[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]



                  HEARING ON BLACK BERET PROCUREMENT:
                   BUSINESS AS USUAL AT THE PENTAGON?

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED SEVENTH CONGRESS

                             FIRST SESSION

                               __________

                      WASHINGTON, DC, MAY 2, 2001

                               __________

                            Serial No. 107-5

                               __________

         Printed for the use of the Committee on Small Business


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                      COMMITTEE ON SMALL BUSINESS

                  DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas                 NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado                JUANITA MILLENDER-McDONALD, 
ROSCOE G. BARTLETT, Maryland             California
FRANK A. LoBIONDO, New Jersey        DANNY K. DAVIS, Illinois
SUE W. KELLY, New York               WILLIAM PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio               DONNA M. CHRISTIAN-CHRISTENSEN, 
PHIL ENGLISH, Pennsylvania               Virgin Islands
PATRICK J. TOOMEY, Pennsylvania      ROBERT A. BRADY, Pennsylvania
JIM DeMINT, South Carolina           TOM UDALL, New Mexico
JOHN THUNE, South Dakota             STEPHANIE TUBBS JONES, Ohio
MIKE PENCE, Indiana                  CHARLES A. GONZALEZ, Texas
MIKE FERGUSON, New Jersey            DAVID D. PHELPS, Illinois
DARRELL E. ISSA, California          GRACE F. NAPOLITANO, California
SAM GRAVES, Missouri                 BRIAN BAIRD, Washington
EDWARD L. SCHROCK, Virginia          MARK UDALL, Colorado
FELIX J. GRUCCI, Jr., New York       JAMES R. LANGEVIN, Rhode Island
TODD W. AKIN, Missouri               MIKE ROSS, Arkansas
SHELLEY MOORE CAPITO, West Virginia  BRAD CARSON, Oklahoma
                                     ANIBAL ACEVEDO-VILA, Puerto Rico
                      Doug Thomas, Staff Director
                  Phil Eskeland, Deputy Staff Director
                  Michael Day, Minority Staff Director


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on May 2, 2001......................................     1

                               Witnesses

Shinseki, General Eric K., Chief of Staff, U.S. Army.............     4
Capps, Hon. Lois, Member of Congress, 22nd District of California    18
Jones, Hon. Walter B., Member of Congress, 3rd District of North 
  Carolina.......................................................    19
Glisson, Lt. Gen. Henry T., Director, Defense Logistics Agency...    23
Goodman, Michele, President, Atlas Headwear......................    27
Cooper, David, Director, U.S. General Accounting Office..........    30
Whitmore, John D., Acting Administrator, U.S. Small Business 
  Administration.................................................    32
Joffe, Evan, Springfield LLC.....................................    34
Schooner, Steven L., Associate Professor of Government Contracts 
  Law, George Washington University Law School...................    36
Oliver, Hon. David R., Acting Under Secretary of Defense, 
  Acquisition, Technology, and Logistics.........................    38

                                Appendix

Opening statements:
    Manzullo, Hon. Donald........................................    71
    Velazquez, Hon. Nydia........................................    74
    Issa, Hon. Darrell...........................................    76
Prepared statements:
    Shinseki, General Eric K.....................................    78
    Capps, Hon. Lois.............................................    81
    Jones, Hon. Walter B.........................................    84
    Glisson, Lt. Gen. Henry T....................................    87
    Goodman, Michele.............................................    92
    Cooper, David................................................   103
    Whitmore, John D.............................................   110
    Joffe, Evan..................................................   122

 
 HEARING ON BLACK BERET PROCUREMENT: BUSINESS AS USUAL AT THE PENTAGON?

                              ----------                              


                         WEDNESDAY, MAY 2, 2001

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 10:05 a.m. in Room 
2360, Rayburn House Office Building, Hon. Donald Manzullo 
[chairman of the Committee] presiding.
    Chairman Manzullo. This hearing will come to order. Good 
morning and welcome to this hearing of the Committee on Small 
Business. A special welcome to those who have come some 
distance to participate and to attend this hearing.
    I would like to extend an especially warm welcome to 
General Shinseki. He is a true patriot having served two tours 
in Vietnam and was wounded twice in combat.
    Let me make it clear that this hearing is not about the 
policy decision to have all active U.S. Army personnel wear 
berets. Nor is the hearing about what color beret a particular 
unit within the U.S. Army is going to wear. This hearing is 
merely focused on the decision to purchase berets from foreign 
sources.
    I readily acknowledge that the Committee on Small Business 
has no jurisdiction over the policy issues of whether the U.S. 
Army should wear berets and the color of those berets. These 
two issues are settled and are not within the jurisdiction of 
this Committee. The military leaders of this nation who have to 
make the difficult decisions to place our young men and women 
in harm's way deserve our total and absolute respect.
    The only reason we are holding the hearing today is to 
discuss the procurement issue. This Committee has both 
legislative and oversight jurisdiction to ensure that small 
businesses are not bypassed in the federal procurement process. 
I would respectfully request that the Committee members limit 
their questions to procurement issues.
    General Shinseki has told me, and I am sure he will tell 
the Committee, that if he had been informed the berets were 
being manufactured overseas because of the short time period 
needed to acquire the berets, he could have changed the date of 
delivery and possibly other requirements.
    Our purpose is to try to get the Department of Defense to 
follow the existing rules of procurement and possibly to seek 
legislative remedies.
    You will hear in this hearing a gross disregard of the 
procurement rules. The number of textile manufacturers and 
apparel and shoe manufacturers in this country continues to 
dwindle.
    Congressman Walter Jones, Jr. was scheduled to testify at 
the hearing originally scheduled for April 5. That same week 
Congressman Jones received word that the district he represents 
lost over 1,000 textile-related jobs.
    As chairman of the Committee on Small Business, I have an 
obligation to these small businesses that are being impacted by 
the military's refusal to follow the procurement laws. The 
report of the inspector general of the Department of Defense, 
dated over two years ago, shows that nearly 60 percent of 
procurements of military clothing made by the department 
violate some procurement laws and regulations.
    It is ironic. While our Army is ready to fight to keep us 
free, the Defense Logistics Agency, a totally separate entity, 
continues to frustrate our laws, which will result in the 
destruction of our domestic small businesses.
    The paramount issue in this hearing is why couldn't these 
berets be manufactured in the United States.
    This hearing is going to be about real people and how real 
people are impacted by decisions that are made by the DLA in 
violating our procurement laws.
    You will hear the compelling testimony of Michele Goodman, 
who has a small manufacturing facility in Phoenix. And you will 
hear about the fact that she has made it a policy for years to 
employ disabled and severely disabled people who have gone 
through workshops and whose only type of occupation are the 
types of positions that Ms. Goodman offers to these people.
    These are the most defenseless of all Americans. These are 
the ones who, in the past, have not been able to work. These 
are the ones who are impacted whenever the United States 
government goes offshore in order to purchase clothing and 
shoes and everything.
    That is what this hearing is about, the thousands of 
Americans that are impacted, the small business that strive to 
compete on a day-to-day basis.
    As a rule of order, I fully intend to keep the questions 
and answers to five minutes, no four minute and 30 second 
questions expecting to have the same amount of time to answer 
the question. We have several panelists and members here.
    Ms. Velazquez, as the ranking member, and I, as the 
chairman, may exercise our discretion to use more than five 
minutes. I will strictly enforce the five-minute rule. I can 
assure you of that.
    Again, thank you. I now yield for the opening statement 
from my good friend, the Ranking Member, Ms. Velazquez.
    [Chairman Manzullo's statement may be found in appendix.]
    Ms.  Velazquez. Thank you, Mr. Chairman.
    Today's hearing continues our effort to shine light on the 
contracting practices of the Department of Defense which are 
effectively deterring this nation's small businesses.
    This is the sixth hearing we have held that looks at the 
contracting practices of this agency. And every time we ask the 
question, ``Why aren't small businesses being awarded prime 
contracting opportunities,'' the answer of the Department of 
Defense, ``Well, we make big stuff, and these are contracts 
that small businesses just cannot handle.''
    First of all, you and I both know that is wrong. Second of 
all, when a contract opportunity is presented that small 
businesses can handle, you yank the rug right out from under 
them by providing unrealistic timelines based on arbitrary 
deadlines. You then create product specifications that are so 
restrictive as to defy the imagination, like a beret that is 
made as one piece.
    My concern today is that we are taking opportunities out of 
the hands of our nation's economic foundation, our small 
businesses, for what, on its face, is a subjective deadline.
    Why do we have one U.S. manufacturer? I will tell you why, 
because only one U.S. company has equipment. The machinery used 
to manufacture the one-piece knitted beret no longer exists, 
which begs a whole host of questions.
    Why is this beret so exclusively made? Is the beret 
indestructible? No. Is the beret bullet-proof? No. Is the beret 
wearable in combat? No.
    So when I ask the question, the answer I get, the 
Department of Defense thinks the beret looksbetter with no 
seam. Looks better? So now fashion consciousness is the new excuse the 
Department of Defense uses when they sidestep federal regulations in 
small business procurement?
    I will tell you all that this is not the end of the issue. 
I want the Army and the entire Department of Defense to know we 
are going to be holding your feet--your collective feet to the 
fire on this and other procurement issues.
    We will not allow the DOD to carry on as they have 
previously and use the same old tired excuses they have for the 
past seven years. And I will tell you that there is no way that 
this Committee will sit still while small business 
participation is continuously blocked.
    First is contract bundling. Now we are talking about unduly 
restrictive specification and arbitrary timeliness. Frankly, I 
wait with eager anticipation to see what DOD will come up with 
next because these excuses just aren't going to work anymore.
    So I suggest you either come up with something new or do 
something to solve the problem. I believe that problems such as 
the one we are examining in this hearing will continue until we 
pass substantive legislation like the Small Business Contract 
Equity Act. This legislation give small business necessary 
protections in government contracting.
    Mr. Chairman, I want to thank you for your tenacity in 
pursuing this issue. I believe that you are right on the mark 
in holding this contract-specific hearing because it seems that 
these forums are the only way to get the Pentagon's attention.
    It is my hope that today we can commit to holding regular 
contract-specific hearing starting with the DLA contract that 
has affected businesses throughout Ohio and the Midwest.
    I want to close by saying that we are here today for one 
purpose and one purpose only, to defend the interests of 
America's small businesses from every quarter. And nowhere are 
those interests more threatened than when it comes to issues 
like this. And I believe that, as we defend those interests, we 
are protecting the future of the American economy.
    Thank you, Mr. Chairman. And, again, I look forward to more 
investigative hearings like this where we get to the bottom of 
these practices by the department that are detrimental to our 
nation's small businesses.
    Chairman Manzullo. Thank you very much.
    The first panel is General Shinseki. General?
    General Shinseki. Good morning, Mr. Chairman.
    Chairman Manzullo. Good morning. Could you pull the mike 
closer to you?
    General Shinseki. I will. Can you hear me?
    Chairman Manzullo. Yes, sir.

