Mr. STROBEL. The partnership was entered into originally in 1945. And the agreement is such that it automatically renews itself from year to year unless either one of the parties uses the option that is part of the agreement.

Mr. MALETZ. Do you recall entering into a new partnership arrangement with Mr. Salzman on January 3, 1955?

Mr. STROBEL. There have been slight changes since 1945 and up to now. And there might have been a change at that time.

Mr. MALETZ. Could you tell us in general what the terms of your arrangement with Mr. Salzman are?

Mr. STROBEL. I would be glad to. The general term is this, that Salzman is guaranteed a certain amount of money each year, and I as the other partner a similar amount, out of the net profits of the business. We are on a cash basis, using the calendar year as our term. Then the balance of the net profit is split between us according to a certain percentage division.

The CHAIRMAN. What is that split?

Mr. STROBEL. The split at the present time is that Mr. Salzman, according to the agreement, is entitled to 10 percent of the balance of the net profit.

The CHAIRMAN. And who gets the other 90?

Mr. STROBEL. I get the 90. However, I do want to say this, that the rule as far as division of money is concerned has never been strictly adhered to. Mr. Salzman has gotten considerably more than he would be strictly entitled to according to the agreement.

The CHAIRMAN. In other words, according to the agreement, I presume, each has a drawing account of a certain amount, and then what is left is split?

Mr. STROBEL. That is correct.

The CHAIRMAN. According to the agreement, 90 percent to yourself and 10 percent to your partner?

Mr. STROBEL. Right, because he is guaranteed a certain amount of money. Suppose there is no profit, he is still guaranteed a certain amount of money.

Mr. FINE. Did this same arrangement exist when you first organized the partnership?

Mr. STROBEL. Yes; but it was slightly different.

Mr. FINE. Was it more or less?

Mr. STROBEL. It would all depend on the number of projects or clients that could be classified as Mr. Salzman's.

Mr. FINE. Was your percentage then more or less?

Mr. STROBEL. Well, I was trying to explain that. Mr. Salzman had then a participation of 35 percent of the net profit of the projects that he brought into the office.

Mr. MALETZ. Now, Mr. Strobel, since becoming a Government official have you continued to obtain a drawing account and 90 percent of the profits of Strobel & Salzman?

Mr. STROBEL. Well, I don't know if it is correct to call it a drawing account. I have participated in the net profit according to the explanation I just gave.

Mr. MALETZ. According to the partnership arrangement?
Mr. STROBEL. That is right.

Mr. MALETZ. Now, is this a correct statement or not, that Mr. Salzman is a partner in name only and in fact is a salaried employee of yours under contract?

Mr. STROBEL. That is not a correct statement.

Mr. MALETZ. Now, did Mr. Salzman make any contributions, any financial contributions to Strobel & Salzman?

Mr. STROBEL. No; he has never contributed financially.

Mr. MALETZ. Who bears the risk of loss?

Mr. STROBEL. I do.

Mr. MALETZ. Now, would it be fair to say that the Strobel & Salzman firm is for all intents and purposes a one-man operation built around you?

Mr. STROBEL. Well, I don't want to build up my own importance, but it probably wouldn't be altogether unreasonable to say that I am a very important man in that outfit-in fact, I knew that all the time, and I found out that I was a lot more important to the firm than I thought I was when I came down here.

Mr. MALETZ. Now, does Mrs. Strobel serve as paymaster and bookkeeper of Strobel & Salzman?

Mr. STROBEL. That is correct.

Mr. MALETZ. I take it she has not moved to Washington.

Mr. STROBEL. She has not.

Mr. MARLETZ. About how many days a week does she go to the office? Mr. STROBEL. She is in there at least 1 full day a week.

Mr. MALETZ. Now, would you say that a considerable percentage of the clients of Strobel & Salzman are architectural firms?

Mr. STROBEL. Yes; they are very important in our business.

Mr. MALETZ. Would you have any objection to disclosing the number of clients Strobel & Salzman has at the present time?

Mr. STROBEL. Well, I don't think I have that figure.

Mr. MALETZ. I do. I have a breakdown which I have compiled on the basis of records which Mr. Schwarz, of your firm, has furnished me. But I just wondered if you have

Mr. STROBEL. I could make a guess.

Mr. MALETZ. I wonder if you have any objection to having that information disclosed.

