 4 3 0 I PAGENO="0351" 0 Co I -~ -~ ~h -~ - - t___--~ -- ~ ;i ~ ~. : 1! ~ - L~U Pfl~ n~ :~ ~1~Z - C') m C) to 0. Cl) Qt -C) =cn a. > go o -C o ~ ~ 00 a 212 3 ~CD 0 a to a. -n B 0* `C CAD CJC PAGENO="0352" 0) Co Co >5 n E a) C 0 0 C a)- E Ow OQ) ç to,-' S 0~ < Ca Cl) 0 0 C) Cl) I S s-5-- - 1 S~k1 222882822 282~2222S 2 222222282 2 228~228?~ 2 222255222 ~kk~i 2~'~ I 711 - 82- 2-- 222222222 2 2 f~ !- !- - 2 52 822252855 2 522522582 2 222852222 .`t - - - #52 9 2 1~- U 25522 2 822222~22 222228222 25222222! ft :~j :8 :s~ I~i~ 22228852 225222 £ ~ :~ :~ :~ :s ~ 2228822 26%2222, ~Hsu:~ ~n~nI :s :~ :s i~ 222222822 2#2 ~sHa ~ :~ :s :8:2 ~ 2822622 2222222 ~ ~hHa ~n~u :~ :~ :~ :s ~ 222222628 8222222_ U~hHZ~ I :~ :~:~ :r~. 22222622 622222~ ~HsH:~ iiflIiilI PAGENO="0353" 0 C)' ;aaaaaaaa a~aa-aaaa aaaaaaaaa a aa aa a a: a ;aaaaaaaa ;aaaaaaaa a-aa-aaaa a a-aa-aaaa aaaaaara a: a a: a: a: a: CD 0 a a::- a: ;aaaaaaaa a a aa a: a a:: ~--~- ~ -~ a a a a ff - `~ a a a a ~a~gaa~ 1~ a aaaaaaaaa a aaaaaaaaa a ;aaaaasaa a aaaaaaaaa a aaaaaaaaa a a;aaa;aaa a a L~~H a ~aaaaaaaa a asaaaaaaa a aaaaaaaaa a . asa~aa~aa a ~aaaaaaaa a ~*fla ha aaaaaazaa a aaaaaaaaz a aaaaaaaaa a aaaaaaaaa a a~aaa~a~a a aaaaaaa a a a a a a- ~~ild a-~ Cl) CD CD C, CD a Cl) DC -C) =Cn a ~ a `-`Ui (00 a 3 O~ go ~CD 0 0 CD a -n 3 0~ `C 03 a PAGENO="0354" - ~--~(.--, ~ ~ ~ ~- -.- ~ ~ ~- ~!;.__!___ ~u ~:~w `~ U) CD a U) CD 0. ~, go 0 0 CD 0. -n 3 0~ (0 PAGENO="0355" ~8~8 3 > Cl) CD CD C, CD 0~ Cl) a) -C, ~C/) 0.~~ (DO ID C) -` ~CD 0 0 CD 0. -Ti 3 333333333 333333333 335333333 33333533 3:: 3: CD N) o 3 3 CA~ 8 338333338 8 PAGENO="0356" a: a: a: a: a: a: a: a a ~aaaL~aaa a a ~ ~a : a ~aa;La~ a ~ ~ ~: a ~aaa~ aa~ ~ a~ a: a: a: : : a a: a a a a a ~ a a a a a ~ahhh~ - L~ U) CD CD C, a U) DC ~ a (Do ~Do 3 c,_1 go 0 0 CD 0. -C, 3 (D CA) PAGENO="0357" 522223222 2522: 2:2 2: 2: 3 : 2: 2: 5222123fl2 1222: ~: a: 5: 523222 252: 2: 3 2 A CD a U) CD CD C, CD 0. Cl) CD -h P-~$1 (Do a 3 o~ a 0 0 CD a- -Ti 3 0~ `C I 282325522 8 2528222 2 2 282228922 222222282 (~ `;_ 5 55! S 2- 2 ) ) a aaaaau a - ,~ 22~2~ ~- 52 53 . - 9 222899228 -~ ~ 2999 9 2 - ~ 2Z9S229-9 22 292S22-9-98 ~. 9 î~ S 2- ~2 2 : ~2Eaaa!~t ~:ni - : ::~z ::~i~ j ~u 2 282982828 2 2S9S2#9S9 2 29229299-2 9 292299-9-95 2 jifll 2~9~ -~ - -- ; 52 2-3 ~aa~n ! 03 C;' PAGENO="0358" 3 3? 3? 3: 3: 3: 3 3? 3? 3: 3: 3: .4' -l a U) CD 0. ~ ~~cn ~ o"~. ~ ~ 3 C_)_~ go 0 0 CD ~1 3 0~ C~i 3 ~ =;:~3 4' :3 4' :3 3 :3_ -~ -~ ~- ~ :3 4' 3:3 `3 -~ - ~4't:34'34':35$ :3 ~~~-4'3:3 33 ~ 4' :3 ~ ~ 3 - 3:3:3333333 4' 4' `33 33 ~ ii~i~ -~ :3 ~;3 ~_33~_-~_ H 3 ~ Ii:! 4' 4' `33 `3 CD U' PAGENO="0359" CD C~) ~:: ~:: ~: ~: ~: :~: l~ ~_ ~- -~ -~: -~ li ~~-.------~ -~ ~ U) CD CD CD 0. U) DC ~ -1 C,) li o 0)0 ~ ~o0 0 0 CD 3 0 PAGENO="0360" 354 97 TABLE 4. Selected Statistics for States With 500 or More Minority-Owned Firms by Industry Division: 1969-Continued PART C. Spanish-Speaking Owned Firms 1 ~ ~, With ptid a'pioy,t, ) (a) (a) (a) (a) (a) (a) (a) (a) Cttia,o, 5 Os (a) (a) (a) 2 (a) (a) tp.ot.h tot spaaitiad 65 2,204 (a) (a) (a) 44 (a) (a) ttioodiatoo,s. 65 2,041 (a) (a) (a) 07 (a) (a) 2 (a) (a) (a) (a) a (a) (a) 0027o Catttii oo Sooth 77.-ia, a (a) - - - a aa Toaatpattatioo ata athst pobSiaiWiiitS,..... 821,149 (a) (a) (a) 70 (a) (a) t,oiaao 1 (a) - - - 1 (a) (a) Poatta Ria..~ 21 277 (a) (D) (a) ao (D) (a) Otha,- Catitti at Sooth Aaatiaat (5) : - . : S (a) (a) thoi,t,ia toad, 21 3,694 (a) (a) (a) 8 (a) (a) Costa 4 1,316 (a) a) (a) a (a) (a) Spati.h tat .paaifiad .::::::: ii 1,703 (a) (a) (a) 3 (a) (a) Othat itdo,ts-i.. . 17 779 (a) (a) (a) aa (a) (a) Itdo,toi.. tat aiassifi,d 131 2,S5t (a) (a) (a) 102 (a) (a) Mtaiaao 2 (a) - - - 2 (a) (a) Oth.o Cattail at Sooth A=,oia,o e (2) - - - (a) (a) tp.ol.h tot .p.aifl.d 51 641 (a) (a) (a) 42 (a) (a) PAGENO="0361" 355 98 TABLE 4. Selected Statistics for States With 500 or More Minority-Owned Firms by Industry Division: 1969-Continued PART C. Spanish-Speaking Owned Firms (owb~-) ($1,000) (~~~s~-) (,,~s~) ($1,000) (,,o1b~o) ($1,000) )~b11) ($1,000) ($1,000) M1o0f&1t11~l. 14 (0) (0) )j~( (o) )°( °) 0501~!~5l to~do 9 )o) (1) (a) )o) (1) (1) Fi1~oo~, ~ ~.od ~l&1 1st~t9 48 )o) (0) (1) (1) )o) (I) Iod9~t~1~ 001 0188S 18184 4~ (o) (0) )o) )o) (o( )n) PAGENO="0362" 356 99 TABLE 4. Selected Statistics for States With 500 or More Minority*Owned Firms by Industry Division: l969-Continued PART C. SpanishSpeaking Owned Firms 181143 { } ~ 6 `121 { J 69 889108,, 370 (n) (s) CD) (o) (0) (DC Otb~ C89t~*1 Sooth AoDtj089 334 CD) (D) (DC (t) CD) CD) M8It0*t 189 (D) `(D) (D) (D) (DC (D) PolIto 61346 2,358 (n) (I') CD) (D) (D) (D) T~*t~pottst1ot 800 0t587 pob1too811it1,~ 20,741 (D) CD) CD) (D) (D) CD) 8881689. 98 CD) (DC (0) (5) CD) CD) Ott,8pC2ttp,1 61 10015 A98P1D16,,,,,,,,,,,.. ` 69 (DC `)D) )D) )D) `)D) )D) ~ PAGENO="0363" E La- C 0 a C .C.. cia0 (n~ cci Cl) C ~Ji g :~1L~ : -~ 22 2222 222 ~ 222 : ~ C ~ C .~ -. -` ~ -~ * ~ C `~ -~ ~ * ~* ,~--~- ~ 0 0 `-4 ~U :~ ~ a) a * ~ ) C ~ :~, ~ a :~ C ~ ~ :~ ~ a :~ C ~ ~ :~ :~ :~ :~ ~ ) ~ a C~h~.C ~ :~ ~C ) C ~ PAGENO="0364" 358 101 TABLE 4. Selected Statistics for States With 500 or More Minority.Owned Firms by Industry Division: l969-Continued PART C. SpanishSpeaking Owned Firms (o~b~) (11,000) (o~b00.) (~~b00) (S1,000) (o~=b00) ($s,ooo) )oo=b~,.) (Si,000) (*0,000) T,&o8p07t89100 008 00000 pobllo otilitl00..... 872 18,091 1,201 8,881 } 338 7800 ~ } 3417 } 840 9:423 .( 406 } 2,898 ~ } 4:193 { ~ } 1419 ~ ~ 1~ } 145 2,225 26 } 782 ~8~;~;;~::::::::::::::::::.:.::: 25 } 871 288 ::~ :::: :: ~ PAGENO="0365" 102 359 TABLE 4. Selected Statistics for States With 500 or More Mlnority*Owned Firms by Industry Division: 1969-Continued PART C. SpanishSpeaking Owned Firms (sober) (~i,o00) (sober) (oob.r) ($1,000) (toobor) (sinus) (,oob.r) ($1,000) ($1,000) cosorado--cootitoed Piscine, theoreooe, cod neal .etate. 84 Oilcan. 90 Other Speoieh 4 Selected eervioee. 825 Mecicco. 910 Other iodoetriee. 53 Mexican, 51 other Spa,,ieb 2 Iodoetriee Rot claeeifie5 186 Other Bpaoieh Men Metico, tctal epeoieh 3,985 Meoitao. 3,949 Other Spanish 36 Contract ccnetroctico. 456 Other Spe.oish. .eoufactoree, 83 Metitan. 63 Traneportatioo and ether poblic utilities,..,. 237 Mexican, 235 Other Spanish 2 Wholeecle trade 79 Other Spati.h Retail trade 1,597 M~tican. 