 STATEMENT OF GENERAL ERIC K. SHINSEKI, CHIEF OF STAFF, UNITED 
                          STATES ARMY

    General Shinseki. Okay. Good morning, Mr. Chairman, 
Congresswoman Velazquez, members of the Committee. I am here to 
explain the Army's decision last October to authorize the wear 
of black berets by our soldiers. And, Mr. Chairman, thank you 
for the opening statement.
    I would just add that, subsequent to that decision that the 
Army announced last October, the Defense Logistics Agency let 
contracts to meet the Army's requirements.
    I'll provide the Army's rationale for its decision to 
authorize the wear of black beret, and I believe the following 
panels will address the contracting decisions that led to the 
production of those berets.
    For those members with whom I have spoken with in person, 
to include yourself, Mr. Chairman, on this issue and other 
members who may have attended a meeting last week of the House 
Armed Services Committed, I regret and I apologize for the 
repetition since some of my remarks will not be new.
    But let me just begin by saying 22 months ago, we, the 
Army, were encouraged to get on and begin the challenging 
process of changing this magnificent Army, to keep it relevant 
for the strategic environment of the 21st century, transform 
the Army, do as much as you can accomplish on your watch but 
don't break near-term war fighting readiness. That was pretty 
much the charter, transform, don't break readiness, but do it 
quickly.
    The Army is a large institution, a million soldiers in 
uniform, and change in large institutions is difficult. Even 
more difficult is trying to effect a commitment for that kind 
of change in a short period of time.
    But thanks to bipartisan congressional support last year, 
we were able to build remarkable momentum for beginning the 
process of change without breaking readiness.
    The decision to don the black beret is part of that 
commitment to change, but it is not a new initiative. It had 
been considered before.
    And when I became the chief in June of '99, the black beret 
initiative was revisited with me. I deferred any decision on 
that black beret decision for a year until the summer of 2000 
in order to get on with the challenging and more crucial need 
to transform the Army-at-large.
    After generating the requisite momentum for Transformation, 
I said we would come back and consider the utility of the black 
beret decision, and so I spent that first year walking the 
Army, talking to our soldiers, explaining to them our need to 
transform and educating them on how we intended to go about it.
    The very first symbols of that commitment to transform are 
occurring even today out at Fort Lewis, Washington, where we 
are standing up our first two interim brigade combat teams.
    As we began to achieve momentum, I also began to sense a 
growing perception on the part of our soldiers that if one were 
not stationed out at Fort Lewis, Washington, then somehow they 
were not part of Army transformation, not on the cutting edge 
of the Army.
    And, remembering back to our experience with the 9th 
Infantry Division High Tech Test Bed, another effort to 
transform the Army about 20 years ago, we needed the Army to 
understand that our requirement for change was much broader 
than just those two interim brigades at Fort Lewis. It was 
comprehensive. It was about more than just platforms, and 
everyone needed to be a part of it.
    And so, as we engaged the Army that first year, we also 
rediscovered that this magnificent Army is composed of a number 
of strong and proud communities, communities which have given 
us the heritage we enjoy today, our active and our reserve 
components, aviation and ground units, maneuver and our support 
formations, and, within our maneuver community, heavy forces, 
light forces, special operations forces.
    All of them are wonderful and important in their own 
rights. But, as happens with communities, each of those 
communities tended to see themselves a little more clearly than 
the larger Army.
    We have gone to great lengths over the past 22 months to 
bring these communities closer together because that is what 
Transformation and change is going to require. There are still 
some walls out there, and, while each community is important, 
none of them alone wins the nation's wars. It takes the Army to 
win a war.
    So the black beret is about building cohesiveness amongst 
those communities because we will need all of them to transform 
just as we will need all of them to win a war. Everyone is part 
of this commitment to change, and, for the vast majority of our 
1 million soldiers, this black beret decision is not an issue. 
Their Army is moving out. They want to be a part of it.
    We chose the black beret to symbolize this change because 
it is the one relevant color that cuts across all community 
lines. Black is the only color that has been worn by both our 
heavy and our light formations. And it is worn today not only 
in the Ranger regiment, but also in our combat training centers 
by the 11th Armored Cavalry Regiment, the 1st Battalion 509th 
Infantry, and the 1st Battalion, 4th Infantry Mechanized.
    The black beret, therefore, best reflects the Army of the 
future, that Objective Force we are pursuing, which will 
combine the lethality and survivability of today's heavy forces 
with the deployability and agility of our light forces.
    The capabilities of this future objective force will be 
dominant. It will extend the decisive capabilities of today's 
M1A2 Abrams tank, the M2A3 Bradley fighting vehicle, The 
Crusader, and Knowledge Base C4 ISR to a future Objective Force 
capability that will be responsive and deployable and 
versatile, agile, lethal, survivable, and sustainable in ways 
that today's force cannot be.
    We will begin fielding this force by the end of this 
decade. That force will have the capability to put a combat 
brigade any place in the world in 96 hours, a war fighting 
division on the ground in 120 hours, five divisions in theater 
in 30 days.
    It will be a strong deterrent to potential aggressors. It 
will bring unmatched capabilities to the joint team, and it 
will give the National Command Authority greater flexibility in 
decision-making and crisis response options.
    Part of the decision to move to the Objective Force is this 
decision to authorize the wear of the black beret to symbolize 
to all soldiers that they are part of achieving the Army's 
vision.
    The Army's first birthday in the new millennium, 14 June 
2001, was chosen to symbolize and to honor our heritage and 
demonstrate our commitment to the rapid transformation of the 
Army that we were asked to undertake.
    This timing captures both our proud history and our 21st 
century responsibilities for national defense and service to 
the nation. We have said that the Army is prepared to adjust 
its implementation plan to fit the availability of DLA's 
production schedule. On 14 June the Army will begin phasing in 
wear of the black beret, and this will continue until complete.
    Mr. Chairman, I enjoy the privilege of serving the world's 
finest Army. And what makes our Army so magnificent is not just 
our equipment, it is our soldiers. They have readily shouldered 
burdens that others do not carry. They have accepted hardships 
and sacrifice and given us professional discipline and uncommon 
courage in return.
    It will take every one of them to transform the Army, just 
as it will take every one of them to win the next war. And when 
those soldiers are called upon to defend this nation and our 
way of life, they will be ready to fight and win decisively. 
The American people can count on it.
    Mr. Chairman, I thank you, and I am ready to answer your 
questions.
    [General Shinseki's statement may be found in appendix.]
    Chairman Manzullo. Thank you, General.
    General, as I announced in our opening statement, I am 
going to ask you questions about procurement and not get into 
the policy issue. And I would hope that the rest of the members 
of our Committee would also follow suit on that.
    But, General, when you announced on October 17, 2000, that 
the black beret would become the Army's standard, were you 
aware that most of the berets could not be procured 
domestically?
    General Shinseki. I was not.
    Chairman Manzullo. Okay. And when was the first date that 
you were aware of that?
    General Shinseki. My recollection is sometime February of 
this year.
    Chairman Manzullo. Okay.
    General Shinseki. Exact date, I can't recall, but some time 
around the time when it appeared in the media.
    Chairman Manzullo. Do you recall the source of that? Was it 
the media, or was it from somebody on your staff.
    How did you find out?
    General Shinseki. My guess, it would be probably somebody 
from my staff bringing to me some information, either from the 
media or information gleaned.
    Chairman Manzullo. If you had been aware on October 17, 
2000, that most of the berets could have not been manufactured 
domestically, would you have given flexibility to that June 
2001 date?
    General Shinseki. Well, that is a hypothetical, and I have 
always tried to understand what the question really is. I think 
you know that I have directed the return of berets that were 
produced in China, and I think the answer would be I would have 
adjusted.
    We may have gone ahead and begun the process of 
implementation on 14 June but phased it over a longer period of 
time. Again, that----
    Chairman Manzullo. So that you could have had American 
production?
    General Shinseki. Correct. That would have been generated 
by what available stocks could have been generated. And I, in 
fact, to this day don't have a solid number, but my guess is 
probably yes.
    Chairman Manzullo. Okay. That is all the questions I have.
    General Shinseki. Okay.
    Chairman Manzullo. Thank you.
    Ms. Velazquez.
    Ms. Velazquez. Thank you, General. General, you were given 
a copy of the Justification for Other than Full and Open 
Competition?
    General Shinseki. I was just handed the document.
    Ms. Velazquez. Would you please--can you please read the 
highlighted portion of that?
    Chairman Manzullo. Could you identify that document for the 
Record?
    Ms. Velazquez. Justification for Other than Full and Open 
Competition.
    Chairman Manzullo. And the date of that, Ms. Velazquez?
    Ms. Velazquez. November 2000.
    Chairman Manzullo. Thank you.
    General Shinseki. This is the first time I have seen this 
document, Congresswoman.
    Ms. Velazquez. General, can you read the highlighted part 
of that?
    General Shinseki. Yes. ``The Army will be seriously injured 
if this action is not approved.''
    Ms. Velazquez. General, with all due respect, if Army 
personnel are not all wearing black berets by June 14, 2001, 
will the Army be seriously injured?
    General Shinseki. The statement is not mine, Congresswoman. 
I think the fact that I have directed that the berets that were 
made in China be returned suggests that I am prepared to make 
adjustments here.
    Ms. Velazquez. General, that is a statement made by the 
Department of Defense. Do youagree with that statement?
    General Shinseki. Well, I am not in a position to comment 
on it. I don't write these contracts, and so I'd be----
    Ms. Velazquez. It is just a simple yes or no answer.
    General Shinseki. About the Army being seriously injured? I 
don't know that the Army would be seriously injured.
    Ms. Velazquez. You don't know.
    General Shinseki. No.
    Ms. Velazquez. General, did you tell the Defense Logistics 
Agency to buy a seamless black beret?
    General Shinseki. I don't believe that that was guidance, 
but I do believe that the Army's standard beret is something 
called a seamless beret. I didn't know there was any other 
kind.
    Ms. Velazquez. Did you tell the DLA that, under no 
circumstances, could the beret they bought to fulfill your 
requirement have a seam or be made in two pieces?
    General Shinseki. I am not aware that any statement was 
made by me to that regard.
    Ms. Velazquez. General, I have read and reread your 
statements on the beret issue and haven't seen any directions 
that you gave DLA regarding a one-piece or a two-piece beret. 
Given the fact that many U.S. small businesses could have 
manufactured the berets if the berets were made in two pieces, 
can I get a commitment from you that the tan berets will be 
competed among small U.S. manufacturers?
    General Shinseki. Congresswoman, again, I don't--I am not 
in the procurement business. I make a request for beret by 
color and design. Beyond that, those acquisition authorities, 
procurement decisions, are made elsewhere.
    And I would respectfully suggest that----
    Ms. Velazquez. General, what is your position? You are 
chief of staff, aren't you?
    General Shinseki. I am.
    Ms. Velazquez. So you cannot state such policies so that 
you and the Army comply with statutory Congress mandates and 
goals and procurement process?
    General Shinseki. I do support the law. I do support the 
law with regard to the procurement policies outlined.
    Ms. Velazquez. General, I am very concerned about the 
commitment of federal agencies to achieving their goals for 
doing business with small, small disadvantaged, and women-owned 
business. Will you assure me, General, that the commitment to 
doing business with small, minority owned, and women-owned 
businesses comes from the top in the Army?
    General Shinseki. Congresswoman, I will be very happy to 
provide an answer for the record, but I would suggest to you 
that I think the Army has been quite responsive in exceeding 
the goals that have been outlined for accomplishing these 
parameters.
    Ms. Velazquez. Sir, with all due respect, I think that your 
staff failed in briefing you. Last year, the Committee staff on 
the Democratic side, we produced a study, and we did a research 
about how the federal agencies, particularly the department of 
defense, failed small businesses in America.
    General Shinseki. I can only speak for the----
    Ms. Velazquez. And the biggest offender, General, is the 
Department of Defense. Were you aware of that study?
    General Shinseki. I am not. You have information I don't 
have, Congresswoman.
    Ms. Velazquez. I will submit it to you, but it is 
unbelievable. The Washington Post and many major U.S. papers 
covered that research, covered that study, and you are going to 
come here today and say that you do not know, you are not 
aware?
    General Shinseki. No. I am suggesting to you that I can 
speak for the Army, Congresswoman. I would be very happy to 
provide the details of the Army's performance in these 
categories, which I'm led to believe, has exceeded, in most 
categories, the goals that were established. And, in fact, in 
terms of women-owned businesses, the Army is the first agency, 
federal agency, to have exceeded a billion dollars. But I will 
provide details for the record.
    Ms. Velazquez. Do you have any details in terms of how did 
you comply with women-owned businesses? Did you achieve your 
goals?
    General Shinseki. I think that may be one of those 
categories that we may not have achieved, but I would say that 
we are the--probably in that regard, the first federal agency 
to achieve a billion dollars. But I will provide that in detail 
for the record.
    Ms. Velazquez. What about the 8(a) goal?
    General Shinseki. I will be happy to provide. I just don't 
have those details with me.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you, Ms. Velazquez.
    Mr. Hefley.
    Mr. Hefley. Thank you very much, Mr. Chairman. I appreciate 
you holding the hearing. I have as much concern as you do about 
the berets being purchased in China. I don't think I like this. 
I don't think General Shinseki likes this.
    And I think from your opening statement and from our 
ranking member's questions, I really question why the chief of 
staff is here today. I am not sure he's the one we need to have 
here.
    Chairman Manzullo. If I may, if you would yield on that----
    Mr. Hefley. Surely.
    Chairman Manzullo. My sole question in asking the general 
to come here is that there is a line between the person who 
makes the decision and the people that carry out that decision 
in terms of procurement. And I requested General Shinseki to 
come here and to tell this Congress and, obviously, the nation 
of his limited knowledge as to what actually happened with 
procurement.
    His job is to fight the wars and to make the orders, not to 
carry out the procurement. And the procurement people will be 
testifying later on.
    Mr. Hefley. And that is good. And I think those are the 
people we ought to be talking to because the general is 
responsible for determining what the needs are to carry out the 
mission of the Army. And then he passes those needs on to the 
people who purchase the equipment to meet those needs.
    I don't think the general is the one we ought to be 
directing our fire to this morning. He is not the guy that made 
this decision.
    I had a question about the decision on the berets, and the 
general and I have talked about this considerably, and I 
understand it a great deal better now. So I am not worried 
about that.
    I am concerned, General, about the purchase of the berets 
from China. And, as a member of the Armed Services Committee, I 
have concern about us purchasing and relying on suppliers from 
other countries, particularly countries that aren't known as 
our greatest allies for our military equipment.
    General Shinseki. Sure.
    Mr. Hefley. I think we ought to be very, very careful about 
that, and so I do have that kind of concern. So if any good 
comes this morning, General, out of your being here, it may be 
thatyou will take back with you the strong concern that this 
Committee has and I think, in turn, the Congress, as a whole has, that 
we don't like military equipment, such as the berets, being purchased 
in foreign countries, particularly military equipment that could be 
done by small businesses across this country. And I think you share 
that feeling.
    So since I don't exactly know why we have you here today, I 
don't have any particular questions, General. But I do hope 
that you understand the concern that we have about the 
procurement process. And insofar as you can influence that 
process, I would hope you would pass our feelings along.
    General Shinseki. I will.
    Mr. Hefley. Thank you.
    General Shinseki. Thank you, Congressman.
    Chairman Manzullo. Mr. Pascrell.
    Mr. Pascrell. Thank you, Mr. Chairman. Mr. Chairman, we 
hope that some good comes out of this or that we change.
    It is obvious that the DOD has not heard the clarion call 
from this Committee over the past four years. They are 
constantly coming back.
    And I know, General, you are not in the business of 
procurement, but you and those that preceded you make the 
decisions. And there is an organization here. There is a link 
between the decision and those in logistics who implement and 
follow it out.
    And I thank the chairman for stepping up to the plate. This 
hearing is a clarion call to me, speaking of clarion calls, to 
all small businesses in the United States of America to get 
into the process of getting on the bidding list because what 
else is being manufactured in other countries for our troops? 
We don't have enough money for ammunition, but we have money 
for the making of hats.
    And God knows how we look to the rest of the world when we 
are asking you these questions, General. And all due respect to 
your great, outstanding record, but these are the cards that 
are dealt with us, and we are going to play those cards.
    General Shinseki. Sure.
    Mr. Pascrell. The Department of Defense's grade on the 
scorecard which we are referred to many, many times is D minus 
when it comes to relationships with small businesses, when it 
comes to the emphasis of procurement. That is not a very good 
record.
    And if you are telling us today that you have nothing to do 
with where the purchases are made in the process itself, I 
personally find that hard to believe. I am not questioning your 
honesty. I am questioning here if, as the person in charge 
making the decisions, if you say, ``Let us stick to the rules 
and the laws that we purchase in America,'' logistics is going 
to follow through on what you say.
    Do you know of any other items that our troops wear that 
are made in foreign countries?
    General Shinseki. Not personally, Congressman.
    Mr. Pascrell. You are not sure about that?
    General Shinseki. I am not. I just haven't done the 
research.
    Mr. Pascrell. Well, it is interesting that the first 
shipment of berets that came into this country, following 
through on your order, have been less than what was ordered in 
terms of aesthetics, in terms of quality.
    And while this is devastating to know that taxpayers' money 
was used for inferior products that, I read in the paper today, 
we may not even use since we have just made an about face. Is 
that correct? Yesterday, last evening, you made a decision. 
Could you tell us what the decision is?
    General Shinseki. Well, six weeks ago we recommended that--
and it's specifically to the production of berets in China. 
When the issue initially came up, the recommendation from the 
Army was that we not use these berets. But the decision is not 
mine. We don't contract for those berets, and we don't have the 
authority to de-contract for them. But last night the directive 
was to take those berets that were made in China and to return 
them for disposition.
    Mr. Pascrell. And where is the money going to go? Who is 
paying for these berets that we are not going to use, that we 
are going to discard because----
    General Shinseki. I don't have an answer, Congressman.
    Mr. Pascrell. I am sorry?
    General Shinseki. I don't have an answer. Again, I don't--
--
    Mr. Pascrell. Well, we are trying to get us all on the same 
page, Mr. Chairman. That is what you are trying to do.
    General Shinseki. I think you are on----
    Mr. Pascrell. It would seem to me we are all trying to get 
on the same page so that there is a relationship between the 
decision and the procurement so that logistics in DOD knows 
quite well the feelings of your office, knows quite well the 
feelings of those people who sit on this Committee, because we 
have been attacking the question of bundling here for four 
years.
    General Shinseki. Right.
    Mr. Pascrell. And we are getting nowhere, so we would all 
like to be on the same page.
    Did you know--when did you first know that these berets 
were going to be made in China?
    General Shinseki. As I indicated----
    Mr. Pascrell. By the way--excuse me, Mr. Chairman--it could 
be China, it could be Costa Rica.
    Chairman Manzullo. Mr. Pascrell, your time is up.
    Mr. Pascrell. Just answer the question.
    Chairman Manzullo. Well, let the gentleman ask.
    General Shinseki. I would--I go back to the statement to--
that I gave the chairman some time in February.
    Mr. Pascrell. Some time in----
    General Shinseki. Some time in February. I don't have a 
date certain.
    Mr. Pascrell. 2001?
    General Shinseki. 2001, that is correct.
    Mr. Pascrell. That is the first you knew about it?
    General Shinseki. That is correct.
    Mr. Pascrell. Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you, Mr. Pascrell.
    Mr. Grucci.
    Mr. Grucci. General, how are you today?
    Chairman Manzullo. Mr. Grucci, before we proceed, I will 
remind the Committee that these mikes are live at all times--
and the staff. Go ahead.
    Mr. Grucci. Good afternoon. Is it afternoon? No, it is 
still morning.
    General Shinseki. Good morning.
    Mr. Grucci. Good morning, General. It is great to see you 
again, and I appreciate the time that you have taken out of 
your schedule not only to be here, but certainly to come and to 
visit with members of Congress throughout these last sessions.
    Chairman Manzullo. Mr. Grucci, could you speak closer to 
the mike, please?
    Mr. Grucci. Sure. Is that any better, Mr. Chairman?
    Chairman Manzullo. Yes.
    Mr. Grucci. I appreciate the time that you spent visiting 
not only with me, but with others in Congress in expressing 
your interest in our views and the issues that are important to 
us.
    I don't have any specific questions of you, sir. I don't 
believe that at your level this issue--I find it kind of 
disturbing that this kind of an issue is at your level. I would 
have thought that it would--it could be handled more 
effectively, more efficiently at a procurement level.
    And I understand the chairman's desire to have you here, 
and I concur with that to demonstrate, perhaps, what your roll 
was in this whole process. And I think that that's healthy.
    I think that the issue for me is not what type of head gear 
the Army will wear. That's solely in the discretion of folks 
like you. The procurement of that does raise some questions, 
and I think that would be more appropriately addressed to the 
procurement officer.
    And we are certainly concerned about small business, about 
minority businesses having an opportunity to fully access the 
five percent set aside that's there for them. And I believe we 
are not at that level yet, and that is of a concern to me.
    But this particular issue, and the questions are more 
appropriate at a level beneath you. And I appreciate you being 
here, and I just wanted to commend you on an outstanding job 
that you have been doing with our army and with you taking the 
time to visit even with freshman congressman.
    So I thank you, and I yield back the rest of my time, Mr. 
Chairman for questions of others that I believe would be more 
appropriate to ask of.
    General Shinseki. Thanks, Congressman.
    Chairman Manzullo. Thank you, Mr. Grucci.
    Ms. Christian-Christensen.
    Ms. Christian-Christensen. Thank you, Mr. Chairman.
    First, I would like to commend the chairman and ranking 
member for calling this hearing. I realize we haven't gotten 
into the real substance of the meeting as yet, but it is 
important that we be constantly vigilant on the Department of 
Defense and their procurement practices, especially as regards 
small and disadvantaged businesses.
    I want to welcome General Shinseki and thank you for being 
here. Thank you for your service and your efforts and 
commitment to transforming and strengthening our army to meet 
the challenges that we face today.
    General Shinseki. Thank you.
    Ms. Christian-Christensen. Like others, I am one of those 
who had issues with the change in the beret, as did my husband, 
who is a 35 year Army retiree. But I think from your testimony 
I better understand, at least, the rationale for why the beret 
was chosen whether I agree with it or disagree with it.
    As both the chair and ranking member have said, our issue 
is with procurement, so that is going to be where most of my 
questions would go. But I do have maybe two questions for you.
    In light of the decision to change the beret, the 
surrounding controversy around it, have you seen any impact on 
the morale of the troops? Is it affecting the men and women in 
uniform?
    General Shinseki. I have not. And, as I indicated, I have 
certainly spent a good bit of time walking the Army to talk to 
youngsters.
    Two nights ago I was with the 3rd Battalion, 75th Rangers, 
down in Fort Benning, Georgia, and they were loaded up and 
parachuted, ready to do a rehearsal of a night operation. And I 
spent hours walking through that battalion, one of three. They 
don't have a problem with this, and neither does the vast 
majority of the rest of the Army.
    Ms. Christian-Christensen. Okay. Thank you for that answer. 
And just to further clarify the decision-making process, 
because I am not sure that I am clear. Even though I know 
Congresswoman Velazquez asked the same question, whose decision 
was it to have the beret be a seamless beret since that seems 
to have determined where it was going to be produced?
    General Shinseki. I don't know whether--well, I would have 
to assume it was a decision. But the Army's standard beret for 
years has been what I have come to understand as a seamless 
beret, and that is the uniform that the Army has worn.
    But, frankly, until I saw this statement that was provided 
by the Congresswoman and the discussion that there was such a 
thing as a seamed beret--not brought to my attention and 
unaware of it.
    Ms. Christian-Christensen. And I would also, just in 
closing, Mr. Chairman, just join my concerns to that of 
Congresswoman Velazquez and ask that, given this particular 
circumstance and controversy and the fact that the Department 
of Defense does have such a poor record with regard to our 
small businesses, that in the future that you would use the 
influence of your office more in ensuring that, when you have 
things that have to be procured, that the department comply 
with the Berry Amendment and do more to meet the goals that we 
have set for small, disadvantaged, and minority-owned 
businesses.
    General Shinseki. Certainly.
    Ms. Christian-Christensen. Thank you.
    General Shinseki. Thank you.
    Ms. Christian-Christensen. Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you.
    Mr. Bartlett.
    Mr. Bartlett. Thank you very much.
    General Shinseki. Congressman.
    Mr. Bartlett. General, welcome.
    General Shinseki. Good morning.
    Mr. Bartlett. Although I still have concerns about the 
policy decision, I just want you to know that does not in any 
way impact my respect for you or my admiration for your 
commitment to do what you think is best for our Army.
    I hope that another symbol can be used to signify the 
transformation of the Army. But if berets are to be it, then 
can we have your assurance that, to the extent that you have 
influence, that you will help to make sure that all future 
berets are bought in America in conformity to the Berry 
Amendment?
    General Shinseki. Yes, sir.
    Mr. Bartlett. Thank you. Thank you very much. I have here a 
copy of the article from the Washington Times today. And I just 
want to read one quote from it made by Mr. Wolfowitz and ask 
you what you think that means.
    ``Therefore, I direct the Army and the Defense Logistics 
Agency, DLA, to take appropriate action to recall previously 
distributed berets and dispose of the stock.'' Now I need to 
put that in context. That's berets made in China. What do you 
think ``dispose of'' means?
    General Shinseki. I am not sure, Congressman. I am about a 
month away from implementing the wear decision of the black 
beret, and I needed to get on with distributing and giving 
guidance.
    And the issue of the berets made in China is still a topic 
of discussion, and so my action was to direct that these berets 
be returned for disposition. And we would use the available 
stocks to get on with the decision of implementing the wear of 
the black beret. I am not sure what----
    Mr. Bartlett. I am very supportive of your decision. I just 
think that most of America is very supportive of the decision 
that troops will not be made to wear a beret made in China. But 
I am a child of depression, and I hate waste. And to return--to 
dispose of these berets in a local incinerator or something is 
unthinkable to me. And I am wondering if we can find a way that 
we might involve our small business community. And we have got 
the lemon here, let us see if we can make lemonade.
    And I would hope that we could work together and see if we 
can involve our small business community so that some good can 
come of this.
    General Shinseki. What a great idea.
    Mr. Bartlett. I want to thank you very much for appearing 
before our Committee today. I know how busy you are. And thank 
you very much for coming.
    General Shinseki. Thanks, Congressman.
    Mr. Bartlett. Mr. Chairman?
    Chairman Manzullo. Thank you.
    Mr. Udall.
    Mr. Udall. Thank you very much, Chairman Manzullo. I very 
much appreciate you and the ranking member focusing in on this 
hearing. I think it is an important area, and I am glad we are 
here today doing that.
    I also want to thank the general for his service. And let 
me get directly to questions here.
    General, in your written testimony you say that the Army's 
beret decision is about building trust and confidence in our 
formations, formations that will be defending this country in 
the 21st century.
    I think what you are hearing from this Committee is that 
the issue for us is about building trust and confidence in 
America's small businessmen and women. And, for us, it is very 
hard to build that trust when American's read the morning 
newspapers and hear on the evening news that the United States 
Army has purchased berets that are made in China, thus 
bypassing the American small businessmen and women. Do you 
think that this builds confidence in American businessmen and 
women to see this kind of action occur?
    General Shinseki. I would take your lead here, Congressman, 
and I would say probably not. But, again, purchase of berets is 
not done within the--inside the Army. And I apologize that I am 
not more conversant on it, but I think following panels will be 
able to address how those decisions were made.
    Mr. Udall. Thank you, General. General, the other context 
for why we are here today is a major decline in our textile 
industries. We have seen the kinds of industries that produce 
these kinds of products decline rapidly. And we have lost 
hundreds of thousands of jobs, tens of thousands of jobs in 
this country because many of those have gone to low-cost 
markets, low labor markets.
    And it seems to me one of the jobs of our federal agencies, 
including the military is try to help us to rebuild those 
industries if we can. And I hope that we have your commitment 
and the Army's commitment that you will try to take a look at 
doing that in the future.
    And I am wondering, what are you doing as a result of this 
incident to see that this doesn't happen again?
    General Shinseki. Well, I am certainly far better educated 
about the procurement process. Again, it is not something that 
I am, at least in this instance, involved in directly. But I am 
sensitive to the issues.
    Mr. Udall. Thank you, General. I appreciate very much you 
coming today.
    General Shinseki. Thanks, Congressman.
    Mr. Udall. Thank you, Mr. Chairman.
    Chairman Manzullo. Thank you.
    Mr. Ross.
    Mr. Ross. Thank you, Mr. Chairman.
    And, General, thank you for being with us today.
    General Shinseki. Good morning.
    Mr. Ross. On the beret issue, the only manufacturer with a 
plant located in the United States happens to be from my home 
state of Arkansas, Cabot, Arkansas. It is not in my district, 
but it is in my home state, so it is the next best thing to be.
    You know, the numbers I am looking at, nearly 5 million 
berets were made, and, yet, only 1.2 million were made at the 
only facility in the United States, which is in Cabot, 
Arkansas.
    And, to kind of follow up on Congressman Udall a little 
bit, I mean, I live in a state where I am sick and tired of 
losing population. I am sick and tired of losing jobs. And the 
textile industry has especially been hit hard in Arkansas.
    And, not only berets, but why can't the Army help us save 
what few textile industries are left out there because these 
are big contracts. There are a lot of things, berets, uniforms, 
shirts, ties that these textile industries could be making.
    In the United States, if we would focus on areas that are 
economically depressed, in areas that have lost a lot of 
textile jobs--you have got a trained workforce in these areas 
with a nice facility, but the doors are padlocked.
    It looks like we ought to start in America, and we ought to 
start especially in light of the fact that we are talking about 
taxpayers' money. These are tax dollars, so why aren't we using 
them more in economically depressed areas? Do you have any 
thoughts on that?
    General Shinseki. I agree with you, Congressman. But, 
again, I don't write these contracts. I happen to agree with 
you, but I understand your concern.
    Mr. Ross. Well, I hope that whoever does write them will 
take heed to this and recognize that I come from a district 
where the average household income is $19,000. There are a lot 
of people that would love to work at textile manufacturing 
plants, and they would do it with pride and honor, knowing that 
they are making uniforms and accessories for our United States 
military.
    So I hope whoever writes the contracts and whoever's in the 
room that has some influence on this will think about that next 
time, that there are people in America that are hurting. And we 
have a lot of trained workers out there no longer working 
because the textile industries have been closed.
    And let us try to do better and be better focused in the 
future. I think it could be a huge boost economically for 
economically depressed areas in Arkansas and elsewhere.
    Thank you.
    Chairman Manzullo. Thank you, Mr. Ross.
    Ms. Kelly, do you have any questions?
    Ms. Kelly. Mr. Chairman, I am going to pass for a few 
minutes. If you can come back to me, I would appreciate that.
    Chairman Manzullo. Okay. You are the last person.
    Ms. Kelly. I am sorry.
    Chairman Manzullo. I do have one question to ask the 
general, and perhaps, during that period of time if you want to 
get your thoughts collected, then you would be the last person 
to ask questions.
    General, could you--in order for clarification, could you 
state the relationship that you have as chief of staff of the 
Army with the Defense Logistics Agency?
    General Shinseki. I am not sure what you mean by 
relationship, but there is not a formal one. In other words, 
the Defense----
    Chairman Manzullo. It is a separate agency, is that 
correct?
    General Shinseki. It is. It comes under the Department of 
Defense. It is outside the Army. I know that they exist, but 
the request for filling a requirement normally goes through an 
ordering process that results in contracts being written by the 
Defense Logistics Agency to fill the requirement that the Army 
has requested.
    Chairman Manzullo. Okay. And the reason I asked that is 
because there are a lot of questions whose answers you don't 
know, and I wanted to establish the relationship between you 
and the DLA.
    General Shinseki. Sure. Thank you, Chairman. The DLA does 
not work for me if that is what you are asking. They do not 
work for the Army. They are not an Army----
    Chairman Manzullo. They are not under your command?
    General Shinseki. No, they are not.
    Chairman Manzullo. Okay.
    Ms. Kelly.
    Ms. Kelly. Thank you, Mr. Chairman.
    General Shinseki, thank you very much for appearing before 
the Committee today.
    There is one question I wanted to ask about the manufacture 
of the berets. And that is, it is my understanding that there 
may not be available in the United States some one agency or 
one industry that can produce enough of these in a short enough 
period of time. Is that correct?
    General Shinseki. I will defer the specifics of that to the 
following panel. My understanding though, the part of the 
reason we are here, is that it is apparent that they cannot all 
be produced here.
    Ms. Kelly. I thank you very much. I also want to compliment 
you on the terrific job that I think you have been doing for us 
as the leader of our army. I want to say that we have had some 
dealings with some areas in my district, and you have been 
extremely helpful, and I do thank you very much. And I thank 
you for appearing here today.
    General Shinseki. Thanks, Congresswoman.
    Chairman Manzullo. Ms. Velazquez has the last question.
    I just want to state that one of the purposes of this 
hearing is to try to find out if any additional laws are 
necessary in procurement. And I have come to the conclusion--I 
am sure Ms. Velazquez would also--that whenever somebody makes 
an order and that order cannot be fulfilled domestically, that 
there has to be a personal notice given to the person who makes 
that order, which may have avoided this entire controversy in 
the first place.
    General Shinseki. Sure.
    Chairman Manzullo. Ms. Velazquez.
    Ms. Velazquez. General, are you aware who do the DLA answer 
to?
    General Shinseki. The DLA is a Defense Department Agency 
and responds, I think, most directly to the undersecretary for 
acquisition on the staff of the Secretary of Defense.
    Ms. Velazquez. Thank you.
    General Shinseki. I believe that is the appropriate 
relationship. And the following panel will probably have more 
specific and a better answer than I have been able to give you.
    Chairman Manzullo. General, I want to thank you for your 
service to this country. I want to thank you for your patience 
in this process. I thank you for taking the time and especially 
your candor this morning.
    General Shinseki. Thanks, Mr. Chairman.
    Chairman Manzullo. Our second panel is Congresswoman Lois 
Capps of the 22nd District of California and Congressman Walter 
B. Jones, Jr. from the Third District of North Carolina.
    Okay. The second panel is here, and let us start with the 
Congresswoman Lois Capps of California. Congresswoman?

