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was made to OMB that they would not be utilized to increase our employment level.
Since the extraordinary research requirements in connection with economic studies were to be of limited duration, it was conducive to contract for these studies rather than augment the Commission's staff on a temporary basis. It was determined from the beginning that the independent and impartial participation required by the Special Counsel could best be performed by an outside source. In order to insure this objectivity, it was decided that the Special Counsel should be an independent contractor, free from control or direction of either the Commission or the parties.
2. In light of the above question, why haven't the funds for such a study been requested previously if ICC internal capabilities cannot handle such a project?
The concern over the possible adverse effects of the series of general rate increase cases in recent years highlighted the need for such an investigation. It was recognized from the beginning that the success of such an investigation was dependent on adequate financing. Additional funds were sought within one month of the identification of the problem. The Commission issued its report identifying the need for such an investigation in November, 1971, and negotiations for additional funding were initiated in December.
3. Was this contract put out for competitive bid? 4. If so, could you provide our offices with the ICC's staff evaluation of the other bidders' proposals?
5. If it was a sole source contract, what was the Commission's justification?
6. If it was a sole source contract, would you provide our offices with a copy of the findings and determination study and other analysis required for sole source?
7. Would you cite the authority from the Government Procurement Regulations used by the Commission for this contract?
The unique qualifications of Special Counsel are such that they do not lend themselves to the evaluation of competitive proposals. However, an intensive search was undertaken to find an individual uniquely qualified to perform services of a Special Counsel on a contractual basis in connection with the investigations. Informal inquiries were made in connection with those individuals who, in our opinion, would meet the qualifications and, in several instances, direct contacts were made concerning their availability. For numerous reasons (identification with special interests, prior commitments, personal reasons, etc.), the individuals considered declined or were eliminated from consideration. The Commission's justification for negotiating an individual contract, as authorized by 41 U.S.C. 252(c)(10), is contained in its Determination and Findings, a copy of which is attached as Exhibit A.
8. What is the contemplated duration of this contract?
The Letter Contract began February 26, 1973. It is contemplated that the Definitive Contract, which is expected to be executed on or before April 1, 1973, will continue until the investigations are ended. The maximum amount for which the Commission will be liable, if the Letter Contract is terminated, is $55,000. The maximum amount of the Definitive Contract will not exceed $650,000, including the $55,000 obligated by the Letter Contract. It is anticipated that this amount will fund the contract for a period of two years. If the investigations are not completed by that date, an extension of the Definitive Contract would be contingent upon the availability of funds.
9. Is this a personal services contract?
10. It has come to our attention that a personal services contract was contemplatedhowever, after obtaining a ruling from the Civil Service Commission, it was determined that Mr. Allott could not receive his Senate annuity along with the $60,000 salary if it were a personal services contract. Also, if it were a personal services contract, Mr. Allott could only be entitled to $115 per day-about half of the $60,000 per year. Is this true? Is this normal procedure for the ICC, during contract negotiations, to be 80 solicitious to the interests of the contractor? Do you feel that these actions on the part of the ICC serve the best interests of the taxpayers in obtaining
the lowest possible price on the contract? Would you provide our offices with the ICC correspondence with the Civil Service Commission concerning this matter?
From inception of the concept to retain Special Counsel, it has been the Commission's consistent intention not to enter into a personal services contract for the compelling reasons, among others, that the employer-employee relationship achieved by a personal services contract could be alleged, upon judicial review of our final orders, to have destroyed Special Counsel's independence and impartiality, and to have infected the proceedings with reversible error because the Commission directed and controlled his presentation and recommendations.
As an independent contractor and party to the investigation proceedings, Special Counsel is in the same position as any other litigating participant and must communicate with the Commission on the record with opportunity for rebuttal by opposing parties.
Mr. Allott has been retained as an independent contractor to produce a work product and will not be supervised or directed by the Commission, its members, or any other Federal employee. His sole responsibility is his own work product which will be presented through his nonpartison participation as a party in the interest of the public in those proceedings.
