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(1) At the time that AID approves for financing used equipment, AID will designate an inspection firm to examine and appraise the equipment which the supplier proposes to sell under A.I.D. financing. The inspection firm will examine the equipment with particular regard to the physical condition and performance capability of the equipment in accordance with instructions which AID shall issue to the inspection firm.

(2) The inspection report shall run to the benefit of AID and to the benefit of the importer. One copy of the report shall be submitted to the commodity supplier and a separate copy to AID. The supplier of the used equipment will be required to submit his copy of the report, countersigned by AID, to the paying bank as a condition for receiving payment under his letter of credit or payment instruction. AID will countersign the report only if the condition and value of the equipment, as indicated by the inspection firm, approximate the condition and value which the supplier has represented for the equipment. (3) AID will secure the services of inspection firms by direct contract arrangements with reputable inspection firms. Payment for inspection services will be made directly by AID to the inspection firm pursuant to these contract arrangements and will not be included within the commodity price.

The new requirements will not be retroactive to existing loans or grants which contain a prior procedure to be followed for procurement of used equipment and parts.


Wichita Falls, Tex., May 2, 1969.

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

GENTLEMEN: I am in receipt of your Thursday, May 1, release concerning the investigation to be made into AID financed purchases with regard to whether small business is receiving their fair share.

This concerns our company in a most serious manner. Repeatedly over the past ten years since our small business did become involved in foreign trade, we have lost business to some of our large competitors under circumstances which were absolutely unjust. In many of these instances we managed through our State Congressmen and Senators to have the AID financing rescinded, however, in no instance where we unfairly lost AID business have we been able to actually get the business, although we were low bidder with an equal product. I am at liberty to disclose the names of the corporations, such as Buffalo-Springfield Division of Kohring Corporation and Bucyrus-Erie Corporation, since the many complaints I have filed against them with AID are of record. We have definite proof of either discrimination against our company or lack of technical ability within the AID organization.

I would appreciate your advising me when hearings will be set by the House Small Business Committee and would request an opportunity to testify before these hearings. If further information would be desired on our company, we will be glad to furnish this and any other pertinent data. I would appreciate hearing from your committee with regard to the hearings as soon as they are set. I appreciate this action by the House Small Business Committee and feel it is vital to small manufacturers and exporters such as our company.

Very truly yours,

W. W. WALKER, Jr., President.


In the absence of specific identification of the cases referred to, we are not able to comment on the merits of the complaints on those cases. We would welcome receiving and investigating the alleged "definite proof of either discrimination against our company or lack of technical ability within the AID organization," referred to above.

Although the cases referred to by Mr. Walker may have been purchases which were made under formal Invitations for Bid (in which case the lowest responsive bidder should have received the award), the majority of AID-financed transactions are purchases which are made following solicitation of quotations and offers by advertising in the AID Small Business publications. These purchases are made by private foreign importers who are buying either for their own use or for resale and who are free to select the offer which best meets their own requirements. We believe that it is understandable that such importers (who are required to pay the full local currency equivalent of their purchases from the United States), will prefer to buy a product which they know or have seen operate and for which there are established spare parts and servicing facilities available locally, rather than an unknown, to them, make. This is true in the United States, as well as overseas. We do not believe that it would be a proper function of AID to force such an importer to purchase a product which he was not convinced was the best for his own use, or was readily resalable in the local market.



Bancroft, Iowa, May 7, 1969.

Representative JOE L. EVINS,

House Small Business Committee,

2361 Rayburn House Office Building,

Washington, D.C.

DEAR REPRESENTATIVE EVINS: Much appreciate your form letter of May 1, 1969, in which you do indicate that you will be holding hearings on AID Financed Purchases and the inquiry into whether U.S. small firms are getting their fair share of these purchases.

I speak now only from the standpoint of the agricultural field and specifically from the standpoint of a basic poultry breeding farm (of which there are now only 12 to 20 left in the U.S.A.). We are presently providing parent stock breeders to associate in many countries of the Free World. All such stock is airjet-freighted to these countries out of Minneapolis, Minnesota. We do provide good service with good connections from this point.