STATEMENT OF HON. LOIS CAPPS, A REPRESENTATIVE IN CONGRESS FROM 
      THE STATE OF CALIFORNIA, 22ND DISTRICT OF CALIFORNIA

    Ms. Capps. Thank you, Mr. Chairman. It is such a pleasure 
to be here this morning.
    I commend you, Ranking Member Velazquez, as well as 
Chairman Manzullo and the entire Committee for your interest in 
this most important subject.
    In the interest of time, I am submitting my written 
testimony for the record, and I will summarize my statement for 
you.
    Chairman Manzullo. All the statements will be admitted 
without objection. Thank you.
    Ms. Capps. Thank you.
    As you know, last night, the Pentagon announced that it had 
cancelled contracts with three companies for foreign-made black 
berets. The Pentagon has said that it did this because of 
``late deliveries and substandard work on these contracts.''
    I am pleased that the Pentagon has cancelled these 
contracts and that plans to seek out the most appropriate 
domestic source available.
    And I have been calling for this since the middle of March. 
I wrote a letter to President Bush. It was cosigned by 79 of my 
House colleagues from across the political spectrum requesting 
that the administration reconsider the Army's contract. To 
date, I have received no response from the administration.
    As we said in our letter, the Pentagon had made a decision 
to purchase over 4 million black berets from companies 
manufacturing them in foreign countries, including China, 
Romania, and Sri Lanka. This decision was ill-advised and 
poorly thought out.
    Purchasing the berets from overseas companies could easily 
have undermined the very morale and unity the Army was 
attempting to instill in its forces as it set out to outfit 
soldiers in matching head gear.
    The Army imposed an arbitrary deadline for the purchase of 
the berets by June 14, 2001. This resulted in sending this 
business to foreign companies and cutting U.S. manufacturers 
out of the bidding process. This cost American firms millions 
of dollars and has probably wasted a lot of taxpayer dollars as 
well.
    These contracts which would normally go to U.S. small 
businesses reportedly totaled $30 million. But in its decision 
to purchase black berets from foreign suppliers, the Defense 
Logistics Agency bypassed normal procurement procedures. The 
DLA did not generate normal public notification for bidding 
prior to awarding two manufacturing contracts.
    It appears this action was in violation of the Competition 
in Contracting Act. DLA also waived the Berry Amendment. The 
Berry Amendment is a staple of Defense procurement law. It 
requires the Department of Defense to buy clothing and other 
textiles made in U.S. factories of 100 percent American 
components.
    It is true that waiving the Berry Amendment is permissible 
in order to meet high volume requests or tight time 
constraints. But I have been informed that the American apparel 
industry could have produced the one-piece berets the Army 
requested rather than the two-piece sewn items the American 
firms currently manufactured if they had been given sufficient 
lead time to fulfill this order.
    I was also disturbed by press accounts that awarding these 
contracts to foreign firms may have been more expensive to 
American taxpayers. It was reported that the cost of a beret 
made overseas ranged from $4.36 to $7.20 compared to $6.30 that 
was being charged by the sole American manufacturer.
    And this whole fiasco has cost taxpayers money as the Army 
has tried to address the questions raised by buying them 
overseas.
    The Department of Defense should employ it's traditional 
procurement process that ensures fair and open competition and 
cost-effective military purchasing standards.
    Mr. Chairman, I believe Congress should continue to support 
improvements in the department's acquisition programs. I hope 
the Pentagon will address the challenges of this complex area 
and protect the interests of the department, of American 
businesses, and, ultimately, the taxpayer.
    Military uniforms are a powerful symbol for U.S. soldiers, 
representing who they are and what they stand for. That is why 
we must give American companies the first opportunity when it 
comes to government purchases. This reflects United States law 
as well as basic common sense.
    Mr. Chairman, thank you for the opportunity to appear 
before your panel.
    [Ms. Capps' statement may be found in appendix.]
    Chairman Manzullo. Thank you, Ms. Capps.
    Mr. Jones.

STATEMENT OF HON. WALTER B. JONES, A REPRESENTATIVE IN CONGRESS 
    FROM THE STATE OF NORTH CAROLINA, 3RD DISTRICT OF NORTH 
                            CAROLINA

    Mr. Jones. Mr. Chairman, I want to thank you and the 
ranking member and Committee members for giving me this 
opportunity. I will also summarize very briefly my comments.
    As you know, I am a member of the Armed Services Committee 
along with some other members of your Committee. And I must say 
that when I first heard this decision, as Representative Capps 
made reference to, I was incensed and outraged by the decision. 
And I also wrote letters to the Department of Defense as well 
as to the President of the United States.
    In my district, the Third District of North Carolina, we 
have three military bases, Camp Lejeune Marine Base, Cherry 
Point Marine Air Station, Seymour Johnson Air Force Base, and I 
am privileged to represent 60,000 retired veterans and retired 
military in that district.
    And I would like to say that the majority of those who 
communicate with our office were outraged by this decision. I 
am pleased to tell you that two former rangers walked all the 
way from Fort Benning to Washington, DC to express to the 
United States Congress their outrage. Both these gentlemen were 
former rangers who had served both in the invasion of Panama as 
well as the Vietnam War.
    David Nielsen, who is here today--Sergeant David Nielsen, a 
former Ranger--actually himself and others walked 750 miles to 
Washington, DC from Fort Benning, Georgia to let the American 
people as well as the Congress know their outrage.
    Chairman Manzullo. Congressman, could you have him stand up 
please?
    Mr. Jones. Would Sergeant David Nielsen stand if he is 
here?
    Chairman Manzullo. Thank you. Proceed.
    Mr. Jones. Thank you, David.
    Mr. Chairman and Ranking Member, I also want to say that 
when we have a military that today pilots are not able to fly 
because of money for parts, many of the units do not have 
ammunition, and a decision was made just because a--the 
thinking was changing the color of a hat or the beret was worth 
$23 million when our men and women in uniform need the help 
now, I think that in itself is a decision that shows that it 
was very short-sighted to be honest with you.
    Mr. Chairman, what I want to talk about today also in the 
two and a half minutes I have left are the small businesspeople 
in my district. And you are exactly right. The week before the 
decision, 1,000 employees in my district were laid off by two 
companies.
    In addition, I want to read very quickly I received a 
letter from a manufacturer in North Carolina, and this is what 
he said. He wrote to me and said that his small textile 
business supports 80 families, and, yet, he struggles to keep 
his plant operations open because he has to compete with cheap 
labor and good from foreign competitors.
    He would have gladly spent the money necessary to convert 
some of his operations into a facility that could help produce 
the berets for our men and women in uniform.
    Mr. Chairman and Committee members, I actually talked to 
this gentleman, and he told me that he could do it. He could 
make the conversion and still make money and ensure the jobs 
for those 80 people and their families that work for him.
    And I must say that I appreciate this Committee more than I 
can tell you because there is no excuse, no excuse, in 
bypassing the Berry Amendment. And I am very grateful that you 
are taking this issue up.
    Let me say that I decided to introduce legislation, this 
H.R. 1352 that will hopefully help prevent a situation like 
this from ever happening again. The changes my legislation 
makes are simple, but my hope is that these minor adjustments 
will give pause before any future decision to unnecessarily 
waive the Berry Amendment occurs.
    Mr. Chairman and Ranking Member, I want to say to you today 
that this has been a ill-fated decision made by the Army from 
day one. And I hope that we, as a Congress working with the 
administration, would do what we can to stop this outrageous 
decision that was made.
    It is not fair to those men and women who serve in the 
military, who respect the Rangers. It is not fair to the small 
businesses of this country that they are not given the 
opportunity to bid for this work.
    So, again, in closing, I want to thank you for giving me 
this opportunity to be with you today. Thank you.
    [Mr. Jones's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much. I want to assure 
you, Congressman Jones, that if Ms. Velazquez and I have to 
subpoena and examine every Berry waiver, then we are prepared 
to do that. We are also prepared to introduce legislation that 
would tighten up the authority process on who could waive it.
    We noticed that a press release was put out yesterday by 
the Senate Small Business Committeeagreeing that it has to go 
to the highest level as opposed to somebody six rungs down the ladder. 
But we are going to continue to be ever vigilant over this.
    We also noticed that there are already laws on the books 
that provide for the cardinals of the appropriations 
Subcommittees to personally sign off on transfers, I believe, 
from one account to the other in the Department of Defense.
    And I think the only way that we are going to be able to 
straighten out the horrible procurement process going on is to 
allow members to be personally involved in it.
    Ms. Velazquez's family is involved in the printing 
industry, and my family is involved in the restaurant industry. 
We are both small businesspeople. We have a passion to protect 
the small people of this nation, and we also happen to be 
members of Congress.
    So we take that passion along with the authority we have to 
do everything we can possible do to keep those jobs here in 
America. Thank you both for coming.
    Ms. Velazquez.
    Ms. Velazquez. No. I just echo your views, and I just want 
to thank you for your commitment and coming here before us to 
share some of the experiences that your own constituency has 
been facing with the Department of Defense and other federal 
agencies.
    And, again, our commitment is to make sure that the 
Department of Defense and any other federal agency complies 
with the laws as they have been stated by the United States 
Congress.
    Thank you.
    Chairman Manzullo. Mr. Grucci.
    Mr. Grucci. I have no comments or questions. Thank you, Mr. 
Chairman.
    Chairman Manzullo. Does any member have any questions to 
ask of our fellow members here? I see Ms. Capps is anxious to 
leave.
    Mr. Bartlett, and then you are next.
    Mr. Bartlett. I want to thank my two colleagues for coming 
to testify today.
    Walter, you and I served together on the Armed Services 
Committee. I know that we both share an admiration for our 
military and a commitment to do the very best that we can, and 
I know that that is shared also by Lois.
    I share with you, Walter, the conviction that the original 
decision was a wrong decision. And here we are now this far 
down the road. What we need to do now is to stop and take stock 
of where we are and what now is in the best interest of our 
military and the best interest of our small businesses and the 
best interest of our country.
    And I continue to believe that perhaps a better symbol 
could be chosen as to signify the transformation of the Army. 
And we in the Congress, I believe, have a responsibility there 
that we share with the military in our hope that the Congress 
will step up to its responsibility.
    It is a very important hearing today because it holds the 
Armed Services Committee in deference to this Committee. And I 
am pleased to serve on both of them.
    The Armed Services Committee was delaying any pending 
action on this out of deference to this Committee. So this is a 
very important Committee hearing today. And I want to thank my 
two classmates. All three of us came into the Congress 
together.
    Thank the Chairman and the Ranking Member for calling this.
    And I want to tell you, Walter, that I am very supportive 
of what you have been trying to do, and I hope that we in the 
Small Business Committee and the Armed Services Committee, in 
working together now with the Army, can make sure that the 
right thing happens for our American troops and our small 
businesses in America in general.
    Thank you very much.
    Chairman Manzullo. Congresswoman Millender-McDonald.
    Ms. Millender-McDonald. Thank you, Mr. Chairman.
    And I would also like to thank the chairman and the ranking 
member for convening such an important hearing.
    I would like to thank these two fine congresspersons who 
are before us because it makes our life a little easier when we 
are here in Committee, and you come before us, and you are not 
part of this Committee, but you are also touting those things 
that we are touting. Made in America is so important to all of 
us, and we want to continue to keep that banner high.
    Again, thank you too for coming this morning.
    Chairman Manzullo. Okay. The second panel is excused. I 
believe we have a vote, is that correct? Okay. We will 
reconvene this hearing as soon as we are done with the vote.
    [Recess.]
    Chairman Manzullo. The Committee will reconvene. I have 
been advised that we have about two and a half hours before the 
next vote.
    The third panel, I believe, is in the process of sitting 
down, and, as soon as you are ready, General Glisson, the 
director of the Defense Logistics Agency.
    General.

  STATEMENT OF LIEUTENANT GENERAL HENRY T. GLISSON, DIRECTOR, 
                    DEFENSE LOGISTICS AGENCY

    Lieutenant General Glisson. Good morning, Mr. Chairman. I 
appreciate the opportunity to be here today to answer questions 
and discuss the acquisition strategy followed by the Defense 
Supply Center, Philadelphia, to procure the black berets for 
the Army.
    I have prepared a written statement for the record. I would 
like to ask that be entered.
    Chairman Manzullo. All written statements will be entered 
in the course of this hearing without objection.
    Lieutenant General Glisson. Thank you, sir.
    I would like to take just a few minutes, if I may, and talk 
about the sequence of events that took place that allowed us to 
get to the point where we are today. And I would like to start, 
if I may, with the requirement.
    In October, as was previously discussed, the Chief of Staff 
of the Army made the announcement that he intended to place 
berets on the heads of all soldiers.
    In November of last year, my Supply Center in Philadelphia 
received a requirements document from the Army that basically 
said that they wanted 1.3 million berets by April 2001 to issue 
the first beret to the Army, 1.3 million berets by July of 2001 
to issue the second beret to every soldier. That required an 
initial sustainment for replacement, and so forth, of an 
additional 1.3 million berets or about 3.9 million berets.
    What that meant for us in the acquisition community was we 
had a requirement for a high production surge during the 
February to July time-frame, and then there would be a 
sustainment requirement thereafter of about 100,000 to 150,000 
berets a month.
    Now the Supply Center in Philadelphia was exceptionally 
well prepared for this task, and the reason they were was for a 
couple of things.
    First of all, they are the primary buyer for the Military 
Services of all clothing and textile products and, 
particularly, enlisted head gear for the military. And they 
have been doing this for many, many years. They know the 
marketplace very well. They know most of the manufacturers,and 
they know the manufacturing process.
    And the issue of potential issue of berets to the entire 
army was not new. The Army had considered such a thing in 1990; 
again in 1996; and as late as 1999, we had done a competitive 
award or competition for berets to a Cabot, Arkansas company 
called the Bancroft Cap Company, which is the only domestic 
producer of berets in the United States today.
    Bancroft had been doing this for about 20 years. Their 
production capacity during that period of time was about 6,300 
berets a month or about 70,000 a year.
    Over the past 10 years, then at least, we have talked to 
over 50 domestic companies and contractors, trying to find out 
if anybody was interested in producing this specific beret for 
the military services, and none were.
    The question you ask is why wouldn't anyone want to do this 
business. Well, a couple of reasons.
    First of all, it takes special machinery to do it. It 
requires a circular knitted machine, which is really old 
technology. It was manufactured years ago, mostly overseas in 
Romania and in France. They are hard to find. There is no new 
production on these machines. Cabot has the only machines in 
the United States, somewhere around 60, I think.
    They are not dual-use, so you are only going to use them to 
produce this specific beret. There is not a follow-on 
application in the commercial marketplace.
    And we talked to the vendors. They said it would take 12 to 
18 months to set up an operation. It takes a capital investment 
to do that, takes training. If you look at it from the 
financial return on investment, there really wasn't a lot of 
incentive there based on the demand that we had had to produce 
berets. It is very labor-intensive also.
    I have a story board, if you will, to show how the beret is 
manufactured, to give you a sense of that.
    Wool is taken, placed on the circular knitting machine, and 
produces the shell which you see up in the top corner there. It 
is then stitched where that seam is so that it becomes a single 
solid beret.
    It is then placed in a machine that basically agitates and 
produces the material to the look that it has there with the 
piling and with the single look that it has.
    We take it and put it in a vat where it is both dyed and 
mothproofed. It is then put on a machine which actually blocks 
it and gives it the shape that you see in the top left corner 
there.
    Then there is a drawstring, which is attached at the base 
of the beret, that allows the soldier to tighten it a little 
bit for sizing, and that is attached on there with a leather 
band. And then, lastly, there is a stay which is placed behind 
on the inside of the beret so that the flashing, which is the 
unit insignia or designation, can be placed on that machine.
    Now there were only three known manufacturers at the time--
and we have been looking at this at least for the last 11 
years--that we knew could produce berets. One was Bancroft, 
which was the only domestic producer. The other two were 
overseas, one in Canada, which is Dorothea, which makes the 
Canadian beret. One was a U.S.-based company out of New York, 
which is Denmark, which had a subcontractor plant in Romania.
    The first thing we did was say, ``What if we gave it all to 
the U.S. to the single source that we had, and what would that 
mean to the delivery for the Army requirement?''
    Quite frankly, at the production rate that Bancroft was 
able to produce, it would have only provided somewhere in the 
neighborhood of max capacity of 100,000 a month. It would have 
taken Bancroft about six years to meet the Army requirements, 
which would not have been a reasonable period of time for what 
the Chief of Staff of the Army has talked to you about 
previously.
    So we had to figure out how to get 3.9 million berets in 
about a five-month period with a follow-on of another 
sustainment quantity immediately thereafter.
    So what we did, basically, is awarded to Bancroft what they 
said their maximum capacity was, which was 100,000 berets a 
month. We then directed the award to Denmark and Dorothea for 
their max capacity, which was 60,000 and 40,000 collectively.
    After we had done that, Atlas Headwear came in--and Ms. 
Goodman will talk to you later today as another member of the 
panel--and submitted a second beret for the Army to take a look 
at. I have the two berets here in case you haven't seen those.
    Basically, we took that back to the Army. The Requirements 
Section for the Army took a look at it and said it would not 
meet the needs of the Army and disapproved the use of that 
particular beret. So that left us with a requirement and DLA to 
figure out how to produce the remainder of the berets to the 
original requirement.
    We did a worldwide search up in Philadelphia. We identified 
20 potential producers. Five were U.S., 15 were foreign. We 
asked for requests for proposals. They all sent in samples, we 
looked at the samples. We reviewed the company records to 
determine responsibility, quality, quantity, price 
reasonableness.
    Then we had full and open competition, and we made four 
awards at that point in time. As you can see on the second 
chart, we awarded two to U.S.-based companies, foreign 
produced, Northwest Woolens in Rhode Island and Bernard in 
Florida, and two foreign, which were to the United Kingdom. One 
was Kangol, and the other was C.W. Headdress.
    We were concerned about the child labor laws, so we asked 
the Defense Contract Management Agency to visit all of the 
plants both initially, and frequently thereafter, to make sure 
that they were in compliance with the local child labor laws, 
and that has been done.
    The last thing we did was, in December we actually issued 
what we call a sources sought advertisement in the Commerce 
Business Daily, which is where you post procurement 
requirements, and that is where the bidders come in and take a 
look at whether they are interested or not to see if we had any 
further interest because we really did want to try to give this 
business to domestic sources.
    Since that time, we have had 13 telephone or written 
inquiries from domestic companies. We have had no serious 
follow-on interest after discussion or receipt with the 
exception of we have announced that we are going to try to do 
an Industry Day on the 23rd of May, at which point we, again, 
are working with small business to try to bring in as many 
manufacturers and interested parties as we can.
    We do have some companies that said they are coming to 
that, and so we are hopeful that we will be able to craft out 
of that some sort of strategy which will allow us to work on an 
industrial base here in the United States.
    In regard to small business, as mentioned, we knew the 
business well. We have been working over the years with our 
Small Business Procurement Center Representative, and, as late 
as 1998, we had issued a competitive contract, no set-aside, no 
restricted procurements because there was only one producer in 
the United States. And we have followed that process 
consistently over the years.
    I will tell you, however, when Philadelphia did these 
awards, these last awards on berets, they did not send the 
small business coordination record to the Procurement Center 
Representative, which they should have done, so he was not 
aware that we had awarded those.
    It was an administrative error. The Department had a review 
conducted by the Small BusinessOffice to determine was this 
something which is a major flaw in the way that we were doing business 
in Philadelphia or a one time error.
    We went out and randomly pulled about 50 records. They only 
found one occurrence where that coordination document was not 
there. We believe that this was simply an oversight as they 
were trying to quickly meet the needs of the Army. And it would 
not have changed the facts and circumstances, at least in our 
minds, with the contract.
    The bottom line, we don't know of any violation of any 
Small Business practices with the exception of that. And, in 
fact, as I will mention in just a minute, we have a strong 
record of support to the Small Business community.
    Finally, in respect to buying American products, I will 
tell you that the buying command in Philadelphia, 68 percent of 
all the clothing and textile dollars that we spent in Fiscal 
Year 2000 or about $750 million went to the Small Business 
community.
    Within DLA, 40 percent, which is the highest in DOD of all 
DLA contracts went to Small Business. That is about $4 billion. 
And 90 percent of all of our clothing and textile procurements 
went to U.S. companies for products made in the U.S. out of 
U.S. components.
    I will tell you that Philadelphia used the sole domestic 
source to the maximum extent possible, and, only when we saw no 
other way to meet the requirement for the Army for quality, 
quantity, and timeliness, did we make the proper determinations 
of non-availability.
    They did have the delegation to waive the Berry Amendments. 
They followed the spirit and the letter of the law, at least in 
our mind. We take the Berry Amendment waivers very seriously. 
In the last 10 years, there are only four instances, that I am 
aware of, where end items for products were waived out of 
Philadelphia. And we only did that to get through the initial 
production and try to get sustainment.
    Finally, I will tell you that the Department of Defense did 
conduct a separate review of our entire acquisition strategy 
and process. What they found is listed basically up here, and 
Mr. Oliver can talk more to that than I, but that our 
procurement was proper, our Small Business practices were 
intact, and we bought American to the maximum extent possible. 
I will tell you that at every step of the way, we tried to 
follow the spirit and the letter of the law.
    The last points I would like to make are, over the last two 
days a couple of other things have happened which I think are 
important to the Committee.
    First of all, the Philadelphia Command terminated three 
contracts for default, and these are the companies that you saw 
up there earlier. They happen to be Bernard, North West 
Woolens, and Denmark, plus, the Chief of Staff of the Army 
decision and the Deputy Secretary decision to terminate the 
contracts--not to terminate, but to not use the China-
manufactured berets.
    What that, in essence, does is put 2.2 million berets back 
to us to try to find domestic sources or about $11 million 
worth of business which we have the opportunity now to try to 
craft a strategy to use Small Business. We hope to be able to 
do that at our 23 May Industry Day.
    And the last point I would make is that on the delegation 
of authority to make waivers of non-availability, that 
authority has been withdrawn. I think you all saw the release 
from the Deputy Secretary of Defense this morning.
    For me in DLA, that means that the Under Secretary of 
Defense for Acquisition, Technology, and Logistics, is the only 
person now that can approve waivers of the Berry Amendment. 
That no longer resides in the Defense Logistics Agency, and 
that is true also with the Service Secretary.
    Chairman Manzullo. General, you are three minutes over.
    Lieutenant General Glisson. Mr. Chairman, I stand ready to 
answer questions.
    [Lt. Gen. Glisson's statement may be found in appendix.]
    Chairman Manzullo. Thank you.
    I am going to go out of order for a specific reason and 
call Michele Goodman because I think she has some contradictory 
statements to you, General.
    Lieutenant General Glisson. Okay.
    Chairman Manzullo. Michele?

