firms in obtaining their fair share of Government contracts; and assistance to small businesses with their management and technical production problems. I will first present a summary of our operations in financial assistance and in production and technical assistance. I will then comment on bills now pending before the committee.

FINANCIAL ASSISTANCE

The primary function of the Small Business Administration in its program of financial assistance is to provide small business concerns with needed credit when such financing is not otherwise available from banks or other lending institutions on a reasonable basis, and to provide loans to victims of floods, hurricanes, and other natural disasters for the restoration or rehabilitation of damaged or lost property. Also, financial experts in the agency's Washington and field offices offer advice, counsel, and often active aid to small business concerns in developing solutions to their financial and management problems.

There has been a marked increase each year in the number of loan applications received from small business concerns, since the agency first began accepting such applications on September 29, 1953, reaching an unprecedented high this fiscal year. It is anticipated that by the end of June, 70 percent more business loan applications will have been received than in the previous fiscal year. Through May 31 of this year a total of 16,032 applications for $880,006,000 had been received, of which 6,820 had been approved as loans in a total amount of $311,494,000. Of these approvals, 3,260 in a total amount of $145,803,000 have been in fiscal year 1957. Nearly 60 percent of all applications acted upon during this fiscal year have resulted in loan approvals.

Because of the greatly increased demand for business loans, it was necessary to ask Congress early this year to increase the legislative limitation on the agency's business loans outstanding from $150 million to $230 million. This is in addition to the $125 million authorized for disaster loans. The revolving fund for loans was also depleted to the point where formal approval of business loans had to be discontinued from February 1 until April 22, when an additional $45 million was appropriated for the fund and approvals could be resumed.

In the operation of the disaster loan program 7,341 applications for $99,598,000 had been received through the end of May, of which 5,974 loans for $64,366,000 were approved. Of this number, 1,422 loans for $11,349,000 were approved during the current fiscal year.

PROCUREMENT AND TECHNICAL ASSISTANCE

I should like to review now our procurement anud technical-managerial assistance service and related programs. In proceurement and technical assistance the Small Business Administration has two primary functions: to assist small firm desiring to participate in Government procurements and to help small firms keep abreast of improved production, managerial, and marketing techniques.

Small business set-aside programs are now in effect at 140 military and Federal civilian agency purchasing offices, including 53 offices which were brought into the program during the first 9 months of this fiscal year.

Set-aside actions earmarking Government purchases for exclusive award to small-business firms have increased progressively, both with respect to number of set-aside actions and contracts awarded. These set-asides are made by SBA jointly with the Department of Defense, and civilian agencies, which have entered into this cooperative program. From August 1953, through March 1957, a total of 19,123 joint set-asides has been earmarked for small business, from which 14,157 awards were made, resulting in 22,115 contracts to small firms. The value of the contracts awarded is approximately $1 billion. The number of set-aside actions increased 105 percent for the 9 months ending March 1957, compared with the same period of the previous year. Likewise, contract awards resulting from these set-asides for the same period increased twofold.

The record is much the same in virtually all other areas of our procurementassistance program. For example, in the development of subcontracting opportunities for small firms, our contracts with prime contractors during the first 9 months of this fiscal year increased 48 percent over the same period of fiscal 1956. At the same time, the Agency made about twice as many referrals of subcontracting opportunities to small firms.

For the period of this comparison, the record also shows an increase of 73 percent in the number of firms helped by the Small Business Administration to

bid on specific Government purchases; a 47 percent increase in the number of firms counseled on procurement problems, or helped to present grievances to procurement agencies; the number of applications received for certificates of competency increased 34 percent and COC's issue increased 11 percent.

The increased number of loans and other types of small-business cases involving technical production assistance, is observed in the 46 percent increase in loan appraisals and other technical surveys related to these items.

These and similar increases in other areas of the procurement assistance program reflect both an increasing awareness of and demand for the Agency's services on the part of small firms, and growing effectiveness of the cooperative programs with the Government procurement agencies.