We know of no legal restrictions on the amount of pay for personal services obtained under contract by the Federal Government. The only pay limitation we know of applies to experts and consultants. Unless an agency has specific authority, 5 U.S.C. 3109 limits the amount an agency may pay an expert or consultant to the highest rate payable for Grade GS-15. That rate is currently $134.48 per day. In the past, many agencies were authorized by their appropriation to pay a rate of $115.00 per day, which at the time was in excess of a GS-15. However, when the daily rate of the top of a GS-15 exceeded $115.00 per day, those authorizations became meaningless and subsequently have been dropped from the language of most appropriation bills.
In view of the urgency to proceed with the investigations and the lack of precise information on the estimated costs involved, a Letter Contract has been executed. We are currently conducting negotiations leading to a definitive contract. You may be assured that throughout these negotiations and during performance of the contract the best interests of the taxpayer will be protected. Compensation for personnel under the contract, other expenses, subcontracts, and special consultants will be carefully appraised for reasonableness consistent with the nature of the expense involved.
Compensation, not to exceed $60,000 a year for the Special Counsel, was a condition precedent to executing the letter contract. When compared with the compensation received by top individuals of either the industry we regulate, the legal profession which practices before us, and other highly qualified personnel whose services are routinely obtained by contract by both Government and the private sector, we consider such compensation entirely reasonable.
The purpose of our discussions and correspondence with the Civil Service Commission was twofold. Primarily, we were interested in the Commission's views on the appropriateness of contracting for Special Counsel, including necessary staff. These discussions preceded our identification of Mr. Allott as a prospective contractor. Secondly, our inquiry regarding Mr. Allott's annuity was to obtain an advanced ruling relative to a nonpersonal services contract, and was done so at Mr. Allott's request. Our correspondence with the Civil Service Commission and their reply are attached as Exhibits B and C. 11. Would you provide our offices with copies of the contract and a brief description?
The Commission has instituted the most searching investigations of the railroads in its entire history. Independent participation by an impartial Special Counsel is both desirable and necessary to assure that an adequate record is produced and that all conflicting views are considered without sacrifice of the public interest. Special Counsel is obligated to formulate issues and obtain, compile and analyze available information and data and present the results of his analysis in the course of the proceedings. Upon analysis of the entire record, he shall take a position on the issues presented with a full statement of his views and supporting reasons therefor.
In sum, Special Counsel's role is to provide an unbiased appraisal of the existing rail rate structure and to recommend changes in the law or ratemaking policy which will effectuate the public interest and the National Transportation Policy's goal of developing and preserving adequate, efficient and economically sound rail transportation service as part of a viable national transportation system.
Several parties to the proceedings strongly urged the appointment of Special Counsel (See 340 I.C.C. 868, 883-4). An early precedent was the appointment by the Commission of the Honorable Louis D. Brandeis, prior to his appointment to the Supreme Court, as special counsel in the Five Percent Case, 31 I.C.C. 351 (1914). A copy of the contract is enclosed as Exhibit D.
12. The negotiations surrounding the appointment of Mr. Allott also raise serious questions. Who attended the negotiating sessions with Mr. Allott and Commissioner Brewer, ICC Vice Chairman?
During the various sessions of the negotiations conducted with Mr. Allott, Vice Chairman Brewer was accompanied by one or more representatives from the
Chairman's Office, the General Counsel's Office, the Managing Director's Office, the Office of Proceedings and the Bureau of Economics. The Commission staff was augmented by two contract specialists.
13. What role did the 11 Commissioners have in deciding upon the choice of Mr. Allott? Why were the Commissioners not allowed to vote on such a major contract?
In his search for a man of integrity to undertake the duties of Special Counsel, Vice Chairman Brewer continuously kept Chairman Stafford and the other members of the Commission advised as to his progress. Initially, each member was requested to submit names of candidates. The Commissioners were kept aware of the preliminary negotiations with all candidates, as well as the final negotiations with all candidates, as well as the final negotiations with Mr. Allott. In view of this, no formal vote was taken nor was one considered necessary inasmuch as each had a continuing opportunity to raise objections.
14. Would you provide our offices with the minutes and file memos of the negotiating sessions?
There were no minutes taken or file memos prepared in connection with the negotiating session. Most discussions involved the explanation and clarification of the language used in standard government contracts.