   STATEMENT OF MICHELE GOODMAN, PRESIDENT, ATLAS HEADWEAR, 
                        PHOENIX, ARIZONA

    Ms. Goodman. Good morning. Thank you for the opportunity to 
discuss the treatment of small businesses dealing with 
government procurement policies. I am am particularly 
grateful----
    Chairman Manzullo. Michele, could you pull it closer--there 
you are. Thank you.
    Ms. Goodman. Is that better?
    I am particularly grateful for the leadership shown by the 
members of the Committee on this issue.
    My name is Michele Goodman, and I appear here today on 
behalf of 120 people from Atlas Headwear. This is down from 240 
people a year ago. We are located in Phoenix, Arizona, and we 
are a woman-owned small business, employing mostly Hispanic and 
other minority women. We also have an aggressive policy towards 
hiring the developmentally disabled and the physically 
handicapped.
    Over the last five years, Atlas has joined a partnership 
with a school, habilitation school, to hire those people that, 
as the chairman pointed out, are defenseless. They have no 
other means, except through the training they get in the school 
and through private businesses, to find a place, a place where 
they can be constructive and a place where they can feel good 
about themselves.
    I will just cite you a couple of examples. We have an 
employee, her name is Chris. She has been working for us for 
four years. She is in a wheelchair, and she has all types of 
emotional and mental handicaps.
    When she first came to our facility four years ago, she had 
seizures on a regular basis. It was difficult, but Chris 
learned, and felt welcomed, and she was diligent in her efforts 
towards trying to make her life better. And she saw that other 
people that surrounded her were trying to help her do as well.
    I can report that now, after four years or even after six 
months, Chris no longer has seizures. She comes to work every 
single day, and she does an excellent job, as does Lori and 
Crete, who happens to be hearing-impaired, Chris, Stephanie, 
Joseph. And the list goes on of those people.
    I will just make one final comment on that. When we had to 
lay off almost half of our staff over this past year, we made a 
conscious effort to keep the people that were least able to 
find a place. And all of the emotionally, developmentally 
handicapped are still working for us, and they represent five 
percent of my workforce.
    This year we will complete 20 years of manufacturing for 
the Department of Defense. We currently make the hot weather 
cap for both the Army and the Air Force for the Defense Supply 
Center in Philadelphia, known as the DSCP, and the Navy and 
recruit hat for NEXCOM in Virginia.
    We have manufactured in the past the Temperate BDU cap, the 
Desert Sun hat, and the Marine Corps utility cap. We have 
commercial work as well, manufacturing for golf, fashion, 
outdoor products, theme parks, and other industries.
    I was asked to speak today about two issues, first, the 
issue of the Pentagon's decision to waivethe Berry Amendment 
when it decided to purchase berets from foreign sources and, secondly, 
the larger issue of Pentagon procurement policies.
    In the interest of time and because General Shinseki was 
available to be here today, I would like to focus my oral 
testimony on the beret issue and leave the other issues to my 
written testimony.
    I would encourage the Committee, however, to read the 
written statement regarding other procurement issues as I 
believe they are as important to small business as the beret 
issue has become.
    I submit to you that I was closely involved in the events 
that took place regarding the beret decision, and my testimony 
is accurate from a firsthand perspective.
    On October 17, 2000, General Shinseki, the Army chief of 
staff, announced a directive to provide all Army personnel with 
berets by the Army's 225th birthday. The due date for having 
the first berets in hand in order to meet the June 14th 
deadline was April 2000, meaning contracts had to be let 
quickly, placed for millions of berets with more than a million 
to be delivered in only five months.
    General Shinseki apparently paid little attention to the 
fact that the task he was ordering had many obstacles before it 
and should not have been rushed. Quite honestly, we had 225 
years to prepare for this.
    It was not a surprise situation. Proper planning for this 
transition could have prevented not only the serious waiver of 
the Berry Amendment, but also would have prevented excess cost 
to the U.S. government, the U.S. taxpayers, and us, the small 
business community.
    Normally, when a procurement solicitation is made by the 
officers of the DSCP, there is a fair and transparent process 
that takes place where the DSCP works to ensure that not only 
does the military get quality products at an affordable price 
and in a timely manner, but that those items are procured from 
American manufacturers who make up the industrial base that 
support the military in both war and peace.
    These small businesses live and die by the fairness of the 
process and the people at DSCP who work closely with business 
to meet this goal. However, in this case, the DSCP was forced 
to act in a manner that would shut out American manufacturers 
because they were given an impossible deadline to meet. The 
lack of planning and foresight exhibited by General Shinseki 
created this problem.
    As a part of my written testimony I have provided a 
timeline of the key events that occurred from the date the 
general's decision was announced, and this timeline highlights 
my company's attempts to be awarded part of the contract.
    When General Shinseki gave the beret order, the DLA, 
Defense Logistics Agency, did not question his decision. It is 
my understanding that they are not permitted to. The result was 
that contracts were let in a manner that conflicted with two 
laws, the Competition in Contracting Act and the Berry 
Amendment.
    The Competition in Contracting Act was violated when two 
contracts were awarded to two companies even before a public 
notice was announced that the contracts were open for bidding. 
When the solicitation for other bids was finally made public, 
the Berry Amendment was waived within days of the announcement, 
and the contracts were awarded to foreign manufacturers. Both 
of these actions shut out potential American manufacturers who 
could have mobilized to fill the orders.
    I have with me a sample beret that I made in my attempt to 
bid for the contract. I was rejected. I was told, ``It doesn't 
look right.'' My attempts to work with the Army on designing a 
beret they could accept were repeatedly ignored.
    And I have also brought with me two berets. This is the 
current beret that they are using. I don't know which beret 
they showed you of ours.
    We have made two attempts, without the help of the Army and 
their design people, to make a beret very similar to their 
beret, and it is two-piece stitched. And I am going to tell you 
that none of you from there can see that, okay. I don't know, 
the one you have up there could have been the first attempt, 
but I would be more than happy for you to see those.
    I do not believe the Congress created laws such as the 
Berry Amendment and the Competition in Contracting Act for 
frivolous purposes. I believe that abusing them is a serious 
matter. I believe that American companies could have fulfilled 
the orders had DSCP given enough time to properly proceed and 
if the Army had been more open-minded.
    The question then is, what can be done at this point. As I 
was prepared to testify a month ago, it was my opinion that 
these contracts should be carefully reviewed for adherence to 
specification and delivery requirements.
    As the general has testified today, rightfully though, some 
of those contracts have been cancelled for those exact reasons, 
which were predicted at the outset.
    We cannot recover the last six to seven months, but we are 
still left with the need for berets. It should be directed that 
the Army work with domestic manufacturers and equipment 
companies to explore alternatives to the current requirement 
for a one-piece knit beret.
    The knit beret that the Army has requested is manufactured 
on machinery that is antiquated and more labor-intense than the 
more modern equipment used to produce the stitched beret.
    The labor requirements for the knitted beret is the main 
reason that the cost is so high. Additionally, the one-piece 
beret is going to have to be replaced in the near future 
because the machinery and the spare parts for the machinery are 
no longer manufactured.
    Forward-thinking countries, such as Italy, are already 
contemplating this change. They have been perfecting the two-
piece beret and could offer assistance in perfecting ours to 
the Army's liking.
    The Army needs to explore other types of headwear that 
would express the general's wish for unity, excellence, and 
values. The current decision and the result of this decision, 
buying from Third World countries at significantly higher 
prices, do not achieve any of these goals.
    An American-made stitched beret would provide the following 
advantages to the Army. They would provide the Army with a 
beret for which the manufacturing machinery will be there in 
decades to come. They will reduce cost, improve the response 
time, increase quality consistency, and save American jobs and 
protect the military's warm industrial base of American 
suppliers.
    In closing, I would like to thank all of you for the time 
you have given me to address the struggles American small 
businesses have in trying to stay alive. We are not asking the 
government for a handout, simply a hand up. I would be happy to 
answer any questions.
    [Ms. Goodman's statement may be found in appendix.]
    Chairman Manzullo. Thank you, Michele.
    The next witness will be David Cooper. I have granted some 
latitude to witnesses who have a personal side of the story as 
opposed to those with an academic. So if you would mind 
adhering to the five minute rule, Mr. Cooper, please.

 STATEMENT OF DAVID COOPER, DIRECTOR, ACQUISITION AND SOURCING 
           MANAGEMENT, U.S. GENERAL ACCOUNTING OFFICE

    Mr. Cooper. Absolutely. I can do that.
    The Army's decision to issue the black berets to all of its 
forces in just eight months placed----
    Chairman Manzullo. By the way, Mr. Cooper is with the GAO.
    Mr. Cooper. Thank you.
    The decision to equip the forces with these new black 
berets in only eight months placed a tremendous burden and 
enormous demand on the normal contracting process followed in 
the Department of Defense.
    In a very short order, DOD awarded contracts to purchase 
nearly 5 million black berets. The chart that is being put up 
now will show the suppliers that were selected and the 
quantities and unit prices of those contracts.
    The total cost there is almost $30 million, and roughly 75 
percent of those berets will be made overseas by foreign 
sources.
    Serious problems have been encountered in this contracting 
strategy. Deliveries of the berets are falling far short of the 
contractual requirements. And we have heard earlier that some 
of the contracts are being terminated. The DOD is also 
experiencing a lot of quality problems with the fit of the 
berets, the coloring of the berets, and I think in one case 
there was an odor from the berets.
    And now we found out just yesterday that the Army is going 
to recall the berets that are made in China and those made with 
Chinese content and dispose of them.
    The key event that drove the process that resulted in this 
outcome clearly is the urgency that was placed on getting the 
berets to all the Army forces by the Army's birthday on June 
14th of this year.
    We have already heard about the actions and strategy that 
was undertaken to do that. I have spent the entire week looking 
at nearly 1,500 pages of contract documents and e-mail traffic 
and studies and so on and so forth. Clearly, this was not a 
business as usual approach to procuring these berets.
    Due to the extremely short time frame for delivery, a 
number of actions had to be taken to expedite the awards of the 
contracts. According to the contract documents, the situation 
was considered to be a ``unusual and compelling urgency.'' The 
basis for that urgency, again, was the timing of June 14th, and 
we have already heard a statement read this morning that the 
documents said the Army will be seriously injured if this 
action is not taken.
    During the process of contracting for the berets, the Small 
and Disadvantaged Business Utilization Office review was 
bypassed inadvertently. I don't think there was an intention to 
do that, but, in the haste to award the contracts, that review 
was not done.
    A recently issued DOD study concluded that such a review 
wouldn't have made any difference anyway, but I would like to 
make a point about that. That study accepted the June 14th 
requirement, and that is the basis for that conclusion in that 
study.
    As another example of the haste, I would like to quote from 
one of the contract documents.
    And this has to do with the contract award to the Canadian 
firm.

    The contracting officer must make immediate awards to 
attempt to meet the initial fielding requirements of the Army, 
so there is no time to obtain detailed cost or pricing data, 
analyze that data, develop a negotiation position, negotiate 
with a firm, and, then finally, make award.

    We looked at some of the competitive awards that occurred 
after the initial non-competitive situation, and the concern 
that was raised in some of the documents about the Canadian 
price being higher than perhaps warranted was borne out because 
we found that the competitive prices were 27 percent below what 
that non-competitive price was.
    And I would like to now put up a second chart that shows 
the sequence of events that surround the waiver of the Berry 
Amendment. To meet the deadline for fielding the berets, DLA 
determined that sufficient domestic sources were unavailable 
and that additional contracts needed to be awarded to the 
foreign firms.
    The center in Philadelphia that did the contracting for 
this procurement prepared three waivers. And the deputy 
commander at Philadelphia approved the first two waivers on 
November 1 and December 7.
    As the first waiver approval was being processed, questions 
arose from the headquarters of DLA about whether, in fact, 
Philadelphia had the authority to waive the Berry Amendment.
    In fact, on November 8, DLA senior procurement executive 
put in a request to the undersecretary of acquisition's office 
to have a delegation of authority be given to DLA to waive the 
Berry Amendment. That occurred on February 1, with a delegation 
of authority to the DLA director and a senior procurement 
executive but not any further than that.
    Let me back up for just a second. Using that delegated 
authority, the senior procurement executive at DLA went back 
and reviewed the previously approved waivers and, in fact, 
ratified the approvals that had been made earlier.
    And then, on April 24th, the delegation of authority was 
pulled back into the Pentagon. So there is a lot of--seems like 
a lot of confusion on who had the authority to make the 
waivers.
    In summary, Mr. Chairman, the imposition of the June 14th 
deadline clearly placed DOD in a high risk contracting 
situation. In their desire to serve the customer, procurement 
officials were forced to take extraordinary measures to 
purchase the berets. However, the date allowed very little time 
to plan for the purchase, as we have just heard, and little 
room to respond to the problems that had been encountered in 
deliveries and quality.
    In the end, Mr. Chairman, in my view, it is clear that the 
Army asked the procurement system to do something that it 
couldn't do. In fact, DOD officials now expect that less than 
half the Army forces will get the new berets by the June 14th 
date.
    That concludes my statement.
    [Mr. Cooper's statement may be found in appendix.]
    Chairman Manzullo. The next witness is John Whitmore, who 
is the acting director of the SBA.
    Mr. Whitmore.

STATEMENT OF JOHN D. WHITMORE, JR., ACTING ADMINISTRATOR, U.S. 
                 SMALL BUSINESS ADMINISTRATION

    Mr. Whitmore. Thank you, Mr. Chairman and distinguished 
members. I am John Whitmore, the acting administrator of the 
Small Business Administration. I appreciate the opportunity to 
appear today.
    Chairman Manzullo. Could you pull the mike closer to your 
mouth? Thank you.
    Mr. Whitmore. We are here today to discuss a situation 
where procedures were not followed. But before I discuss the 
beret issue, let me explain SBA's role in government 
contracting.
    SBA is responsible for ensuring that America's small 
businesses receive a fair share of federal government 
contracts. One of the agency's responsibilities is to review 
proposed acquisitions to identify both prime and subcontracting 
opportunities.
    SBA's PCRs will recommend alternative procurement methods 
when small business contractparticipation is unlikely due to 
quantity, dollar value, restrictive delivery dates, or requirements for 
non-commercial specifications.
    If the SBA and the contracting activity disagree regarding 
the procurement strategy, SBA may appeal to the head of the 
procuring activity. However, it is important to note in the 
last five years we have been successful less than 50 percent of 
the time.
    Ordinarily, such acquisitions such as the beret purchase 
are coordinated with SBA's procurement center representatives. 
They are located at major buying activities. Their goal is to 
ensure maximum small business participation.
    During the last few years, an increasing amount of PCR's 
responsibility is involving and evaluating cases of contract 
bundling. Some positive results of PCR oversight include 
initiating small business set asides, removing work from 
consolidated solicitations and including them in the 8(a) 
program or in the small business set aside program, and 
ensuring that subcontracting to small businesses is included as 
an evaluation factor in the solicitation.
    In terms of procedure, the PCR and the small and 
disadvantaged business utilization specialist review the 
agency's strategy, including the extent to which small 
businesses will be used. The PCR reviews the procurement 
strategy to determine the capacity for small businesses to meet 
the particular requirement.
    With regard to the beret acquisition, the procurement was 
not sent to SBA for review as required by the Federal 
Acquisition Regulations. Had it been sent to SBA, we could have 
been effective in suggesting the use of modern machinery, 
suggesting delivery dates that are in line with developing a 
domestic supplier pool, and recommending improvements to the 
commercial item description as envisioned by FAR. In this 
instance, the commercial item description was 15 pages.
    In general, our overall goal is to maintain a significant 
and meaningful procurement opportunity for small business. 
Congress has repeatedly acknowledged that participation of 
small business is vital to the growth of the U.S. economy. More 
specifically, small business participation and procurement 
increases competition, diversifies the supplier network, and 
generates the majority of innovations. It also creates many new 
jobs.
    While the data suggests that the percentage of government 
contracting dollars to small business has remained relatively 
constant, the actual number of contracting opportunities is 
declining.
    New contracting opportunities declined almost 50 percent 
from fiscal year 1995 through fiscal year 1999. Obviously, this 
reduction has significantly reduced contracting opportunities 
for small businesses wishing to compete for federal contracts.
    This is a classic supply and demand problem. An increasing 
number of small businesses are interested in a decreasing 
number of federal contracts. This is a serious obstacle to the 
growth of America's small business community.
    In particular, small businesses are concerned because 
purchases under $2,500 are no longer reserved for small firms, 
and a large percentage of that is going to the large office 
supply stores.
    They are troubled by multiple award contracts, government-
wide acquisition contracts that are now used extensively, both 
limiting small businesses' contracting opportunities. And, as I 
previously stated, contract bundling continues to be a major 
impediment to small business.
    Free markets thrive on competition. Small and new companies 
epitomize that competition. The federal marketplace needs small 
businesses to ensure competition and to provide the taxpayers 
with the best value for goods and services.
    Acquisition reform has had success. However, we must make 
certain that, in the process, small businesses are not 
precluded from participating in the federal contracting 
opportunities.
    If we followed procedures in this instance, we would have 
appealed the Defense Personnel Support Center's decision to buy 
in this way. Had we appealed this, these questions would have 
been raised quite a while ago, and we probably would not be 
here today.
    Thank you, and I would be happy to answer any questions.
    [Mr. Whitmore's statement may be found in appendix.]
    Chairman Manzullo. Appreciate your testimony.
    Mr. Joffe.

  STATEMENT OF EVAN JOFFE, SPRINGFIELD LLC, NEW YORK, NEW YORK

    Mr. Joffe. Chairman Manzullo, members of the Committee, I 
appreciate the opportunity to appear before you today. My name 
is Evan Joffe. I am the market manager for government and 
military fabrics for Springfield LLC, a small textile company 
headquartered in New York with manufacturing in Gaffney, South 
Carolina.
    My full statement has been submitted for the record. 
However, I would like to summarize some of my points before the 
Committee today.
    A little background on Springfield: we are a small business 
that employs approximately 370 associates. We manufacture 
apparel fabrics worn by U.S. Air Force pilots, Army helicopter 
crews, Navy seamen, and all servicemen in garrison as well as 
fabrics for civilian, career, and uniform applications.
    I am also the immediate past chairman of the Government 
Textile Procurement Committee for the American Textile 
Manufacturers Institute, the national trade association for the 
U.S. textile industry.
    First, I would like to applaud the Army chief of staff, 
General Eric Shinseki, for his efforts to modernize the U.S. 
Army and bring it into the new millennium. And, also speaking 
for the entire textile industry, I commend Lieutenant General 
Henry Glisson of DLA for his partnership with our industry.
    From his days as commander at the Defense Personnel Support 
Center, now known as Defense Supply Center, Philadelphia, where 
he led the efforts to modernize textile and apparel 
specifications to his innovations with the best value 
contracting currently being employed by DLA, our industry had 
enjoyed a solid working relationship with him and also with the 
new head of the clothing and textiles at DSCP, Colonel 
Diamante, who has continued by reviving the modernization 
effort. Will be working with him in the fall to get some of the 
modernization Subcommittees started again.
    If it sounds that I am pretty supportive of the military, I 
am because for people who spin yarn, weave fabrics, manage 
markets, and executives who lead those businesses, they are a 
very big customer with a very big open-to-buy. And it is very 
important for us as we start, because we actually have declined 
in membership in our industry, to keep what's left here.
    So today, my desire is to continue to support this defense 
supply team and facilitate a closer working relationship 
between all team members, services, DLA, and the supplier base 
to keep our forces ahead of the edge.
    I would like to emphasize that the partnership between the 
United States Armed Forces and the domestic textile industry is 
fundamentally sound. But, like any good relationship, there are 
always improvements that can be made.
    A foundation of this relationship is the Berry-Heffner 
``Buy American'' Amendments. Since World War II, this law has 
ensured a warm U.S. industrial base for clothing and textiles, 
and amajor component of this base is small business. But the 
landscape is changing.
    Over the past 10 years the U.S. textile and apparel 
industries combined have lost over 540,000 jobs, and there are 
new plant closings being announced every week. We have lost 
over a third of our textile industry. We are now down to about 
530,000 in the textile industry. So we have lost, like I said, 
about 33 percent. However, if it weren't for the Berry-Heffner 
Amendment, our industrial base would have been eroded even 
further.
    General Henry Shelton, the chairman of the Joint Chiefs of 
Staff recently spoke at ATMI's annual meeting here in 
Washington. His undergraduate degree was actually in textile 
technology.
    Referring to the threat posed by chemical and biological 
weapons to American service personnel and to our industry's 
efforts to provide protective fabrics and clothing, General 
Shelton said, ``I am thankful that we can continue to call upon 
the American textile industry to help us meet that threat. You 
are an indispensable partner of our military forces, improving 
their prospects for success in future conflicts.''
    This hearing today was prompted by the U.S. Army's decision 
to waive the Berry-Heffner Amendment in order to allow the 
expeditious purchase of black berets in time for the Army's 
225th birthday celebration. A more realistic deadline, as we 
have seen, would have allowed U.S. manufacturers to gear up to 
produce these items.
    In recent years, there has been a trend towards 
consolidation in all sectors of the defense supply industry, 
including textiles. As small businesses are acquired by larger 
companies, these larger companies may not be able to make 
smaller run but nevertheless crucial items for the military. 
Therefore, we need to maintain a small business supply sector 
to provide these vital niche products.
    And, as we were talking about a little bit before, I think 
what we are coming to is a challenge between having a warm 
industrial base for our defense purposes as opposed to going 
into completely commercial procurement strategies.
    In conclusion, my message is basically this. U.S. small 
businesses are a vital part of the military supply chain and 
must be maintained. And the Berry-Heffner Amendment is 
important to these small businesses that supply the needs of 
American armed forces.
    I commend the Committee for your support for a reliable 
defense industrial base which needs to continue to include a 
strong small business sector.
    Thank you for your invitation to appear, and I would 
welcome any questions you might have.
    [Mr. Joffe's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much. Our next witness is 
Professor Schooner, Associate Professor of Government Contracts 
Law, George Washington University Law School here in 
Washington.
    Professor.