Mr. STROBEL. No.

Mr. MALETZ. Our breakdown shows that at the present time Strobel & Salzman is being retained by 17 architectural firms, 5 engineering concerns, 3 contracting firms, and 7 other concerns, making a total at the present of 32 clients. Is that approximately correct, to the best of your knowledge?

Mr. STROBEL. To the best of my knowlege, that would be correct. Mr. MALETZ. Now, I take it that Strobel & Salzman, like other consulting engineers, obtain contracts from clients on a negotiated rather than a competitive-bid basis in accordance with the requirements of the code of ethics, if you will, of professional engineering societies; is that right?

Mr. STROBEL. Well, I wish I could say that it was 100 percent correct, but it isn't, because there are some firms that will take proposals from different firms, and then they give out the work on the basis of price.

Mr. FINE. I didn't hear that last word.

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Mr. STROBEL. On the basis of price. However, we attempt not to get into that too much.

Mr. MALETZ. Now, would it be fair to say, Mr. Strobel, that the average fee for a job is about $7,000?

Mr. STROBEL. I would like to say this, that the contracts of Strobel & Salzman are in a great number, and they are quite small, so the $7,000 figure might be right. We have contracts that are a lot bigger, we have a number that are a lot smaller, but we have many contracts, many jobs going on at the same time.

Mr. MALETZ. Now, how many employees does Strobel & Salzman now have?

Mr. STROBEL. At the present time I think they have about 20 or 22 technical employees.

Mr. MALETZ. Is the firm now working on an overtime basis?

Mr. STROBEL. Overtime is not fixed; we use overtime a lot for several reasons. First, the men get paid time and a half; they can make some extra money and we can take care of peak loads without having to go out and hire additional people. In other words, it increases the flexibility of a stable organization.

Mr. MALETZ. Maybe I didn't make my question clear. Is the firm now working on an overtime basis?

Mr. STROBEL. I don't know.

Mr. MALETZ. Do you recall whether or not the firm was working on an overtime basis on or about September 14, 1954?

Mr. STROBEL. September 14, 1954? Well, it might have been. I cannot retain that kind of information.

Mr. MALETZ. Now, Mr. Strobel, before I ask you about your relationship with Strobel & Salzman since becoming a Government official let me put this question to you: Did you feel that you could not accept Government employment unless you could also continue to obtain your drawing account and 90 percent of the profits of Strobel & Salzman?

Mr. STROBEL. Well, I put it this way, that I could not see my way to accept employment with the Federal Government without being assured that the office of Strobel & Salzman could be permitted to continue, because it is my creation, and it is about the only thing I have.

The CHAIRMAN. And continue under the terms of the contract you have with Mr. Salzman?

Mr. STROBEL. Yes.

Mr. MALETZ. I take it you felt, in other words, that you could not afford to go to work for the Government unless your income continued from Strobel & Salzman?

Mr. STROBEL. That is correct. But I was more interested in the continuation of the firm. I could not under any circumstances permit the firm to go to pot or get out of action.

Mr. MALETZ. Now, were you concerned about the propriety of working for the Government and at the same time continuing to draw an income from Strobel and Salzman?

Mr. STROBEL. Well, indirectly I suppose I was concerned.

Mr. MALETZ. Did you endeavor to obtain an opinion from anyone prior to assuming Government employ as to the propriety of this arrangement?

Mr. STROBEL. Yes; I had the situation clarified with the Administrator of General Services.

Mr. MALETZ. You discussed with Mr. Mansure before you came to work for the Government your arrangement with Strobel and Salzman?

Mr. STROBEL. Yes. The understanding was, as was pointed out in the news release that you read part of, that I relinquished active management of my firm.

Mr. MALETZ. Did you consult with anybody else with respect to this arrangement prior to assuming Government employment?

Mr. STROBEL. No; I don't think so, because it was an item that was paramount to me, and it was either that or I didn't come to Washington.

Mr. MALETZ. Do you recall an interview that I had in your office on or about September 11, 1955?

Mr. STROBEL. Right.

Mr. MALETZ. Did you not indicate to me at that time that you had spoken to an adviser of yours about the propriety of this arrangement?

Mr. STROBEL. I had spoken to several friends of mine about this, about coming to Washington.