15. Would you describe Mr. Allott's qualifications for managing such a sizable contract? Senator Allott's unique qualifications for Special Counsel are:
(i) A person highly esteemed by government and the parties to the proceeding,
(ii) a person with broad knowledge of national economic problems and policy,
(iii) a person trained in the law, of unquestioned integrity, of judicious temperament, of national prominence and without past identification with special interests involved in the proceedings,
(iv) a person who will ensure that all aspects of the cases are impartially reviewed, considered and recorded, and that any aspect of such cases which, in his judgment, requires further investigation or emphasis will be investigated or emphasized before decision is made by the Commission, and
(v) a person who has proven his management ability through many years as a practicing attorney, elected county and state official, U.S. Army Air Corps Officer, U.S. Senator and Congressional leader. 16. What other contracts even approaching the magnitude of $650,000 has Mr. Allott managed?
Since Mr. Allott was a Senator from the State of Colorado for the past 18 years, he has not managed any government contract during that period of time. However, part of his responsibility in that capacity was overseeing appropriation requests and budgetary justification of billions of dollars. Also, there is no significant question of contract management involved. Rather the contract calls for the performance of a lawyer's classic function of representing a client in these proceedings the public interest of the entire Nation.
17. In the last ten years, what is the largest contract the ICC has let prior to this contract and has the ICC ever negotiated a similar contract?
The largest contract the Commission has let in the past ten years was awarded to RMC, Incorporated, of Bethesda, Maryland, for economic research and studies reflecting rail rate structures and related areas in support of the investigations. It is anticipated that the total cost of this contract will amount to approximately $884,000. To date, $575,000 has been obligated and an additional $155,000 has been allocated for obligation later this fiscal year. The remaining funds are contained in the Commission's 1974 budget request currently pending before Congress. The only other contract of any magnitude is one awarded annually for stenographic reporting services. Our present contract is with C. S. A. Reporting Corporation of Washington, D.C. The total cost of this contract is based upon the actual number of pages of transcript furnished during the fiscal year. At the present time, we have $360,000 budgeted for this year's contract.
Both of these contracts were put out for competitive bid. The Commission has never before negotiated a contract similar to the one let for the Special Counsel.
18. Has any consultant ever been paid $60,000 per year by the ICC?
No. However, it should be noted that the contract in question pertains to a nonpersonal service and is not to be confused with a "consultant."
19. Last year the ICC assured the House Appropriations Committee that an FY 1973 appropriation of $1.4 million—which includes the $650,000 contractwould be sufficient to complete the railroad investigation. Now, however, we understand
that in FY
1974 Budget, the ICC is requesting additional funds for the completion of the study. What happened? Did the Allott contract bust the budget?
The question of the total projected cost of the studies in connection with these investigations was raised in the hearings before both the House and the Senate Appropriations Committees. In both hearings, it was pointed out that we thought we could conclude the studies for the $1,460,000. However, in both hearings, no assurances were made that this amount would be sufficient to complete the entire investigation. (See House hearings, page 1196, and Senate hearings, pa ge 935.)
The Commission is requesting an additional $450,000 for Fiscal Year 1974 to fund economic studies which were not, and could not have been, contemplated when we appeared before the Appropriations Committees. As a result of increased emphasis on the environmental issue, it is necessary to expand our present studies to consider more fully the question of how the demand for rail transportation of recyclable materials might respond to changes in rates. In addition, the Commission staff has in progress an initial study of rail service characteristics. In developing the specifications for this study, it was found necessary to encompass a wider range of service considerations to provide a closer focusing on the rail service performance in relation to the demand for service.
The contract let for the Special Counsel had no impact whatsoever on the additional funding request. In fact, the request for additional funds was initiated in the regular þudget process for Fiscal Year 1974 which began last September.
20. We understand that Mr. Allott has already hired a staff director. If that is true, what functions will be carried out by Mr. Allott for $60,000 per year; Would you provide us with a copy of the work statement?