    STATEMENT OF STEVEN L. SCHOONER, ASSOCIATE PROFESSOR OF 
  GOVERNMENT CONTRACTS LAW, GEORGE WASHINGTON UNIVERSITY LAW 
                     SCHOOL, WASHINGTON, DC

    Mr. Schooner. Chairman Manzullo, Congressman Velazquez, and 
members of the Committee, I appreciate the opportunity to 
appear before you today.
    I believe the black beret provides a unique opportunity to 
consider the role of congressionally mandated policies in the 
federal procurement process. Procurement statutes and 
regulations long have required that the procurement system 
further a broad range of social policies.
    In buying black berets, Congress's intent was clear. The 
military must purchase clothing manufactured in the United 
States unless the military's needs cannot be met at market 
prices by domestic manufacturers.
    If the military's needs cannot be met in a timely fashion, 
the statute permits clothing purchases from foreign 
manufacturers. Thus, the statutory language permits DLA to 
procure foreign berets if domestic capacity could not produce 
the berets when needed.
    As the Army described its requirement to DLA, the Army 
needed the berets by a certain date, June 14, 2001, and DLA 
acted accordingly. Yet, as this Committee has heard, no pending 
crisis in October 2000 required the Army to obtain millions of 
berets by June 14th.
    Under a strict reading of the relevant statute, this self-
created exigency proudly provided sufficient legal 
justification to permit purchases of foreign berets despite 
Congress's wishes.
    So DLA could procure the foreign berets if domestic 
capacity would not produce the berets when needed. And if you 
look at contemporary dictionaries, you'll see that need is 
defined as a lack or something required or something desirable 
or something really wanted.
    So here the Army wanted a large number of berets rather 
quickly, and the DLA wanted to fulfill the Army's desires. The 
statute permits this behavior. But the behavior nonetheless is 
inconsistent with congressional intent.
    The Competition in Contracting Act, which we have already 
heard about today, requires full and open competition in 
government procurements and offers a useful analogy here. There 
are seven statutory exceptions to the Competition in 
Contracting Act that permit the use of other than competitive 
procedures.
    These exceptions exist because Congress did not intend 
government business to screech to a halt in the name of 
competition. But the exceptions are narrowly construed because 
the acquisition planning process is intended to overcome all 
but the most compelling urgency situations.
    Unusual and compelling circumstances will not be found if 
the agency is slow to conduct the procurement, and it won't be 
found where there is a lack of advanced planning. In other 
words, poor planning which results in compressed time frames or 
crisis management does not justify avoidance of competitive 
procedures.
    In the classroom I attempt to impress upon my students 
that, as future lawyers, just because they can get away with 
something doesn't necessarily mean it is a good idea. This 
message plays out today in the constantly evolving relationship 
between program managers and contracting officers.
    Program managers, such as, in this case, the Army chief of 
staff, define requirements based upon missions they are tasked 
to achieve. Contracting officers attempt to fulfill those 
requirements.
    The message of the 1990s acquisition reform movement was 
that customer service, pleasing the program manager, merited 
increased emphasis. Accordingly, DLA bent over backwards to 
fulfill a need described by the Army.
    Now government buyers should have every motive to please 
their customers. Unfortunately, these customers rarely 
appreciate the value of congressionally mandated social 
policies that may delay or deter their ability to obtain needed 
goods or services.
    The not-so-subtle message trumpeted during the 1990s was 
that it was more important to please the program manager than 
to adhere to long-standing procurement policies, particularly 
certain social and economic policies mandated by Congress.
    It is not enough for our procurement professionals to focus 
on satisfying the program manageror the end user. Procurement 
involves the expenditure of public funds, and the federal government 
has been and always will be different from the commercial sector.
    The federal procurement process need not be slow, 
ponderous, or inefficient. And, in fact, DLA demonstrated that 
they can move quickly to meet needs. But no crisis required 
that the Army obtain these berets quickly. Almanacs and 
reference books teem with dates commemorating births, 
achievements, and epochal events.
    The arbitrary selection of such a date is not a compelling 
reason to avoid a congressionally mandated policy. If it were, 
nothing would stop program managers from routinely mandating 
delivery of what they ask for by next Friday.
    Better acquisition planning or, more specifically, more 
realistic definition of the Army's actual requirements could 
have avoided this situation.
    Mr. Chairman, that concludes my statement, and I would be 
pleased to answer any questions you may have.
    [Mr. Schooner's statement may be found in appendix.]
    Chairman Manzullo. Thank you, professor.
    The next witness is the Honorable David Oliver, Acting 
Undersecretary of Defense Acquisition, Technology, and 
Logistics.
    Mr. Oliver.

  STATEMENT OF HON. DAVID R. OLIVER, ACTING UNDERSECRETARY OF 
        DEFENSE, ACQUISITION, TECHNOLOGY, AND LOGISTICS

    Mr. Oliver. Yes, sir, Mr. Chairman, distinguished members.
    Let me sketch this, beginning where I--the office I occupy 
is in the chain of command because we are talking about this to 
General Shinseki. We have questioned him a great deal on 
procurement practices.
    There are four offices that report directly to the 
secretary and deputy secretary of Defense in OSD. I occupy the 
one responsible for all procurement.
    Now, for example, General Glisson then is two levels down 
from me. And, as General Shinseki said, it is a completely 
different chain of command, so he is not responsible for 
procurement.
    Now I appreciate why we are all interested in this and it 
is because the United States Department of Defense spends $48 
billion a year on small businesses, doing business with small 
businesses. And you would like to increase that amount, as 
would we.
    Let me talk about what I was interested in this issue. I 
was interested when this came up as to whether or not the 
people working for General Glisson as well as General Glisson 
had followed all the rules. So I took the person who was 
responsible for contracts and some other people, a tough team, 
put them together and said, ``I want you to go review that.''
    They did that. The results are generally what General 
Glisson said, which is that they performed, in general, rather 
well.
    The bigger question then becomes should we make some 
changes. And I have made some changes as a result of this which 
you may not recognize.
    One is I don't think the responsibility for the Berry 
Amendment waivers should be in Philadelphia, where they are 
being made by someone who is subjected to lots of different 
pressures and may not understand why the Berry Amendment is 
important and also is not a political person responsible to you 
all directly.
    And so, as the general accounting office pointed out, I 
pulled that back a couple of weeks ago, pulled back all the 
authority for that to my office, to me.
    And the deputy secretary of Defense yesterday directed the 
services to do the same thing, and he pulled--told them to pull 
back responsibility for waivers to the Berry Amendment to the 
Secretary of the Service.
    And, in addition, he told them that any time they are going 
to waive the Berry Amendment, they have to examine all the 
alternatives, and they have to present the required activity, 
that is, for example, General Shinseki, with alternatives that 
would not require a waiver under the Berry Amendment. And then 
they have to evaluate that, and only after doing so can they 
waive them. So that is a significant change, and the effort was 
to make sure that we were reflecting the issues I told you.
    Secondly, the question is why, as you may ask, how many 
waivers do we have--I have reviewed all the Berry Amendment 
waivers, and there are not very many. But the question is why 
do you have any.
    There is one for a Muslim religious garment, and that may 
still ride because I am not sure anybody's going to make that. 
But there are two others that exist. Therefore, ``Tom is going 
to hold an open house in Philadelphia later on this month, and 
we are going to do our best to do whatever is possible to get 
American small businesses to make that.''
    And in Atlantic City the next month we are going to have 
another open house to see if we can do the same thing for 
substance providers, essentially fruits and vegetables, et 
cetera. So we are making every effort to eliminate the need for 
Berry waivers.
    In addition, I have promised some members of the Congress 
that once we have started the berets, that we will make sure 
that the berets that are used for subsistence, in other words, 
the replacement berets--and you need, as Tom has said, about 
1.2 million a year--that all those will be produced in the 
United States.
    So we hope this outreach effort will produce significant 
additional small businesses and will ensure future Army beret 
procurements will be from domestic sources.
    That is all I have, sir, because I don't want to repeat 
other people's testimony. Thank you.
    [Mr. Oliver's statement may be found in appendix.]
    Chairman Manzullo. Thank you very much.
    Could you put up the two page memo, the fact sheet there?
    All right. Now what that fact sheet says--it is dated 
October 8, 1996. I can't read it. All right. This is a fact 
sheet on Army berets that comes from DLA, prepared October 8, 
1996. And it states generally that DLA knew what the exact 
capacity of domestic production of berets were going back to 
1996, which means this was nothing new. Is that correct, 
General Glisson?
    Lieutenant General Glisson. That is correct, Mr. Chairman. 
We knew as early as 1990, again in 1996, and all the way to 
present what the domestic capacity was in the United States.
    Chairman Manzullo. So you knew when the order came down you 
would have to get a foreign requirement.
    Lieutenant General Glisson. When I received the 
requirement, I knew that I would have to find other sources 
other than Bancroft, that is correct.
    Chairman Manzullo. Well, you knew you would have to get 
foreign sources because Bancroft is the only domestic supplier.
    Lieutenant General Glisson. That is correct. But as we do 
with all contracts, Mr. Chairman, we always go back out to try 
to make phone calls to see if there is anybody else that we 
didn't pick up on.
    Chairman Manzullo. Did you ever convey to General Shinseki 
that you couldn't have the requirement fulfilled domestically 
by the June date?
    Lieutenant General Glisson. Congressman, I did not. And, if 
I may take a minute to explain how that communications flow 
went in terms of this acquisition.
    Chairman Manzullo. Evidently, there were no communications.
    Lieutenant General Glisson. No, sir, that is not true. On 
an ordinary procurement what would happen is the buying office 
in Philadelphia would communicate directly with the Army 
Requirement Command, whoever that is. It would never be 
elevated above that level.
    In this particular case, we actually had three levels going 
on. Number one, I contacted and maintained direct communication 
with the Army Deputy Chief of Staff for Logistics, a Lieutenant 
General, who is my counterpart on the Army staff. He was 
designated by the Army as the point of contact for the Army on 
the beret acquisition.
    In addition to that, my Senior Enlisted Advisor was working 
with the Sergeant Major of the Army on the wear of the beret 
and on distribution. And, below that, the buying command was 
working with the PM soldier, which is the requirer/generator 
for the Army.
    So we actually had three levels of people working this and 
communicating on this particular acquisition to make sure we 
all understood what was going on at any one time.
    Chairman Manzullo. Well, you heard General Shinseki, that 
he didn't know there could not be domestic requirement until 
February. You heard him testify to that.
    Lieutenant General Glisson. I did, Congressman. I can't 
speak to what General Shinseki knew or didn't know. I can only 
tell you who I dealt with and who my people dealt with during 
that period of time.
    Ms. Velazquez. Mr. Chairman, would you yield?
    Chairman Manzullo. Sure.
    Ms. Velazquez. General, why did you not notify General 
Shinseki immediately that providing the June 14, 2001, deadline 
would not allow for a U.S. company to produce those berets 
here?
    Lieutenant General Glisson. Because I was talking to his 
Deputy Chief of Staff for Logistics, who is his designated 
point of contact for the acquisition process.
    It would have been extremely unusual for me to step outside 
the bounds of the Army staff and go directly to the Chief of 
Staff of the Army on an acquisition issue.
    Chairman Manzullo. So the members of the staff knew, but 
they never told him?
    Lieutenant General Glisson. Sir, I can't tell you that. I 
don't know.
    Ms. Velazquez. This is unbelievable.
    Chairman Manzullo. Did you personally examine the waivers?
    Lieutenant General Glisson. I have.
    Chairman Manzullo. And could you take a look at them and 
tell me where in the waivers it states that there be sufficient 
quality?
    Lieutenant General Glisson. Congressman, I would offer the 
following in regard to quality. I am aware of what the 
requirement is to waive the Berry Amendment, and it does talk 
to both quality and quantity.
    I would agree with the contracting officer who said, when 
they looked at the only domestic source that was available, the 
only product that was available in the United States was 
Bancroft. Once you had exhausted their maximum capacity----
    Chairman Manzullo. You are not answering my question. That 
is quantity. Under the law, the waiver must specifically state 
three things, the necessity to go over seas, the quantity, and 
the quality.
    Lieutenant General Glisson. Right.
    Chairman Manzullo. Could you show me in these waivers where 
the quality is discussed?
    Lieutenant General Glisson. Congressman, I cannot because 
there is no product to which to evaluate quality. You have to 
have a product to evaluate quality. And once you exhaust what 
Bancroft has, there is no product to make a quality 
determination.
    Chairman Manzullo. The product is the beret. Did you ask 
these foreign firms for samples of the beret and look at them?
    Lieutenant General Glisson. We did, Congressman. We looked 
at samples from all of the manufacturers who submitted under 
our request for proposal.
    Chairman Manzullo. Then why didn't you place that in the 
waivers, the fact that you have examined these berets, and they 
meet your quality standards?
    Lieutenant General Glisson. Sir, the first thing we did was 
a technical evaluation to determine quality. Once the quality 
was determined, then it becomes a quantity and a timing issue.
    Chairman Manzullo. But the quality does not appear in the 
waivers. The law says--and the professor can back me up--that 
these waivers must state quality.
    Now I understand that some of these waivers relate to 
contracts on berets that have been cancelled for lack of 
quality, is that correct?
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. So you didn't do your job.
    Lieutenant General Glisson. Congressman, I think the 
contracting officer did do their job.
    Chairman Manzullo. Well, wait a second. Wait a second.
    Lieutenant General Glisson. Yes, sir.
    Chairman Manzullo. There is nothing in these waivers to 
indicate the quality. And then I think just yesterday, on the 
eve of this hearing, the contract is cancelled for lack of 
quality. And you are telling me that the contracting officer 
did his job?
    Lieutenant General Glisson. Congressman, I would tell you 
that the contracting officer did review quality on each and 
every contract. The fact that it is not so stated in the 
waiver, which you are referring to, does not negate the fact 
that the very first thing that the contracting officer did was 
look at quality.
    Chairman Manzullo. I understand that. But this is a legal 
requirement. You have an obligation to review these waivers, 
isn't that correct, they pass under your hand?
    Lieutenant General Glisson. Sir, I don't have that 
obligation. I have general counsel who does that.
    Chairman Manzullo. But he works for you.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. That is correct. So, ultimately, you are 
the one responsible for these contracts, isn't that correct?
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. And you are familiar with the law?
    Lieutenant General Glisson. Yes, sir, I am.
    Chairman Manzullo. And the law specifically states that 
quality has been examined. And don't you think that should have 
been put into the waivers?
    Lieutenant General Glisson. Sir, had that waiver required 
that piece in there, I would say yes.
    Chairman Manzullo. The law required it.
    Lieutenant General Glisson. Sir, our understanding of the 
law was what the law required was that we examine quality, 
quantity, and reasonable price.
    Chairman Manzullo. And that is supposed to be put into the 
document.
    Lieutenant General Glisson. Sir, I can't speak to whether 
it needs to be specifically in the document. I know it has to 
be considered.
    Chairman Manzullo. Well, I would suggest to you, General, 
that because the law was violated, that the companies that made 
these berets should not be paid by the United States government 
because it is their obligation to review all the documents. And 
this document is insufficient by law. Would you agree with 
that?
    Lieutenant General Glisson. Congressman, I would not. I 
have been advised by both Department of Defense counsel and my 
own counsel that what we did was legal and appropriate and did 
not violate the law.
    Chairman Manzullo. Well, Professor?
    Mr. Schooner. As I suggested in my testimony, I guess where 
I begin on this, Chairman Manzullo, is that it seems like a 
fair reading of the statute that DLA did not violate the law. 
And, in fact, my perception coming in was that the major 
problem here lies in the requirement, not in DLA's actions.
    In addition, at least one reasonable way to interpret the 
statute is that the Berry Amendment requires that, in this 
case, DLA determine the quality and quantity of domestic 
manufacture. And so, once we determine, if, in fact, they 
determine that Bancroft is the only alternative--and I am not 
going anywhere towards one-piece versus two-piece beret.
    Once they make a determination with regard to domestic 
quality and quantity, and they put--and they make that 
determination, they have pretty much fulfilled their 
requirement. And, on my reading, I am not sure that what the 
statute requires is they make any determination with regard to 
foreign-produced quantity and quality. The exception deals with 
domestic quantity and quality.
    Chairman Manzullo. All right. I can appreciate that.
    General, these contracts were signed on what dates?
    Lieutenant General Glisson. Congressman, I would have to go 
back and look. There was one in November, one in December, and 
another in February.
    Chairman Manzullo. So there were three contracts. One 
contract was signed November 2nd to Bancroft.
    Lieutenant General Glisson. Right.
    Chairman Manzullo. Another one to Dorothea November 2nd, 
and the other one was November 6th.
    Lieutenant General Glisson. Right.
    Chairman Manzullo. Now do you know the date that the open 
solicitation was released?
    Lieutenant General Glisson. Sir, there was no open 
solicitation for those first three contracts. We waived the 
CICA requirements because they were the only known source and 
because of the urgent and compelling----
    Chairman Manzullo. So you didn't even ask if anybody out 
there could do it.
    Lieutenant General Glisson. Sir, we did not, and that was 
because we had been looking at this since 1990. We knew the 
industry.
    Chairman Manzullo. But you didn't ask if anybody out there 
in the community, in the textile community, had the ability to 
do it.
    Lieutenant General Glisson. That is correct. Other then we 
did make phone calls, but we did not do an open competition. 
That is correct, Congressman.
    Chairman Manzullo. So you did no open competition.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. With the open competition you would have 
found out what's available, isn't that correct?
    Lieutenant General Glisson. Congressman, we would have 
found if we had missed anything, that is correct.
    Chairman Manzullo. Now you thought it insignificant the 
fact that the SBA representative in Philadelphia made an error 
in not being contacted, is that correct?
    Lieutenant General Glisson. Congressman, I didn't mean to 
imply that was insignificant.
    What I said was that was an administrative oversight. We 
require that. We demand that. It was not done. It was something 
that should have been done.
    Chairman Manzullo. But it wasn't done.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. Why wasn't it done?
    Lieutenant General Glisson. My guess is that in the haste 
of trying to meet the Army requirement and do all of these 
contracting actions, there was simply an oversight.
    Chairman Manzullo. An oversight.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. Now Mr. Whitmore says that if they had 
been notified, they could have actually gone to court in order 
to stop the procurement.
    Is that correct, Mr. Whitmore?
    Mr. Whitmore. What I said was we could have appealed this 
and raised a number of issues. One, if this is a brand new 
requirement that is going to be going on for a number of years, 
we certainly would have tried to point out that a domestic 
supplier should--we should broaden the domestic supplier base. 
We would also raise a number of questions on a commercial 
standard, which is supposedly to be able to buy off the shelf, 
certainly not a 15 page standard.
    We also pointed out that the delivery dates and the 
quantities here certainly were not the right size and scope to 
be able to deal with small business.
    If we are making a major change in what we are buying for 
the Army head gear, we certainly would try to point out that 
domestic suppliers, small domestic suppliers, should be 
involved in this because there will be follow-on procurements 
for this type of thing year after year.
    If we were to appeal this, Mr. Chairman, and it would have 
raised it to the highest levels over there, and these questions 
would have been brought to light very early on in the process.
    Chairman Manzullo. So there would have been another 
opportunity for domestic requirement?
    Mr. Whitmore. Certainly. And it would also have been raised 
to the highest levels of the Army, and the questions that were 
not asked about are they being purchased out of the country, 
where would they have been done, and what quantities certainly 
would have been raised. And they would have had to address that 
very early on.
    Chairman Manzullo. When was the SBA finally notified by the 
DLA?
    Mr. Whitmore. I am not sure of the exact date, but I think 
it was three to four months after----
    Chairman Manzullo. March 24th.
    Mr. Whitmore. Right. It was after the awards were already 
made.
    Chairman Manzullo. After we sent out notice of our hearing 
and after members of Congress were continually raising hell 
over the fact that these berets were being made in China, Sri 
Lanka, Romania, and elsewhere.
    Mr. Whitmore. Yes, sir.
    Chairman Manzullo. I have another question that I wanted to 
ask, and I will try to be as short as possible, on the line of 
authority and the chain of command which I find--well, would 
you give me a minute?
    General, were you in charge of supplying the documents to 
me and Ms. Velazquez pursuant to our subpoena duces tecum?
    Lieutenant General Glisson. I was.
    Chairman Manzullo. I got these yesterday, last night. There 
must be 400 pages in there. Could you explain to me why it took 
you until last night to come up again with this latest batch of 
documents? I haven't even had a chance to read them.
    Lieutenant General Glisson. Congressman, is that the first 
book or the second book? I don't know which one you have there.
    Chairman Manzullo. Try the fourth book.
    Lieutenant General Glisson. Congressman, that was a follow-
on. In your subpoena you told me to continue to provide you 
with documents as they occurred. And that is what we have tried 
to do, as those have been developed, to continue to provide 
those as we put them together.
    Chairman Manzullo. But these documents are dated prior to 
the date of our subpoena duces tecum.
    Lieutenant General Glisson. Congressman, all I can tell you 
is, as we locate the documents, as we find them, we try to be 
as open and honest with the Committee as we can.
    Chairman Manzullo. Do you know what you didn't give us?
    Lieutenant General Glisson. No, sir.
    Chairman Manzullo. You didn't give us General Shinseki's 
memo that he gave to you six weeks ago that said that he didn't 
want to have Chinese procurement. Did you hear him testify to 
that?
    Lieutenant General Glisson. Congressman, I do not have that 
document.
    Chairman Manzullo. You don't have that document?
    Lieutenant General Glisson. I do not.
    Chairman Manzullo. Where is it?
    Lieutenant General Glisson. Congressman, I have no idea.
    Chairman Manzullo. I think it is extremely relevant. I 
mean, that is what this hearing is about. The chief of staff 
said as long as six weeks ago to your agency that he did not 
want to have Chinese procurement. And you don't have the 
document?
    Lieutenant General Glisson. Congressman, I have never seen 
such a document.
    Chairman Manzullo. You have never seen such a document?
    Lieutenant General Glisson. Have not.
    Chairman Manzullo. Is there anybody on your staff here that 
has the document?
    Lieutenant General Glisson. Congressman, I don't know of 
anybody who has seen such a document.
    Chairman Manzullo. I would like you to bring all of your 
documents relating to this to my congressional office tomorrow, 
at which time Ms. Velazquez and I can go through everything to 
see if there are anymore surprises there. I mean, that is a 
critical document.
    Lieutenant General Glisson. Congressman, I would agree. I 
have not seen such a document. Obviously, you say one exists. 
It has not been given to me.
    Chairman Manzullo. General Shinseki says it exists, and I 
believe him.
    Lieutenant General Glisson. Yes, sir. Congressman, the only 
document I saw was a release that was made last evening where 
General Shinseki agreed to not wear the China-manufactured 
beret.
    Chairman Manzullo. Ms. Velazquez and I sent you a letter 
April 5th on our Small Business Committee letterhead to your 
liaison that states,

    Pending completion of congressional investigation into the 
procurement of U.S. Army berets in whole or part from non-
domestic U.S. sources, in light of possible violations of 
federal law and unanswered questions that may seriously 
undermine the validity of the procurement, we must insist that 
you suspend any contracts or orders coming from non-domestic 
U.S. sources.

