The abuses in the SBA's 8(a) Procurement Program : hearing before the Committee on Small Business, House of Representatives, One Hundred Fourth Congress, first session, Washington, DC, December 13, 1995 online

selection memo was developed to facilitate the BOS's review and assure compliance with agency
requirements prior to each 8(a) contract award. Also, program participants must certify their
continued eligibility prior to award of each 8(a) contract. This self certification is reviewed by the
BOS, SBA contracting officials and District Counsel prior to award.

Continuing program eligibility is evaluated on a yearly basis through the annual review. This review
includes an assessment of the firm's business plan as well as verification of the firm's continuing
eligibility to participate in the 8(a) Program.

Question #5: When an 8(a) contract is competed among program participants, who certifies
that all the competitors are eligible and who approves the award?

Response: Under competitive contracting procedures, firms that contend for 8(a) competitive awards
must self-certify they are in compliance with program criteria and are eligible to compete. The SBA
Office that services an apparent successful offeror verifies the firm's self-certification prior to award,
and approves the award.

In processing competitive requirements, the following steps are taken: (1) Upon receipt of a
requirement, SBA evaluates and if appropriate, accepts the offer as competitive requirement, and
instructs the procuring agency to synopsize the requirement. (2) 8(a) firms interested in bidding
contact and obtain a copy of the solicitation from the procuring agency. (3) 8(a) firms submit their
offers directly to the procuring agency. (4) The procuring agency evaluates the offers and determines
the apparent successful offeror, and advises SBA of the apparent successful offeror. (5) SBA



186



verifies that the apparent successful offeror is eligible to receive the award. (6) SBA notifies the
agency of its determination and the contract documents are sent to the servicing district office for
award.



Question #6: The BOS for TAMSCO (Charita Albright) certified that the firm was making its
business plan mix, yet a financial report for the firm shows that 76 percent of their contracts
were sole-source. Is that the correct business mix for an 8(a) firm in that stage of
participation?

Response: TAMSCO was "grandfathered" into the new regulations requiring business mix. The
target business mix of 20-30% was determined based on the firm's remaining program term
eligibility.

Because TAMSCO did not meet the target (it fell short by 4%) the firm was under a remedial plan
approved by SBA's Philadelphia Regional office which allowed the firm to continue to receive
contract awards as long as it met the conditions of the remedial plan. The remedial plan was
approved prior to award of the Coast Guard contract. Therefore, TAMSCO was eligible to receive
the award.



Question #7: If it was incorrect, then why did the BOS allow the contract to go forward?

Response: Based upon the firm's compliance with its remedial plan, it was eligible to receive the
contract award.



Question #8: Please furnish the Committee with a list of 8(a) Program Participants who were
determined to be ineligible for award of an 8(a) contract due to the firm's failure to make its
"business activity targets" during fiscal years 1989 - 1995, identifying if possible whether the
proposed contract was to be awarded on a sole source basis or as a result of an 8(a)
competition, and the circumstances warranting the denial of award.

Response: There were 13 program participants determined by district offices to be ineligible for
awards due to the firms' failure to achieve their "business activity targets." In 12 of the 13 cases the
proposed contract was to be awarded on a sole source basis, the remaining one was competitive.
These firms are listed as follows:

1 . Gill Construction Co. - sole source contract - Kansas City District Office

2. Bachman & Associates - sole source contract - Denver District Office

3. Systems Technology Associates, Inc. - sole source contract - Denver District Office

4. Speedy Food Service - competitive contract - Lower Rio Grande Valley District Office

5. KIRA, Inc. - sole source contract - Miami District Office



187



6. Kohly Construction, Inc. - sole source contract - Miami District Office

7. Aegis Associates, Inc. - sole source contract - New York District Office

8. CTJ - sole source contract - San Francisco District Office

9. Yourok - sole source contract - San Francisco District Office

10. Dependable Janitorial - sole source contract - San Francisco District Office

1 1 . Ponderosa - sole source contract - San Francisco District Office

12. Environmental Contraction - sole source contract - San Francisco District Office

13. W.C. Parish - sole source contract - San Francisco District Office



Question # 9: The offer letter from the Coast Guard to the SBA revealed no evidence of self-
marketing by TAMSCO, as required, nor did it reveal any other contact with other 8(a) firms.
In such a situation shouldn't the BOS question the award of the contract, or suggest
competitive procedures? Why wasn't there any evidence that the BOS attempted to clarify this
situation or ask any basic questions about how this contract was steered to TAMSCO?

