"(c) to make a complete inventory of all productive facilities of smallbusiness concerns which can be used for war, defense, or civilian production, or to arrange for such inventory to be made by any other governmental agency which has the facilities. In making any such inventory, the appropriate agencies in the several States may be requested to furnish an inventory of the productive facilities of small-business concerns in each respective State if such an inventory is available or in prospect;

"(d) to coordinate and to ascertain the means by which the productive capacity of small-business concerns can be most effectively utilized for war, defense, or civilian production;

"(e) to consult and cooperate with officers of the Government having procurement powers, in order to utilize the potential productive capacity of plants operated by small-business concerns;

"(f) to obtain information as to methods and practices which Government prime contractors utilize in letting subcontracts and to take action to encourage the letting of subcontracts by prime contractors to small-business concerns at prices and on conditions and terms which are fair and equitable;

"(g) to determine within any industry the concerns, firms, persons, corporations, partnerships, cooperatives, or other business enterprises, which are to be designated ‘small-business concerns' for the purpose of effectuating the provisions of this Act. To carry out this purpose the Administrator, when requested to do so, shall issue in response to each such request an appropriate certificate certifying an individual concern as a 'small-business concern' in accordance with the criteria expressed in this Act. Any such certificate shall be subject to revocation when the concern covered thereby ceases to be a 'small-business concern'. Offices of the Government having procurement or lending powers, or engaging in the disposal of Federal property or allocating materials or supplies, or promulgating regulations affecting the distribution of materials or supplies shall accept as conclusive the Administration's determination as to which enterprises are to be designated 'small-business concerns', as authorized and directed under this paragraph; "(h) to certify to Government procurement officers with respect to the competency, as to capacity and credit, of any small-business concern or group of such concerns to perform a specific Government procurement contract. In any case in which a small-business concern or group of such concerns has been certified by or under the authority of the Administration to be a competent Government contractor with respect to capacity and credit as to a specific Government procurement contract, the officers of the Government having procurement powers are directed to accept such certification as conclusive, and are authorized to let such Government procurement contract to such concern or group of concerns without requiring it to meet any other requirement with respect to capacity and credit;

"(i) to obtain from any Federal department, establishment, or agency engaged in procurement or in the financing of procurement or production such reports concerning the letting of contracts, and subcontracts and making loans to business concerns as it may deem pertinent in carrying out its functions under this Act;

“(j) to obtain from suppliers of materials information pertaining to the method of filling orders and the bases for allocating their supply, whenever it appears that any small business is unable to obtain materials from its normal sources.

"(k) to make studies and recommendations to the appropriate Federal agencies to insure that a fair proportion of the total purchases and contracts for supplies and services for the Government be placed with smallbusiness enterprises, to insure that a fair proportion of Government contracts for research and development be placed with small-business concerns, and to insure a fair and equitable share of materials, supplies, and equipment to small-business concerns.

"(1) to consult and cooperate with all Government agencies for the purpose of insuring that small-business concerns shall receive fair and reasonable treatment from said agencies;

"(m) to establish such small-business advisory boards and committees truly representative of small business as may be necessary to achieve the purposes of this Act;

"(n) to make studies of matters materially affecting the competitive strength of small business, or the effect on small business of Federal pro

grams or regulations; to make recommendations to the appropriate Federal agency for the adjustment of such programs or regulations to the needs of small business.

"SEC. 108. (a) The Administration shall make a report every six months of operations under this Act to the President, the President of the Senate, and the Speaker of the House of Representatives. Such report shall include the names of the business concerns to whom contracts are let and for whom financing is arranged by the Administration, together with the amounts involved, and such report shall include such other information and such comments and recommendations as the Administration may deem appropriate.

"(b) The Administration shall make a report to the President, the President of the Senate, and the Speaker of the House of Representatives, to the Senate Select Committee on Small Business and to the House Select Committee To Conduct a Study and Investigation of the Problems of Small Business on June 30 and December 31, of each year, showing as accurately as possible for each such period the amount of funds appropriated to it that it has expended in the conduct of each of its principal activities such as lending, procurement, contracting, and providing technical and managerial aids.

"(c) The Attorney General is directed to make, or request the Federal Trade Commission to make for him, surveys for the purpose of determining any factors which may tend to eliminate competition, create or strengthen monopolies, injure small business, or otherwise promote undue concentration of economic power in the course of the administration of this Act. The Attorney General shall submit to the Congress and the President within ninety days after approval of this Act, and at such times thereafter as he deems desirable, reports setting forth the results of such surveys and including such recommendations as he may deem desirable.

"(d) For the purposes of aiding in carrying out the national policy to insure that a fair proportion of the total purchases and contracts for supplies and services for the Government be placed with small-business enterprises, and to maintain and strengthen the overall economy of the Nation, the Department of Defense shall make a monthly report to the President, the President of the Senate, and the Speaker of the House of Representatives not less than fortyfive days after the close of the month, showing the amount of funds appropriated to the Department of Defense which have been expended, obligated, or contracted to be spent with small-business concerns and the amount of such funds expended, obligated, or contracted to be spent with firms other than small business in the same fields of operation; and such monthly reports shall show separately the funds expended, obligated, or contracted to be spent for basic and applied scientific research and development.

