15 



thing that came easily. It was fought hard in every step of the proc- 

 ess. The agencies were literally dragged, kicking and screaming 

 into this program. They would not have done it without it. 



We have heard just two examples of the technology that we have 

 seen to be successful. This is a program that many countries 

 around the world have copied. The States are doing follow on as- 

 sistance in setting up their own programs. It really does work. 



I have always maintained leave it to the Government contractors 

 or contracting officers. Interesting, we just did an analysis, six com- 

 panies do more business with the Government than all small busi- 

 nesses, all minority businesses and all women-owned business — six 

 companies. Six companies do more than all the small business. 

 Leave it to the Government, that is what you will see. Huge compa- 

 nies who have the lobbyists, who have the people here to make 

 sure that they get their views of point, who have the former gen- 

 erals, the former admirals. They are going to win and small busi- 

 ness is going to lose. 



Without this legislation, small business got crumbs in the area 

 they are most productive in which is research and development. 

 Everybody knows, nobody, the Government labs. Government re- 

 search, big business, universities, do not commercialize their prod- 

 ucts. It is an exception when they do. Small business does the ma- 

 jority of innovations. Despite that, except for this program, you do 

 not see any increase in the Federal funds to be the most produc- 

 tive. Quite frankly, most cost effective. Small businesses do not 

 have the overhead. 



When is the last time you heard about a small business with a 

 yacht they were writing off and charging their research and devel- 

 opment fiinds? We just do not do that. 



Mr. Thompson. Thank you very much. Mr. Neal, following that 

 line of thinking, would it be safe to say that the free enterprise sys- 

 tem, as it relates to small businesses, many times is not in best in- 

 terest of small business, unless you have a program like this? 



Mr. Neal. This program is essential in order to give small busi- 

 nesses the opportunity to participate in Federal R&D sector. As 

 Jere had indicated, sole source contracting is really the norm for 

 Federal contracts. You want to deal with somebody that you are fa- 

 miliar with. You want to deal with someone that has that known 

 reputation. 



Small businesses, because they lack the clout, because they lack 

 the name recognition, but they have the creativity, they have the 

 lower overhead, provide ample opportunities for us to obtain prod- 

 ucts and services and research results at a much lower cost, and 

 we found that they have been much more innovative and creative 

 than the larger business. 



This is something that we found is essential in terms of moving 

 ahead in keeping this Nation on the forefront of developing techno- 

 logical innovations. This program has shown itself time and time 

 again to be very effective, administered very well, and it is essen- 

 tial to keeping small businesses involved in Federal research and 

 development. 



Mr. Thompson. For my final comment, Mr. Chairman, what re- 

 sistance have any of your agencies found from the larger contrac- 

 tors when you have identified small business components to do 