Response: This contract offering by the Coast Guard named TAMSCO as the proposed contractor.
This was not unusual and did not warrant the BOS questioning the Coast Guard's rationale for
nominating the firm. This was an Indefinite Delivery, Indefinite Quantity (IDIQ) contract, with a
minimum value below the competitive threshold and therefore acceptable for sole source negotiation
under the applicable regulations at that time.

There is no agency regulation that requires procuring agencies to state specifically that a sole source
offering is the result of self-marketing. It has been our experience that when an agency nominates
an 8(a) firm for a specific 8(a) contract opportunity, this nomination is based upon the agency's
acceptance of the company's self marketing efforts. In the case of TAMSCO, the firm had
successfully performed contracts for the Coast Guard and the agency's technical and contracting
personnel were well aware of the firm's capability.

Question #10: In your testimony regarding the termination of ineligible firms from program
participation you stated that the SBA had terminated 334 firms in the last 18 months. Please
provide the Committee with a list of all firms terminated from the program since 1989 and
please indicate whether these firms were terminated for: (a) exceeding applicable size
standards, (b) control or ownership by ineligible individuals, (c) overcoming the "economic
or social disadvantage" by the individuals upon whom the firm's eligibility is based, (d)
business success of the participant firm compared to other small businesses, (e) failure of the
firm to comply with "business activity targets" for non-8(a) contracts, (f) failure to comply
with statutory or regulatory requirements relating to program administration, (g) debarment
or suspension of the firm or its owners, (h) administrative termination due to cessation from
the firm's business activities. Please also include the date of the last approved business plan
for these firms, the date of the last contract award, and the total number of contracts awarded
to each firm.



188



Response: Enclosed, you will find a report entitled Finns Terminated and Graduated Since the
Beginning of FY 1989 reflecting Case Number, Firm Name, Last Contract Awarded, Total Contract
Awards, Program Status, and Status Date. The SBA is now in the process of entering historical
termination and graduation data into its official data base, the Servicing and Contracts
System/Minority Enterprise Development Central Office Repository (SACS/MEDCOR). Prior to
establishment of this data base, program termination and graduation information was captured in a
variety of ad hoc logs, and was limited substantially to tracking data. We have migrated skeletal
termination and graduation data (e.g., action, and date of action) from these logs into
SACS/MEDCOR. For this reason, it is not possible at this time for us to associate a specific reason
for termination or graduation with each of the cases processed since 1989. For the same reason, we
currently lack capability to report last business plan approval for these firms.



Question #11: The SBA is required to conduct eligibility reviews of program participants
whenever it receives specific and credible information concerning a firm's eligibility. Please
provide the Committee with information regarding the number of eligibility reviews conducted
since 1989 under those circumstances as a result of (a) referrals from other agencies, (b)
referrals from the Inspector General, (c) referrals from SBA field offices, (d) referrals from
the private sector. Please also provide information on the number of referrals that were
declined because their information was not deemed credible, and the number of termination
or remedial actions taken as a result of credible referrals.

Response: Our District Offices conducted 13 annual reviews since 1989 based upon referrals
questioning company eligibility. Of these 13 annual reviews, 1 1 resulted in recommendations for
termination.

