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DU-VAL INDUSTRIAL FOREIGN TRADE CORP.

DU-VAL INDUSTRIAL FOREIGN TRADE CORP.,
Dallas, Tex., May 6, 1969.

HOUSE SMALL BUSINESS COMMITTEE, 2361 Rayburn House Office Building, Washington, D.C.

Attention: Representative Joe L. Evins, Chairman.

DEAR SIR: With reference to your circular letter pertaining to AID financing which is being discussed with the Committee on May 15, we would like to state that our company, as a combination export-management company, has tried on many occasions to participate in AID financed projects; however, we have been unsuccessful in receiving any awards. It is our belief that the reason for this is that in many instances, the specifications are written around a wellknown manufacturer's product and although the requirements state "or equal," it has been our experience that the decision apparently has already been made by the customer ahead of time to purchase equipment which is known to him through previous purchases, and which specifications appear in the official AID bulletin.

It is our opinion that in order to give a company such as ours a greater scope and possibility in participating in some of the AID-financed requirements, the specifications given should not bias the ultimate customer to purchase equipment which is already known to him and thus ignore other offers with similar or better characteristics.

We have also found that when we use the AID Circular as a base, in most instances, not enough time is allowed in order to submit an intelligent quotation for complicated equipment and machinery. We feel that a preparatory period of at least two months should be granted after publication date of the Circular. We would be grateful for the views of the Committee in this matter. Yours very truly,

V. J. MILLERS, President.

DU VAL

It is AID policy and practice to require that commodity specifications be stated in a nonrestrictive manner in order to permit maximum response from prospective suppliers. In screening the notices which are received for publication, we attempt to see that they are not preclusive or unreasonably restrictive. In many instances we have insisted that specifications be modified before publication. There are cases where, because we are not familiar with the details of all the products of all manufacturers, some items have been published which certain manufacturers considered to be restrictive. When these cases were brought to our attention and we found the complaint to be justified, we required that the specifications be modified. We invite any supplier who considers specifications which are published in our Circulars to be overly restrictive to bring the case to our attention.

The description of the items to be purchased, and their specifications, are prepared by the foreign importers-not AID. We believe it is understandable that importers in the relatively unsophisticated and developing nations of the world will describe the items they wish to buy in terms of the equipment they know or have seen exhibited locally. We also believe that it is understandable that a foreign importer (who is required to pay the full local currency equivalent of his purchases from the United States), will prefer to buy a product which he knows or has seen operate and for which there are established spare parts and servicing facilities available locally, rather than an unknown, to him, make. We agree that it is often difficult to convince buyers that a product, other than the one he knows, is equal or better in actual practice. This is true in the United States, as well as

overseas. We do not believe that it would be a proper or appropriate function of AID, however, to promote or to force the purchase of one product over another. The time permitted for submissions of bids and offers after the date of publication is normally a minimum of 30 days. We believe that, in most cases, this is adequate. We further believe that a general extension of the bidding period to two months would place an undue burden on the foreign importer and is impracticable. Counting the time required by the foreign importer for preparation in the English language of the information to be publicized, mailing time to Washington, the time required for review in Washington, plus the time required for printing and mailing by the Government Printing Office, the importers waiting time already exceeds 60 days. In countries which require large advance deposits prior to obtaining an import license, the high cost of money (often 6-15% per month) adds substantially to the importers cost for every additional day of delay.

ELECTRONICS & MECHANICAL DESIGN

ELECTRONICS AND MECHANICAL DESIGN,
DIVISION OF LYNN AIRCRAFT SALES, LTD.,
Des Plaines, Ill., May 6, 1969.

Hon. REPRESENTATIVE JOE L. EVINS,
Chairman, House Small Business Committee,
Washington, D.C.

DEAR REP. EVINS: Thank you for your kind invitation of May 1, 1969 regarding any views we may have on small business participation in the procurement of goods and services financed with AID funds.

We are of course a small business which provides services in the sales abroad, of airplanes and spare parts. As exporters, we have submitted many offers and bids on aircraft and parts under AID sponsorship. Our efforts have resulted in only an exercise in futility for we have found it impossible to buck "big business" interests.

We are not "against" big business as such since it has a very important place in the business world, but we would appreciate it very much if a few small morsels of business filtered to us under the AID program.

It is not our wish or desire to testify in your hearings but we have enclosed a few of our exhibits, which may be of interest to your committee. Very truly yours,

EDWIN A. JANSKI.

DEPARTMENT OF STATE,

Mr. E. A. JANSKI,

AGENCY FOR INTERNATIONAL DEVELOPMENT,
Washington, D.C., November 15, 1968.

Electronics and Mechanical Design,

Des Plaines, Ill.

DEAR MR. JANSKI: Thank you for your letter of November 4 addressed to Mr. Schmeisser concerning the availability of certain turbo-prop aircraft.

I regret to inform you that aircraft are not considered eligible for financing under AID programs, and that I am not aware of the interest which you understand exists on the part of several overseas airlines in purchasing this type of aircraft. Since any possible purchase of this equipment would not be AID-financed, I suggest that you communicate directly with the airlines themselves.

Sincerely yours,

EDWARD E. KUNZE, Special Assistant for Small Business.

