TESTIMONY OF HOWARD WILLIAMS, CHIEF, SPECIFICATION AND ESTIMATING BRANCH, ENGINEERING DIVISION, MILITARY CONSTRUCTION, CORPS OF ENGINEERS

The CHAIRMAN. Give your name and your affiliation.

Mr. WILLIAMS. Howard Williams, Chief of the Specification and Estimating Branch, Engineering Division, Military Construction. Mr. MALETZ. Mr. Williams, did you prepare that memorandum? Mr. WILLIAMS. Yes, sir.

Mr. MALETZ. You did prepare the memorandum?

Mr. WILLIAMS. Yes, sir.

Mr. MALETZ. And can you tell us the nature of that memorandum? Mr. WILLIAMs. It is a record of events occurring at the time of the negotiation and shortly thereafter in connection with contract 305, the helicopter hangar contract with Strobel & Salzman.

Mr. MALETZ. You did prepare that?

Mr. WILLIAMS. Yes, sir.

Mr. MALETZ. When did you prepare it, Mr. Williams?

Mr. WILLIAMS. I do not know the exact date, but I would say approximately the middle of September 1954.

Mr. MALETZ. Mr. Chairman, I offer this memorandum in evidence at this point.

The CHAIRMAN. It will be accepted.

(The memorandum referred to is as follows:)

STROBEL & SALZMAN-HELICOPTER HANGARS

1. This office was instructed to prepare plans and specifications for helicopter hangars at the request of G-4, Transportation Corps, and the Army Aviation Service. As a result of this request, negotiations for preparation of plans and specifications for 4,000-, 12,000,- and 20,000-square-foot hangars occurred on March 31, 1954. Negotiated price for this work was $71,050. Negotiations were approved and notice to proceed was given on April 26, 1954. The scheduled completion dates were as follows: Sketch drawings to be submitted 7 days after notice to proceed for the 4,000-square-foot hangars, and 21 days for the other 2 hangars. Definitives were to be completed within 30 days after approval of sketches. Working drawings to be completed within 85 days after approval of definitives. The A-E information form submitted at the time of the contract negotiations indicated the firm to be a partnership of Peter A. Strobel and Joseph Salzman, and was signed by Joseph Salzman, partner, April 7, 1954.

2. On July 1, 1954, Mr. Strobel officially assumed duties as Commissioner, Public Buildings Administration.

3. As a result of requirements by the using service for higher hangar doors and for crane runways in lieu of monorail systems, a modification was negotiated on July 15, 1954, in the amount of $1,478.40. The modification is of such nature that work on basic contract could not be logically completed without incorporation of the requirements of the modification. The architect-engineer information form submitted in connection with this modification again indicated a partnership of Mr. Strobel and Mr. Salzman and was signed by Mr. Salzman on July 19, 1954. 4. Approval of the negotiations for the contract modification was not accomplished because of objections by Legal Division that Mr. Strobel was now a Government employee and as such should not participate in profits resulting from Corps of Engineers' contracts. On August 4, Mr. Schwartz, business manager for the A-E, was called and advised of the necessity of securing a statement of Mr. Strobel's nonparticipation in profits from Government contracts. Mr. Schwartz indicated that the firm was agreeable to any arrangement necessary to meet our requirements in the matter and that he would take up the matter immediately with Mr. Strobel. A confirming letter was dispatched on August 4, 1954, to Strobel & Salzman calling attention to Mr. Strobel's employment as Public Buildings Commissioner and requesting a statement regarding his participation in company profits.

5. On August 20 at the request of General Tulley, Colonel Harris, Legal Division, and Mr. Williams, Engineering Division, briefed Mr. Berry of the Department of the Army Counselor's Office relative to the participation by Mr. Strobel in the contract for Army hangars. The Army Counselor's Office had entered into the picture as a result of inquiry by the PBA legal staff relating to our August 4, 1954, letter. Mr. Berry indicated that our stand with regard to Mr. Strobel's disassociating himself from company profits on Corps of Engineers contracts was ethically correct but to his knowledge was not legally required. Mr. Berry proposed to discuss this matter further with Public Buildings and presumed that a satisfactory answer to our August 4 letter would be forthcoming. 6. On September 16, 1954, Mr. Schwartz in the office of Strobel & Salzman was contacted by phone and directed to stop all work on the contract. It was explained to Mr. Schwartz that this action was necessary pending clarification of Mr. Strobel's connection with the firm. On September 17, 1954, a call was received from Mr. Strobel who also had a representative from PBA Legal Division on the phone. The Corps of Engineers' stand in this matter was explained to Mr. Strobel. During the conversation, Mr. Strobel stated that he was the sole owner of the company and that Mr. Salzman's position was that of a paid partner. In view of this complication and because of other questions of a legal nature which were raised, Mr. Strobel and the PBA' attorney were referred to Mr. McGregor, of Legal Division. It is not known what discussions, if any, occurred as a result.