There have been 32 referrals from the Inspector General's Office since 1989 which questioned the
continued program eligibility of program participants. Of these 32 referrals, 8 firms completed their
program term prior to any action being taken, 23 firms were found to be in compliance, and one firm
is currently being processed for termination. It should be noted that our field offices annually review
their respective portfolios in order to ensure continuing program eligibility and assess company
business plans. As I indicated in my testimony of December 13, 1995, SBA has made completion
of annual reviews a goal for all district offices in FY 1994/1995.

Question #12: The Committee has received information that the SBA has drafted regulations
that would eliminate SIC code restrictions for contract awards in the 8(a) program. Is this
correct? If so, how does the SBA justify this departure from current practice.



Response: Yes, it is correct that SBA drafted a proposed regulatory change that would eliminate
approved SIC codes as a prerequisite for contract awards. The elimination of this requirement to
approve SIC codes was suggested as a proposal to reduce burdensome administrative requirements
and streamline the 8(a) acquisition process.



189



The inclusion of an approved SIC code is not necessarily an indication of a firm's capability and
capacity to perform. A technical evaluation or pre-award survey is a better measure of performance
potential. This proposed administrative change would not change the requirement that a firm
demonstrate its capability and capacity to perform prior to SBA's acceptance of a contract offering
for the firm. SIC codes will continue to be used to evaluate a firm's small business size status for
individual contract awards.

If you or your staff have further questions, or require clarification of these responses, do not hesitate
in contacting me on 202-205-6412.



A-Calvin Jenkins
' Associate Administrator for
Minority Enterprise Development



Enclosure



190



ENCLOSURE
FIRMS TERMINATED AND GRADUATED SINCE THE BEGINNING OF FY 1989



Case

32319
3244S
32479

37003
290S3
00384
00394
37105
40696
20546
60760
60779
60961
60988
00274
00376
00469
80357
90980
29063
10569
36062
36093
50943
35016
35029
35066
29050
36103
00390
60991
20349
20374
2044S
20477
29035
36132
61103
80342
50977
80355
00449
00453
51016
90957
40875
00459
90807
40695
40881
90818
00414
90846
91033
20525
20553
36117
80265
40856
80348



Name



I -Net Inc.

MVM Inc

Systems Engineering & Mgt . Associates, I

C.H. James & Company, Inc.

International Compressor Co. Inc.

Laduke Construction Company

Nate Hartley Fuel Oil Company

Rtv Enterprises Inc.

U S Construction Inc

Metropolitan Oil fc Chemical Of Pr Inc

Harper-Bend Company

Andrews Brothers Lines Inc

Msa General Contractors, Inc.

Garza Advertising Inc.

Up&D Dpshaw Painting & Decorating Company

David E Lopeman Company

Crazy Rock Company

J&R Development

Bilco Construction, Inc.

Yipkon Corp.

Northeastern Corridor Construction Co In

Libra Enterprises Of Virginia Inc.

Automated Business Service Of Virginia

Analytical Photogrammetrics Inc

Rms Technologies Inc

Instrutek Corporation

Mara Specialty Chemicals Supplies

Northhampton Construction Co., Inc.

Paper & Office Products Inc

R & R Construction

New Associated Dredging Company, Inc.

Charles D Gomez Cpa

Duroyd Manufacturing Co Inc

MtJ Sausauge Corporation

Unimac Motor Freight, Inc.

Deron Industrial Textiles Inc

Maga Sales Inc

R M Balli Enterprises, inc.

Crabtree Corporation

Aztec Energy & Power Transmi

All west Tel Com, Inc.



Inc .



Geo Res



Gonzales Tree Service

Kinross Manufacturing Corporation

Chippawa Tool & Manufacturing Co.

Millers Wood Pallets

Khan Machine Tools Company

Dhillon Construction Company

Allied Management Services Inc

J M Business Svc Inc

Quality Products

Hill Enterprises

RMS. Travel Service

The D.A. Miller Agency

Tropical Fruits Products Co. Inc.

J & D Cleaning Services

A. R. Wood & Son, Inc.



Bin



ill Wilson
isaco Eng



Producti
Mfg.