Mr. MALETZ. And did you not tell me then that your adviser-and I am quoting you directly-said he would check with persons in the administration as to the propriety of this arrangement?

Mr. STROBEL. Well, I am not too definite as to what happened, and actually I don't know what checks were made.

Mr. MALETZ. Did you not tell me that this adviser specifically informed you that he would check with administration officials as to the propriety of this arrangement?

Mr. STROBEL. Well, I may have said something like that. Whether it was done or not, I don't know.

Mr. MALETZ. Do you recall a rather lengthy meeting that I had with you on September 13, 1955?

Mr. STROBEL. Right.

Mr. MALETZ. In the course of that meeting did you not tell me that in the early part of 1954 you were recommended for your job by a person you would not identify, who had never had any official Government status?

Mr. STROBEL. You mean recommended for the position down here? Mr. MALETZ. Yes. Do you recall telling me that? I think Mr. Moody was present, Mr. Moody, counsel of Public Building Service was present at the same meeting?

Mr. STROBEL. Right.

Mr. MALETZ. Do you recall telling me that, sir?

Mr. STROBEL. That is correct.

Mr. MALETZ. Did you indicate to me that you had considerable discussion with your adviser as to whether you could serve as Commissioner and at the same time continue to operate the firm of Strobel & Salzman?

Mr. STROBEL. Well, this so-called adviser is one of the friends that I discussed the situation with.

Mr. MALETZ. Did you not indicate to me that this adviser told you that he would check with Attorney General Brownell and Thomas

Stevens, an assistant to the President, as to the propriety of your arrangement?

Mr. STROBEL. I don't know if that is the real meaning of what I said, because I don't know whether it was checked or not.

Mr. MALETZ. But did the adviser, your adviser, inform you that he would check with the Attorney General and Mr. Stevens at the White House as to the propriety of your arrangement?

Mr. STROBEL. No, I don't think so.

Mr. MALETZ. You don't recall telling me that?

Mr. STROBEL. Yes, we talked about this so-called adviser, who was one of my friends.

Mr. MALETZ. Do you recall that I asked you a number of times whether you would tell me the name of your adviser?

Mr. STROBEL. Yes, I can do that.

Mr. MALETZ. And I take it that you recall stating that you would prefer not to disclose his name?

Mr. STROBEL. That is what I said, yes, sir.

Mr. MALETZ. Could you tell us the name of the adviser?

Mr. STROBEL. Yes, I can.

Mr. MALETZ. Would you please, sir.

Mr. STROBEL. I would call him a friend. The name is Harry Smith.. Mr. MALETZ. And who is Harry Smith, sir?

Mr. STROBEL. Harry Smith is a businessman in New York who runs a photographic establishment, and who also is an educational consultant or counsel.

Mr. MALETZ. Now, did Mr. Smith tell you at a later date that he had checked with the Attorney General and Mr. Stevens concerning the propriety of your serving as Commissioner of Public Buildings and at the same time continuing to draw your income from Strobel & Salzman?

Mr. STROBEL. Would you repeat that?

Mr. MALETZ. Would you repeat that question?

(The question was read by the reporter.)

Mr. STROBEL. Well I was made to understand that I could continue my interest in Strobel & Salzman.

Mr. MALETZ. You were made to understand by whom, sir?

Mr. STROBEL. Well, it was cleared at the time I took office, I mentioned before, with Mr. Mansure.

Mr. MALETZ. Did Mr. Smith tell you that he had consulted with the Attorney General and with Mr. Stevens at the White House?

Mr. STROBEL. No; he didn't tell me that.

Mr. MALETZ. Did he say he was going to consult with him?

Mr. STROBEL. I don't recall that; no.

Mr. MALETZ. You don't recall telling me that?

Mr. STROBEL. I told you that, but I don't recall having him say that to me at that time. But he did tell me that it was in order for me to continue my interest in the firm of Strobel & Salzman.

Mr. MALETZ. Mr. Strobel, I made a rather detailed memorandum of our lengthy meeting, and this is what I understood you then told

me:

Mr. Strobel volunteered that in the early part of 1954 he was recommended for his job by a person he did not identify who has never had any official Government status. Mr. Strobel indicated that he had considerable discussion with this person as to whether he could serve as Commissioner and at the same time continue to operate his engineering firm. This individual, Mr. Strobel said,.