7. By letter, dated September 20, 1954, the architect-engineer indicated their regrets at the delay in answering our August 4 letter and stated that they expect Mr. Strobel to make a formal reply to the above-mentioned letter within the next few days. To date, no letter of confirmation has been sent the architectengineer with reference to the verbal stop order of September 16, 1954.

8. By letter, dated September 20, 1954, the architect-engineer has indicated the status of work in connection with the final drawings and specifications as follows: 4,000-square-foot hangar, 85 percent; 12,000-square-foot hangars, 25 percent; 20,000-square-foot hangars, 65 percent; all specifications, 60 percent. 9. G-4 has previously indicated an urgency for completing these plans both to meet programed construction of three hangars and to assist certain congressional action on construction progress.

10. Estimated cost of 20,000-square-foot hangar without shops is $461,000. Mr. MALETZ. This memorandum reads as follows:

STROBEL & SALZMAN-HELICOPTER HANGARS

1. This office was instructed to prepare plans and specifications for helicopter hangars at the request of G-4, Transportation Corps, and the Army Aviation Service. As a result of this request, negotiations for preparation of plans and specifications for 4,000-, 12,000-, and 20,000-square-foot hangars occurred on March 31, 1954. Negotiated price for this work was $71,050. Negotiations were approved and notice to proceed was given on April 26, 1954. The scheduled completion dates were as follows: Sketch drawings to be submitted 7 days after notice to proceed for the 4,000-square-foot hangars, and 21 days for the other 2 hangars. Definitives were to be completed within 30 days after approval of sketches. Working drawings to be completed within 85 days after approval of definitives. The A-E information form submitted at the time of the contract negotiations indicated the firm to be a partnership of Peter A. Strobel and Joseph Salzman, and was signed by Joseph Salzman, partner, April 7, 1954. 2. On July 1, 1954, Mr. Strobel officially assumed duties as Commissioner, Public Buildings Administration.

3. As a result of requirements by the using service for higher hangar doors and for crane runways in lieu of monorail systems, a modification was negotiated on July 15, 1954, in the amount of $1,478.40. The modification is of such nature that work on basic contract could not be logically completed without incorporation of the requirements of the modification. The architect-engineer information form submitted in connection with this modification again indicated a partnership of Mr. Strobel and Mr. Salzman and was signed by Mr. Salzman on July 19, 1954.

4. Approval of the negotiations for the contract modification was not accomplished because of objections by Legal Division that Mr. Strobel was now a Government employee and as such should not participate in profits resulting from Corps of Engineers' contracts. On August 4, Mr. Schwarz, business

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manager for A-E, was called and advised of the necessity of securing a statement of Mr. Strobel's nonparticipation in profits from Government contracts. Mr. Schwarz indicated that the firm was agreeable to any arrangement necessary to meet our requirements in the matter and that he would take up the matter immediately with Mr. Strobel. A confirming letter was dispatched on August 4, 1954, to Strobel & Salzman calling attention to Mr. Strobel's employment as Public Buildings Commissioner and requesting a statement regarding his participation in company profits.

5. On August 20 at the request of General Tulley, Colonel Harris, Legal Division, and Mr. Williams, Engineering Division, briefed Mr. Berry of the Department of the Army Counselor's Office relative to the participation by Mr. Strobel in the contract for Army hangars. The Army Counselor's Office had entered into the picture as a result of inquiry by the PBA legal staff relating to our August 4, 1954, letter. Mr. Berry indicated that our stand with regard to Mr. Strobel's disassociating himself from company profits on Corps of Engineers' contracts was ethically correct but to his knowledge was not legally required. Mr. Berry proposed to discuss this matter further with Public Buildings and presumed that a statisfactory answer to our August 4 letter would be forthcoming. 6. On September 16, 1954, Mr. Schwartz in the office of Strobel & Salzman was contacted by phone and directed to stop all work on the contract. It was explained to Mr. Schwartz that this action was necessary pending clarification of Mr. Strobel's connection with the firm. On September 17, 1954, a call was received from Mr. Strobel who also had a representative from PBA Legal Division on the phone. The Corps of Engineers' stand in this matter was explained to Mr. Strobel. During the conversation Mr. Strobel stated that he was the sole owner of the company and that Mr. Salzman's position was that of a paid partner. In view of this complication and because of other questions of a legal nature which were raised, Mr. Strobel and the PBA attorney were referred to Mr. McGregor of Legal Division. It is not known what discussion, if any, occurred as a result.

7. By letter, dated September 20, 1954, the architect-engineer indicated their regrets at the delay in answering our August 4 letter and stated that they expect Mr. Strobel to make a formal reply to the above-mentioned letter within the next few days. To date, no letter of confirmation has been sent the architect-engineer with reference to the verbal stop order of September 16, 1954.

8. By letter, dated September 20, 1954, the architect-engineer has indicated the status of work in connection with the final drawings and specifications as follows: 4,000-square-foot hangar, 85 percent; 12,000-square-foot hangar, 25 percent; 20,000-square-foot hangar, 65 percent; all specifications, 60 percent.