Last


Last


Total






Status


BP Appr


Award


Awards

127


Status


Date


/


i


01/13/95


Graduated


07/28/94


1


1


01/29/91


12


Graduated


04/21/95


1


1


07/13/95


30


Graduated


05/01/95


1


1


07/01/93


35


Graduated


06/23/95


1


1


/ /





Ter


minated


10/03/8B


1


1


12/06/84


9


Ter


minated


10/05/88


1


1


/ /





Ter


minated


10/05/88


1


1


/ /





Ter


minated


10/18/88


1


1


09/14/81


1


Ter


minated


10/18/88


1


1


/ /





Ter


minated


11/04/88


1


1


03/26/8S


16


Terminated


11/15/88


1


1


/ /





Ter


minated


11/15/88


1


1


/ /





Ter


minated


11/15/86


1


1


/ /





Ter


minated


11/15/88


1


1


09/30/85


14


Ter


minated


11/16/88


1


1


OS/09/85


5


Ter


minated


11/16/88


1


1


/ /





Ter


minated


11/16/88


1


1


/ /





Ter


minated


11/20/88


1


1


02/12/87


1


Ter


minated


11/20/88


1


1


12/29/86


7


Ter


minated


11/21/88


1


1


/ /





Ter


minated


11/24/88


1


1


/ /





Ter


minated


12/05/88


1


1


03/20/86


5


Ter


minated


12/0S/88


1


1


/ /





Ter


minated


12/07/88


1


1


09/21/87


69


Ter


minated


12/30/88


1


1


05/01/84


12


Terminated


12/30/88


1


1


/ /





Ter


minated


12/30/88


1


1


/ /





Ter


minated


01/27/89


1


1


06/05/87


7


Ter


minated


01/27/89


1


1


07/24/87


2


Ter


minated


02/09/89


1


1


07/29/87


4


Ter


minated


02/09/89


1


1


05/16/79


2


Ter


minated


02/24/89


1


1


08/29/84


17


Ter


minated


02/24/89


1


1


/ /





Ter


minated


02/24/89


1


1


/ /





Ter


minated


02/24/89


1


1


/ /





Ter


minated


03/01/89


1


1


/ /





Ter


minated


03/10/89


1


1


/ /





Ter


minated


03/14/89


1


1


09/30/85


1


Ter


minated


03/21/89


1


1


/ /





Terminated


04/20/89


1


1


07/10/86


1


Ter


minated


04/20/89


1


1


11/18/87


4


Terminated


05/21/89


1


1


08/07/87


7


Ter


minated


05/21/89


1


1


06/30/87


4


Ter


minated


07/11/89


1


1


/ /





Ter


minated


07/14/89


1


1


/ /





Ter


minated


08/18/89


1


1


/ /





Ter


minated


09/17/89


1


1


08/14/86


10


Ter


minated


09/17/89


1


1


/ /





Ter


minated


09/18/89


1


1


/ /





Ter


minated


09/27/89


1


1


/ /





Ter


minated


09/27/89


1


1


05/22/85


3


Ter


minated


10/03/89


1


1


/ /





Ter


minated


10/04/89


1


1


/ /





Ter


minated


10/04/89


1


1


/ /





Ter


minated


12/02/89


1


1


/ /





Ter


minated


12/02/89


1


1


/ /





Terminated


12/02/89


1


1


05/26/89


21


Terminated


12/02/89


1


1


/ /





Terminated


12/06/89


1


1


08/05/86


1


Terminated


12/06/89



191



Inc.



Inc.



40882 L F Dickerson Contracting Inc

51022 C. T. Lighting Company, Inc.

36146 White Bus Rental Inc.

51008 Windham Medical Supplies & Services, Inc

S1075 Flamingo Industries Usa Ltd.

S1087 Ashford Industries Inc.

