There may well be times when generators will be included as one of the items in a "package" purchase to assure compatability of the components making up a complete assembly. We believe such practice to be understandable and appropriate. We would also point out that adoption of Mr. Thickens' suggestion that foreign buyers be required to make awards on an individual item basis could result in a total higher cost to the purchaser after taking into consideration the added costs for administrative handling, opening of separate letters of credit, and individual shipments, all of which must be borne by the purchaser. AID already attempts to see that unrelated items are not grouped in a package purchase. Should any potential supplier believe that a package procurement which we advertise is unjustified and uneconomical, we would welcome their advising us so that we could give the matter consideration. ENSENAT & CO., INC. Hon. JOE L. EVINS, Chairman, House Small Business Committee, ENSENAT & Co., INC., DEAR MR. EVINS: We write to express a request to be considered at hearing that will open May 15, 1969 under your Chairmanship on AID Financed Commodities. It has been our experience that in four documented cases, publication in SBA bulletins of AID financed transactions for which bids are invited, comes POSTERIOR to the transaction having been concluded as between the financed buyer and a preferred seller. Granted that the buyer must obtain specifications from some source to define his need, nonetheless it is obvious that in some cases collusion between buyer and preferred seller can result in AID dollars not buying 100 cents worth of merchandise. We suggest that AID Missions change their policy of not being concerned from whom the buyer buys, to one of fish-bowl negotiations and a written signed statement by buyer justifying his reasons for buying from that one seller. Copies of such a final decision-letter should be circulated to all who participated in the bidding. Then if any wrong-doing is involved, it could come to light in time to be corrected. Sincerely yours, A. G. ENSENAT, President. HOUSE SMALL BUSINESS COMMITTEE, Mr. A. G. ENSENAT, President, Ensenat & Co., Inc., New Orleans, La. DEAR MR. ENSENAT: This is in further reference to the hearings conducted by our Procurement Subcommittee to review the position and problems of U.S. small business in Agency for International Development-financed procurements. It will be helpful to the Subcommittee if you would provide details in connection with the cases in which you found that invitations to bid were published in the AID Small Business Circular after the purchase was made. Unless you advise to the contrary, it is our intention to bring such information to the attention of the AID Administrator. Your cooperation in the matter is appreciated. Sincerely yours, Hon. JAMES C. CORMAN, M.C., JAMES C. CORMAN, M. C., Chairman, Procurement Subcommittee. ENSENAT & Co., INC., New Orleans, La., August 27, 1969. Chairman, Procurement Subcommittee, Select Committee on Small Business, Washington, D.C. DEAR MR. CORMAN: Your letter of August 14th., calls on us to provide details in connection with cases published in the AID Small Business Circulars. We enclose copy of our letter of February 20, 1969 to AID Mission in Managua, Nicaragua which gives details of one such case. Another case was mentioned in our letter of October 31, 1968 to the same mission which can be explained away by political pressures within the country so it serves no present purpose to bring it up now. Sincerely yours, A. G. ENSENAT, President. FEBRUARY 20, 1969. AGENCY FOR INTERNATIONAL DEVELOPMENT, American Embassy, Managua, Nicaragua. Attention: Mr. Parke D. Massey. GENTLEMEN: Apropos to our present correspondence regarding the abnormality of SBA publication of AID financing of imports POSTERIOR to the actual consummation of the sales-purchase agreement, we give you a fresh instance where we believe it behooves your office to investigate just how well are our tax dollars being used to obtain the maximum merchandise value which I presume is the intent of publishing the invitation to bid widely. December 2, 1968-Miguel Martinez M., etc., advertised to buy two (2) 61 passenger buses, with 3-3 seating thru Corp. Nicaraguense de Inversiones handling your AID dollars. We wrote and asked for information under above date. There is no answer so we quoted December 17th, in time to come within the advertised time limit. No answer, so we wrote Mr. Floyd Jones, of CNI on January 17th., 1969 and enclose copies of letters. No answer, we wrote Mr. Martinez again on January 3, 1969. No answer, so we have International Harvester Distributor in Nicaragua investigate and his findings are per his letter of February 15, 1969, copy enclosed. It says that Mr. Martinez had already bought his buses from Casa Pellas three or four months ago, or possibly in November 1968. In the light of these facts please re-read our complaint to you of October 31, 1968 about spinning our wheels while use of dollars is made without any commercially accepted criteria of competitive bidding. Your solution to this persistent situation well be welcome. ENSENAT & Co., INC. ENSENAT & Co., INC., To the best of our knowledge, the notices of proposed procurement which appear in the AID Small Business publications represent real trade opportunities, and placement of the orders have not been pre-determined. AID Regulations 1, which governs commodity transactions financed by AID contains two sections which are designed to preclude such actions. Section 201.22(d), which covers formal competitive bid procurement, provides that: "Every award shall be made to that responsible bidder whose bid, conforming to the invitation for bids, is lowest in price, unless another bid is demonstrably more advantageous to the importer because of any factor (other than price) set forth in the invitation for bids as a factor to be considered in the evaluation of bids." Section 201.24(a) (2), which covers the solicitation of quotations and offers for informal commercial procurement, provides in part that "No importer, importer's agent or representative, or anyone acting in his behalf, shall accept any offer or place any order or