Do you remember getting that letter?
    Lieutenant General Glisson. I do.
    Chairman Manzullo. Was there any production made in China 
after April 5th?
    Lieutenant General Glisson. Congressman, there was.
    Chairman Manzullo. Did you ever answer my letter?
    Lieutenant General Glisson. Congressman, I did not.
    Chairman Manzullo. Why?
    Lieutenant General Glisson. For several reasons. Number 
one, I was under a review at the time which had not been 
completed by the Department of Defense.
    Chairman Manzullo. I am not part of the Department of 
Defense. I am the chairman of the Small Business Committee with 
subpoena powers.
    Lieutenant General Glisson. Sir, I understand.
    Chairman Manzullo. And you did not answer this letter. You 
knew there was concern. And now General Shinseki said that he 
sent you a note six weeks ago, and you still continued 
production in China. Is that correct?
    Lieutenant General Glisson. Sir, I have never seen a note 
from General Shinseki telling me that.
    Chairman Manzullo. But you saw my letter.
    Lieutenant General Glisson. Sir, I did.
    Chairman Manzullo. And you ignored it.
    Lieutenant General Glisson. I did not ignore it.
    Chairman Manzullo. You didn't answer it.
    Lieutenant General Glisson. Congressman, I did not ignore 
it even though I didn't answer it.
    Chairman Manzullo. You didn't answer the letter.
    Lieutenant General Glisson. No, sir.
    Chairman Manzullo. Don't you have an obligation to answer 
letters from members of Congress?
    Lieutenant General Glisson. Sir, I do. The Office of the 
Secretary of Defense said it was fine----
    Chairman Manzullo. Did he tell you not to answer our 
letter?
    Lieutenant General Glisson. Sir, the instructions I had 
were they were trying to gather all of the facts to give you a 
proper response and that we should not provide an interim until 
that was concluded.
    Chairman Manzullo. We got no response.
    Lieutenant General Glisson. Right.
    Chairman Manzullo. This Committee got no response, none. 
And it is apparent that, until the U.S. Congress became active 
in this situation, you wouldn't have done anything. In fact, 
Mr. Oliver, what we have got here on this designation of people 
who have the authority to sign theBerry waiver were all over 
the place on this.
    First, we have somebody at DSC in Philadelphia. Would you 
put up one of the waivers? There it is right at the bottom 
there, the one waiver that is dated November 11, 2000, that 
document right there. Do you see that?
    Why don't you put it so Mr. Oliver and the general can see 
it. That is one of the waivers signed by George Allen. Now who 
is George Allen?
    Lieutenant General Glisson. George Allen, Mr. Chairman, is 
the Deputy at the Defense Supply Center in Philadelphia.
    Chairman Manzullo. All right. And then read underneath that 
date. Read to us what that says. What is typed in underneath 
and who signed it?
    Lieutenant General Glisson. Sir, on the other side is Mr. 
William Kenny, who is my Senior Procurement Executive.
    Chairman Manzullo. And what is the date of that?
    Lieutenant General Glisson. The date on that is 23 March 
2000.
    Chairman Manzullo. And what does it say?
    Lieutenant General Glisson. I can't see that far.
    Ms. Velazquez. 2000 or 2001?
    Chairman Manzullo. 2001.
    Lieutenant General Glisson. 2001.
    Chairman Manzullo. And what does it say?
    Lieutenant General Glisson. ``Reviewed and approved.''
    Chairman Manzullo. Reviewed and approved four months after 
it was signed.
    Lieutenant General Glisson. Yes, sir.
    Chairman Manzullo. Signed by somebody who had no authority 
in the first place, is that correct?
    Mr. Oliver.
    Lieutenant General Glisson. Not to my understanding, Mr. 
Chairman. Mr. Allen was serving in the capacity as Acting 
Commander. And, under the Directive which we have, he had 
authority to sign that.
    What Mr. Kenny did is, when I was given the authority from 
Mr. Oliver at a later date, what we did is, we went back. I 
asked Mr. Kenny to take a look at the records and to review to 
see if there had been any wrongdoing on the part of the Supply 
Center in Philadelphia in the acquisition strategy. His comment 
there and his signature indicates he did review those and that 
he approved what they had done.
    Chairman Manzullo. That he reviewed the contract?
    Lieutenant General Glisson. He did.
    Chairman Manzullo. Or that he is trying to ratify the 
validity of this?
    Lieutenant General Glisson. No, sir. He reviewed the entire 
acquisition process and ratified exactly the process that had--
--
    Chairman Manzullo. Did he sign every single document with 
that same type of signature?
    Lieutenant General Glisson. No, sir, he did not.
    Chairman Manzullo. But just the waivers?
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. And, General, I mean, it is obvious that 
whenever there is an investigation of documents, and the 
documents are shown to be true, the person who did the 
investigation doesn't sign off on the bottom and say, ``This is 
okay.'' You don't sign documents in that manner.
    Lieutenant General Glisson. Congressman, what Mr. Kenny was 
attempting to do was to show that he had reviewed the files, 
concurred with the actions taken by the Supply Center in 
Philadelphia. And this happened to be the document that he 
signed to so ratify.
    Chairman Manzullo. What he was attempting to do was to give 
retroactive ratification to the document.
    Lieutenant General Glisson. That is not correct, sir.
    Mr. Oliver. He was attempting to follow my guidance, Mr. 
Chairman.
    Chairman Manzullo. And your guidance was?
    Mr. Oliver. By the way, I had my attorney write down what 
had happened. They were researching the Berry Amendment for the 
purpose of drafting language for a potential legislative 
initiative. And, during the course of the research, they were 
unable to locate a copy of the written delegation of DLA for 
the authority to make determinations. They couldn't find a 
paper trail.
    Chairman Manzullo. There is no--there is no document on 
written authority for the Berry Amendment.
    Mr. Oliver. They could not find a paper trail. The people 
who had been involved told me that for more than 11 years 
Philadelphia had exercised that waiver authority, and there 
were certainly indications that people did not think they were 
doing things dishonestly.
    Chairman Manzullo. This isn't a matter of honesty. It is a 
matter of competence, chain of command.
    Mr. Oliver. Yes, sir. I understand.
    Chairman Manzullo. And authority.
    Mr. Oliver. So what happens is they said, ``We want a 
letter of delegation.'' 1 February they came up to me and gave 
me a draft letter. And, as you can see, because I made pen and 
ink changes, I was thinking at the time that I did not want to 
give authority for waiver of the Berry Amendment down further 
than someone that I knew well. And so I limited it at the time 
to General Glisson and his procurement executive.
    Chairman Manzullo. That would be somebody down further than 
the one who had signed it, isn't that correct?
    Mr. Oliver. No. No.
    Chairman Manzullo. George Allen?
    Mr. Oliver. No, he is down further. No, sir.
    So what happens, Mr. Chairman, is when we looked at the 
Berry Amendments--and, first of all, we reviewed all of them to 
see where they were there--I said to Tom, ``Under the new 
guidance, I would like your procurement executive to go back 
and re-sign all those if he agrees with them because I would 
like to find out 
if----''
    Chairman Manzullo. To re-sign and thus ratify the 
documents, is that correct?
    Mr. Oliver. Well, the real purpose is to see if there are 
waivers in force that shouldn't be. In other words, I would 
like someone more senior to look at that and say that.
    Chairman Manzullo. In other words, to make sure the 
documents were legal.
    Mr. Oliver. No, to make sure that he agreed with the 
decisions. My attorneys believe the documents are legal.
    Chairman Manzullo. Wait a second. There is no document 
showing who had the authority to sign, is that correct, that 
George Allen had the authority to sign.
    Mr. Oliver. That is correct.
    Chairman Manzullo. Would you agree on that? So he signs. 
Congress gets involved. Westart asking inquiries. We send a 
letter dated April 5th. There is no authority. There are all kinds of 
problems. No one answers it. Then, all of a sudden, there is this 
flurry of activity to find somebody who has the authority to do so.
    Mr. Oliver. The time frame doesn't hold, does it, sir, 
because in November they came to my office saying that they 
could not find the paper trail. And I signed that waiver 
authority on 1 February and was distributed----
    Chairman Manzullo. But why did that take so long?
    Mr. Oliver. A good question, sir, and I can ask----
    Chairman Manzullo. You knew February 1st there was no 
authority, no signing authority?
    Mr. Oliver. Actually, what I did was I knew there wasn't a 
piece of paper, and I signed a piece of paper to give them 
that.
    Chairman Manzullo. But that wasn't until after the person 
down the line who had no authority or questionable authority 
had already signed and contracts had been awarded and 
production started.
    Mr. Oliver. You wouldn't believe this at the time, but we 
weren't focused on berets at the time, nor did I have any idea 
that they were doing--this is just a matter of routine. In 
fact, I have a paper to that effect.
    Chairman Manzullo. This is routine? The authority to waive 
the Berry Amendment is a matter of routine?
    Mr. Oliver. No. It is a decision. It is not related to 
the----
    Chairman Manzullo. The statute says that only the secretary 
or his designee can sign it.
    Mr. Oliver. That is correct.
    Chairman Manzullo. This is not routine. This is authority 
to sign a contract, to sign a waiver.
    Mr. Oliver. Yes, sir. And I think, in fact, the fact that I 
marked this letter up and changed it shows that I was thinking 
about that very carefully.
    Chairman Manzullo. Evidently, thinking about it from 
November until February.
    Mr. Oliver. It landed on my desk.
    Chairman Manzullo. Ms. Velazquez please.
    Ms. Velazquez. I regret, Mr. Chairman, that the witnesses 
were not put under oath. Do you hear me?
    Chairman Manzullo. I am sorry?
    Ms. Velazquez. I regret the fact that, you know, the 
witnesses here are not being put under oath.
    General, I am going to ask the same question that I asked 
to General Shinseki. And this is in regard to the justification 
for other than full and open competition, the comment that was 
there that says that the Army will be seriously injured if this 
action is not approved.
    He said that he couldn't comment because this was the first 
time that he saw that. So I guess this is not the first time 
that you saw that.
    Lieutenant General Glisson. That is not the first time I 
have seen that. That is correct.
    Ms. Velazquez. So what is your reaction to that?
    Lieutenant General Glisson. Congresswoman, that the wording 
leads one to believe that there would be serious harm or 
damage. And our opinion, based on the requirement from the 
Army, the chief of staff had said he had an urgent and 
compelling reason to have these ready in June. I had no reason, 
nor did any of my people have any reason to question that 
requirement.
    Ms. Velazquez. Professor Schooner.
    Mr. Schooner. Yes.
    Ms. Velazquez. Would you please comment on that?
    Mr. Schooner. I guess what I had hoped that my testimony 
would suggest is that at some point in the process it would be 
nice if someone asks that question.
    One of the most difficult issues that frequently arises in 
any procurement is the tension between the procurement people, 
the contracting officers or, in this case, DLA, and the 
requirement's determiners, the program manager, the people who 
say, ``I want this.''
    It seems to me that in a good dialogue in a working 
organization it would be perfectly reasonable for someone at 
DLA to, as we might say, push back and ask the question, ``Is 
this necessary.''
    Similarly, I think it is perfectly reasonable to expect 
from DLA's perspective that someone in the chief of staff's 
office, whether they are general counsel's office or some of 
their staffers, would have already asked those reasonable 
questions.
    But the concern here is that it appears that no one asked 
the question or, if they did, the question wasn't asked in a 
manner that it got the attention of the people that realized or 
would have realized that this was going to be a problem.
    Ms. Velazquez. Thank you.
    General, I am trying to get a handle on the number of 
berets that you were buying with the Berry Amendment Waiver. My 
understanding is that the immediate need is for 1.3 million 
berets so that the June 14th deadline can be met.
    Lieutenant General Glisson. That is correct.
    Ms. Velazquez. An additional 1.3 berets will be required so 
that each soldier can have a second beret by October of this 
year. A third 1.3 million are sustaining berets, meaning that 
they will be used for new Army personnel and in case berets get 
torn or damaged in some way.
    My question is, this adds up to 3.9 million, and yet you 
are ordering 4.17 million, an additional 860,000 beyond your 
immediate need. In fact, it could be argued that your immediate 
need is only 1.3, isn't it?
    Lieutenant General Glisson. Not quite, Congresswoman. If I 
may explain what the additional buy is for.
    Ms. Velazquez. Would you please explain to me why are you 
using the urgency waiver of the Berry Amendment for all these 
4.76 million?
    Lieutenant General Glisson. Yes, ma'am. There are three 
increments really. The first 1.3 gets to the issue of the first 
beret to every soldier, another 1.3 to get the second beret 
issued.
    The wear-out rate on a beret is about--you are going to run 
through those on an annual basis, so if you issue 1.3, you are 
going to use up 1.3 million berets in a year, so you have to 
have a replenishment stock for that.
    It is not quite so simple in pure numbers because you have 
size differences and tariffs that you have to meet. So you need 
additional quantities in order to cover the large number of 
sizes that you have.
    In addition to that, you also have distribution issues that 
you must consider. These are soldiers stationed around the 
world, and the issuing sites for these are stationed at various 
places. So you have to have quantities of sizes at all of these 
places.
    And then the third part of this is that you have to offer 
sale of these items into the Army/Air Force Exchange for 
soldiers who lose them and/or somehow damage them, and it is 
their own fault, that they have an opportunity then to either 
go buy, or someone else can go buy those.
    That total requirement adds up to about 4.8. They are all 
part and parcel of the same requirement document that we had 
received from----
    Ms. Velazquez. General?
    Lieutenant General Glisson. Yes, ma'am.
    Ms. Velazquez. The rationale to use the waiver----
    Lieutenant General Glisson. Yes, ma'am.
    Ms. Velazquez. It was that you needed them to be ready by 
June 14th.
    Lieutenant General Glisson. That is correct.
    Ms. Velazquez. Did you need all of them, 4.76 million by 
June 14th?
    Lieutenant General Glisson. I did not.
    Ms. Velazquez. Thank you.
    Ms. Goodman, I find it really ironic that your business was 
awarded an Innovative Business Partner Award by the DLA and, in 
fact, by General Glisson, and yet the DLA did not want to 
consider your innovation to the beret to make a more updated 
product. How do you respond to that?
    Ms. Goodman. Well, it is my understanding that the Army has 
the final decision on what the beret looks like, not DLA. So I 
am not sure that that really holds true that DLA didn't want 
to. But I find it ironic though that they are the buying 
activity for the Army, and the Army still refuses to look at 
that.
    I did want to add something though, if I may on what you 
were talking about the waiver.
    Ms. Velazquez. Mm-hmm.
    Ms. Goodman. Atlas, at a cost of $20,000 in legal expenses, 
on November 24th, as outlined in my timeline, filed a protest 
exactly based on what you just brought up, the fact that there 
was a known quantity. And this protest originally was filed 
with the GAO.
    But, however, on December 7th, the DLA issued an 
authorization for contract award and performance 
notwithstanding a protest. And in that they basically said that 
they couldn't wait for the GAO's decision on my protest, so 
they awarded the contracts. So they were aware of that.
    Additionally, when they did that, I turned around and filed 
an injunctive action in the Court of Federal Claims, 
challenging the awards based on both the violation of the CICA, 
the Competition in Contracting Act, and the Berry Amendment.
    Ms. Velazquez. Thank you, Ms. Goodman.
    Mr. David Oliver, I am happy to see you again. Now that you 
have admitted, and you said that you have pulled the Berry 
Amendment waiver authority back to your office from 
Philadelphia, my question is, would you have approved these 
Berry Amendment waivers for the beret procurements?
    Mr. Oliver. I don't know, Congresswoman. It is really hard 
to say in retrospect and for all the reasons that we have 
talked about.
    What we tried to set up with new guidance that went out is 
that you have to evaluate the alternatives. And you essentially 
do a three step process to determine if there is somebody who 
will come in, and then you go back with the alternatives. For 
example----
    Ms. Velazquez. Mr. Oliver, excuse me.
    Mr. Oliver. I don't know the answer to that.
    Ms. Velazquez. With all this time, and you don't have an 
opinion of this?
    Mr. Oliver. Yes, ma'am.
    Ms. Velazquez. You didn't have time to evaluate this?
    Mr. Oliver. No. I think it is very complicated because of 
what the chief of staff said about he actually needs the 
berets, and there are really good reasons that he made that 
decision whether or not everyone agrees. And he wanted the 
berets, and he wanted to buy them for what I happen to think 
are tremendously important reasons to the integrity of the 
Army.
    Then the question becomes, should we do a different design 
than the other berets in the world--and these are fighting 
berets--or should we do this different design. I don't know the 
answer because we didn't go through that process. So I am 
giving you an honest answer. I don't know the answer.
    Ms. Velazquez. Mr. Oliver, I would like to ask you a 
question that is related to procurement but not to the beret 
procurement.
    Mr. Oliver. Yes, ma'am.
    Ms. Velazquez. Would you please read the highlighted 
portion of the letter that you sent to Chairman John Warner?
    Mr. Oliver. ``I believe strongly the department must remain 
the final authority on how to structure its procurements as it 
is in other matters that relate to the accomplishment of its 
mission,'' a letter of November 17, 2000, having to do with 
bundling.
    Ms. Velazquez. Correct.
    It appears, Mr. Oliver, from your statement in this letter 
to Senator Warner that you do not believe that Congress has 
jurisdiction over Defense procurement matters as they relate to 
small businesses.
    Mr. Oliver. Absolutely not. You certainly have 
jurisdiction, and that is the reason I am here. I mean, all I 
said in this case is I don't think you should change rules on 
bundling. It is just, as in the Berry Amendment, I was trying 
to tighten bundling up to change things so you would not have 
to change the law so we could remain responsive to the soldier.
    We went to Desert Storm. They had to go out and do a Berry 
waiver to provide tents so the Army had enough tents to 
actually fight the war. Now the Army did not buy them in the 
end, but they needed to be prepared.
    I don't want to set up situations in which you have 
something like the berets. We want to fix those problems so we 
don't make war-fighting problems.
    Ms. Velazquez. You want to fix. I am going to give you some 
numbers so that you realize that you haven't fixed. And let me 
just say this to you. As I said it before when you came before 
our Committee, you know, when the Department of Defense 
misplaces small businesses whom we all know are the primary 
employers in this country, this Committee is going to have and 
to tell you what to do.
    When the numbers of contracts to small businesses are 
decreasing by nearly 35 percent over the past three years, and 
the department is telling us that purchasing berets is urgent 
and implies that national security is at stake, this Committee 
is going to tell you what to do.
    I have seen nothing from your agency so far that leads me 
to believe that you care even the slightest bit about small 
business participation in Department of Defense contracts. This 
is even confirmed by the LMIS study.
    I want for you to tell me, Mr. Oliver, don't you think that 
if a contract bundle doesn't show cost savings, it should be 
unbundled?
    Mr. Oliver. I think, as you know, that you should not do a 
bundling unless you can think that you are going to get a cost 
savings.
    Ms. Velazquez. General Glisson, I believe that the reason 
contract bundling as well as the beret procurement are 
problematic is because the underlying procurement processes 
within the DOD are flawed. Because of this, this Committee is 
going to stay and deal with this until these laws are 
corrected. In light of this, can you tell me, General, has the 
DLA set an 8(a) programgoal?
    Lieutenant General Glisson. We have.
    Ms. Velazquez. What goal have you set?
    Lieutenant General Glisson. I don't recall the number right 
now. I don't know the answer to that, Congresswoman. I will 
have to provide it for the record.
    Ms. Velazquez. You knew that we would be discussing today 
procurement processes in the DOD.
    Lieutenant General Glisson. I did. I did.
    Ms. Velazquez. And you come here, and you are not prepared 
to answer that question?
    Lieutenant General Glisson. I cannot.
    Ms. Velazquez. So, Mr. Chairman, I will request from the 
general to submit a written answer to my question, to that and 
other questions that I will be submitting to you----
    Chairman Manzullo. I think the general stated that he is 
willing to do that. Ms. Velazquez, the procurement is a little 
bit different than 8(a) here. We are dealing with this 
particular situation. I will give you plenty of latitude, but 
just keep that in mind.
    Ms. Velazquez. General Glisson, how many hours of training 
do contracting officers in your command receive regarding the 
Berry Amendment?
    Lieutenant General Glisson. They don't take specific 
classes on Berry Amendment. It is part of the overall 
acquisition training which all contracting officers receive. It 
varies at what level they are and how much training and 
experience they have had.
    Ms. Velazquez. General, are you aware that in 1998 DOD's 
inspector general report said that 59 percent of contracts 
issued in fiscal year 1996 and '97 did not include the proper 
contract clauses?
    Lieutenant General Glisson. I am, Congresswoman. I would 
also point out though that that report highlighted the military 
services and did not include the Defense Logistics Agency.
    Ms. Velazquez. Thank you, Mr. Chairman.
    Lieutenant General Glisson. So I would like to be careful 
that we are not included in those numbers.