90850 R.E. Winters Company

80407 E. L. Mitchell Construction Corporation

20610 Specialty Food Corporation

20466 R And W Knitting Mills

50886 Morris Paint & Varnish Co.

51077 J & R Manufacturing Co.

51129 Csjc International Inc.

61152 Cantu-Speedy Services, Inc.

32265 Automated Data Management,

90954 Greenleaf Industries, Inc.

91023 Amber Construction

90649 Chess And Associates Inc

32292 American Foods Corporation

40649 Minact Inc

60946 Harris/eagle Joint Venture

90761 Rcr General Contractors, Inc.

60942 A-l Plumbing

40869 Carolina Welding Constr & Maint

32489 Hue, Inc.

10610 Bbvm Electrical Corp

40938 Gulf Coast Safety Products Inc

40895 Anchor Marine Inc.

40831 Tsali Construction Co

80253 vigil And Son Construction Company

90867 Lecher Construction

41371 Novel Pharmaceutical Inc

10589 Ami. Inc.

10595 S. R. Roofing Company

30953 Trans-Ed. Inc.

80382 Crb Enterprises, Inc.

32449 Equal Lock And Upholstery Company, Inc.

00448 Square Deal Concrete

00479 Conmx, Inc.

10573 H&L Tool Co., Inc.

20603 Toni Y Lewis Cpa

29038 Robro General Machine Inc

29068 American Systematica Inc.

40823 Moore t Artis Ltd

4 0835 Harvey Oil Co Inc

40900 Kentucky Star Coal Co Inc

40941 Pitt General Contractors Inc

40984 5 Star Electronics Inc

41093 United Maintenance Systems Inc

60860 Cavern City Construction

61011 Orange and Associates, Inc.

70325 L. J. Cutwright, Inc.

20473 Flagg Brothers Trucking Service Inc

51140 Ewa, Inc.

90895 Quality Electronic Associates

29024 Electronic Data Management

70340 Action Manufacturing, Inc.

00413 Plant Man. Inc.

29043 Hxk Inc.

361S6 Rogers Corporation

40976 Wire America Dhs Inc

60904 Linrose Electronics Corporation

70311 Albert J. Moore Construction Company, In

70351 The Lazer Corporation

90962 Jackmar Engineering Company



/


/


06/29/87


/


/


/ /


/


/


/ /


/


/


/ /


/


/


/ /


/


/


/ /


/


/


08/27/85


/


/


09/28/88


/


/


01/21/87


/


/


/ /


/


/


06/27/85


/


/


/ /


/


/


/ /


/


/


09/30/87


/


/


07/02/87


/


/


/ /


/


/


/ /


/


/


02/11/86


/


/


/ /


/


/


/ /


/


/


09/28/84


/


/


09/18/87


/


/


09/18/85


/


/


/ /


/


/


/ /


/


/


/ /


/


/


09/10/87


/


/


04/06/87


/


/


06/26/87


/


/


09/28/87


/


/


04/29/88


/


/


/ /


/


/


03/04/88


/


/


08/07/91


/


/


09/14/92


/


/


/ /


/


/


02/23/90


/


/


08/26/87


/


/


10/05/88


/


/


/ /


/


/


/ /


/


/


02/02/87


/


/


/ /


/


/


01/05/88


/


/


/ /


/


/


04/06/89


/


/


09/30/90


/


/


09/27/89


/


/


/ /


/


/


09/28/89


/


/


10/27/88


/


/


09/30/87


/


/


09/08/87


/


/


09/12/88


/


/


11/16/88


/


/


06/25/86


/


/


/ /


/


/


01/20/89


/


/


/ /


/


/


/ /


/


/


/ /


/


/


/ /


/


/


03/20/8S


/


/


/ /



Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated



Ter



ted



Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated
Terminated



12/18/89
03/19/90
04/10/90
04/13/90
04/13/90
05/10/90
05/10/90
06/14/90
07/24/90
08/21/90
09/28/90
09/28/90
09/28/90
10/07/90
10/30/90
04/19/91
04/19/91
04/21/91
07/19/91
09/23/91
09/30/91
09/30/91
10/08/91
11/08/91
11/15/91
12/19/91
12/19/91
01/21/92
01/23/92
06/16/92
08/04/92
10/26/92
11/10/92
11/30/92
12/09/92
12/31/92
02/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/26/93
03/31/93
03/31/93
03/31/93
04/08/93
04/08/93
04/29/93
04/29/93
04/29/93
04/29/93
04/29/93
04/29/93
04/29/93
04/29/93