1,578 Other Spe.oieh 19 Finance, Insurance, and real *eta 196 13 13 108 16 18 27 1,298 1,288 12 158 157 29 29 39 39 27 27 705 695 10 1,803 6,951 115 1,055 1,055 2,210 2,192 117,034 116,088 966 13,912 55~912 3,380 3,390 4,897 4,957 6,553 8,553 88,480 87,876 804 1,060 39 1,483 3 114 39 1,485 3 114 318 3,924 3 36 318 3,924 3 36 42 868 3 54 42 868 3 54 49 1,628 2 60 49 1,628 2 60 4,357 98,925 3 75 4,320 37 96,048 779 3 3 75 65 690 12,162 4 77 . 690 12,162 4 77 200 3,144 7 108 200 3,144 7 109 228 3,401 6 87 228 3,401 6 87 151 5,409 6 200 2,112 59,811 3 85 2,112 59,611 3 85 )o) (0) )o) )o) (o) (o) (0) (0) (0) (o) (0) (0) (0) )o) (0) )o( 515 502 13 37 St 139 139 2,687 2,663 24 258 258 34 34 198 198 52 892 167 167 318 290 3,027 3,027 185 165 584 556 20,209 20,022 187 1,750 1,750 236 236 1,296 1,296 1,144 1,144 8,869 8,869 (0) (0) (0) (o) 18 22 10 10 (0) (0) (0) (o) PAGENO="0366" 360 103 TABLE 4. Selected Statistics for States With 500 or More Minority*Owned Firms by Industry Division: l969-Continued PART C. Spanish-Speaking Owned Firms St&t. ..~d 1~d.~t~y Ci~tsi~ ~ f; ~ PAGENO="0367" 104 361 TABLE 4. Selected Statistics for States With 500 or More Minority*Owned Firms by Industry Division: 1969-Continued PART C. Spanish-Speaking Owned Firms (t~tbtt) ($1,000) (otobot) (oto~btt) ($1,000) (oto~bto) ($1,000) )oto~btt) ($1,000) ($1,000) i,u:s 33,300 350 8:: 24,::: : :: :,::: ~: Pos,to 01o&o..............................' 13 68 1 (0) (u) (0) (o) 12 (1) (1) (1) Otbot C2ttt~&1 0,' Sooth Att,'lo&". 16 491 9 (o) (o) )o) (n) n } 10 `a:: a :i { ` ~ J `: 8 - 88po28.tt~ 1216. )o) Wlthh:ld to &:old d12:1o21:g f1go3'~ to,' lodItIdoll 068p20112. PAGENO="0368" a: a: HaH a: ~::~: a: ~: a: a: ~: a: F *~ a a a a a aaaa~-a ~ ~aa a a~aaaaaa~ a a a a a a~i a. aai~aa~ ~ ~ ~LL ~~E_ a aaaaa~aaa a aaaaaaaaa a a a a a a~a~aa~-aa a a~a~~a U) CD CD C) a Cl) DC -)~ o_ ~, p 0 o~ a I a UI PAGENO="0369" a) 8: 2: 2: 0 0 a: a: :2: 8:. a 282228282 8 22222 8 285 2:8-22 22 a 2- 8 I 82 a a - - ------------- 2382-832-35 8 5 889522 8 I~ 2 2- 2 5 2382228 !~ g~:aa L~tH S 88892222 5 82222281 ;fla - ~ 52 a a 8 2258225-2 2 21223~68 2 8a832~g~2 2 288858 88 2 9~8g233312 2 0 0 a 3 2 Cl) CD CD a Cl) 0) 0. _ ~CJ1 ~0 0 00 go gCD 0 0 0. -n 3 0* `C 03 03 PAGENO="0370" a: : a: a: a: ~: a: : a a a a. ~ a~aaaa aaaaaaaaa aaaa a a aaaa a a :;a~ a a a a ~~a~aa.aaa a aaaaaaaaa -4 g) a Cl) -o ~ D-. ~ I ~ ~ 0 1* a a a aaaa~aaa aaaaaaaaa 2 a~2aa ~ a aaaaa~~aaaa aaaaa a -o a :a-÷a0--0--a-a~a.0-aa-aa--a 2 a. 0 PAGENO="0371" CD C, a Cl) CD 0 Cn~ a Co SQ-n 0, Cl) CD C, a C/) CD 0. CD 0. CD 0 *0 0 CD 0 01 0 a B PAGENO="0372" a 1 - ~~`- ?-- ~- ~ a >~- - - ~ - ;, ~.,: : a a L!~ ~ ~ ~, `;, S ~ ~ ~ a ~ ii~ Iii aa~:~ a~g.. aa~~ g) a U) DC 00 -~ ~ O CD o 0. ~ 3 ~cr Cl) a Cl) 0. 0. CD 0 0 DC 0 CO PAGENO="0373" 367 110 TABLE ~. Selected Statistics for Minority-Owned Firms by Selected Standard Metropolitan Statistical Areas: 1969-Continued PART C. Spuninh-Speuking Owned Firmu (ooth~) )tu,nnn) (o,,,~u,.) (~b~~) (tu,nnu) )0~:?) (tu,non) (o,~~bo,) tenon) (tenon) In) in) in) in) in) ni ni ni ni ni PAGENO="0374" 368 111 TABLE 5. Selected Statistics for Minority*Owned Firms by Selected Standard Metropolitan Statistical Areas: 1969-Continued PART C. Spanish-Speaking Owned Firms ~=~-i t~,oooi c~~a~i c~=~~i aloud (s~~-) 155,0031 (o~bss) 55,0301 (*1,0001 ~io~ 945 5~,433 335 (a) (0) (a) (a) eon (a) (a) 0500, Sp&ol.h 5 ecu a (a) (a) (01 (a) 3 (a) Cal Ccupb1~, Tsuu.-A00., tutsl 0p~u1sh 58 643 13 47 585 4 45 15 61 4 MubIls, A0~., tud&1 epsulsb 07 1,091 10 (a) (a) (Dl (a) 17 01 (a) N7!fllk-05,58705th, Id., 07551 SpsIlSb 19 454 1 (a) (a) (a) (Dl 18 (Dl (a) eluhuoud, Vs., Ootsl Sp~o1sh 9 87 1 (a) `(a) (a) (a) 6 (Dl (a) PAGENO="0375" 112 369 TABLE 5. Selected Statistics for Minority-Owned Firms by Selected Standard Metropolitan Statistical Areas: 1969-Continued PART C. Spanish-Speaking Owned Firms (,,oobo,) ($1,000) (o,bo) (ooobo~) ($1,000) (oOobOO( ($1,000) (ooob~,) ($1,000) ($1,000) )n) Withhold to tooid ditoiooiog figoots Woo iodioidoli ootpgoig$. PAGENO="0376" 2 2 2 Cl) CD CD C, CD 0. Cl) DC -~ > DC' o ~ * 0 o CD~. q o C0fl 2 0 Cl) C, CD 0. Cl) DC 0. 0. CD 0 *0 0) 1182 112 ~ 2 882112 118282 811812 ~ i~~ii ~ii~ I . ~. 2811 8822 1111 82 ~ 11 1111 ~ 22 11 ~ ~28 ~ ~ 11222 - 11 ~ 2118 2822~ 2~c~ 8; -~~-- 11~;~ 1111 22 2~1111z 881188 28828 811288 2 ! CC) PAGENO="0377" * g ~ 3 3 : :::3: :3: `3: : : 3 `3 `3'33 `3 `3 `3'3'3'3'3'38'3'3 `3 .~ w U) CD a U) a) C, -1 O~ > ~ -C ~ o ~2. `3 CflA) ~ `-`Cl) 3 C, DI CD a) C-" 0 0 CD `3 `3 `3 `3 `3 2 `3 `382 `3 `3.'3.'3'32228'3 `3 `3 `3 `382'388'3'3'3 8 8'318888'38 `3 I PAGENO="0378" I a2aa3a$a I ;aaaaaa2a a9a~28 2 8 2 8 2 a a a a a a a a a2aa~aaaa ~a:-a~aaa~ 2aaa.aaar *aa-a. 8aaa?;ar~-aaaa,aaaa a~aaaaa~ aaaa?aa:~2 a aaa~'aa'2 aaaa~aaa~ aaalaa ~ ~ ~a:a~:a~ 28:aa a: ~: a: .:~: a: ~: ~: a a: ~: : a: ~::~:: - a:~: ~:. a: :: a. : :::a: : a: a: a: : :::a:a : ~: a:. : a:: aaaaaaaaa a aa:aaaaaa a aaaaaaaaa a a a I gaa a a aa aa~aaa a aaaalaaaa a aaaaaa ~ ----a. IIII~IIIII aaaaaaaaaa 1111111111 aaaa -~ a - 2 a a a a aaEliaaali aa~aiaIIII a IaIaaaII aJIjallIl a~IaIaaaIi ~. lal 11111 aaIai~ -:1111111 1 111111111 1 111111111 1 lalIllIll I 111111111 1 ~ ---a~ aaaaaaaaa a aaaaaaaaa a aaaaaaaaa a ~Ua aaaaaaaaa a aaaaaaaaa a aaaaaaaaaaaaaaaa - -~ aaaaaaaaa a aaaaaaaaa a aaaaa~aa a - a -1 Cl) a Cl) DC C, 0~~ ~ ~Cn v -~ »=a ma. - a. rCD I 11 ~°~2 3 CD) Ca CD DC Cii 0 0 CD cli t\D 1 111111111 1 111111111 1 IllIlIlal I a Cii PAGENO="0379" > Cl) CD CD 0 CD 0. Cl) U) 0 U) o~. CD 0. 0. 0 (0~ 0~~ ~ a~. CD U) Cii 8 0 0 CD a 3 PAGENO="0380" Cl) CD CD C) a Cl) a) 0 ft CD 0 0 0 0 CD 8 L ~ ~ ~ ~ i ~ 3 ~ -~ ~ ~ ~ ~ 2 ~ ~ -~ a 3 21 3 3 PAGENO="0381" -~ I I I 111111 II I I lUll I 1111111 1 III 11111 1 I ~fl1UIU I I 11111 1 1 1111111 III ~ 111111111 IUIIUU 1111111 I III a;13:UU I I~IffilllI co 11111 111111111 ~ 119111 1 I UllUl! ~iii?iUI a 21 3 Cl) 0 a U) 03 0 =0 0~1 21. Cl) ~:2*0) 0= CD 0. a 33 Pit 0 0)21 ?Co 5. a!. CD 0) 3. Cii 8 0 0 CD 03 C;' PAGENO="0382" 2 2 2 2 2 ~ ~ 2 2 ~ ,~~~:C:2 ~ ~ 2: ~::?:~:~- * ~ :::::2: 7 ~: : 2: : ::2.:::~::2:: : :: :2::: 28h~:22~ 8 I I I 8 U) CD a U) DC ~Cn I ~ ?cn 2 ~ CD DC 01 0 0 CD 8 888888888 8 88~888888 8 8 8 88888 PAGENO="0383" r~) 0 8333888 8 8 8 `- ~i ~ 3 i `~ L I~ - L~*~ ~iU8 8 ~_J1_~__ 8 $3$(~~(~88 j ! C') CD CD C, a U) 0) C) :!~ ~ 33 3 O~ ~C) a~. CD 0) (31 0 0 CD PAGENO="0384" -1 Cl) CD a Cl) ~C ~ ~ ~ rCl) 3 CC) CD DC (Cl 0 0 CD I ~ ~mi~ 8. - 8. 