During the calendar year 1956, the Small Business Administration, in cooperation with other Federal agencies and local business groups, cosponsored 20 business opportunity meetings for the benefit of small-business owners and managers. The direct purpose of these meetings is to acquaint small-business operators with Government procurement procedures and with services of the Small Business Administration. The meetings are designed to tell small-business owners and managers how and what the Government and prime contractors buy, and what they currently need. This is accomplished through talks by purchasing officials, visual displays, sample bid sets, and exhibits of articles bought by the Government and by prime contractors.

More than 25,000 businessmen attended these meetings, and most of the comments the Agency has received from them and from the cosponsoring groups have been to the effect that the meetings were mutually helpful, and they would like to see additional meetings arranged. Tentative plans also provide for approximately 40 business opportunity meetings during the next fiscal year.

The success of these meetings would not have been possible without the cooperation and assistance of the several Government procurement offices. I should like at this time to pay tribute to the Government departments and agencies that cooperated with the Small Business Administration in making these business opportunity meetings helpful to small firms.

In addition to financial assistance and help in obtaining Government contracts, many small-business concerns need and are asking for assistance in improving their management and technical knowledge. The Small Business Administration helps to fill this need through its management and technical-assistance program, which is tied in closely with the procurement assistance operations I have just described.

In order to aid small firms in improving their managerial techniques, the Small Business Administration cosponsors administrative management courses with colleges and other interested organizations. These courses, usually conducted in the evening, are taught by buiness leaders and college teachers. The courses provide one possible answer to the basic need of most small-business operators for improved management skills. To date upward of 8,000 businessmen and women have attended the 263 courses which have been held in cooperation with 100 educational institutions and organizations. Tuition fees paid by the business owners and managers cover the expenses of the courses.

In the Small Business Administration publications program, the agency seeks to accomplish through the printed word the objective of providing small firms with information on sound production practices and management methods and of helping them to overcome specific problems.

The agency publishes four series of management and technical production publications. Three of the series are short, practical leaflets, written chiefly by specialists in private industry who contribute articles without any charge to the Government. There has been a continued increase in the number of requests received from small firms for SBA small-business publications; 3,331,600 management and technical publications have been distributed since August 1953. The agency also publishes a series of management booklets, written by specialists under contract, as well as bound copies of the earlier leaflets. These booklets are sold by the Government Printing Office at nominal prices.

The Small Business Administration also has made available to small firms a United States Government Purchasing Directory, which is a guide to who buys what and where in the military and Federal civilian agencies, and a United States Government Specifications Directory, which is a guide to sources of the specifications used by the Government in its purchasing. Businessmen and others have purchased more than 50,000 copies of these directories from the Government Printing Office.

Another Small Business Administration service is help to small firms in gaining access to product research and development information available from both Government and industry. The agency has two purposes here: To help small firms obtain data needed in solving problems relating to specific products and processes, and to provide them information on available products and processes that can be used to maintain, diversify, or expand their operations.

As a part of this service, the Small Business Administration publishes each month a circular which lists privately owned and Government-owned inventions available for license or sale to small firms. This Product List Circular makes available to small-business firms information on new products and processes that can be used by small plants having open capacity or seeking to diversify their business operations. Also published in the Products List Circular have been the titles and patents released by the Department of Justice in connection with provisions of judgment in antitrust cases.

Through the period ending in March of the present fiscal year, the agency has aided some 7,650 small-business concerns in the solution of problems pertaining to new products and processes or improving present products. In addition, approximately 3,000 requests for additional data on inventions listed in the Products List Circular have been received by the agency.

The magnitude of the job of assisting the greatest possible number of small firms is highlighted when one considers that there are more than 4 million small-business concerns, including approximately 300,000 small manufacturers. It has been necessary to give the greatest emphasis to activities which are far reaching in scope and which benefit the largest possible number of small firms. The top priority in the procurement programs has been given to that phase which involves setting aside certain Government purchases for competitive award to small firms.

One of the problems I am hopeful can be corrected in the coming year is that of meeting our responsibilities to more small business concerns by making the agency's facilities more accessible to small firm owners and operators. During the past year, the personnel of the Small Business Administration have had to devote the maximum share of their time and energy in meeting an increased demand for the agency's services in the financial and technical assistance fields, and to making refinements in these programs which experience has indicated were necessary. However, in spite of the increased workload under our programs, we have worked diligently to find new ways to further the interest of small business.

