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Table 10

NET VALUE OF MILITARY PROCUREMENT ACTIONS UNDER FORMALLY ADVERTISED AND OTHER CONTRACTS /

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b/ Includes contracts negotiated by authority of 10 U.S.C. 2304(a) and modifications made pursuant to the provisions of negotiated contracts, for which statutory negotiation authority is not required or used.

All actions of less than $10,000, and actions of $10,000 or more offered to all business.

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Table 11

NET VALUE OF MILITARY PROCUREMENT ACTIONS UNDER FORMALLY ADVERTISED AND OTHER CONTRACTS /

(Amounts in Millions)

Fiscal Years 1951 1959

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NOTES ON COVERAGE

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MILITARY PRIME CONTRACT AWARDS

Coverage. This report includes prime contracts executed by the military departments and procurement agencies of the Department of Defense, to obtain military supplies, services, or construction. All new prime contracts are included, regardless of the amount; debit or credit changes in contracts are included only if they involve $10,000 or The reports submitted by the departments as of the dates specified in this report are intended to include all contracts and amending actions executed up to that date, insofar as practicable. In practice, there is some lag in contract reporting, and some contracts may be unavoidably omitted from the statistical reports for the month in which they were approved.

Prime Contracts are defined as contractual instruments which obligate funds to obtain supplies, services, or construction. (An amendment to a prime contract may deobligate funds.) New or superseding definitive contracts, purchase orders, and the funded portion of preliminary contractual instruments such as letters of intent and letter contracts are included in this report. Contracts which do not obligate a firm total dollar amount, or do not specify a fixed quantity, such as open-end, indefinite quantity, or term contracts, are not included in this report. However, job orders, task orders, delivery orders, or any other orders against such contracts are included.

Procurement Action as used in this report refers to an action which officially awards, amends, or otherwise offically changes a prime contract. A procurement action thus may be a new prime contract, or a debit or credit change in a contract, such as an amendment, supplemental agreement change order, cancellation, or termination that changes the total amount of funds obligated.

Intra-governmental Purchases include (a) Inter-departmental Purchases, made from or through agencies of government other than the Department of Defense, and (b) Interservice Purchases, which are orders placed by one military technical service, bureau or command, against open-end or indefinite quantity contracts executed by other military technical services, bureaus or commands or by a joint pur

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chasing agency. (Requisitions or other means of transfering supplies within or between military departments not included in this report, because they do not increase or decrease the total obligations of the Department of Defense.)

of

Net Value refers to the net change in the amount obligations resulting from debit and credit procurement actions recorded during the period. Debit procurement actions are all new contracts plus contract changes that increase the amount of obligations by $10,000 or more. Credit procurement actions are contract modifications that decrease the amount of obligations by $10,000 or more.

Location of Work. The location of work is the place where the item is to be manufactured, assembled or otherwise supplied by the prime contractors, the place where the service is to be performed, or the site where the construc tion is to take place.

Reports from the three military departments for Fiscal Year 1954 and subsequent years provide information as to contracts under which the work is to be performed (1) within the United States, including its territories and possessions and the Commonwealth of Puerto Rico, and (2) outside the United States as so defined.

The data on location of work for periods prior to Fiscal Year 1954 are not precisely comparable. Available reports for Fiscal Year 1953 include data on contracts awarded by procurement offices located in the Continental United States, for work to be done within Continental United States. These data for Fiscal Year 1953 therefore differ from those for Fiscal Year 1954 and subsequent years in that they exclude data on awards for work to be done in the territories and possessions, and the Commonwealth of Puerto Rico from the United States figures.

For Fiscal Years 1951 and 1952, the available reports for the Department of Defense as a whole provide information on contracts awarded by procurement offices located in the Continental United States. While most of those con

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tracts are for work to be done in the United States includ-
ing territories and possessions, and the Commonwealth of
Puerto Rico, some contracts are for work in foreign coun-
tries. Data for these years therefore are roughly but not
exactly comparable to current reports.

Business Firms. Included in the data on awards to
Business Firms are data on awards to companies, individuals
and partnerships with which the military departments have
contracts for work performance within the United States,
including the Commonwealth of Puerto Rico, and other re-
gions administered by the U. S. Small Business Firms are
concerns which are not dominant in their fields of opera-
tion and which, together with their affiliates, employ
fewer than 500 persons, or which have been certified by
the Small Business Administration as small business firms.
There are three important exceptions as follows: (1) in the
petroleum refining industry a business concern is small if
it is independently owned and operated, if its number of
employees does not exceed 1,000 persons, and if it does not
have more than 30,000 barrels per day crude oil capacity
from owned and leased facilities; (2) in the
industry a business concern is small if it is independently
owned and operated and its average annual receipts in the
preceding three fiscal years do not exceed $5,000,000; and
(3) in the air transportation industry a business concern
is small if its number of employees does not exceed 1,000

persons.

construction

Educational and Non-Profit Institutions. Data for
these institutions have been segregated from the Business
Firms category and are shown separately for the first time
in the tables for Fiscal Year 1957. In all records prior
to July 1956, procurement actions with educational and non-
profit institutions are included in the data for U. S.
Business Firms.

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Definition of Small Business Potential. The small
business potential includes all procurement actions of
$10,000 or more which are offered to small business. Since
it is not practicable to secure individual reports on each
of the millions of military procurement actions of less
than $10,000 each, for purposes of this report it is as-

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sumed that all actions of less than $10,000 also are in
the small business potential. (This assumption is not
strictly correct. The effect of making it is to over-
state the potential and understate the percentage share
af the potential awarded to Small Business.) Excluded
from the potential are procurement actions of $10,000 or
more for which no small business source is known to ex-
ist or which for reasons peculiar to the particular pro-
curement, such as patent or other proprietary rights,
delivery schedules, necessity for interchangeability of
parts, or mobilization base considerations can not be
placed with small business concerns.

The

Ratio of Small Business to Totel. The ratio of
small business to total prime contract awards is sub-
Ject to wide fluctuation, and figures for any short
period of time are not necessarily representative.
percentage depends mainly on the type of commodities
being procured in that particular period. When procure-
ment of soft goods and easy-to-make items is a
part of the total, the small business percentage will
be high. When aircraft, missiles, or other
items are purchased in large volume, the small business
percentage will be relatively low.

large

heavy

certain

the

Comparison with Fiscal Reports. There are
differences between the coverage of this report on
value of military prime contract awards, and that of the
fiscal reports of the Department of Defense which in-
clude certain data on obligations of funds for procure-
ment and construction. One difference is that the re-
ports on contract awards do not include funds obligated
by project orders issued to military-owned and military
operated establishments, such as Navy Yards, unless and
until the funds of this type are used to finance con-
tracts with private business firms or with other govern-
ment agencies. Another significant difference is
this report segregates contracts for services from
other procurement and production, whereas the fiscal
data on obligations for procurement and construction
do not. It is noted also that the Major Procurement
and Production Budget Categories are not comparable with
the Office of Defense Mobilization Procurement Program
categories used in this report.

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Office of the Secretary of Defense 15 January 1960

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