192



41137
29137
S1329
60959
61074
61079
61278
70310
70336
90848
91043
61144
90810
29051
41195
61374
91091
90817
90857
41183
90986
40793
61118
00457
40931
41029
40918
60914
40800
60996
91275
29079
40920
60957
61267
90978
20619
41152
50966
61078
29113
61059
30820
30821
30845
61120
29065
50893
90875
40923
90853
90902
51127
90816
90825
90960
90967
91110
91226
80388
60659
61088
61246
41095
00487



B J L Construction Company

Star Housekeeping, Inc

Battle Company

Veterans Electric, Inc.

s fc J Contractors, Inc

Computer Technologies

Carrillo Builders Inc

City Roofing k Remodeling

The Brooke Company

J.H. Lee Accountancy Corporation

California Western Fibre Co., Inc.

U. Gaines Electric Co., Inc.

Tecumseh Construction Company Inc.

Del Interior Construction Inc.

Gonzales General Contractor

Isthmus International

Interface Connectors, Inc

Rocket Maintenance Service

Tiff Culture Inc

W B Kirkwood & Son Construction Co

No. California Universal Enterprises Co.

Weeks Painting & Construction Co

Archi-Holli International Contractors, I

Meza Construction, Inc.

ATS-Ancar Company

New Bern Wood Processing Inc

Velvet Sod Company

Woodrow W Howard Jr

Sara Jones Electrical Contracting Inc

Gilbert Maintenance Service

Aunt Shaggy 's Maintenance Svc

Safe International Inc.

Dixons Inc

Service Circuits, Inc.

High Quality Machine Shop

Excel Security Services, Inc

Operating Scientist Inc.

Reality World Communication Enterprises

Youngstown Dental&Medical Supply Co. Inc

Peacock General Contractors

Winfield Mills, Inc.

Project Group Ltd

Eccles Security Guards Inc

Ajnaf Tndustries Inc

Digna Manufacturing Company

T.J. Jordan & Associates, Inc.

Vng Associates Inc.

C k H Machine Co., Inc

Trend Construction And Development Compa

Cleveland Fruit Market

Pat's Decorating Service, Inc.

Ray & Ross Transport Inc.

Summit Precision Industries, Inc.

A Answer Inc .

Jose F Campos

G & J Daughters Landscaping

Innotec Industries Inc

Puga Engineering, Inc.

Boraq Systems International

Chang's Food Service Company

Moseley Woodcraft Inc

Avs, Inc.

Compel Services, Inc.

O B C Incorporated

Myriad Systems and Services Inc



/


/


/ /


/


/


03/31/92


/


/


/ /


/


/


02/06/86


/


/


/ /


/


/


/ /


/


/


/ /


/


/


/ /


/


/


10/18/88


/


/


/ /


/


/


/ /


/


/


12/14/88


/


/


09/29/89


/


/


12/30/86


/


/


/ /


/


/


/ /


/


/


/ /


/


/


06/19/85


/


/


09/28/84


/


/


/ /


/


/


/ /


/
/


/
/


06/19/89
08/29/88


/


/


09/28/89


/


/


/ /


/


/


/ /


/
/


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09/30/87


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01/16/87



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01/24/90


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10/17/85


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08/29/86


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09/14/90


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04/21/88


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09/18/85


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04/15/87


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12/16/85


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01/21/92

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09/24/87


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11/16/89


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09/30/87


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