"(e) The Administration shall retain all correspondence, records of inquiries, memoranda, reports, books, and records, including memoranda as to all investigations conducted by or for the Administration, for a period of at least one year from the date of each thereof, and shall at all times keep the same available for inspection and examination by the Senate Select Committee on Small Business, and the House Select Committee To Conduct a Study and Investigation of the Problems of Small Business, or their duly authorized representatives. "(f) It shall be the duty of the Administration to consult and cooperate with governmental departments and agencies in the issuance of all orders or in the formulation of policy or policies in any way affecting small-business concerns. All such governmental departments or agencies are required, before issuing such orders or announcing such policy or policies, to consult and cooperate with the Administration in order that the interests of small-business enterprises may be recognized, protected, and preserved.

"SEC. 109. (a) The President is authorized to consult with representatives of small-business concerns with a view to encouraging the making by such persons with the approval of the President by voluntary agreements and programs to further the objectives of this Act.

"(b) No act or omission to act pursuant to this Act which occurs while this Act is in effect, if requested by the President pursuant to a voluntary agreement or program approved under subsection (a) of this section and found by the President to be in the public interest as contributing to the national defense, shall be construed to be within the prohibition of the antitrust laws or the Federal Trade Commission Act of the United States. A copy of each such request intended to be within the coverage of this section, and any modification or withdrawal thereof, shall be furnished to the Attorney General and the Chairman of the Federal Trade Commission when made, and it shall be pub

lished in the Federal Register unless publication thereof would, in the opinion of the President, endanger the national security.

"(c) The authority granted in subsection (b) of this section shall be delegated only (1) to an official who shall for the purpose of such delegation be required to be appointed by the President by and with the advice and consent of the Senate, and (2) upon the condition that such official consult with the Attorney General and the Chairman of the Federal Trade Commission not less than ten days before making any request or finding thereunder, and (3) upon the condition that such official obtain the approval of the Attorney General to any request thereunder before making the request.

"(d) Upon withdrawal of any request or finding hereunder, or upon withdrawal by the Attorney General of his approval of the voluntary agreement or program on which the request or finding is based, the provisions of this section shall not apply to any subsequent act, or omission to act, by reason of such finding or request.

"SEC. 110. The President may transfer to the Administration any functions, powers, and duties of any department or agency which relate primarily to small-business problems. In connection with any such transfer, the President may provide for appropriate transfers of records. property, necessary personnel, and unexpended balances of appropriations and other funds available to the department or agency from which the transfer is made.

"SEC. 111. No loan shall be made or equipment, facilities, or services furnished by the Administration under this Act to any business enterprise unless the owners, partners, or officers of such business enterprise (1) certify to the Administration the names of any attorneys, agents, or other persons engaged by or on behalf of such business enterprise for the purpose of expediting applications made to the Administration for assistance of any sort, and the fees paid or to be paid to any such persons; (2) execute an agreement binding any such business enterprise for a period of two years after any assistance is rendered by the Administration to such business enterprise, to refrain from employing, tendering any office or employment to, or retaining for professional services, any person who, on the date such assistance or any part thereof was rendered, or within one year prior thereto, shall have served as an officer, attorney, agent, or employee of the Administration occupying a position or engaging in activities which the Administration shall have determined involve discretion with respect to the granting of assistance under this Act; and (3) furnish the names of lending institutions to which such business enterprise has applied for loans together with dates, amounts, terms, and proof of refusal.

"SEC. 112. To the fullest extent the Administration deems practicable, it shall make a fair charge for the use of Government-owned property and make and let contracts on a basis that will result in a recovery of the direct costs incurred by the Administration.

"SEC. 113. To effectuate the purposes of this Act, small-business concerns within the meaning of this Act shall receive any award or contract or any part thereof as to which it is determined by the Administration and the contracting procurement agency (1) to be in the interest of maintaining or mobilizing the Nation's full productive capacity, or (2) to be in the interest of war or national defense programs. Whenever the Administration and the contracting procurement agency fail to agree, the matter shall be submitted for determination to the Secretary or the head of the appropriate department or agency by the Administrator of the Small Business Administration.

"SEC. 114. (a) Whoever makes any statement knowing it to be false, or whoever willfully overvalues any security for the purpose of obtaining for himself or for any applicant any loan, or extension thereof by renewal, deferment of action, or otherwise, or the acceptance, release, or substitution of security therefor, or for the purpose of influencing in any way the action of the Administration, or for the purpose of obtaining money, property, or anything of value, under this Act, shall be punished by a fine of not more than $5,000 or by imprisonment for not more than two years, or both.