COOPERATION WITH OTHER AGENCIES

During the past year, in addition to the program operations of SBA, there has been a coordinated effort among all Government agencies and departments to render specific assistance to small business. The Small Business Administration has cooperated actively both as participant and adviser with other agencies in implementing the recommendations of the President's Cabinet Committee on Small Business. SBA activities and programs have pinpointed small business problems and have served as a corollary to efforts of small-business men to bring such problems to the attention of this Cabinet Committee.

Pursuant to recommendation No. 5 of the first progress report of the Cabinet committee, the Small Business Administration is giving its full cooperation to the Task Force for Reviewing of Government Procurement Policies and Procedures. As I have said previously to the members of this committee, I feel this task force is undertaking a highly important assignment-one that will likely have far-reaching effects on the ability of small firms to increase their share of procurement from the Government. Responsibility for carrying out this recommendation was asigned to the Administrator of the General Services Administration.

The task force is composed of representatives of the principal procurement agencies. The Administrator of GSA named a chairman of this task force from his own staff. The Bureau of the Budget, the General Accounting Office, and the Small Business Administration participate in this program as members of a special advisory group. SBA also participates in two other capacities.

At the invitation of the Administrator of GSA, the Small Business Administration assigned a full-time member to the task force. In addition, SBA staff members serve on study groups under the task force-1 serving as chairman of the group which is developing uniform small business set-aside procedures; 1 with group 6, small-business participation in Government-sponsored research and de

velopment programs; and another on a subcommittee concerned with the drafting of proposed legislation.

The Small Business Administration has made available to the task force specific examples of inequities, inconsistencies, and complexities in Government procurement. This has been accomplished by having SBA field offices prepare factual information on cases which illustrate the difficulties of small firms in selling to the Government. These cases, in turn, are forwarded to the task force and the experience of the agency is detailed and interpretations supplied through the SBA member of the task force. As of the end of May 1957, the agency has submitted 173 specific cases covering such problem areas of Government procurement

as:

1. Nonavailability of specifications and drawings;

2. Standardization on items which exclude small-business products;

3. Procurement by specifying a brand name or equal;

4. Inadequate or inaccurate blueprints;

5. Inspection or testing of the product;

6. Delay in payment;

7. Delay in settlement of claims;

8. Contract financing, including progress payments;

9. Small business in the field of research and development;

10. Packing and packaging requirements.

Pursuant to recommendation No. 6 of the President's Cabinet committee, procedures and regulations have been issued by both the GSA and Department of Defense that should facilitate and accelerate contract financing. The SBA has been active in promulgation of changes in policy to alleviate the need for credit by many small concerns and their being deprived of an opportunity to do work on Government contracts.

We have actively participated with the Department of Commerce in developing plans for a conference on technical research and development and distribution research for the benefit of small business. This conference will be held September 24, 25, and 26, 1957. Small business, other business concerns, trade and smallbusiness associations, educational institutions, representatives of the various Government departments, agencies, and committees, and professional technical groups will participate in this conference.

The Cabinet committee's recommendation No. 14 directs attention to the need of a study of reports and statistics required of small business by the Government. This study is being made by the Bureau of the Budget and a member of the Small Business Administration has been assigned to assist in this project.

This agency has for some time taken exception to the use of the weighted average price on partial set-asides for small business. I am happy to report that a change to the Armed Services Procurement Regulations effective June 3, eliminating the use of the weighted-average price, has been announced. Now small-business firms will receive awards on partial set-asides at the highest unit price of the unreserved quantities.

COMMENTS ON LEGISLATION

The committee is now considering S. 1789 introduced by Senator Thye, for himself and Senators Capehart, Bush, Allott, Aiken, Butler, Case of New Jersey, Case of South Dakota, Cooper, Flanders, Ives, Javits, Kuchel, Malone, Martin of Iowa, Mundt, Payne, Potter, Revercomb, Saltonstall, Mrs. Smith of Maine, Smith of New Jersey, Bennett, Beall, Kefauver, Carlson, Stennis, Wiley, Barrett, and McCarthy. This bill has received unanimous support from all the agencies in the executive branch. It establishes the Small Business Administration as a permanent agency and materially strengthens the Small Business Act. I recommend therefore that your committee give favorable consideration to the enactment of S. 1789.