8. C ~8 8.8..8.38 ~ 8 8 2 8.: ~: ~: ~: : C C C CC CCCCCCCC 8. 8. 8. 3C~83C838 8. 8. ~- ~ C 8.8.88888.8.3 8. C C CCC .~ .r ~ C C CCCC~ CC C C C CC C CC C CCC C C88$C~CC8 C 8CC$C3C CC8. 8. CC8.38.C8.88. 8. - ~ 1 ~ LL ~ ~ ~;1~8 8. ~ #C8.888.~8. C CCC CC8 CCC C8CC8.C C8C8.88 ~ 8 8. 8. 8. CCCCCCCC~ CCCCCCCCC3CC CC C ~C~8CC.~9C C CCC~CC~.9C C C~C8.C~!C C . ~ 8. 8. ~ ~3.9~3~3.83 8~88~8 3~3~~3C 8 ~ 8. 8. #Ch3C3C3 8. ~ - 88 8. CCCC8C8CC 88 8. ~ ~C PAGENO="0385" S C a a 8 a a a s a - 8 8 8 8 a 8 a 88 8 8 S S S S S a: ~:8: a: ~::5: S a: ~: 5: 5: 8: : a: ~: ~:8 a: ~: a~ ~ :a: a~ ~ ~ 1%) 85558 5: a: 8: 8 88 8 S 8 S w a ~ c-I ~ ~ `PCI) ~5. 03 Ci' 8 0 0 S S S 555888888 8 8 ~8S8888S8 8 8558 #5558885-5-S ~8SS888888 8 58S~8.858 8588858888 85-8588 85~-888 88h8-~8-~# ~5J8 PAGENO="0386" o 3 Cl) CD a Cl) CD C, ~Cn 0~' ~. U) ~.Q) CD 0. 0. 1CD 11 0 CD CD (31 0 0 CD C~) PAGENO="0387" 4 2 2 2 2: 2: : : 2: 2: 2: 52 ~ ~. 2 52 ~ S 2 2 2 2 i~U L~*~ 2 5 2 2 !~s 52 ~;2 U) cD 0 C) a U) C) C) U) -~ > C) 0 CDO 0. o ~ ~ 2. ~C) CD U, Ui 8 0 0 CD PAGENO="0388" Cl) CD a Cl) DC ~ rCl) CD DC Cii 0 0 CD a~:~1 ~ ~ ~ ~~iii *~ it -~ -~ I ~;i~ Cii PAGENO="0389" 383 126 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. Spanish-Speaking Owned Firms (00,167,) ($1,000) (lo3~b7,-) (,088b8,-) ($1,000) (lobo,-) ($1,000) (,02th2,-) ($1,000) ($1,000) Mlootlotol-81, totIl IplolIb 25 2,3~1 (0) )o) (o( (o) )o) (0) 6811029. 25 2,361 )o) (o) )o) (o) (o) (2) Whol,,,1, 1,-3d,, 16121 Sp200lh 24 )o) )o) (o) (2) )o) 336 21 t,oio,o. 24 (o) (2) (o) (2) (2) 336 21 6261010. 351 `(o) 346 3,140332 )o) (0) 011627 Sp~oi~h 3 (o) - - - - (o( )o) 01h~p lodottpl,s, oo0~1Sp~o1~h 17 )o) 10 175 3 58 )o) (o) Oth,plp,oish 1 )o( - - - - (o) (0) 0,01026. 58 )s) 24 1,032 2 66 (o) (2) 01h,p 12701116 1 )s) - - - - )o( (o) 0,61029. )o( °° 3,443 3 us (o) (o) 0oh~p Sp,oish 1 (0) - - - - )o( (o) M3941806opls, 16111 Splollh 5 696 (o) (2) (o) (D( (0) (0) 5890026. 5 195 (o) )o) (1) (1) (o) (2) 6111027. 60 )o) (o) )o) (0) (2) 376 8 - 0116,,- Sp~oi~h 1 (2) (0) (2) (o) (o( - - 0160111111 1,-3d,, Oot,1 Sp261816 4 273 )o) (2) (2) (o) (2) )o) 98916,9. 3 )o) )o( )o( )o( )o( (o( )o( Oslo,- Sp~o1sh 1 (o( )o( CD) (o( (2) - - 9661029. 1205,215 (D) )o( (2) )o) (0) )o) 0516,,- Sp~tish 4 426 )o( )o) (0) )o) )o) )o( 9071239, 46 )o) 9 342 2 68 (o) (0) 0016,,- Sp~o1~h 2 )o( - - - - (o( (2) 9790039. 107 (o( 108 2,043 3 58 )D) )D) 0116,,- Sp~oj,l, 1 (o) - - - - (o( )o) 0201589. `9 °) l~ )o) ~ (2) 60 6 Olh,p Sp~oi~h 2 . )o) (2) )D( (0) (D( - - 9,oio&o. 32 (1) 13 676 2 97 (o( (D( Ooh,p Sp~o1~h 1 (2) - - - - )o) (o( PAGENO="0390" 384 127 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. SpanishSpeaking Owned Firms (o~b07) (01,060) (o07b~) )o100) ($1,000) (6b00) (0l,ooo( (6=100) (01,070) (01,076) c7t12 90161, 69681 Sp&oi8h 116 1,074 (o) (o) (2) (0) 69 (6) (9) 6291986. 115 (n) 122 1,459332 69 (o) (s) Oth,o Sp&718h 1 (1) (o( (9) (o) (6) - M,of,6t1076, tot.1 9p~o121 13 (o( (o) (o) (2) (o( 9 (D) (n) 6861981 93 (o( (1) (o( (9) (1) 9 (I) (1) 69681 Sp*o190 641,181 (9) (9) (9) (9) 59 (1) (0) 618791989 641,181 (9) (1) (o( (1) 50 (o) (9) ~ 6080,, 6968167861,' 29 (1) (s( (o) (o( (o) 13 42733 6861121 29 (1) (9) (o) (6) (9) 13 427 33 51 946 (9) (9) (o) (o) 29 (9) (9) 97827986. 51 946 (9) (9) (1) (0) 29 (o( (1) 6261687. 71 (9) (2) (o( (1) (o( 46 186 4 Oshso Sp&oI.h 3 (1) (9) (1) (DI (2) . . - C~b&6. 2 (o) (o) (2) (2) (o( - - - Oth,o C2620&1 90 So~2h 902971087. 1 )o) (o) (0) (0) (o) - . - 6251186. 8 (0) (9) (2) (0) (1) 7 64 9 Po2~to 61126. 6 (0) (9) (o( (1) (9) 3 30 10 Cob&o. 1 (9) (DI (9) (0) (0) - - - 0.12062 01126 2 (0) ID) (0) (2) (o) nI (DI 020:, 95020,1 06 So~1h 0o8~1o.&'~ 1 (1) (9) (2) (2) (9) . - Sp,oI,h tot ~p~oif1~d 14 412 (o( (9) (o( (DI (0) ID) PAGENO="0391" 385 128 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. SpaninhSpealoing Owned Firmo )u~one) (01,000) (too) (oboe) ($1,000) (too:) (01,000) (otto) (01,000) (00,000) esoloso 03 itS (n) )e) (1) Ce) (e) (0) Cueto Ron..' ii )n) (n) (e) (1) Ce) 10 1 etheeneutesluelluthklee1050 1 )n) - - - - Ce) (n) Cobsu 3n 331 (1) (n) (0) Ce) (e) Ce) oth.e nonneol so South Aeniuso 14 one )n) (0) (0) )n) (e) Ce) eonie.u (0) )e( )e) )e) )e) ~ (0) I'ueetn Rin*o~ 2 (0) - - - - Cu) (0) tesolob not .peniti.4 121 )e) (0) (0) (0) )u) Ce) Pueto nuns,, 1 110 )e) Ce) ` (e) )e) )e) (0) Cubst' 7 65 )e) Ce) Ce) Cu) (1) (1) on 04 () I )) SlIce ~e~e~1 2 Ce) - - - - Ce) Ce) Sinutontiess, tutol tesoish in in) (1) Ce) Cu) Ce) 23t 20 MenSes', 17 Ce) 0) Ce) Ce) Ce) 230 in MotORs,, 107 Ce) Ce) )e) )n) Ce) Ce) In) SlIce Sesoish n )n) (0) )n) Ce) )e) )n) )e) eeeinso 02 `in) )e) )e) Ce) Ce) ~ 30 othse Ses.oiCu 1 )e) (0) )e) Cu) )e) - - notiCe, 406 13,001 Ce) In) )n) Ce) (1) (0) otuet tesoiot 12 780 (5) Ce) In) )e) (0) In) so C) Sthse Insoish 1 )e) - - - - )u) (0) Rtbeo innustnies, toRsO Sesoish 31 327 )u) )e) In) (0) )e) Ce) Itetleso 31 327 nC (0) Ce) (0) Ce) )e) Intusinlee not elossitist, totsi teonish 03 (e) Ce) (0) )e) )e) )e( Ce) Metins', 03 (0) (0) 101 )e( Ce) )e) Ce) Metinso lot 4,205 (0) )e( 10) Ce) "C 6 ORIon ies.oisb o 212 (e) )u) Ce) Ce) Cu) 12 PAGENO="0392" 386 129 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority*Owned Firms: 1969-Continued PART C. SpanishSpeaking Owned Firms L-~" 1100! 10th ~ With p!td (100500.) ($s,000) (000500.) (o~~b00) ($1,000) (,0~1t~) ($i,ooo) (000511) ($1,000) ($1,000) (1) (0) (D) (D) (0) (0) (1) (0) (0) (0) (0) (1) (0) (0) (0) (0) (0) (0) (1) (0) (0) (I) (0) (0) (1) (0) (1) (1) (0) (0) (1) (1) (0) (1) (0) (0) (0) (0) (1) (I) (0) (1) (0) (1) (0) (0) (0) (0) (1) (I) (I) (1) (0) (0) (1) (0) (o) (1) 1) (0) (1) (1) o) (1) (0) (0) (0) (I) (0) (1) (0) (0) (0) (0) (0) (0) (0) (0)* (1) (0) (1) (0) (0) (0) (0) (0) (0) (0) PAGENO="0393" 130 387 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. Spunish-Speuking Owned Firms (1~l511-) (tiunu) (nn5~I-) (n=b~-) (01,000) )1~:n) (01,000) (,,o,bo,-) ($1,000) ($1,000) (1) nI (n) (n) (n) `In) in) ni )n) nI (n) (n) ni In) (5) ni e,,,nn&. sos 115) otho- np&oIsh 1 loins. 