    Chairman Manzullo. Would you yield on that?
    Ms. Velazquez. Sure.
    Chairman Manzullo. I just have to put this in general. This 
is a summary of recommendations by the Office of Inspector 
General, dated October 29, 1998. ``Summary of Recommendations. 
We recommend the director Defense procurement----''
    Lieutenant General Glisson. That is not me, Congressman.
    Chairman Manzullo [continuing]. ``Issue guidance, emphasize 
the requirements to incorporate and enforce the Buy American 
Act and Berry Amendment provisions and clauses and 
solicitations and contracts for clothing and related items. The 
guidance should also remind contracting officers, when they 
procure incidental non-federal supply schedule items, that they 
should verify that the procurement complies with the Buy 
American Act.
    ``We recommend that the Deputy Undersecretary of Defense 
Acquisition Reform ensure that the Defense Acquisition 
University stress the ramifications of not buying with the Buy 
American Act.''
    The Deputy Undersecretary of Defense for Acquisition 
Reform----
    Mr. Oliver. Works for me.
    Chairman Manzullo. Did he ever institute this report?
    Mr. Oliver. Yes, she did. Yes, she did. On 30 September 
1998 she got a report back from the Defense----
    Chairman Manzullo. Which would have been two months before 
this report was issued.
    Mr. Oliver. What happens is, when the report is issued, of 
course, as you know, you pass these things around, and, if 
people are really doing their job, they, of course, take action 
before it even comes out if they agree with it.
    Chairman Manzullo. If they had been doing their job, we 
would have had the written authority.
    Mr. Oliver. Mr. Chairman, the answer to your question is 
yes, they did issue the guidance, and it is taught at the 
school, sir.
    Chairman Manzullo. Who are the contracting officers 
referred to in this? Are they the ones that work with DLA?
    Mr. Oliver. All the contracting officers.
    Chairman Manzullo. It says, ``Additional instructions 
should emphasize the important responsibility that contracting 
officers have to incorporate and enforce the Buy American 
Act.''
    Mr. Oliver. Yes, sir.
    Chairman Manzullo. The Berry Amendment Act.
    Why don't you finish with----
    Ms. Velazquez. I am finished with my questions, Mr. 
Chairman.
    Chairman Manzullo. Okay.
    Then Mr. Bartlett? I am sorry.
    Mr. Bartlett. Thank you very much.
    Mr. Oliver and General Glisson, can I assume that you now 
have an appreciation of the intensity of the commitment of our 
Committee to protect small business interests?
    Lieutenant General Glisson. Absolutely, Congressman.
    Mr. Oliver. Yes, sir.
    Mr. Bartlett. Okay. We don't need to pursue that any 
further. You understand that we take our responsibility very 
seriously.
    Mr. Oliver, who first became aware that there was not a 
defensible paper trail for the waivers that were made on 
November 1 and December 7, and when did that happen?
    Mr. Oliver. Let me read this. It doesn't say. It says they 
were ``unable to locate a copy of the written delegation to DLA 
of the authority. The DLA federal regulations supplement, 
however, for many years has provided delegations of authority, 
et cetera.''
    Since they couldn't do it in November 2000, it says the 
acquisition procurement executive of DLA submitted a formal 
request. It doesn't say who it was.
    Mr. Cooper. Mr. Bartlett, I think I can answer your 
question more specifically.
    Mr. Bartlett. Yes, sir.
    Mr. Cooper. I looked at the e-mail traffic that surrounded 
all this. And I think it was on November 2nd that the question 
was raised by DLA headquarters about whether Philadelphia had 
the authority. That is where it started. And then on November 
8th the request letter was sent to Mr. Oliver's office.
    Mr. Bartlett. What sort of paper trail is there for this 
delegation of authority? The statute gives that authority to 
only two individuals, is that correct?
    Mr. Oliver. The Secretary of Defense and the military 
service secretaries, sir.
    Mr. Bartlett. Or their designee.
    Mr. Oliver. Right.
    Mr. Bartlett. Okay. So that is two levels of--okay, 
Secretary of Defense or----
    Mr. Oliver. My lawyers tell me it is to whomever that is 
delegated down, sir.
    Mr. Bartlett. When was this delegated to Philadelphia? Is 
there a paper trail for that, or was this just an assumption 
that was made in the past?
    Mr. Oliver. That is what I am saying. The people could not 
find the paper trail. When they looked back, they knew it had 
been assumed for at least 11 years, but they could not find a 
paper trail, which is the reason they asked me to provide that. 
Now I chose, as you know, not to delegate it to Philadelphia.
    Mr. Bartlett. Understand. The next question I want to ask 
is one that just would appear there ought to be a reasonable 
answer to. Somebody must have asked themselves did General 
Shinseki really want these berets that bad.
    Somebody should have told him, ``General, I am not sure 
that the juice is worth the squeezing here. If you are going to 
get those berets by June 14th, you are going to have to procure 
a whole bunch of them outside the country, and a bunch of those 
are going to be made in China. General, is that really what you 
want?'' Now it is incomprehensible to me that somebody didn't 
have those thoughts.
    Mr. Oliver, do we have such a structured system that nobody 
down the line could raise that question? I think General 
Shinseki was very honest when he told us that he didn't know 
they were being procured overseas. He didn't know they were 
being procured in China. But somebody sure as heck knew that.
    Mr. Oliver. I am sure he didn't. And, as General Glisson 
has told you, he was informing people at the three-star level 
in the Army and General Glisson's staff at the senior enlisted 
E-9 level and also through some other--in other words, I don't 
know where that broke down, sir.
    Mr. Bartlett. But you don't think that there were more than 
one person who wondered whether or not this was a wise course 
of action to be procuring berets from overseas and particularly 
from communist China, that our military people, when they took 
that off their heads, were going to see a ``Made in China'' on 
it, and that was going to be a problem?
    What I am looking for is a way of providing an open door. I 
worked at IBM for eight years. We had an open door policy. If I 
had a serious enough question, I could go to Tom Watson 
himself.
    Mr. Oliver. Right.
    Mr. Bartlett. And there would be no recriminations for 
that. Can we have kind of an open door policy so when 
something--and this was dumb. I think, looking back on this, 
procuring these things overseas and from China was dumb. And I 
think that General Shinseki would have said, ``Yeah, let us not 
do that.''
    But, apparently, the system did not permit that several 
people who must have had that question in their mind--because 
we don't have a bunch of dummies in procurement. And several 
people must have had that question in their mind, and the 
structure of the system did not permit them to voice that, is 
that correct?
    Mr. Oliver. Yeah. And when Alan did the review for me, a 
whole bunch of e-mails came up of conversations, and you could 
see that people were doing that. And it obviously didn't get up 
to General Shinseki, didn't get to me. That is my thought on 
pulling back the waiver authority to me, that it will have to 
get up to me then.
    You know, if I am aware of each of the waivers that are 
made and become the decision authority, then, obviously, people 
bring their thoughts and complaints to me. So I agree that is 
what happened. That is my fix to it.
    Mr. Bartlett. I have a concern about a chain of command 
that is so rigidly adhered to that if one person--and I can 
understand that any one person may not have had this question 
in his mind because he may not have had all the information.
    But a chain of command that prohibits this kind of concern 
from coming up so that it gets to you or General Shinseki, if 
it had gotten to anybody at a responsible level, I think that 
the plug would have been pulled on this a long time ago, 
wouldn't it?
    Mr. Oliver. Well, we certainly have cancelled some 
contracts and cancelled some other things and spent a great 
deal of time on this, sir, since we became aware of it.
    Mr. Bartlett. But that was only when the fire was burning 
pretty hot, wasn't it?
    Mr. Oliver. Yes, sir.
    Mr. Bartlett. Can we do something so that this kind of 
thing in the future doesn't happen because we have a system 
which permits people, at whatever level they are, if they have 
a real serious concern, an anonymous suggestion box or 
something?
    Mr. Oliver. Yes, sir.
    Mr. Bartlett. ``Hey, Chief, this is dumb.'' Can't we have 
some way so that this kind of thing won't happen again because 
I am certain there were a whole bunch of people out there--e-
mails verify that--that had some serious concerns about whether 
the juice was going to be worth the squeezing in this 
operation.
    Mr. Oliver. Yes, sir.
    Mr. Bartlett. Well, we would like a report, I think, as to 
how you might implement such a system so that we can avoid this 
in the future.
    Mr. Oliver. I will give you one. I will give you one, sir.
    Chairman Manzullo. If you would yield, it is pretty simple. 
The head of DLA just calls the man who made the orders. That is 
how simple it is.
    Mr. Oliver. It is even more simple now because, since it 
has to come up to me, I can do this. I mean, do you understand? 
What I am doing is I am taking the responsibility up to the 
political appointee who is confirmed by you all who has to 
answer to you.
    Chairman Manzullo. You took direct action on that.
    Mr. Pascrell.
    Mr. Pascrell. This is a civics lesson. It really is. Of 
course, it may not rise to the level of $700 hammers, but the 
more we talk, it is getting there.
    The only document that we have from Walter Holten, who is 
colonel of the infantry, a memorandum he sent to Paul Diamante, 
Director of Clothing and Textiles, Defense Supply Center 
Philadelphia.
    This is the order for, when you add it all up, first 
requirement for 1.3 million berets to be available on the April 
14, 2001. The berets would be issued to how many active 
soldiers, how many reserve National Guard soldiers. The 
additional quantity required is for an appropriate size tariff 
for the force. Now this went November the 1st.
    Now these are followed by three contract actions. And if I 
listened to Mr. Cooper correctly--correct me if I am wrong, Mr. 
Cooper--you say on page one of your testimony that the first 
three contract actions in November 2000 were taken by DLA 
without providing for full and open competition as required by 
the Competition in Contracting Act of 1984. You stand by that 
statement?
    Mr. Cooper. That is correct. Yes, sir.
    Mr. Pascrell. And what do you think of that statement, 
General?
    Lieutenant General Glisson. That is an accurate statement, 
Congressman.
    Mr. Pascrell. That is an accurate statement.
    Lieutenant General Glisson. Yes, sir.
    Mr. Pascrell. That is what he said.
    All right, the second point, the quality of work. We have 
had a review of what's been already produced, and the quality 
of work is not up to standard. That is interesting. And it 
would seem to me that because of expediency we have not only 
changed what is law or not regarded it, but the results of that 
have been a product that is not acceptable. Now who is going to 
eat that?
    Mr. Oliver. They are. That is one of the key things perhaps 
that I meant to bring up when they were talking about earlier 
because she asked someone else. You have to realize that the 
quality that is not accepted is not paid for. And the United 
States government is not bearing that, the company has to eat 
it.
    Mr. Pascrell. So we don't have to worry about that?
    Mr. Oliver. Absolutely do not at all.
    Mr. Pascrell. The company has agreed.
    Mr. Oliver. It doesn't matter whether they agree.
    Mr. Pascrell. Oh, it doesn't?
    Mr. Oliver. They don't get the money.
    Mr. Pascrell. Well, that leads me back to the general's 
question. You were starting to get into the conditions that you 
reviewed in factories where these are going to be produced, and 
I am particularly interested in that.
    And I realize that there are 3,000 sweatshops in the city 
of New York itself where people work 120 hours a week. You said 
that there were no child labor laws being broken in any of 
these factories where these berets would be produced. I think 
you said that.
    Lieutenant General Glisson. Congressman, I think what I 
said is I asked the Defense Contract Management Agency to visit 
these plants and make frequent visits to ensure that they 
complied with local child labor laws.
    Mr. Pascrell. The local child labor laws?
    Lieutenant General Glisson. That is correct.
    Mr. Pascrell. You mean in the country that the factories 
existed in?
    Lieutenant General Glisson. Congressman that is correct. 
And we had taken their local labor laws and compared them to 
our own. And what we found is they met the minimum standards 
that we would ask in this country.
    Mr. Pascrell. Do you know where the berets were 
manufactured in China?
    Lieutenant General Glisson. Yes, sir, I do.
    Mr. Pascrell. Do you have a list of those?
    Lieutenant General Glisson. Sir, there is only one 
manufacturing plant in China.
    Mr. Pascrell. And who visited this particular factory?
    Lieutenant General Glisson. The Defense Contract Management 
Agency sent a representative there, and they have made a visit 
since then.
    Mr. Pascrell. Can you tell us what wages were paid at these 
factories?
    Lieutenant General Glisson. I cannot.
    Mr. Pascrell. Could you tell us whether there was any 
overtime involved in these factories?
    Lieutenant General Glisson. I cannot, Congressman.
    Mr. Pascrell. We have a Kathy Lee syndrome here. Nobody 
knows where anything is done.
    Lieutenant General Glisson. Sir, the Contract Management 
Agency can give you those numbers. I just don't know what they 
are because that is what they do for a living.
    Mr. Pascrell. Well, we request through the chair those 
numbers to see where these berets were being made, whether it 
be China or any other foreign country.
    Chairman Manzullo. I would like to have a list of where 
every beret has been made, the city, the company, how much 
money was paid on each contract, and the date that each was 
made, especially any payments made after April 5th.
    Lieutenant General Glisson. Okay.
    Chairman Manzullo. The date which you got the letter which 
you refused to answer to this date.
    Lieutenant General Glisson. Okay.
    Mr. Pascrell. You say, General, that only 10 percent of the 
garments made for our men and women in the forces that protect 
us every day are made overseas, is that correct?
    Lieutenant General Glisson. That is not exactly what I 
said, Congressman. I think what I said was 90 percent are made 
by U.S. companies, with U.S. products in the United States, 
which means there are 10 percent that are not fully total U.S. 
components.
    Mr. Pascrell. Well, could you have a list of those products 
that are made outside of this country?
    Lieutenant General Glisson. I would have to----
    Mr. Pascrell. Now I am saying can you provide for this 
Committee all of those items that are manufactured for our 
armed forces, the people who defend us day in and day out.
    Lieutenant General Glisson. Right.
    Mr. Pascrell. I am not talking about any armament. I am 
talking about the very uniforms that they wear, from fatigues, 
hats, boots. Ninety percent of that is made in the United 
States of America, you are telling us today.
    Lieutenant General Glisson. That is correct.
    Mr. Pascrell. So I want to know what about the 10 percent.
    Lieutenant General Glisson. I can provide that, 
Congressman.
    Mr. Pascrell. And would you do that for the Committee and 
have that as soon as possible? We would like to review that to 
see what other things we could discover, Mr. Chairman, that we 
don't know anything about.
    Lieutenant General Glisson. I certainly will.
    Mr. Pascrell. I am sorry. Go ahead.
    Chairman Manzullo. For the record, we are requesting that 
you furnish us the letter stating the location of manufacture 
of all items furnished to the DLA that are not made in this 
country.
    Lieutenant General Glisson. I understand, Congressman.
    Chairman Manzullo. Okay. And then we will probably have 
follow-up letters from that, which I trust you will answer, 
unlike my April 5th letter, which has still not been answered.
    Lieutenant General Glisson. I will, Congressman.
    Mr. Pascrell. Mr. Chairman, there has obviously been an 
avoidance of competitive bidding here. I mean, it is clear. And 
I would like the Committee to reserve through you, the chair 
and ranking member, the ability to bring folks back here under 
oath to discuss the question of bidding and to discuss the 
question of how, through avoidance, how we have avoided 
competitive bidding in not only this particular matter, but any 
other matter.
    Chairman Manzullo. I don't know about the issue of under 
oath, but let me put it thisway. Every member of the Committee 
will have 21 days within which to submit questions. And if we don't get 
responses within 14 days, I will very seriously consider another round 
of subpoenas plus the people testifying under oath.
    Mr. Pascrell. Well, I think, Mr. Chairman, that the 
question of without providing for a ``full and open 
competition'', again, Mr. Cooper, I think is devastating, I 
think needs thorough examination. And it is not very different 
than what members from both sides of the aisle have said in the 
last four years in this Committee on various occasions beyond 
the subject of putting contracts together, simply understanding 
the bidding process and the competitive nature or the lack of 
it.
    And we are not going to accept that. I can say that, and 
most of the members of this Committee could say I voted for the 
four defense budgets that I had to vote for since being here. 
So I unequivocally support the military.
    But we are not going to accept what we have heard today. 
And it is got to go beyond this Committee. The American people 
aren't going to accept it. And for us to be a blink and a wink 
with the Chinese authorities and then give them contracts that 
our armed forces will be using is an insult to every man and 
woman in the armed forces. There is no question about it.
    Morale? You are talking about the boosting of morale when 
you take off the hat made in China? Tell me how that works. 
Tell me what I am missing, General, please. I will listen. I 
sympathize and I respect your position. I respect you as a 
person. Tell me what I am missing when I say that. You tell me.
    Lieutenant General Glisson. Congressman, I can't tell you 
on the wear of the beret. That is an Army decision. I can only 
tell you that we told the Army. We were very vocal with the 
Army on where we would have to buy these berets in order to 
meet the requirement.
    I can tell you that I feel like we did that at the 
appropriate levels and that we thought we were acting in the 
spirit of the law and in the procurement practices.
    Chairman Manzullo. Would you yield?
    Mr. Pascrell. Sure.
    Chairman Manzullo. Do you have documents to that effect? 
Did you put anything in writing to those individuals?
    Lieutenant General Glisson. Sir, we have memoranda from 
both meetings, and we have other memorandums which they 
produced which so indicate.
    Chairman Manzullo. Those were not furnished to us either.
    Lieutenant General Glisson. Sir, they should have been in 
book one. If they are not, I can----
    Chairman Manzullo. Should have been, would have been.
    Lieutenant General Glisson. I will check, sir. They should 
have been there.
    Chairman Manzullo. I am sorry. We do have them.
    Lieutenant General Glisson. Yes, sir.
    Chairman Manzullo. I apologize.
    Ms. Christian-Christensen?
    Ms. Christian-Christensen. Thank you, Mr. Chairman.
    I apologize for having to step out, and I understand from 
speaking to staff that many of the questions that I would have 
asked have been answered.
    But I would like to just run the risk of asking this if it 
has been asked already on the Berry Amendment and the confusion 
that we saw in the chart as to who had the ability to waive and 
not waive and the fact that it was waived. I direct my question 
to Professor Schooner.
    Mr. Schooner. Schooner.
    Ms. Christian-Christensen. Schooner. And you may have 
answered it already. You indicated in your testimony that, 
because the standard that might have been used would have been 
what someone wanted to happen and that it still fell within the 
purview of that amendment.
    Is there a way in which that amendment should be 
strengthened to tighten up the language to preclude the 
possibility of waivering the use of companies in the U.S. to 
just make it stronger?
    Mr. Schooner. I think that is an interesting question, 
Congresswoman. The language itself, I think, is actually 
reasonably good. What the language basically says is that no 
part of the appropriation shall be available for the 
procurement of an article, so it is very broad, basically, 
unless it is produced in the United States. And then the 
exception is unless it cannot be procured as and when needed at 
United States market prices.
    As I suggested in my testimony, the problem that you have 
from a semantical standpoint is the word ``needed,'' I think, 
many of us would suggest has been diluted over the last 
generation. I think that if we compared, for example, Webster's 
I versus Webster's II versus the more contemporary 
dictionaries, what some of us think the word ``need'' means 
might have something closer to a definition like requisite as 
opposed to want.
    Unfortunately, from your perspective, I think the 
frustration is that, under a dictionary definition, need, in 
contemporary American usage, means want. And the Army wanted 
it.
    And I think that while they may or may not win in the court 
of law, I think that that is a perfectly defensible position 
and one that would have a pretty good chance of success, given 
the contemporary meaning of the word.
    Ms. Christian-Christensen. Did anyone else want to answer 
that question? Okay.
    Mr. Joffe. Yes, if I may.
    Ms. Christian-Christensen. Sure.
    Mr. Joffe. Excuse me, Michele. Please go ahead.
    Ms. Goodman. Well, excuse me. Because we filed a suit that 
dealt with this issue, I believe that the exception though says 
clearly, Professor, that the need cannot have arisen out of a 
lack of proper planning. And I believe that in this instance 
that is the key thing. We all, I think, can agree that there 
was a lack of proper planning.
    So I would ask the professor to verify that. I think that 
is part of the statute.
    Mr. Schooner. As I suggested earlier in my testimony, the 
best analogy here, being the Competition in Contracting Act, 
suggests that poor planning or crisis management isn't a 
legitimate exception.
    I think, in terms of the actual words of the Berry 
Amendment though, your escape hatch that I think is available 
to DOD here is the ``as needed'' language. But I think the 
point that she is made is a valid one.
    Mr. Joffe. There is also in the House right now, House of 
Representatives Bill 1458 to strengthen that.