"(b) Whoever, being connected in any capacity with the Administration, (1) embezzles, abstracts, purloins, or willfully misapplies any moneys, funds, securities, or other things of value, whether belonging to it or pledged or otherwise entrusted to it, or (2) with intent to defraud the Administration or any other body politic or corporate, or any individual, or to deceive any officer, auditor, or examiner of the Administration, makes any false entry in any book, report, or statement of or to the Administration, or without being duly

authorized, draws any order or issues, puts forth, or assigns any note, debenture, bond, or other obligation, or draft, bill of exchange, mortgage, judgment, or decree thereof, or (3) with intent to defraud participates, shares, receives directly or indirectly any money, profit, property, or benefit through any transaction, loan, commission, contract, or any other act of the Administration, or (4) gives any unauthorized information concerning any future action or plan of the Administration which might affect the value of securities, or, having such knowledge, invests or speculates, directly or indirectly, in the securities or property of any company or corporation receiving loans or other assistance from the Administration shall be published by a fine of not more than $10,000 or by imprisonment for not more than five years, or both.

"SEC. 115. (a) The Administration shall not duplicate the work or activity of any other department or agency of the Federal Government and nothing contained in this Act shall be construed to authorize any such duplication unless such work or activity is expressly provided for in this Act.

"(b) All small business functions not heretofore transferred to the Small Business Administration by the Department of Commerce are hereby transferred upon the effective date of this Act.

"SEC. 116. If any provision of this Act, or the application thereof to any person or circumstances, is held invalid, the remainder of this Act, and the application of such provision to other persons or circumstances, shall not be affected thereby.

"SEC. 117. There are hereby authorized to be appropriated such sums as may be necessary and appropriate for the carrying out of the provisions and purposes of this Act.

"SEC. 118. All laws and parts of laws inconsistent with this Act are hereby repealed to the extent of such inconsistency."

The CHAIRMAN. We have with us this morning Mr. Wendell B. Barnes. He informs me he has a ticket on a plane that leaves at 1:05 and wants to get away not later than 12:15. I told

Mr. PATMAN. Mr. Chairman, would we have another opportunity to question Mr. Barnes? Obviously we can't cover the entire bill this morning.

The CHAIRMAN. Yes.

He said he would come back.

Mr. PATMAN. Today is Tuesday. If he leaves at 1 o'clock, when can we talk to him again?

The CHAIRMAN. In the latter part of this week.

Mr. BARNES. I would be back tomorrow and available the day after tomorrow.

The CHAIRMAN. The day after tomorrow?

Mr. BARNES. Yes, sir.

Mr. PATMAN. That is all right.

The CHAIRMAN. We are here to consider the extension of the Small Business Act. We would hear you, Mr. Barnes. If you have a statement, you may proceed to read it.

Mr. BARNES. Thank you.

The CHAIRMAN. Without interruption, if you so desire.

Mr. BARNES. Thank you, Mr. Chairman.

STATEMENT OF HON. WENDELL B. BARNES, ADMINISTRATOR OF THE SMALL BUSINESS ADMINISTRATION

It is a pleasure to meet with this commitee to discuss in general the programs of the Small Business Administration and to comment on certain legislation now being considered by this committee.

I would like to emphasize the progress which the Small Business Administration has made in each of its major areas of service: Assistance to small-business concerns with their financial problems; financial assistance to disaster victims; assistance to small firms in

obtaining a fair share of Government contracts; and assistance to small firms with their management and technical production problems.

FINANCIAL ASSISTANCE

The lending program of the Small Business Administration is divided into three main functions: Providing small-business concerns with advice and active aid in their financial problems; extending needed credit to small businesses for working capital, expansion and other needs; and making loans to victims of floods, hurricanes and other disasters for the restoration or rehabilitation of damaged property.

The business-loan program has been marked by steadily increasing activity since the agency first began accepting applications on September 29, 1953. Of the total of 15,377 business-loan applications for $845,022,000 received through April 30 of this year, 37 percent were received in the first 10 months of the present fiscal year. Currently, slightly over 50 percent of all applications acted upon result in loan approvals.

At the beginning of the present fiscal year it was anticipated that an average of 350 business loan applications per month would be received. Instead, an average of 569 applications per month have been filed, reaching a high of 702 applications in March. Five hundred sixty-two applications for business loans were received in April. Because of this unanticipated increase in demand for business loans, it was necessary to ask Congress to increase the legislative limitation on the agency's business loans outstanding from $150 million to $230 million. This is in addition to the $215 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 additional funds were appropriated and approvals could be resumed.

In the operatin of the disaster-loan program, 7,140 applications for $97,636,000 have been received resulting in 5,829 loan approvals for $63,126,000. The heaviest activity occurred in fiscal year 1956 during which, due to extensive floods in New England and on the west coast, 4,006 applications for disaster relief were received.

PRODUCTION AND TECHNICAL ASSISTANCE

The procurement and technical-assistance programs of the Small Business Administration are designed to assist small firms desiring to bid on Government purchases of supplies and services, and related subcontracting opportunities, and to help small-business concerns keep abreast of improved production, management, and marketing techniques.

Highlights and accomplishments of these programs are:

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 SMA jointly with the Department of Defense, and civilian procurement agencies, that have entered into this cooperative program.