17 (n) ushon InsuilS 1 (1) 07550*0. so In) noOns- nn*1l*S 1,sin&u. 11 (1) mOo,- sp'ui*h 1 (1) e,oin*o. 113 (1) lIOns 1s-*oi*5 1 In) `(I) (n) nI (n) (1) (n) (11 In) (n) In) (n) In) )n) .11) In) nI In) (n) In) (1) (1) (n) (1) (1) )n) )n) (1) ni (1) (1) In) )n) )n) (1) (n) (1) In) In) In) In) In) In) (1) (1) (1) In) ni (n) (n) (11 (1) In) In) In) (1) (n) In) In) (1) (1) (1) (n) (1) (1) )n) nI ni )n) )u) )n) )n) 1) )n) )n) )n) ni )n) In) )n) In) In) nI In) )n) (1) In) In) In) In) nI In) PAGENO="0394" 388 131 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Conhnued PART C. Spanish-Speaking Owned Firms ~b~) (Piano) )~~ban) (%n=b8i-) )Si,00o) )sanban) (Sims) )sanbsn) (SimOn) (Sloan) 38 (a) 1 (D) 141 (a) 2 (a) en (a) en (a) 3m (a) 3m (a) 211 (a) 1 (0) 14 (a) 53 (a) 1 (n) (a) (a) (a) (a) (D) (a) (a) (a) )D( (a) (n) (a) (a) (a) (a) (a) (a) (a) (a) 1) (a) (a) (a) a) (a) (a) (a) (0) )D) (a) )D) a) a) a) (a) )D) a) )D) (a) a) )D) a) (a) 0) (a) (a) (a) a) in) (a) (1) (a) a) a) )n( (a) (a) a) a) a) a) (a) (a) a) (a) (a) (a) (a) a) (a) )D) a) a) (a) )D) a) (a) (D) (D) (a) a) )n) (a) (a) (a) (a) a) (a) (a) )D) (a) )D) (a) a) (a) )D) a) a) PAGENO="0395" a a a a a aaaaa a2aaa aaaaa a aaaaa a2aaa aaaaa a2aa~ aaaaa a aaaaaa a a a: a a: ~: ~: a: : a: a: a: a: a aa ~ a a a a aaaa 1u ~ a a a a ~ w p 0 a a U) CD CD C) CD U) D) C) o~ U) It CD DC 01 0 CD PAGENO="0396" 390 133 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: l969-Continued PART C. Spanish-Speaking Owned Firms )o=no,-) teens) z, :::: ;~; !~! )e~ben~ 01,000) ~2 2151 Ce) (e) Ce) Ce) Ce) as Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) `Ce) Ce) Ce C Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) Ce) eae a `Ce) - I Ce) - a Ce) - a Ce) Ce) it `Ce) CD) ass C~ CD) - Ce) 1 cc Ce) e C Ce) - - Ce) e ee Ce) Ce) CD) Ce) aa Ce) PAGENO="0397" $8 8 8 8 .8 ...28~ .8.82.888.892885 .88288.88 .822.888.892882. 28$sS .892.889 .8928~ .82 .9-:: 8: 5.8-: :98~: 9.8: :~8: 8: ~: 2 59:: 59: 59: .8 . 9 .2 : 59: .8 59: 59: .2 88: - ~: :8: .8 8:: .8 9: 9:9: 9 9 .8 9: 03 --- 8.8528988~ - ~ - - ~-~- -- - 8288288882.~#8858~8 - -~ - -- ~ 88~.88859~8889888 58 22 2. .8 ~ - - - - ~ 58 .8 -- 8~ - 958~9.52~ .88 ~88.8.82 - $.888.8~.882.2 L -- - -- - - - - ~-~8 - 8.8~ 1_~ ~ ~m ~8 88.8 .8 882888 .8 ~. - ~ ~ - ...~8... - -- ~ 58 > C', CD a U) 03 C) ~. U) o~. !t. cL~. CD 03 (31 0 0 CD 0 3 888.88.8 PAGENO="0398" 392 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority~Owned Firms: 1969-Continued PART C. Spanish-Speaking Owned Firms 135 (o*,) (*1,000) (003103) (~s.,) (*1,000) (103b03) (*1,000) (603103) (*1,000) (*1,000) tot*1 Sp*oish 69 1,580 009182*18 to&d*, t,t*1 Sp*oi*h 20 1,972 020*11 to&d6, tot*1 Sp*ois', 292 11,462 02411*9 97 (0) Oth*o Sp&oish ~ (0) Iodo*toi**o,t,1&,sifi*~, tot&1 8p&oi*'~ 92 2,320 S&oo*o2ot,, C*lLf., 0,1*1 lp&oi*h 925 19,936 02119*0 4 (1) 00026 Sp&oi*', 1 (2) tot*1 Sp*ois'~ 44 1,458 0*01940 47 (1) Olh*o Sp&oi*'~ 1 (0) 0*t&i1 16&d4, 6,0*1 1041120 184 9,991 72 (1) Oth*o Sp&oish 1 (2) S*1*ot*d *2,01,2., tot*1 Sp&oi.h 177 4,298 00022 Sp&oi*h 4 177 1020*06122 ooo ol&,s 11122, 0,041 Sp&01.h 53 803 0211903 51 00082 Sp*oj.'~ 2 (2) C9ot:8otooo.ooootioo,to1215p27.j.5,....,.~ 565~ 15,9 (2) (2) (1) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (2) (0) (2) (1) (2) (2) (0) (1) (0) (2) (2) (1) (1) (2) (1) (a) (2) (2) (2) (2) (2) (0) (a) (2) (2) (2) (2) (2) (a) (0) (2) (2) (2) (2) `(0) `(1) (2) (2) (2) (2) (2) (2) `(2) (1) (2) (2) (a) (D) (2) (2) (2) (2) (2) (2) (2) (2) (1) (2) (1) (2) (2) (2) (1) (2) (1) (2) (1) (2) (2) (2) (1) (2) (1) (2) (2) (2) (0) (2) (0) (1) (2) (1) (0) (2) (2) (2) (1) (1) (0) (2) (2) (D) (2) (2) (0) (2) PAGENO="0399" 393 136 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority*Owned Firms: 1969-Continued PART C. SpaniohSpeuking Owned Firms )oo7b~) 101,0001 )o~b~) (0%7.b77) $1,000) (o~:o) )$s,00o) )o,,.bo,) 101,000) 101,000) `10) 0) 10) 16) 10) uI Il 0th~, 0p~o1sl, 10) (0) (0) (0) (0) (0) (0) Moo1o~0. `(0) (0) `(0) (0) (0) (0) (0) 010., lp.oIsh (0) uI (0) (0) (0) (0) (0) 6..1o.o. 29,469 (0) `(0) (0) (0) (0) (0) 090., 97.ol.h 241 (0) (0) (0) (0) (0) (o) 2,072 (0) uI uI (0) (2) uI 0th., tp.ulsh 44 (0) uI 0) (0) (0) Is) tOstI,,o. (0) 19 277 3 40 uI (1) 0th.~ 0p~t1sh ui - - - - (0) (0) Mstlo.o. 2,261 (0) `(2) (2) (o) (0) (0) 0t0s~ 0p291.h 72 (0) (0) uI (0) uI (0) Mstlo.o. 108 5,644 43 (0) uI (2) 0) 65 (2) (0) 0th.~ tp.ol.h 3 626 2 (0) (0) (0) (0) 1 (0) (0) lotthot, 88 (1) 19 (0) `(1) (1) Is) 69 (0) (0) 080., 1p.ol.h 2 0) 1 (0) (0) (1) (0) 1 (0) (o) M~t1o~o. 24 (0) 10 44 2,360 4 217 13 (0) (0) 0t0.~ 0p.ol.h 1 0) - - - - - 1 uI (0) 8.,,1,,o. 374 7,480 101 (0) (0) (2) (0) 273 (0) uI 0th.~ Op.ol.h 13 82 2 (0) (0) (0) (0) 11 (0) (0) 8s.1~~t. 65 (0) 16 66 1,743 4 109 49 (o) 1) 0t0o~1p.t1.0 1 (0) - - - - - 1 (2) 0) 6o,,1o~s. 93 (1) 22 42 1,865 2 85 71 (1) 10) 080.' tp.sIsh 1 0) - - - - - 1 (0) (2) PAGENO="0400" 394 137 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority.Owned Firms: 1969-Continued PART C. Spanish-Speaking Owned Firms 00SA ~d io0~~toy di~i.i~ H~' ~ 71~ 00p1~:~ ~ (o~bo,) 101,000) Io~b~s) I~o~b.o) 101,0001 )1bos) 101,000) Io00s~7) 101,0001 101,00°) 28o10&o .:::::: 114 5,481 101 `DI ID) ID) ID) 0th27 lpsoi.h 8 135 III (1) ID) III ID) Oooio&o 28 `ID) (0) `)D) ID) ID ID) 0th10 Sp201.h 2 (2) (1) DI ID) DI ID) O2oio&o 22 ID) ID) ID) ID) ID) 343 Othoo Sp&oi.h 2. ID) ID) ID) ID) ID) - Cthoo todo!t712,, tot&1 SpDoi&h 15 1,432 12 1,232 4 .103 200 0201010 33 ID) DI 111 ID) ID) ID) Oth2o Sp3018h 2 ID) ID ID) 111 ID) 101 100031018! Dot 01333101.0, t0t21 Sp*oith,.,,.. 94 2,293 60 1,933 3 81 325 Oth.o Sp&olsh 3 4 - - - Oth2o C86t021 ot Sooth 30201020 3,248 247 3,907471 1,341 8 706, lto..o ~ ID) `ID) ID) 11) 10) ID) 011,80 Cooto~1 Sooth 03opio.o 273 ID) ID) ID) ID) ID) ID) 702010 ~ ID) ID) `ID) ID) (DI ID) ID) Cob*o ID) - - - - ID DI 0t01o C~tto&D oo Sooth 208o1o&, 391 ID) III ID) 101 ID) ID) 70801, 10020 ID) ID) ID) ID) ID) - - Co01o ID) - - - - (1) ID) 01080 C80t021 07 Sooth Ao801020 ID) ID) ID) ID) ID) ID) ID) 002000 61020 ID) - ` - ID) ID) Oth.o C201021 oo Sooth 03801040 ID) - - (DI ID) PAGENO="0401" 395 138 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. Spanish-Speaking Owned Firms (t,~h~t) ($1,000) (to~sbat) (tothao) ($1,000) (sob,) ($1,000) (t,,tto,-) ($1,000) ($1,000) Pototo 01025 8 (to) 2 (to) (to) (1) (to) 6 `(to) (to) Colas 8 (to) to (to) (to) (to) (to) 7 31 4 OtO,.o Cattoal so tooth Attooioaot 28 380 2 (to) (to) (to) (to) 20 (to) (to) Ottott toodostPto~8, total Sptooto$h 55 790 6 (to) (to) (to) (to) 4t (to) (to) Poasto 019ao 3 (to) - - - - - 3 (to) (to) Othtp Catla-ato ot- Sooth A,tootooao. a (to) 1 (s) (to) (to) (to) I (to) (to) Itdooatoto,, tot otoa~, 17184, total tpoo1~h 256 4,230 43 (to) (to) (to) (to) 213 (to) (to) Ottoto Ct,otoal 0a- Sooth A,toloat. 