    Ms. Christian-Christensen. Yes.
    Mr. Joffe. And it says to limit the exceptions to certain 
Buy American requirements and to expand such requirements. So 
that is already, I think, being worked on right now by the 
Committee on Armed Services.
    Ms. Christian-Christensen. Okay. One of the reasons that 
DOD is here and will probably pretty assuredly be back again is 
because there--we found that there are many obstacles to small 
businesses participating in contracting with the department.
    We have a businesslady here with us today, Ms. Goodman, who 
attempted to appeal her beret procurement, and yet she was 
found not to have ``standing,'' as her company was not capable 
ofproducing one piece berets.
    Mr. Cooper, I direct this question to you. Could you help 
us understand the concept of standing as it applies to 
procurement?
    Mr. Cooper. Well, that is more of a legal term.
    Ms. Christian-Christensen. Okay.
    Mr. Cooper. But I can, I think, get at what you are after. 
This whole issue and the reason we are all here today trying to 
explain this--and it is difficult to explain.
    Ms. Christian-Christensen. Yes, it is.
    Mr. Cooper. It goes back not just to the contracting people 
that took the actions, it goes back to the requirement that was 
established. Once the requirement was established to have these 
berets by June 14th and only a one-piece beret, all the normal 
contracting processes went out the window. That is what drove 
this situation simply.
    Ms. Christian-Christensen. Well, I don't have any further 
questions, Mr. Chairman.
    As I said, I did have to step out, and I am sure most of 
the questions have been asked.
    Chairman Manzullo. Appreciate that.
    I have a couple of questions. Thank you.
    General Glisson, who specifically told you not to answer 
the letter of April 5th that was signed by Ms. Velazquez and 
me?
    Lieutenant General Glisson. Sir, the decision came from the 
Office of the Secretary of Defense Public Affairs. They had 
been inundated, as I understand, with many letters. They knew 
the investigation was on. They were trying to gather the right 
information in order to make the response to you.
    Chairman Manzullo. The Office of Public Affairs?
    Lieutenant General Glisson. Yes, sir. Congressional 
liaison, yes, sir.
    Chairman Manzullo. Who sent it there, you did?
    Lieutenant General Glisson. Pardon me, sir? Sir, they had 
recalled all documents which had been sent to us in writing. 
Those were to be consolidated and tried to be answered out of 
the Office of the Secretary of Defense.
    Chairman Manzullo. I think maybe somebody consolidated them 
and put them in a shredder.
    Lieutenant General Glisson. Congressman, I don't know the 
answer to that.
    Chairman Manzullo. I mean, you knew why you were coming 
here today.
    Lieutenant General Glisson. I did.
    Chairman Manzullo. Is that correct?
    Lieutenant General Glisson. I did.
    Chairman Manzullo. I mean, you knew you were aware that you 
didn't answer this April 5th letter.
    Lieutenant General Glisson. Congressman, I am.
    Chairman Manzullo. Were you aware of the fact that money 
had been paid to vendors after April 5th?
    Lieutenant General Glisson. I am.
    Chairman Manzullo. Who wrote the check?
    Lieutenant General Glisson. The Department of Defense 
probably. We obligated that one to the Defense Contract 
Management Agency.
    Chairman Manzullo. Who authorized the writing of the check?
    Lieutenant General Glisson. Sir, it was based on a legal 
document, a legal contract which we have out of Philadelphia.
    Chairman Manzullo. That doesn't answer the question. Legal 
contracts don't write checks, people do.
    Lieutenant General Glisson. Yes, sir. The way that----
    Chairman Manzullo. Who wrote the check to pay for----
    Lieutenant General Glisson. Sir, the Defense Finance and 
Accounting Office wrote the check.
    Chairman Manzullo. They wrote the check.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. Did you ever contact them when you got 
my letter, saying, ``Here's the letter from the ranking 
minority member or the chairman of the Small Business 
Committee, saying that there could be possible violations of 
applicable federal law?'' You never contacted them?
    Lieutenant General Glisson. Congressman, I did not. I sent 
a copy of that letter to the Office of the Secretary of Defense 
and to their Legislative Liaison, Public Affairs.
    Chairman Manzullo. Now who is that?
    Lieutenant General Glisson. I will have to ask Mr. Oliver 
for the name of the person there, Congressman. I don't know. 
But it was not----
    Chairman Manzullo. Was it Larry Dorita at the time?
    Lieutenant General Glisson. Congressman, I don't know. I 
guess the point that I would try to make to you it was not an 
effort to ignore you or anything like that. I think they 
honestly were trying to gather the right facts from which to 
make a public response.
    Chairman Manzullo. Our office contacted yours when this 
letter wasn't answered. Were you aware of that?
    Lieutenant General Glisson. Congressman, I was not.
    Chairman Manzullo. Mr. Oliver, do you know anything about 
this letter, April 5th?
    Mr. Oliver. I think it is sitting on my desk, sir, because 
what happens is, as Tom said, is we got several letters and we 
were trying to get organized to make sure we gave you good 
answers.
    Chairman Manzullo. And we got none.
    Mr. Oliver. Yes, sir.
    Chairman Manzullo. It is sitting on your desk? This letter 
is sitting on your desk?
    Mr. Oliver. It is not physically on my desk, but I know it 
is someplace in a----
    Chairman Manzullo. This is a letter from two members of 
Congress.
    Mr. Oliver. Yes, sir.
    Chairman Manzullo. We are here representing thousands of 
small business people in this country that are losing contracts 
on a daily basis because of bungling going on by the federal 
government. And this letter is sitting on your desk, and it 
hasn't been answered. That is what you are telling me.
    Look at Michele Goodman. She is the one that lost 100 
employees. Why can't you answer a letter from two members of 
Congress?
    Mr. Oliver. It will be answered this week, sir.
    Chairman Manzullo. It will be answered this week probably 
along with the contract bundling report that you were supposed 
to have before us a year ago, and it got filed last week.
    Ms. Velazquez. Eighteen months later.
    Chairman Manzullo. Eighteen months later.
    Ms. Velazquez. Correct?
    Mr. Oliver. Yes, sir.
    Chairman Manzullo. You know, I am just too totally shocked. 
So it was up to you to answer this letter, correct?
    Mr. Oliver. No, it was not up to me. You asked physically 
where it was, I gave you an honest answer. It is on my desk 
right now with the----
    Chairman Manzullo. But it is up to you to answer the 
letter, is that correct?
    Mr. Oliver. No, sir.
    Chairman Manzullo. You had authorized General Glisson to 
answer the letter.
    Mr. Oliver. Congressman, as you know, we have spent a great 
deal of time on this issue, and we really have tried to think 
through this. And there is lots of things that have gone on.
    Chairman Manzullo. It is a very simple question. How do you 
answer a letter to two members of Congress? Or you just ignore 
it, you think we are insignificant?
    Mr. Oliver. No, sir.
    Chairman Manzullo. Or does it go with your philosophy that 
the Department of Defense has the final answer? I mean, have 
you seen this letter?
    Mr. Oliver. I have seen that letter, sir.
    Chairman Manzullo. And when did you first see it?
    Mr. Oliver. Probably the day you sent it over, sir.
    Chairman Manzullo. April 5th or the day that General 
Glisson sent it.
    Mr. Oliver. Whenever----
    Chairman Manzullo. General, I presume you sent it over as 
soon as you got it.
    Lieutenant General Glisson. That is correct.
    Chairman Manzullo. And it is just sitting on your desk. It 
has taken you a month to think about answering this letter.
    Mr. Oliver. Actually, I have had several answers to that 
letter, Congressman.
    Chairman Manzullo. No, I understand. But you know what we 
are asking for? We asked that you cancel contracts. And do you 
know what you did? First, you paid money to the Chinese, isn't 
that correct, for Chinese production. And then you canceled it.
    Mr. Oliver. Not that one.
    Chairman Manzullo. What do you mean, not that one.
    Mr. Oliver. Not the Chinese one.
    Chairman Manzullo. The Chinese one has been canceled.
    Mr. Oliver. No, it hasn't. It will be completed at the end 
of this month.
    Chairman Manzullo. Are the Chinese still in production at 
this point?
    Mr. Oliver. The Chinese are still in production, and----
    Chairman Manzullo. Did you tell them to stop production?
    Mr. Oliver. We can't sir.
    Chairman Manzullo. So you are going to take all these 
berets and pay for them?
    Mr. Oliver. We are going to. By contract, we have to.
    Chairman Manzullo. You are going to take all the berets and 
pay for them?
    Mr. Oliver. Sir----
    Chairman Manzullo. Yes or no?
    Mr. Oliver. Yes. Yes, sir. Absolutely.
    Chairman Manzullo. And then what are you going to do with 
them?
    Mr. Oliver. Then we are going to resell them. We are going 
to consider some of the suggestions about how we dispose of 
them. What we have thought about is disposing them by reselling 
them by foreign military sales to those countries who use them.
    Chairman Manzullo. We are a middleman for small businesses. 
When members of Congress send letters, these are red flags. Did 
you ever offer to come into my office and talk to me about 
this?
    Mr. Oliver. No, sir.
    Chairman Manzullo. Did anybody from your office say, ``You 
know, two members of Congress have requested an answer''?
    Mr. Oliver. No, sir.
    Chairman Manzullo. And how many of these letters did you 
have from members of Congress?
    Mr. Oliver. I don't recall, sir.
    Chairman Manzullo. Was it five, 10, 15?
    Mr. Oliver. I didn't count them, sir.
    Chairman Manzullo. You have no idea?
    Mr. Oliver. We were trying to answer the best possible 
answer to you.
    Chairman Manzullo. But you didn't give us any answer. 
Somehow I can't get that across.
    Mr. Oliver. Yes, sir. I understand, and I accept it.
    Chairman Manzullo. And you----
    Mr. Oliver. No, I understand it, sir. I just don't have an 
answer for it.
    Chairman Manzullo. I mean, do we have to go through this 
every time there is a waiver of Berry?
    Mr. Oliver. Well, I am trying to fix that. I told you how I 
did. I pulled that back so that I have to make that 
determination.
    Mr. Pascrell. Mr. Chairman?
    Chairman Manzullo. Yes?
    Mr. Pascrell. I have one more question to add on to yours.
    Chairman Manzullo. Yes.
    Mr. Pascrell. What is the quality of the work of the berets 
that are made in China?
    Mr. Oliver. Congressman, that isn't a good question. It 
happens to be the best possible.
    Mr. Pascrell. It is the best possible?
    Mr. Oliver. It is the best.
    Mr. Pascrell. In other words, if we went to an outfit that 
knew what they were doing, we would have a better product. So 
this is the best we can expect from that factory where they 
are.
    This is the best work they can do. You don't mean that.
    Mr. Oliver. No.
    Mr. Pascrell. What do you mean?
    Mr. Oliver. I mean it is the best beret we are getting.
    Mr. Pascrell. It is basically the beret that we saw before.
    Mr. Oliver. It is the best beret of any of the people we 
contracted with.
    Chairman Manzullo. Is this better than Bancroft's?
    Mr. Oliver. I will ask Tom to answer that.
    Lieutenant General Glisson. Yes, sir, it is.
    Chairman Manzullo. How is it better?
    Lieutenant General Glisson. Better quality, better 
workmanship.
    Chairman Manzullo. And at what price?
    Lieutenant General Glisson. At less than the Bancroft 
price, sir.
    Ms. Velazquez. Ms. Goodman? She would like to comment.
    Chairman Manzullo. Ms. Goodman.
    Ms. Goodman. Yeah. I believe that the Chinese berets were 
bought by Kangol.
    Lieutenant General Glisson. That is correct.
    Ms. Goodman. Wasn't their price considerably higher than--
--
    Lieutenant General Glisson. The price on the Kangol beret 
is $6.24 each. The price on the Bancroft Beret is $6.30 each.
    Ms. Goodman. And the labor cost of the two?
    Lieutenant General Glisson. I mean, that is the acquisition 
price that we paid.
    Chairman Manzullo. Ms. Goodman, you could have made these 
berets, is that correct, the one piece?
    Ms. Goodman. No, sir.
    Chairman Manzullo. No. I mean, if you had some time to gear 
up and get some equipment.
    Ms. Goodman. The situation is a little bit more complicated 
than that. The machinery that is currently used hasn't been 
made in over 50 years.
    Chairman Manzullo. Okay.
    Ms. Goodman. There are no spare parts for it.
    Chairman Manzullo. What about the blocking machine?
    Ms. Goodman. There is machinery to make a two piece beret, 
okay? The Army has failed to even consider sitting down with 
industry, not just myself, but other small businesses who have 
put forth the effort to try and work with them to come up with 
a solution.
    As far as the one-piece knitted beret, there are many 
obstacles. The only way that they can get what they want is by 
doing it over a long-term basis. Machinery would have to be 
made that would copy the process of a very antiquated machine 
into a new machine.
    And whether the equipment people are willing to put forth 
the effort and the funds to do that is yet to be determined 
because the Army never gave American small businesses the 
opportunity to present this position.
    Mr. Pascrell. Mr. Chairman?
    Chairman Manzullo. Yes.
    Mr. Pascrell. Doesn't that sound rather peculiar that one 
item was $6.30 per beret, and the other, coming across the 
ocean, is $6.24? We have a word for that in New Jersey which I 
won't repeat. But doesn't that strike you as rather strange, 
General?
    Lieutenant General Glisson. Congressman, based on the 
prices that we saw with the other contracts, they are all 
reasonably in line with each other within a dollar or so of 
each other. The lowest is $4 and something up to the range of 
$7 and something. So they are all within that price range.
    Mr. Pascrell. Did Atlas bid first? Did you have their 
number in first before you got the number from China?
    Lieutenant General Glisson. Sir, we never got that far as 
she testified because the Army rejected her beret. So she never 
made an offer that I am aware of on a price.
    Mr. Pascrell. Well, who bid besides this----
    Ms. Goodman. I did make a bid. Excuse me.
    Mr. Pascrell. You did make a bid.
    Ms. Goodman. I did bid on a two piece stitched beret, yes.
    Mr. Pascrell. You did?
    Ms. Goodman. Mm-hmm.
    Mr. Pascrell. Is that correct, General?
    Lieutenant General Glisson. Congressman, I don't know 
whether she bid or not. There was no requirement for a two-
piece beret. What she offered was, in fact, a two-piece beret 
at a price. The Army rejected that, so it was never considered 
as part of the----
    Mr. Pascrell. Well, how did you wind up in China?
    Lieutenant General Glisson. Congressman, basically, what we 
did is, as I said previously, at the time we knew three 
manufacturers, Bancroft, Dorothea in Canada, and Denmark out of 
New York City. Those were the three that we did directed awards 
to because we knew them to be in business today, and we knew 
they could make the beret.
    We then did an open competition worldwide, and we invited 
anybody who could produce berets to come in. We called people 
who had berets, asked them where they got them from.
    Mr. Pascrell. Did you call the Chinese manufacturer?
    Lieutenant General Glisson. We talked to Kangol, which is a 
United Kingdom manufacturer who manufactures berets for the 
British army and other countries. And they did produce a beret.
    We got samples from all of the proposals. We looked at 
them, examined them for quality. We took a look at the 
companies to see if they were responsible companies, went 
through the normal contracting procedures that one would go 
through before we made the award. And we ended up then with the 
four additional awards, two U.S.-based foreign produced and two 
foreign-located foreign producers.
    Mr. Pascrell. They were all produced outside the United 
States.
    Lieutenant General Glisson. That is correct. Yes, 
Congressman.
    Mr. Pascrell. Who was the contact with the Chinese? Who has 
the responsibility in the chain of command as far as these 
kinds of manufacturing contracts are concerned, what office?
    Lieutenant General Glisson. Well, the acquisition took 
place in my Philadelphia buying office through the contracting 
officer there. He also has a Senior Procurement person there 
who watches him. That then flows back up to the Senior 
Procurement Executive in the Agency.
    Mr. Pascrell. So you would expect that the Philadelphia 
office would reach out to foreign countries and companies, and 
that is how they reached out to the company in China? Is that 
how that works?
    Lieutenant General Glisson. At the point in time when it 
was determined there was no domestic capacity to produce these 
berets and still meet the Army requirement, at that point in 
time, then they did a worldwide search, which they are 
authorized to do. And then they can go offshore to try to 
determine if, in fact, there are sources to meet the compelling 
requirement.
    Mr. Pascrell. Are you also telling us that because of the 
disqualification of some of the berets that were made in some 
parts of the world, we are still in contract with the Chinese 
company. That is right?
    Lieutenant General Glisson. The United Kingdom----
    Mr. Pascrell. We are not going to be able to meet the 
deadline anyway, are we?
    Lieutenant General Glisson. Based on the production 
schedule, that is correct, Congressman.
    Mr. Pascrell. So we did all of this. It is amazing.
    Chairman Manzullo. If the Chinese cannot meet the deadline, 
then they are breaching thecontract, isn't that correct?
    Lieutenant General Glisson. Sir, the Kangol contract from 
the United Kingdom, which has a production plan in China is, in 
fact, ahead of schedule. They accelerated schedule. They have 
been our best producer to date.
    Chairman Manzullo. General, did you ever convey to General 
Shinseki or anybody on the staff that perhaps they could 
consider making a two piece beret so it could be homemade?
    Lieutenant General Glisson. Congressman, we did. We 
actually took the sample that Ms. Goodman gave us. We gave it 
to the Army to look at. The Army came back and said they 
disapproved it. They would not use that beret.
    Chairman Manzullo. Who gave it to whom? Who from your 
agency----
    Lieutenant General Glisson. Sir, my Supply Center in 
Philadelphia gave it to the PM soldier, which is the 
requirement generator for this particular contract and for this 
requirement.
    Chairman Manzullo. Mr. Bartlett.
    Mr. Bartlett. I would just like to ask for a point of 
clarification.
    Lieutenant General Glisson. Yes, sir.
    Mr. Bartlett. We did not directly contract with the Chinese 
firm, did we?
    Lieutenant General Glisson. We did not, Congressman.
    Mr. Bartlett. Okay.
    Lieutenant General Glisson. We contracted with the United 
Kingdom company.
    Mr. Bartlett. Okay. Yes. And then they subcontracted to 
China?
    Lieutenant General Glisson. That is correct, Congressman.
    Mr. Bartlett. Okay. I just wanted to make that clear.
    Lieutenant General Glisson. We knew their plant was in 
China.
    Mr. Bartlett. Yeah.
    Lieutenant General Glisson. I don't want to mislead you.
    Mr. Bartlett. But our contract was not with the Chinese 
company. It was with the----
    Lieutenant General Glisson. With Kangol, which is the 
United Kingdom.
    Mr. Bartlett. Okay. And then they had the work done in 
China.
    Lieutenant General Glisson. They own that plant in China. 
That is not a sub-contractor.
    Mr. Bartlett. Yeah. And you knew when you let the contract 
that it was going to be made there.
    Lieutenant General Glisson. I did. I did, Congressman. And 
we were concerned at the time about child labor, not about 
procurement from China. Hindsight is wonderful, obviously.
    Mr. Bartlett. How many of our weapon systems do we procure 
from China?
    Lieutenant General Glisson. Sir, I don't buy weapon 
systems. I can't tell you.
    Mr. Bartlett. You don't. Okay. Do we buy other clothing 
from China?
    Lieutenant General Glisson. Generally not, no, sir.
    Mr. Bartlett. Thank you.
    Chairman Manzullo. Well, we want to thank you all for 
coming. It is obvious what has happened here is that when we 
started off----
    Ms. Velazquez. Mr. Chairman?
    Chairman Manzullo. I am sorry?
    Ms. Velazquez. I have a last question for General Glisson.
    Chairman Manzullo. Yes. Go ahead. Please.
    Lieutenant General Glisson. Yes, ma'am.
    Ms. Velazquez. You mentioned to us before that you 
communicated with a staffperson from the chief of staff about--
you know that it will require to award the contract to a 
foreign company.
    Lieutenant General Glisson. That is correct. Yes, ma'am.
    Ms. Velazquez. Can you please tell us the name of that 
person?
    Lieutenant General Glisson. Yes, ma'am. My counterpart on 
the Army staff is Lieutenant General Mahan, M-a-h-a-n.
    Ms. Velazquez. Thank you.
    Lieutenant General Glisson. Yes, ma'am.
    Chairman Manzullo. I want to thank you all for coming. I 
don't know how you summarize this incredible weave of events, 
but the victims out there are the people that this Small 
Business Committee is trying to protect.
    It is obvious to me that General Shinseki was never advised 
as to the availability or the unavailability of domestic 
production until some time mid-February. He stated that, and I 
believe him.
    It is also obvious that if he had known about that, that he 
would have changed the procurement date or the date necessary 
to fulfill the needs. He stated that, and I believe him.
    But what has happened here is this incredible maze of 
people, lack of accountability, failure to give this Small 
Business Committee documents that it needs. We did request 
them, we had to subpoena them. And as a result of all these 
memos and everything going back and forth, we end up with the 
incredible situation of American people having to buy these 
Chinese berets, having to pay for them, and now they are not 
being used.
    And I would suggest the following, that if the cries of the 
members of Congress had been heeded initially way back when, 
that efforts could have been made to stop the production of 
these berets in China. But no one heeded that, not until the 
eve of this hearing when yesterday, miraculously, all kinds of 
things happened. Three contracts were cancelled. The Chinese 
berets would no longer be used. That happened as the order came 
down from Mr. Wolfowitz yesterday.
    And yet General Shinseki stated it, and I believe it, that 
as long as six weeks ago he was imploring procurement not to 
use Chinese berets.
    Now isn't that interesting? He is the one who gave the 
order for June 14th. He is the one that could have changed that 
date. He is the one that could have put an end to Chinese 
production, and no one listened to him.
    This meeting is adjourned.
    [Whereupon, at 2:12 p.m., the Committee was adjourned.]

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