SMALL BUSINESS ADMINISTRATION

STATEMENT OF HILARY SANDOVAL, JR., ADMINISTRATOR

ACCOMPANIED BY:

EINAR JOHNSON, DEPUTY ADMINISTRATOR

ANTHONY G. CHASE, GENERAL COUNSEL

ARTHUR H. SINGER, ASSOCIATE ADMINISTRATOR FOR INVESTMENT

JACK EACHON, JR., ASSOCIATE ADMINISTRATOR FOR FINANCIAL ASSISTANCE

MARSHALL J. PARKER, ASSOCIATE ADMINISTRATOR FOR PROCUREMENT AND MANAGEMENT ASSISTANCE

ARTHUR MCZIER, ASSISTANT ADMINISTRATOR FOR MINORITY

ENTERPRISE

WILLIAM P. TURPIN, ASSISTANT ADMINISTRATOR (COMPTROLLER)

BUDGET REQUEST AND HOUSE ALLOWANCE

Senator MCCLELLAN. Our next witness is Mr. Hilary Sandoval, Jr., Administrator, Small Business Administration.

The total budget request was $267,440,000 for the three appropriations and the House allowed $220,290,000, a reduction of $47,150,000.

APPEAL LETTER AND JUSTIFICATIONS

By letter dated May 19, 1970, request was made for restoration of $5 million in the appropriation for salaries and expenses in order to provide the budget estimate of $10 million for minority business enterprise.

The appeal letter and supporting justifications will be placed in the

record.

(The letter and justifications follow :)

The Departments of State, Justice, Commerce, the Judiciary and Related
Agencies Appropriations Bill for FY 1971 as passed by the House of
Representatives on May 14, 1970, provides a direct appropriation of
$18,950,000 and transfer authority of not to exceed $53,100,000
from the revolving funds for salaries and expenses of the Small
Business Administration. The Bill also provides $1,340,000 for
insufficiencies arising out of the participation sales authorized
in the 1968 Act and a capital appropriation of $200,000,000 for the
Business Loan and Investment Fund.

The amount approved for the direct appropriation for salaries and
expenses represents a reduction of $5,150,000 from our request. Of
this reduction, $5,000,000 is from the funds requested to carry out
the provisions of Section 406 of the Economic Opportunity Act of
1964 as amended. The balance of the reduction reflects the elimination
of the funds requested for research contracts. In addition, the request
for capital for the Business Loan and Investment Fund was reduced from
$242 million to $200 million.

After careful review of the reductions, we feel that we can accept
the House action without imparing our commitments to the small business
community with the exception of the reduction of $5,000,000 in funds
required to carry out the provisions of Section 406 of the Economic
Opportunity Act of 1964 as amended.

The $5,000,000 allowed by the House will allow us to continue only the same program level which we now have for FY 1970. However, this program level is not sufficient to meet the increasing requirements

of assistance to the socially and economically disadvantaged as provided in Section 406. Some of the pressures that make it imperative for us to extend our program of assistance under this act are as follows:

1.

2.

3.

4.

The increasing number of economic opportunity loans in our portfolio and the continuous escalation of requests for technical and management assistance.

The need for professional management assistance for new
minority firms obtaining government contracts under
Section 8a of the Small Business Act. We project a
$100,000,000 procurement program under this authority
and professional management assistance is so basic
to these new minority firms that if it is not avail-
able on a timely basis, the concept of developing new
self-supporting minority owned productive facilities
could fail.

The need to strengthen our construction task force so
that we may provide the necessary kind of assistance
to minority contractors in overcoming the barriers
that have prevented minority contractors from full
participation in the construction industry.

And finally, these funds are necessary as a catalyst
to encourage the private sector to greater efforts
in the area of support and assistance to the socially
and economically disadvantaged, as demonstrated in
our FY 1969 and 1970 programs.

We now have on hand over 200 proposals exceeding $15,000,000 from management and technical assistance organizations that have the capability to render significant assistance in carrying out the program envisioned under Section 406. We, therefore, earnestly request the restoration of the $5,000,000 that was reduced by the House to the full $10,000,000 as requested in order to carry out the programs contained in the enclosed justification.

My staff and I will be glad to discuss our entire budget estimates and our appeal on this item at the convenience of the Committee.

Sincerely,

Hilary Dandoval Jr.

Hilary Sandoval, Jr.

Administrator

Enclosure

Page 45 line 20 strike "$5,000,000" and insert "$10,000,000" an
in increase of $5,000,000 to restore the budget estimate for the
section 406 activities. Page 45 lines 22, 23, strike $18,950,000"
and insert "$23,950,000" an increase of $5,000,000 to restore
the budget estimate.

HOUSE REPORT ( P. 24)

Salaries and Expenses "The Committee recommends a direct appropriation of $18,950,000 together with transfer authority of not to exceed $53,100,000 from the revolving fund for the necessary salaries and expenses of the Small Business Administration."

"The Committee has included in the bill $5,000,000 the same amount as for the current fiscal year, to carry out the provisions of section 406 of the Economic Opportunity Act of 1964, as amended. The funds requested for research have not been approved."