14 231 a (to) )o( (to) (to) na (to) (to) M~ttooat. 133 0,071 49 (to) `(5) (to) (to) 84 `(5) (to) Sthm Sp&olah 5 197 2 (to) (5) (to) )D) 3 (to) (to) 0O,oSoat. So `(to) 20 28 921 1 46 30 (to) (to) tIlt, Spatto!h to (to) - - - - - to . (to) (20) it `(to) 7 (to) `(to) (to) (D) 12 291 24 0th,, tpaslth 1 (to) 1 (to) (to) (to) (to) - - - 8,619*5. 103 2,130 19 (to) `(5) (to) (to) 104 (to) (to) OSh,o tp,olth 13 159 2 (to) (to) (to) (to) toto (to) (to) 0061010 33 (1) 6 (to) (to) (to) (to) 27 154 6 Othtp Opaoiah 2 (to) 2 )D) (to) (to) (to) - - - 70-654 0-72-26 PAGENO="0402" 396 139 TABLE 6. Selected Statistics for Standard Metropolitan Statistical Areas With 500 or More Minority-Owned Firms: 1969-Continued PART C. SpanishSpeaking Owned Firms S~A ~ed 1ede,t~ ~91!1D0 ~ HH ~ ee~u,et, 90911 171.21,5 06 475 CD) CD) CD) Ce) CD) CD) `95,, ~.;;~::::::::.:::::`.:::::::::`.:::: 1 (DC CD) D) (D) CD) . CD) tot,l S~.o11h 19 CD) I) )) (D) (D) 114 19 1) CD) (D) (1) Cu) 114 B Wh0DDB~1B t9129, tot,l Spool,5 15 1,151 (1) ID) (D) Cs) CD) Cs) B1.61D,e 55 1,151 CD) CD) )D) CD) )D) (1) 1,91Db 175 )D) )D) ID) CD) CD) DOSDI Dpeoi~h 2 ID) )D) CD) )D) )D) )D) )D) 1912,895 CD) `CD) CD) )D) CD) CD) DOS,, Sp,olsh 4 40 CD) CD) CD) CD) CD) 1) 096,7 1,DO,9~1,,, 90911 Spo0I~h 12 (DC )D) )D) )D) )D) )D) M,,Dooo 11 197 CD) )D) )D) ),) 1) )D) 0th,, Spoo1~h 1 CD) . - - - (s) CD) Coo9,DD9 60912069194, 92911 Sp,o1~h 32 1,624 CD) CD) (DC CD) CD) 1) 90111 Sp~e1~5 29 274 CD) CD) (DC 1) (D) ),) 1501,,,1, 12,7,, 9,911 Dpool60 2 CD) - - - - CD) )D) 12,1Db 7. 292 CD) `(1) CD) CD) (DC CD) Po~~t, 616,, 5 261 t CD) (DC CD) (1) CD) CD) Cob,, 5 509 CD) (DC (DC (1) (1) CD) 55 163 CD) CD )`) CD) CD) C') Cobs,.,.. 14 103 (DC 1) CD) CD) CD) CD) D95~~ 1e2o~9~1,~, 969~1 971,11h 2 CD) CD) (1) CD) 1) CD) 1) PAGENO="0403" ~SHU~ ~!V~1D ~ ~8 ri U) 8: : a Cl) 828288852 8 2822 8 -o 0 -` - ~ ~Cl) ;;~ Is 18 18 --~a° ~ 5 5 5 555555 55 55 528 2 8 8 8 8s8828s5s 8 3 ~ - 02. (DQ) 8 Ss2828, 88 8 8 2 28288252 S ~- ~ 82882882 8 588888 5~8582~ 8 5 -5555 555 CD S 8882528-8-5 8 (31 0 0 S 55 5 0 8 5 5 88 2 rn S PAGENO="0404" 8 C ~:~: ~ 8 Cl) CD a Cl) i ~ I ~ ...~. ~oa~ ~ 3 o~ a!. CD CD C,' 0 0 8 -- ~ - ~88~ 8 888~3~~Z-~8 3 8 ~ I -~ -~ -~ -~ ~ 8 8 ~1~8 !~~--- 8 8 8 8 - 8 88 8 8888#~8~8 8 ~- ~ 8 ; C p.' I-' PAGENO="0405" -4- g) CD C) CD Cl) 0) C) 0 fi: 30 CD~ Fr * -u ,-~ 0) 4Dm 3 *0 0 40 CD 0. C 0 0) 0. ~HU~ PAGENO="0406" 143 TABLE 7. Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969-Contnued PART A. All Minority-Owned Firms F1~-~ (=s~?) °m'~n~~. (~~b~) ($s,000) ($s,000) 400 PAGENO="0407" g) CD C) CD U) DC C) 0 ~ a 0 -n CD (OW. I 0. C) o ITI *0 (~0 CD CD 0. 0 DC 0. ,. ~ ~ Ti______ o 3 8 8 PAGENO="0408" 402 145 TABLE 7. Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969-Continued PART B. BlackOwned Firms I020ot~ d1:~&~d ~p1~oo5~ 578 650 20 ~ :2~6Y~..:::: :::::::::.::: ~ ~:::::.:::.::::::::::::::::: 11,048 356 6,087 127 PAGENO="0409" 403 146 TABLE 7. Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969-Confinued PART C. SpanishSpeaking Owned Firms (~b~) (,b~) ($1,000) ($1,000) PO~O1O liooo. 107 680 16,792 156 1 to 4 oop1oy~o~. 1,831 3,244 00,606 48 0,oi,&o. 38 (5) (0) (0) 1p&si~h ootspooifiod 4 (0) `(D) (0) 70-654 0-72-27 PAGENO="0410" 404 147 TABLE 7. Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: l969-Conhnued PART C. Spanish-Speaking Owned Firms lodostoy dioi:ioo*opl,,t-*o**ol&ss Fi~ (o~b00) Eploy*** (o~b~) ($1,000) ($1,000) 7 (0) (0) (0) 1 (0) (0) (0) Po*o0o 01o*~, 7 (0) (0) (0) Cob&o. 10 (0) ) 00h*o C*o0o&1 00 Sooth 40*000*9 4 (0) (0) (0) Sp*oi*h 0008729 0009d 9 (0) - (0) (0) 50 to 99 ~p0oy**s 13 (0) (D) (0) Po8oOo Oi,&o 1 (0) (0) (0) Cob*o. 5 (0) (0) (0) 000*o C*oto*1 09 Sooth 40271989 1 (0) (0) (0) 000 *oploy*** 90 9008. 8 (0) (0) (0) Sp*oish too sp200012d 2 (0) (0) (0) 002700 Oto*o. 1 (0) (0) (0) Oth*o C800081 90 Sooth Ao2oio&o. 5 (0) (0) (0) Po*oto Oio&o 1 (9) `(0) Cot&o. 1 (0) (0) (0) Sp*oish tot sp20001sd: 4 (0) (0) (0) PAGENO="0411" 405 148 TABLE 7. Selected Statistics for Minority.Owned Firms With Paid Employees, by lnduétry Division and Employment Size of Firm: 1969-Con~nued PART C. SpanishSpeaking Owned Firms (toobso) (oooh27) (~1,0O0) (51,000) Po2~to tio&o. 1 (I) (0) (0) Sp&oi!h sot sp801ft2d 2 (0) (0) (0) 50 to 99 2=7107008. 8 (0) (0) (0) Posoto tio.o 5 (0) (0) (0) 100 2=7197228 ossoo~ 1 ~) o~ (0) Cob2o. 1 (0) (0) (0) 6bo128218 t02d8, too&1 953 4,223 240,078 207 Spsoish sot sp202ft2d 16 111 8,838 552 10 to 19 267107828. 50 652 33,431 688 Osototo 34 (0) (0) (0) Cobto 5 (0) (0) (0) Oth8o C866021 so Sooth 8=882026. 1 (0) (0) (0) S7261.h sot 8780 iftod 4 47 2,699 674 20 to 49 26ploy22s.. . 23 (0) (0) (0) OSoioSs. 19 004 20,896 1,099 Cobs. 2 (0) (0) (0) 06225 Csoto&1 Cs Sooth 82201,26. 2 (0) (0) (1) SO to 99 262p18y288. 2 (1) (0) (0) 6291026. 2 (5) (5) (5) 081211 t~2d2, tot&1 16,315 61,991 1,485,081 91 1 to 4 28pI0y228. 0,917 17,366 820,149 62 PAGENO="0412" 406 149 TABLE 7. Selected Statistics for Minority.Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: l969-Continued PART C. Spanish-Speaking Owned Firms 31&~$ (~b.~) (~n~) ($i,000) ~i,ooo) R.1~11 T~~d.-~21~d 132 (s) (a) (s) Splli!h ~t ~p~11f1.d 9 (s) (D) (D) 3 (5) (a) (5) Sp&ai.h at *p.slfI.d 1 (a) (a) tat .1l~.t.2 .1... 4,300 aa,aoo 449,000 104 500.90 R1~oo 17 (a) `(a) (a) 0th.. C.ot,a5 a, tooth ~ 20 (a) (a) (a) 00.t-to Rtaao 2 `(a) `(a) (a) 005., Coot.al st tooth A~50aao 10 (a) `(a) (a) PAGENO="0413" 407 150 TABLE 7. Selected Statistics for Minority0wned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969-Continued PART C. Spanish.Speaking Owned Firms Thd90toy 4171.100, .301 tt-.12. 91888 sod .p.otfio Spsoish 5009~ V1os~ slth ...ld ,spIoy..~ ?Io,o (s~bs~) E,,p18y2.. o~o.tpts ($1,000) A00o2g2 ~ ($1,000) 9231900. 41 (0) (3) (0) Otitso C.st~&1 to 000th Aosoio2t. 2 Spstish ttt.p.o101sd 5 3331020 6 (n) (u) (D) soot 11906. 1 (~) (0) (3) Oth.o C.otosl 000th Assoitso. 1 (3) (0) (s) Sp201.h ttt spOt ifi.d 2 )s) (0) (u) Ott &lloo*t.d by .122. 1,800 7,900 135,900 75 031.6 Spsoish 1,800 8,200 114,600 72 Oth.o Sp.oi.h 87 248 5,715 66 296 485 16:114 00914001 00 ~ :: ::::: :: 03879001620. 