ELECTRONICS & MECHANICAL DESIGN

The attachments to Mr. Janski's letter of May 6, 1969 indicate that, from 1955 to 1963, AID financed certain aircraft, and that in March 1969 we advertised the proposed procurement of Twin Powered Helicopters for Chile. This appears to be at variance with another attachment-AID's response of November 15, 1968 to Mr. Janski's letter of November 4, 1968-which advised that aircraft were not considered eligible for financing under AID programs. A copy of Mr. Janski's letter of November 4, 1968 is attached for inclusion in the record.

It is correct that, during the period of 1955 to 1963, A.I.D. did finance the purchase of certain aircraft and that on March 13, 1969, we advertised the proposed procurement of Turbine Powered Helicopters for Chile. It is also correct that from July 1, 1968 to December 31, 1968 (the period during which

Mr. Janski's letter of November 4, 1968 was received), aircraft were not considered eligible for AID financing, as indicated on page A-26 of the attached copy of "AID Condensed Schedule 'B'" dated July 1, 1968. A revised issuance of "AID Condensed Sechedule 'B'" issued January 1, 1969 makes the eligibility of aircraft subject to prior approval by AID/W on a case-bycase basis.

It should be noted that the advertisement for helicopters in March of this year was for use by the Chilean police, and not by the foreign airlines which were the subject of Mr. Janski's letter of November 4, 1968.

DEPARTMENT OF STATE,

ELECTRONICS AND MECHANICAL DESIGN,
DIVISION OF LYNN AIRCRAFT SALES, LTD.,
Des Plaines, Ill., November 4, 1968.

AGENCY FOR INTERNATIONAL DEVELOPMENT,
Washington, D.C.

Attention: Mr. William C. Schmeisser, Jr., Special Assistant for Small Business. GENTLEMEN: We have been advised that several principal domestic airlines overseas are interested in re-equipping with turboprop aircraft.

Our firm has been commissioned to sell fifteen (15) used Lockheed Electra turboprop model LKE-188's which will be available for sale by May of 1969. Presently we have one (1) Electra, FAA Serial N-6125, overhauled and ready to go, with zero times on airframe, engines and propellers.

We would appreciate it very much if your office would disseminate this fine purchase opportunity to your commercial staffs overseas. Sincerely yours,

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* Passenger automobiles and chassis (including station wagons) priced in excess of $2,400 FAS each, and military automobiles are ineligible.

2 Parts other than new require prior approval of AID/W.

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EMPIRE GENERATOR CORP.

EMPIRE GENERATOR CORP.,
Milwaukee, Wis., May 5, 1969.

HOUSE SMALL BUSINESS COMMITTEE,

House Office Building,

Washington, D.C.

Attention: Hon. Joseph L. Evins, Chairman.

DEAR MR. EVINS: Relative to AID financed contracts, I have several specific comments which would help at least this small business. We are midwestern as you can see by the address, and the requirements for 100% shipments of AID financed contract in US ships very difinitely places midwestern firms at a disadvantage. The reason for this is of course that very few American lines come into the Great Lakes and we are therefore required to use coastal ports with the net disadvantage of the cost of inland freight from the manufacturing facilities to the port areas. Waiving the requirement for American bottoms would result in lower overall cost for equipment supplied under AID contract. Secondly, the modification of the AID procedures at least on the part of the foreign buyers would be desirable. Presently, most of the procurements for at least our products are awarded not by item but rather in total. A requirement that the buyer award contracts by individual items would also be desirable. There are many bid requests which come out where a broad range of equipment is requested and only a very few manufacturers are in a position to cover the total range. If buyers spending AID money were required to award items on procurement by item rather than in total, there would be considerably more competition for one thing, there would be a lower total cost for the second, and the third of course is a corrollary to the first two. Our tax money would go considerably further.

The two above suggestions are my suggestions as to changes which would be desirable in the handling of AID financed contracts.

Very truly yours,

RICHARD W. THICKENS.

EMPIRE GENERATOR CORPORATION

The statement that 100% of AID financed shipments must be made on U.S. flag ships is incorrect. The Cargo Preference Act to which AID is subject, requires that at least 50% of AID cargoes must move on American ships, to the extent that they are available at fair and reasonable rates. Since AID does not (for balance of payments reasons), finance freight costs of foreign flag vessels, however, some countries require the maximum use of U.S. flag vessels to avoid having to use their own limited foreign exchange resources for freight payments to third countries.

Responsibility for compliance with the minimum 50% U.S. flag-shipping requirement rests with the importing country, with determination of compliance being based on performance during each fiscal year. The decision as to whether a U.S. flag or a foreign flag vessel is to be used on a specific shipment is, therefore, a responsibility of the importing country. As long as the country meets the statutory shipping requirement, AID would have no objection to the use of foreign flag vessels and that country finances the freight costs with its own funds.

On the assumption that the company's name reflects the products in which it is interested, we do not believe that their statement that most of the procurements for their products "are awarded not by item but rather in total," is correct. During the month of August 1969, for example, we find that the proposed procurement of generators, as separate items, appeared in the following AID Small Business Circulars: SBC 69-373 dated August 1; SBC 69-383 dated August 7; SBC 69-389 dated August 13; SBC 69-390 dated August 13; SBC 69-400 dated August 19; SBC 69-402 dated August 19; and SBC 69-406 dated August 20.

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