I would like to discuss S. 1789 in some detail but first I would like to comment briefly on some other bills amending and extending the Small Business Act which presently are before this committee for consideration.

S. 55, S. 246, S. 300, S. 1762, and S. 1789 all give the SBA permanent status. The Small Business Act which authorizes the establishment of the Small Business Administration was passed by the Congress in 1953. The original legislation provided that all authority under the act would terminate June 30, 1955. In that year Congress amended and extended the act to July 31, 1957, at which time this law will terminate.

Experience under such temporary legislation has revealed a number of difficulties which seriously hamper the efficient operation of the Small Business

Administration. These liabilities do not appear to be balanced by the advantages, if any, of a termination date. This is particularly true since the agency may at any time be terminated by Congress if it so desires.

It appears, for example, that some business organizations and Government agencies tend to regard SBA programs as temporary expedients. As the expiration date of the Small Business Act approaches, we believe some banks hesitate to join with the agency in participation loans. This hesitation may be based on the fear, among others, that a bank committed to a long-term loan will incur unanticipated expenses arising out of the shift of responsibilities from SBA to a successor agency. Government agencies, too, may be reluctant to embark on longer range programs with SBA because they may find themselves burdened with additional duties which they are not prepared to assume if SBA should be terminated.

It is clear that the Small Business Administration will have important and continuing responsibilities in any defense program. However, integration of the Small Business Administration into national-defense planning is made difficult because of the temporary nature of the agency. And, finally, experience has indicated that better relations with the business world can be established if it is clear that the Administration's small-business program is a continuing S. 545 and S. 1762 would abolish the Loan Policy Board of the Small Business Administration.

one.

This Board is composed of the Administrator, Small Business Administration, who serves as Chairman; the Secretary of the Treasury, and the Secretary of Commerce, or their designees. The Board is charged with the responsibility for establishing general policies, particularly with reference to the public interest, which govern the overall operation of the Small Business Administration's financial assistance program.

The Loan Policy Board performs an essential function for SBA by establishing policies which assist the Small Business Administration to meet the credit needs of small concerns. In addition, the Board provides a means for coordinating this agency's lending policies with those of other Government departments. The Board does not supervise the administrative activities of the Small Business Administration nor does it take any part in its management. The Board functions only in developing the overall lending policy of the agency.

The Small Business Administration in lending public moneys must be guided by considerations of the public interest. The determination of what constitutes the public interest can best be made by the collective judgment of Government representatives who have substantial responsibilities in the business and fiscal affairs of the Nation. I have found the Loan Policy Board to be of immeasurable assistance in the administration of SBA's lending program. I therefore do not recommend any legislative changes in the Small Business Act which would eliminate the present Loan Policy Board.

S. 244 would authorize loans by the Small Business Administration to alleviate unemployment in areas of substantial labor surplus. This proposal would enlarge the present authority of the Small Business Administration to make disaster loans and would authorize such loans in those areas which the Secretary of Labor determins to be an area of substantial labor surplus. The financial assistance program contemplated in S. 244, in general, is similar to that proposed in S. 1433, the Area Assistance Act. However, S. 1433 is an integrated program designed to deal with the problems of persistent unemployment by utilizing the resources of several Government agencies. This approach would be more effective in meeting the needs of the surplus labor areas referred to in S. 244; therefore S. 1433 is recommended over S. 244.

S. 2184 directs the Small Business Administration to make extensive studies of certain problems of small business and to report on such studies. Section 208 (n) of S. 1789 amends the Small Business Act of 1953, as amended, to authorize the Small Business Administration to make studies of matters materially affecting the competitive strength of small business or the effect on small business of Federal programs or regulations. This amendment will eliminate the necessity for changes of the type proposed under S. 2184. It is preferable to the latter bill in that the requirement to make studies is not mandatory but rather within the discretion of the Administrator as he finds studies to be necessary. For this reason the enactment of S. 1789 is recommended in lieu of S. 2184.

S. 2185 authorizes the Small Business Administration to make loans to local private nonprofit organizations formed to assist, develop, and expand the econ