2 37201.1 609 sp.tifi.d 4 Hooit8o. 18 (u) `(0) (o) Ctb&t. 1 (0) (s) (0) 37251.1 tOt .p20181.d 1 (5) (s( (o) - 8.7798206. s.oo. (o) 81611.14 36 86614 dlst14sisg fiio°.s foo loditldtll 965p200185. PAGENO="0414" 408 151 TABLE 7. Selected Statistics for Minority-Owned Firms With Paid Employees, by Industry Division and Employment Size of Firm: 1969-Continued PART D. Other MinorityOwned Firms 21299 E~19y.60 ,;;~;;, 601pt9 ________________________________________ (o~b60) (st5~o) ($1,000) ~$1,O00) ALL I9SUSTRIES, TOTAL 18,875 91,772 2,496,901 131 50 t~ 99 873197508... 8 572 19,133 1,891 5~999~9~;10759 } 60 `~ ~ ~ 6,052 ~ ~ .24 } 840 47,319 1,752 to 4 ~ 7,336 14,184 558,592 no 50 4 £5PI9Y22!. 682 998 36,275 53 } 889 31,947 2,866 100 997197828 97 9950....... } 46: 660 10 tO 19 28p19y222... 16 212 1,656 103 PAGENO="0415" U' f') Cl) 0 a Cl) 0 N ~. ii cc PAGENO="0416" (I) CD CD C, a C,) Cn~ ~ ~ oa, ~ a 8cr 0~ I! 8 8 888-~~.~ 8 §88 ~8~88~ ~ 8 -~ 8 88 I ~ 88 8 8 8 ~ 8 8 8 8~88888888 8 § §~ § m~ 8 ~I ~-~---------------------------------------- ~- ~ ~ 8 8 8~ § ~-.8 §~ 8 8 888. 8 8 88 88.. 8 ~ -~ ~ § ~: 8 8 8 88.88 § ~ PAGENO="0417" 8 8 5 5 UI 8 8 8 5 : .: :: : :::: :: 59 2 Cfl 8:: ~.: :: ::::::: .: .: : .::: :: 8:989 * 8:: ::: : ::. : . : 9. . :: : :.:: : 8.::: .: S 0 5 : : . . *. :: : :::: : : ::: . ~ 2 28.-. _________________ - ~ ~ 82 2 8 2 2 . 5. S D 928 8 8 8 2~ 552 8 8295 8 585 2 258852582 8 25888555 9 5 2 22.2 . 8 __ 9889 55 0.. .8 ~ 8.888 C, .5 5999228 5 5 8 PAGENO="0418" U) 0 a U) 03 U: U: cn~ (ii Cl PAGENO="0419" 8 ~ ! ~I: ~ ~ : ~ :~ ~ -~ ~ I ~8 3 888 3-~8~3$ ~ 8~8~83 c~:;~:.' -f ~_: (ii Cl) 0 a Cl) Cl: ~ CI)' ~ ~ m. ~ ~ 3 0~' (Pg! -n ~ ~ Q.~. 0. C 0 0 0. 0 0 :: PAGENO="0420" 414 157 TABLE 8. Selected ~t~tistics for Minority-Owned Firms, by Industry Division and Receipts Size of Firm: l969-Continued PART C. Spanish-Speaking Owned Firms )o~28bl,) ($s,000) (638925-) (280*,-) ($o,mo) )~28b20-) (o38os,-) ($1,000) $5,000 to $9,995 1,493 10,720 74 152 568 2 1,419 10,152 $so,ooo so $24,999 1,711 27,772 354 932 6,249 3 1,357 21,523 $25,035 So $59,9s~ 1,007 35,632 000 1,067 31,856 2 107 3,776 928750 010&s 12 824 12 ID) `ID) )D) I )D) Oths, 35ot,sl S, Sooth 43881026. 14 `928 13 ID) )D) ID) 1 (DI Sp2olsh sot IplolfIld 72 4,066 07 )D) ID) ID) 5 (1) $100,000 to $199,959 293 40,281 283 )D) (DI DI fo ID) 8p261s1o Dot 8psolflsd 26 3,605 23 (5) (DI (DI 3 ID) $200,000 to $499,999. 151 45,533 150 )D) (0) (DI S )D) 9881029. 122 ID) 121 ID) (0) (0) 5 ID) Po,s,to D2o&o. 2 ($5 2 )s) (DI (0) - - $500,000 So $O1S,ogg 28 19,489 28 641 19,489 23 - - lsolo.o..- 26 (2) 26 ID) ID) ID) - - Oths,- 2368,-si 08 Sooth d*sti~oo 1 )D) 1 (1) ID) (I) ` - 5259583 095 5p595755d 1 ($5 1 (DI )D) )D) - $1,000,000 05 8978.. 13 21,371 13 40921,371 06 - - 25985 2 (I) 2 0) )D) )D) - - Spsslsh sot spsolfisd 3 )D) 3 ID) )D) ID) - - 0*25 th*o $5,000 544 1,026 15 33 si 2 529 075 9*,-to 05029 30 80 5 )D) (DI (DI 29 (0) 0th:, 0,655*1 os Sooth 42071589 24 54 1 ID) ID) 0) 23 0) 35*61*1 sot 82*010184 74 161 2 (DI ID) (0) 72 )D) $0000 to $9,099 271 1,846 27 62 204 2 243 1,742 PAGENO="0421" Cl) a U) Cl)~ 36 UI U) :* 01 PAGENO="0422" a C,) CI)~ II UI (0 PAGENO="0423" 0 Cl) cD a U) 0) 36 1!: PAGENO="0424" 418 TABLE 8. Selected Statistics for Minority-Owned Firms, by Industry Division and Receipts Size of Firm: l969-Continued PART C. SpanishSpeaking Owned Firms 161 (0009.6.) (*1,000) (000000) (ooob.,) ($1,000) $100,000 to *199,999. $200,000 to $499,909. $1,000,000 0t.~~~.~ L~. th&o $4,000 *10,000 to $24,999. $25,000 o~ $49,999 2 (0) 1 )o) 0 (0) ~ !~! (0) (o) (0) ,)D) (0) (0) (0) (0) `(0) `(0) (0) (0) (0) (0) (0) (0) (0) (0) (0) )o) (0) (0) ~ (0) ~ 96 °: (0) ~ (0) (0) 2 ~ (0) (o~ (0) (0) (0) 2 - 4,422 0L )D~ )D~ 1 )o~~ (0) (D~ (0) PAGENO="0425" Cl) 0 a U) ~ -1 N C, 6~ I ~ 0. ~ 0~. C. D 0 0 C. I! C) a ~ ~~:: ::: 0~0~ h ~____ i;.;~ i~j~ .; i~ g~ j~ !_! 000~ .-.. ~ 0~~ ~ 000 ~ 0 I~ 000~0000 ~ 00 ~ 0 ~ !! ~ ~ 00000 PAGENO="0426" 420 163 TABLE 8. Selected Statistics for Minority-Owned Firms, by Industry Division and Receipts Size of Firm: 1969-Continued PART C. Spanish-Speaking Owned Firms (ooobo,-) ($1,000) (ooob~,-) (ooobs,-) ($1,000) (osob.,-) (~~oob~,-) $900,900 to $999,999 17 10,774 17 513 10,774 30 - - $1,000,000 OP 9999 12 25,192 122,32025,192 193 - - P~~,So 910*0 2 (0) 2 (0) (0) (D) - - 19*9191, 6099990*1182 2 $5) 2 )D) )o) ($5 - - Not *lloo*9,d by ,1,s. 6,900 165,200 1,800 7,900 135,800 4 5,100 29,400 L80* 00*9 $s,000 905 1,925 10 27 23 3 895 1,902 $s,ooo to $9,999 456 3,180 16 39 118 o 440 3,004 *8810*8 391 2,739 14 (0) (0) (0) 377 (0) 198196 6109.9 1 (0) (0 )o) 7 $5) 090.,- C8otp&1 op Sooth *29110*9 4 24 1 (0) 0) (0) 3 0) $10,000 So $24,990 oTt 5,890 0* o) o) - o) 309 (o) 9999190 691 89*9171.4 47 757 3 (0) (0) (0) 44 (D) $25,000 to $49,999. 182 (0) 181 399 6,353 2 i )o) *8oio*o 136 0) 135 318 4,772 2 1 (0) $50,070 to $99,909. 105 7,235 104 o) (0) (0) 1 908680610*9 2 (0) 1 (9) ($5 (0) 1 )o) 8992190 ~ot *p.olfi.d 13 (0) 13 (0) (DO (0) - - 37 PAGENO="0427" 164 421 TABLE 8. Selected Statistics for Minority*Owned Firms, by Industry Division and Receipts Size of Firm: 1969-Continued PART C: Spanish-Speaking Owned Firms (000187) ($1,000) (~A4bo,-) (908027) ($1,000) (o~obst) (168187) ($1,000) 8.81080. 2,118 3,217 15 (0) (0) (1) 2,103 - (n) Sp161!h sot 887611184 548 848 2 (0) (0) (0) 546 (0) $5,000 to $9,999 817 5,792 31 69 229 2 786 5,566 Cobs,,. ss 386 3 (n) (0) (o) 52 (u) Sp.olsh sot .p.oIfi.d 122 872 5 (0) (0) (0) 117 (0) $10,000 to $24,999 904 14,905 95 194 1,580 2 829 13,321 $25,000 to $49,909. 8101610. 400 oss (6) (0) 489 354 (0) (u) )o) )o( (0) )o) -1 1 (0) (0) 5079181 980 lp.C1fl1d 68 )n) 68 (0) (6) )o) - $50,000 t~ $99,999 8.61619. 241 157 16,514 10,811 247 150 (o) (0) (o) (o( (0) (0) 1 1 (6) (0) $100,000 to $199,999 104 14,286 10-8 207 14,286 3 - - $200,000 to $499,909. 8.31010. 0th., Clotoll ot Sooth A.oo881t so ~ 2 (to) ($4 (0) tO 45 2 (0) ($4 (0) (to) ($4 (0) (0) (to) (0) - - - - - - tot 111o6*ttd by 8188. 