The performance of a lawyer's function as an impartial participant in any case is well known to Mr. Allott, both from his prior practice of law and his participation in Senate hearings on various legislative matters. The marshalling and presentation of evidence, analysis of the evidence submitted by other parties, possible areas of cross-examination of witnesses, and the presentation of arguments or statements of position on the issues require the unique aptitude of a lawyer with a broad knowledge of economic problems and policies of national scope. The decision as to what form the above matters are to take is within the sole discretion of Special Counsel. As with any case of the magnitude of the pending ICC investigations, a staff of attorneys, economists, tariff and rate experts and clerical help will be required to complete the documents necessary to carry out the directions and decisions of Special Counsel. Of course, a staff director will assure completion of his directions within the time limits demanded by the schedule of the proceedings. Additionally, the staff director will serve as a sounding board for ideas generated by Special Counsel, aid Special Counsel in research, preparation of necessary pleadings, and the formulation of policy that will direct Special Counsel's approach to the overall problems exposed during the hearings.
Your attention is invited to Section A of the Letter Contract pertaining to the nature and scope of service to be rendered.
TO NEGOTIATE INDIVIDUAL CONTRACT UNDER 41 U.S.C.
252(c)(10)—DETERMINATION AND FINDINGS
1 The proposed procurement will provide the nonpersonal services of "Specia Counses” and staff recommended by several parties during the course of the Ex Parte Nos. 270 and 271 proceedings, which recommendation was concurred in by the Interstate Commerce Commission subject to the availability of funds. After conferences with the Office of Management and Budget and hearings before the Senate and House Appropriations Committees, FY 1972 funds were released and FY 1973 funds were appropriated for this purpose. Such funds were to be used only to acquire the services by contract and could not be used to support additional positions on the Commission's staff.
Parties to the above referenced Ex Parte Nos. 270 and 271 hearings were aware of the fact that the tasks to be carried out by Special Counsel would be among the most urgent and complex ever undertaken by the Interstate Commerce Commission; that they could impact heavily upon the rail transportation industry and thus
upon the general economy of the Nation. The responsibilities involved call for (i) the selection of a person highly esteemed by Government and parties to the proceeding, (ii) a person with broad knowledge of national economic problems and policy, (iii) a person trained in the law, of unquestioned integrity, of judicious temperament, of national prominence and without past identification with special interests involved in the proceedings, and (iv) a person who would ensure that all aspects of cases are impartially reviewed, considered and recorded, and that any aspect of such cases which, in his judgment, requires further investigation or emphasis will be investigated or emphasized before a decision is made by the Interstate Commerce Commission.
Procurement of the services of Special Counsel by means of formal advertising is neither feasible nor practical because the nature of the requirement cannot be set forth in a descriptive specification or any other adequately detailed description for the solicitation of bids. It is only possible to specify ultimate objectives that are not sufficiently detailed to communicate a definitive requirement. The final implementation of particulars can only be done as work by Special Counsel progresses.
1. The proposed contract is for services for which it is impractical to obtain competition by formal advertising.
2. The contract may be negotiated with Gordon Llewellyn Allott pursuant to Section 302(c)(10) of the Federal Property and Administrative Services Act of 1949, 63 Stat. 393–4, as amended by 41 U.S.C. 252(c)(10).
ELIZABETH K. DALGLEISH, Contracting Officer, March 6, 1973.
FEBRUARY 21, 1973. Hon. ROBERT HAMPTON, Chairman, U.S. Civil Service Commission, Washington, D.C.
DEAR CHAIRMAN Hampton: Some time ago, we discussed with General Counsel Mondello and his staff the appropriateness of the Interstate Commerce Commission's contracting for the independent and impartial participation by an attorney as Special Counsel in the most comprehensive investigations ever conducted by this agency into the railroads' freight rate structure, freight services, rate base and rate of return.
We are fortunate to have former Senator Gordon Llewellyn Allott of Colorado negotiating with us. However, as a Federal annuitant he desires from the Civil Service Commission a clearance or assurance that his Federal retirement pay will not be jeopardized or affected in any manner if he undertakes the role of Special Counsel under contract with this Commission. A copy of the proposed contract in draft form is enclosed for your information.
Since time is of the essence, may we please have the Civil Service Commission's views with respect to the question presented as promptly as possible. Sincerely,
W. DONALD BREWER,
Washington, D.C. February 26, 1973.
DEAR MR. BREWER: This is in reply to your letter of February 21, 1973, enclosing a proposed Letter of Contract between your Commission and former Senator Gordon L. Allott with respect to matters relating to Ex Parte 270 and related cases.
The draft of the proposed contract indicates that Senator Allott will function as an independent contractor and not as a Federal employee as defined under