Now to the point of this letter-we would like to see, with more frequency, the listing of poultry breeding stock on the list of products available that the foreign countries can use AID funds for in their financing. I recall that just recently a loan of $100 million was approved for Indonesia, I believe it was. I did fail to see any agricultural products as such on that listing of products eligible. The same thing has transpired in other such AID grants.

It is possible that your committee or even our federal government does not have nor should they have anything to say as to what products a country must use the money for. It is probable that the country receiving the financing would set this up. However, it should be mentioned that with poultry, this is one of the most rapid ways to get food for people as has been proved time and again since WWII. The shipment of breeding stock into a country (such as is now going into South Vietnam) is a tremendous step toward meeting human food needs and it would seem that this was particularly the case in the instance of Indonesia (and other countries, also).

Your consideration of the above comments, if applicable, appreciated.

Sales Manager.


The need for any particular product or commodity under AID programs varies from country to country. The basic decision as to which items will be most useful under any particular country program is made by the recipient country in consultation with the AID Mission in that country. The purchase of poultry breeding stock has been permitted in many countries.

Contrary to the recollection of Mr. Shoenhair, poultry breeding stock (Baby Chicks: Breeder Stock) was among the eligible items listed in Procurement Information Bulletin No. 69-12 dated May 22, 1969 for Indonesia. It was also announced as an eligible item in Procurement Information Bulletin No. 68-18 dated July 24, 1968 for two loans to the Republic of Columbia.



ZERO MANUFACTURING CO., Washington, Mo., May 13, 1969.

Subject: AID financed purchases hearing.
Representative JOE L. EVINS,

Chairman, House Small Business Committee, Rayburn House Office Building,
Washington, D.C.

GENTLEMEN : We are in receipt of a release dated May 1, 1969 advising of subject hearing.

In view of the fact that it will be impossible for a representative of our firm to be present at the hearings, we are writing the comments below in hope that they will contribute to the meetings. In our opinion the items listed below discourage small businesses in general from participating in AID financed purchases:

Referring specifically to AID Loan 617-H006 Livestock Development, Invitation for Bid No. D-10, Afro-American Purchasing Center, Inc., New York, Invitation for Bids dated April 11, 1969. Bids to be opened on May 8, 1969 at 10:00 a.m. at New York. Under general specifications, Item 1B it states that "only those bidders who have adequate service facilities in operation in Uganda are eligible to submit bids." I suggest that it is highly improbable that any American manufacturer of stainless steel bulk milk holding tanks will, at this date, have a qualified representative established in the country of Uganda. Indeed, it might be extremely difficult to find one such qualified representative.

The amount of time between the published date of the bids as received in our offices and the opening of the bids does not allow us sufficient time to establish such representation.

Under Item No. 8 and Item No. 9 which refer to bid guarantee as well as a performance guarantee, it is our feeling that the amount involved would certainly discourage many small businesses.

The above comments are in response to your announcement of the hearings to be held at Washington and I sincerely hope that they will be of some value to the meetings.


SAMUEL M. DUNCAN, Vice President.



The condition in Item 1.B. of the Invitation for Bids which is referred to actually reads, "For items which normally require servicing, only those bidders who have adequate service facilities in operation in Uganda are eligible to submit bids." The underscored phrase above was omitted in the letter from Zero Manufacturing Company.

Although we understand that there are only a few parts included in stainless steel bulk milk holding tanks which would require servicing, we have been advised by the Afro-American Purchasing Center that of the three firms which submitted bids, only the Zero Manufacturing Company did not name a servicing facility to satisfy this requirement. The three bids which were received are tabulated below:

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The Invitation for Bid required a bid guaranty of 5% to accompany the bid, and a performance guaranty of 10% by the successful bidder within 15 days of the date of the award. The requirement for bid and performance guaranties has common usage among U.S. Government procuring agencies and is authorized by Part 1-10 of the Federal Procurement Regulations. We believe that their use by foreign purchasers is not only prudent, but is particularly desirable as a safeguard against possible non performance by bidders who are located thousands of miles away and against whom the possibility of recourse is otherwise remote. We also believe that the amounts of the guaranties required were most reasonable. The Federal Procurement Regulations require, for example, that bid guaranties may not be less than 20% of the bid price, as compared with the 5% requested by the Afro-American Purchasing Center.

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