1,600 9,600 - 1,600 9,600 - ttpt28.o 98 ~ (I) Withh,ld to soold d1~o1o~8tg flgAo.8 tot Itdioldoo&1 8o.p&oit~. PAGENO="0428" g) a C,, Cn~ :!1'~ U a. 0 0 a. I I-' a, C,' PAGENO="0429" C, C, U) S a U) a, U)~ `C So PAGENO="0430" 424 TABLE 9. Selected Statistics for Minority-Owned Firms, by Industry Division and Legal Form of Organization: 1969 PART A. All Minority-Owned Firms Ildlltly dili,100 *od lIgli 167 (1~~b1l) (*1,000) (100500) (000000.) (*1,000) (l~b~,-) (*1,000) (,o~b~,-) (*1,000) (*1,000) lot &lloo&t.d by 1.gol foog 6,900 165,200 1,100 7,900 2O,716~ 251,09: PAGENO="0431" 425 168 TABLE 9. Selected Statistics for MinorityOwned Firms, by Industry Division and Legal Form of Organization: 1969-Continued PART B. BlackOwned Firms (o%~b~o) ($1,000) (~00b00) (o,~b00) ($5,000) (,o~b~s) ($1,000) (o~b00) ($1,000) ($1,000) PAGENO="0432" 426 169 TABLE 9. Selected Statistics for Minority-Owned Firms, by Industry Division and Legal Form of Organization: l969-Contrnued PART C. Spanish-Speaking Owned Firms (59,000) (,00b~,-) (,~b~,-) (Si,ooo) (oso,-) (5i,ooo (obo,-) (Sins) (Snow) a (o) 9 (o) 4 (o) 1 (o) (0) )n) (0) (n) `Cs) )n) (0) (n) (0) ao,n4:~ (o) (0) )n) )D) (0) (0) (1) (0) PAGENO="0433" 427 170 TABLE 9. Selected Statistics for Minority-Owned Firms, by Industry Division and Legal Form of Organization: 1969-Continued PART C. SpanishSpeaking Owned Firms (toolbtl') ($1,000) (so7h~t) ),,o,tbs~) ($1,000) ),,,,oh8,) ($1,000) (Sothtt) ($1,000) ($1,ooo) 708~50 oi~o. 19 (u) 17 `283 4,004 17 239 2 )u( (8) 0th,~ Ctot~~1 07 SOOth 43,71610. 1 `(5) - - ` - - - 1 (to) (to) P&~t~,8,hip 218 13,846 134 (to) (to) (to) (o( 84 (D( to) 88,1680. 169 11,394 108 (to) (o( (to) (to) 61 (to) 0) 0th,, C,St811 67 Sooth 40870680. 3 160 2 (to) (o( (to) (o) 1 (to) (to) Co8po78tSo6t 44 23,194 42 (to) (to) (to) (to) 2 (1) (to) 8871686. 20 3,318 19 (to) (to) (to) (to) (to) (to) 0tht~ CtoStl81 Ol SOOth 07,11686. 4 220 3 (to) `(to) (to) `(to) 1 (to) (5) Po~1to 516,8, 84 6,605 23 (to) (u) (to) (1) 61 (to) (to) Oths, C,tt~11 01 Sooth 438,1689, 40 2,616 9 (to) `(to) (to) (to) 31 (to) (to) Cohlo, 15 3,385 13 (o) `(to) (to) (0) 2 (5) (to) 0th,, Ctott,,1 o, Sooth 4o,~1u1t, 5 252 4 (to) (to) (to) (to) i (to) (to) 816,9. 3,005 8 (to) `to( (to) (to) 2 (to) (to) 4040,,, 9710,15916 (to) (0) (s) (to) 1 (to) (to) PAGENO="0434" 428 171 TABLE 9. Selected Statistics for Minority*Owned Firms, by Industry Division and Legal Form of Organization: 1969-Continued PART C. Spanish-Speaking Owned Firms ~:, l~b6)~(30bs) (o~ (30) ($1,000) tot ~11oy8ttd by 18g91 70,-s 6,700 481,600 4,300 23,300 p8yt00000t. 53 (0) 4 )D) DOS:, Csoots~1 0, Sooth AODt-lylo. 61 (D) 11 (D) R1y~o. 2 (0) 1 (1) 030s, byots-*1 Sooth .8o~,-1o&o 3 (D) a (DI Not ~11oy~ttd by log&1 foss 0,100 20,800 300 400 (Di (0) (DI ` 49 ID) (DI (DI 50 ID) (DI (DI 1 (DI (DI ID) 1 i F 2,373 } 71 `It) (DI (DI (DI (DI (0) (DI (DI PAGENO="0435" 429 TABLE 9. Selected Statistics for Minority-Owned Firms, by Industry Division and Legal Form of Organization: 1969-Continued PART C. SpnnishSpenking Owned Firms ~n,bn~) )$i,nnn) ),nnbn~) (,~5nn) )$s,nnn) )n~:~l )$s,nnn) )n=bnn) )$s,nnn) )$i,nnn) sn,nnn n4n,4n0 4,040 n `In) 5 In) 0 4 )n) 0 1 `)o) - 5 )s) 0 o )n) 1 ~ In) 1) )n) 0) )n) )n) )n) )n) 06 )n) )n) )n) 1) )s) 0) )n) )n) 0) )n) )n) 0) 0) )n) )n) in) )n) 0) )n) )n) ni )n) )s) )n) )0) )n) )n) ni )n) )n) )n) 0) 0) )n) )n) )n) )n) In) )n) in) PAGENO="0436" 430 TABLE 9. Selected Statistics for MinorityOwned Firms, by Industry Division and Legal Form of Organization: l969-Continued PART C. Spanish-Speaking Owned Firms 173 (~b00) ($1,000) (~00b~,-( (9~~b~y) ($1,000) )o~~b~,-) )$i,00o) )a~ba,-) ($1,000) ($1,000) Not s11oo&t~d by 12921 9,79 `CD) (a) (a) (D) 179 CD) (a) 6 (a) `(a) 20 (a) (a) 10 (a) (a) 17 (a) (a) 1 (a) (a) a (a) (a) a (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) (a) 931 (a) (a) 41 `(a) (a) 45 292 (a) a, (a) (a) 22 (a) (a) a (a) (a) - - (DC 1 (a) (a) witaa.aa to ~o,ia diSoDa2iag 91go~-.s 9,,- lodb,ldo*D 00*720100, (a) (a) (a) (a) (a) (a) PAGENO="0437" 431 174 TABLE 9. Selected Statistics for Minority.Owned Firms, by Industry Division and Legal Form of Organization: 1969-Continued PART D. Other MinorityOwned Firms (o,500) ($1,000) (obss) (=510) ($1,000) (680527) ($1,000) (10=120) ($1,000) ($1,000) To*ospo~tstioo 294 oths~ pobiio otiiiti66, Sols pOopoi2loO8hip 1,058 88,362 282 904 74,869 13,493 17 R,t&ii 19632, toi&1 18,486 1,556,561 10,297 10,703 1,431,724 124,837 15 727t1.O2hip 2,726 370,746 2,020 12,275 350,531 20,215 29 0th~o ildo2tOiS., Oot*i 4,74872,137965 1,981 47,414 24,723 S812 plOpOi8tOOShip 4,575 59,024 512 1,461 35,080 23,944 6 Co~po~2tioos. 37 2409 21 401 13,268 1,793 PAGENO="0438" 432 Appendix A SURVEY METHODOLOGY The information in the 1969 report of minority- owned business was developed from a number of sources, including administrative records of govern- ment agencies, information obtained from respondents in a direct mail canvass, various published and unpub- lished source listings, and personal contacts with community and government representatives knowledge- able in this area. Safeguards were provided to insure the confidentiality of the data reported to the various agencies and organizations furnishing information to the Census Bureau. Information reported directly to the Census Bureau is confidential by law and individual reports can be seen only by sworn Census employees. The same restriction also applies to individual data obtained from other government agencies and unpub- lished sources, Under the Internal Revenue Service (IRS) system, the tax return for sole proprietorships (form 1040, schedule C) lists the names of individual owners. Tax returns for partnerships (form 1065) list the names of partners. Similarly, the tax return for small business corporations (form 1120S) lists the names of the individual shareholders. (Small business corporations using form 1120S are legally incorporated businesses with 10 or less shareholders who elect to be taxed as shareholders rather than as corporations.) Minority ownership was measured directly for the above three segments of the business population. Data about that segment of the business population filing tax returns on other than forms 1040C, 1065, and 1 120S were assembled as a result of a systematic review of files of government agencies, known public sources, and contacts with representatives of minority development programs. The Internal Revenue Service made available to the Census Bureau selected items included on the 1969 tax returns for the three groups of sole proprietorships, partnerships, and small business corporations. For each -business, the file included the name, address, employer identification number of