agree to accept any offer or place any order until 45 days after the expected arrival of such form (the notice of proposed procurement) at the Office of Small Business, AID/W, in the course of mail." Violations of either of these provisions would constitute grounds for our demanding a refund from the recipient government for the amount of the transaction. We would very much appreciate Mr. Ensenant furnishing us with the details of the four documented cases to which he has referred, so that we might initiate an appropriate investigation. A very high percentage of the items which appear in the AID Small Business Circulars represent solicitations of offers and quotations by foreign commercial importers who are buying either for their own use, or for resale locally. In this respect they are the same as the thousands of manufacturers and retailers in the United States who purchase raw materials for fabrication into the products which they themselves manufacture, or who purchase material or end products for resale. As in the case of their American counterparts, their procurement is based on informal negotiation following review of the offers and quotations received. Unlike procurement made by U.S. Government agencies under formal Invitations for Bid, with award to the lowest responsive bidder, the buyer is free, under informal negotiated procurement, to accept the offer which he considers most advantageous for his purposes. In light of the foregoing, it is not completely clear to us what "wrong-doing" Mr. Ensenat seeks to prevent by his suggestion that our Missions overseas review each proposed award. Further, the task of prior reviewing the tens of thousands of individual transactions which AID finances each year would require the availability of far more personnel than could reasonably be expected to be provided, and would inevitably add to the existing delays in completing transactions which foreign importers already find so burdensome and costly under AID financing. As pointed out in the statement made by the National Association of Export-Management Companies, there is already fear that the necessity for complying with AID's current procedures may tend to make overseas buyers and importers look to other countries as sources of supply once the AID program is no longer essential to them. The imposition of further requirements which would add to delays and would increase importers costs would certainly increase that possibility to the detriment of our export expansion efforts. We believe that our current practice of assuring compliance with our pricing and other requirements through posts audits is more practical and far less disruptive. FARM EQUIPMENT MANUFACTURERS ASSOCIATION Hon. JOE L. EVINS, FARM EQUIPMENT MANUFACTURERS ASSOCIATION, Chairman of the House Small Business Committee, DEAR CONGRESSMAN EVINS: Our organization is composed of approximately 230 manufacturers of farm implements ranging in size from annual sales volumes of less than $1 million up to $25 million for our largest member. Our membership does not include any of the eight large tractor companies such as International Harvester, John Deere, etc. When we learned on May 7, 1969 that your committee was holding a hearing on May 15 designed to broaden American small business participation in the procurement of goods and services financed with AID funds, our office had no opportunity to request to be allowed to attend these hearings because previously we had scheduled conflicting committee meetings of our members in Kansas and Nebraska. We would like to submit, however, the contents of this letter to your committee for whatever help it might be in helping our small business members and other small businesses in other industries to receive an equitable share of purchases with AID funds. We have, therefore, furnished a quantity of additional copies should you wish to furnish them to the members of the committee. Several years ago members of our organization called to our attention the fact that regulations by the U.S. State Department at that time required on some bids using AID funds that one supplier be in a position to furnish all items listed in the bid request. Since most bids contained requests for one or more farm tractors, the regulation automatically dictated that only the eight large tractor companies would be allowed to bid even though equipment produced by the small business members of our organization were sometimes stipulated in the bid request. When this was called to the attention of AID officials they took steps to correct the situation. However, there are other procedures connected with quoting on bids using AID funds which continue to work a hardship on the small business firm. For example, a small business attempting, under AID, as a result of Public Tenders, to make sales, find they sometimes lose out because of close specifications of a product of a large manufacturer, or perhaps because the Tender was made locally overseas some weeks or months ahead of publication in the United States by AID with the result that the foreign local distributor of the large manufacturers know all about the Tender being prepared and when it was going to be made public overseas and was, therefore, prepared to have their U.S. AID principal enter a bid immediately, having everything calculated and in order. In such an instance small manufacturers who had not received similar advance notice were unable to prepare proper and detailed bids in the time allowed, and I am sure that this has resulted in bitter complaints to Congressmen. As a matter of practice I believe, too, that it is entirely possible for the foreign distributor for a large U.S. manufacturer to prepare specifications which eventually end up in a publication by AID which would preclude competition from many small manufacturers because of the unique characteristics specified, even though the small manufacturer may have a similar machine or implement that is better suited for the job to be done. Even though these public specifications will mention a make or model of the equipment desired and then add "or equal", it is many times difficult to convince anyone that the small manufacturer's product is equal when it comes to actual practice. |