the firm; social security number of the owners, partners, or shareholders; principal industrial activity code; dollar receipts; and legal form of organization, The Social Security Administration made certain data available to Census, under provisions of law and regulation, to be held confidential and used only for summary tabulations. The statistical code "White," "Negro," or "Other" obtained from these files identi- fied firms which were owned by Negroes or other minorities, (The latter category includes Chinese, American Indian, Filipinos,- etc.) For example, a firm was considered to be Negro-owned if the sole owner or half or more of the partners were Negro, Small business corporations were classified as Negro-owned if 50 percent or more of the stock was owned by Negroes. It was recognized that the approach used to identify "Negro" and "Other" racial minorities would not provide identification of firms owned by Spanish- speaking groups. In a second phase of this project, the surnames of owners or shareholders of firms that were not classified as Negro-owned were matched against a list of Spanish surnames developed ax the Census Bureau for work associated with the census of popula- tion, Firms having one or more owners, partners, or shareholders whose surname was included in the Spanish surname list were included in a mail canvass to determine the specific ancestry of all owners. The specific groups identified on the airvey form were Mexican, Cuban, Puerto Rican, and Latin American. Classification of firms in terms of their ownership by members of these Spanish-speaking minority groups followed the same system used to identify the owner- ship of firms with black partners or owners. Use of the Spanish surname list in connection with other projects had shown that all Spanish-speaking Americans could not be identified through the use of a Spanish surname list, Such lists are not necessarily complete and some Spanish-speaking Americans have surnames that are not normally associated with Spanish ancestry. Therefore, a national sample was selected from the universe of all firms in order to provide an estimate of the number of firms owned by Spanish-speaking Americans with surnames not usually associated with Spanish ancestry. A mail canvass was conducted for both the Spanish surname group and the national sample to determine the specific Spanish origin of the owner, partner, or shareholder; Le., Mexican-American, Cuban, Puerto Rican, or Latin American. The form used for this purpose is shown in appendix B. An additional sample of firms, selected from those businesses that were identified in the Social Security records as being owned by neither whites nor blacks, was surveyed to 175 PAGENO="0439" 176 determine the number of businesses owned by Amer- icans of Japanese, Chinese, Filipino, Hawaiian, Korean, and American Indian ancestry. Firms having paid employees are included in files obtained by the Census Bureau from the Social Security Administration for use in the preparation of the statistical report, "County Business Patterns" (CBP). The Social Security Administration authorized the use of these tapes in the minority-owned business project. By abstracting selected information from the 1969 CBP file, it was possible to assign to each business the Standard Industrial Classification Code 433 (SIC), a geographic code, and the number of em- ployees reported during the mid-March 1969 pay period. Business firms not included in the CBP list were then matched to 1967 economic census files of firms with no paid employees to obtain the geographic and industry code for such companies. Businesses not found on either list were generally companies which had no paid employees in 1969 and were not in business in 1967 or were classified in an industry in 1967 that was not within the scope of the 1967 economic censuses. Such firms were geographically coded based on the name and address included in the IRS file. The Principal Industrial Activity codeused by IRS was converted to a comparable SIC code. PAGENO="0440" 434 Appendix B 1969 Survey of Business Ownership Report Form COMPLETE AND RETURN THIS REPORT WITHIN 15 DAYS NOTICE-Youere poet to the Census Bueeao is confidential by Ian (Title 13 U.S. Cede). It maybe seen onlyby swo nC 500esployresund maybe used only fnestotlstical puepnseo. The Ian also pencides that copies eetained in ynue files are encoRe leone legal Item 1 - NAME AND ADDRESS OF BUSINESS 1969 SURVEY OF In cones rdence peetalnlng Is IbIs report relee Is IbIs Census FIle Number BUSINESS OWNERSHIP Bureau BrIbe Census 1201 EaslTereth StresS .Isllers.omnllle, Indlera 41130 EMPLOYER IDENTIFICATION NO. business identified in item 1 Ole a Foete 941, Employee's Federal Too any quoetee io 1969. E Yes - Ente, the c,aetently aooi~tedEI onoethee (9 dgito~,, I I I 11 (Pleaneeooect anty esrnen in nanee and uddeeno, ieeolading ZIP node) OF BUSINESS ACTIVITY IN 1969 Item 4 - APPROXIMATE Li DOLLAR VOLUME . Major unlovely of Ibis business List in nedre ot ispnetoene the peincipal products nude, lines if nercbsndise OF BUSINESS IN 1969 Mark (X) one snld, types ot semi ceo tendered, on eons teuntius actiiity peefoecved Murk (X) one t E Less lhun S5,000 E Finance, Reel Eslule, Insuranne Trade [] Olher - Denceibe ._,, WltotnsaleTrade . 2 [J$ 5,000 In S 9.999 n El 10,000 to 24,999 El 25,000 In 99,999 sEJ 100,000 or more OWNERSHIP OF BUSINESS - Mark (X) nne box and follow accompanying insorucoions. El Individual proprietor. . "1,, Complele one line below for each owner or pantone. Do not enter the El Partnership J percenlage of ownnnship. LI Corporation El Other - Specify ~.. ~, Pop~townerncI~ng I or patl.owners, complele lines 1 lhrough 10 for the len having the ,) greatesl pencnnl of ownership. REPORT ON A SEPARATE LINE FOR EACH OWNER, PARTNER, SHAREHOLOER What Is thIs White °Z person's race or colul Anescan* Mob one WItal Is lIds pessor's Olher..5 ,~ubun ~ desceel or orIgIn? Mob one £~o~;hLhem~s_r Ceesos~ 3~ ~ T ~TH 4 ~ TP~1 4 14 * Includes Chinese, Japanese, Filipino. Enmean °~ tnnludes Chicano and Meoicono Remarks . - Item 6 - PERSON TO CONTACT REGARDING THIS REPORT None Addeess `-JVsanhee, otneet, city, State. ZIP code ~ Telephone Area code Nunbee Ext. Signatine it authoriaed official Title Date 17~ PAGENO="0441"