9. G-4 has previously indicated an urgency for completing these plans both to meet programed construction of three hangars and to assist certain congressional action on construction programs.

10. Estimated cost of 20,000-square-foot hangar without shops is $461,000. Now, Mr. Rhind, do you know how this matter was finally resolved

Mr. RHIND. The matter of the

Mr. MALETZ. Of disassociation by Mr. Strobel from his firm's profits resulting from this contract?

Mr. RHIND. The matter was never formally resolved. After a number of discussions, it was decided that it was in the best interests of the Government to proceed and complete the contract work and clean up the contract.

Mr. MALETZ. Who made that decision?

Mr. RHIND. The decision was passed to me from Mr. Zackrison's office.

Mr. MALETZ. Did Mr. Zackrison issue instructions to you?

Mr. RHIND. Not directly.

Mr. MALETZ. I beg your pardon.

Mr. RHIND. Not directly.

Mr. MALETZ. How did you get the instructions?

Mr. RHIND. Through Mr. Williams, I believe.

Mr. MALETZ. All right. Mr. Williams can you explain what transpired subsequently?

Mr. WILLIAMS. The decision came from Mr. Zackrison, from conversations with other people, I believe.

Mr. MALETZ. Did Mr. Zackrison tell you to cancel out the stop order? Mr. WILLIAMS. He was not aware, to the best of my knowledge, that a verbal stop order had been issued. That was an action that was taken by our Structures Branch. However, he was aware of the hold order on this modification to the contract, and it was in connection with that that he came to a final decision, or a final decision was reached, and we were instructed to continue the processing of the contract papers for the modification.

Mr. MALETZ. Mr. Zackrison, can you clear this situation up? Can you tell us what happened? Was a stop order issued as indicated by Mr. Williams' memorandum?

Mr. ZACKRISON. I had no knowledge of a verbal stop order having been issued excepting as it occurs in this memorandum, and as I have been assured by others. I believe such a stop order was issued, and I believe it was issued for the purpose of expediting an answer from Strobel & Salzman; in other words, to give them a little push to giving an answer to our question.

Mr. MALETZ. You mean, as to whether he would disassociate himself from his firm's profits?

Mr. ZACKRISON. That is correct.

Subsequent to that, there were discussions with the Legal Division, and I was assured that there were no legal objections to a continuance of the contracts.

After examining the situation, it seemed to me and to General Tulley that it was in the best interests of the Government to continue with the contract in view of the amount of money already expended, in view of the additional expense that would have been incurred by reason of going to another architect-engineer. A considerable duplication of effort would have been required, as well as delaying the progress of the work. It was based on those facts that we decided to continue. Mr. MALETZ. You decided to continue even though Mr. Strobel had not disassociated himself from the profits?

Mr. ZACKRISON. That is correct, sir.

Mr. MALETZ. Did you also make any decision with respect to future contracts of Strobel & Salzman while Mr. Strobel is in Government service?

Mr. ZACKRISON. It was decided that we would not have any more contracts with Strobel & Salzman while he was in office.

Mr. MALETZ. I have no further questions, Mr. Chairman.

The CHAIRMAN. No questions.

Thank you very much.

Mr. Robb, will you read into the record the telegrams that were received?

Mr. ROBB. Yes.

Mr. FINE. Will you do that expeditiously?

Mr. ROBB. Yes, sir; as fast as I can.

The first one I have here, Mr. Chairman, is addressed to you from Irwin S. Chanin, head of Chanin Organization, Chanin Building, New

York 17:

I should like to present following character reference in behalf of Peter A. Strobel. I have known Strobel for more than 15 years and have had extensive dealings with him and his firm as consultant engineers. Have always found Strobel highly ethical, honest, and proper in all respects and consider him a person of excellent moral character and reputation.

Signed, "Irwin S. Chanin."

The second is signed "George E. Horr, Turner Construction Co.," addressed to the chairman:

I was greatly surprised to read recent press reports about Peter Strobel and the conduct of his office. I do not believe the criticism is justified and since I cannot personally appear to speak in his behalf I take this opportunity to say that I have known him about 20 years and assure you he is an able engineer with a fine reputation in the construction industry. In my position as executive vice president of the Turner Construction Co. I have had many business relations with him and have always found him a man not only of the highest technical ability but also of high personal character and integrity.

GEORGE E. HORR.

The third wire is signed by John P. H. Perry, 1 West 54th Street, New York City, addressed to the chairman:

Understanding that your committee will continue tomorrow its investigation of Peter A. Strobel, Commissioner of Buildings, General Services Administration, I take this method in view of my inability to be in Washington tomorrow to acquaint you with my knowledge of and opinion of the professional standing and character of Mr. Strobel. Should your hearings be postponed to later this coming week I will be glad appear personally before you. I have known Mr. Strobel for 12 years, solely in business and professional relationship.

The consulting engineering firm of which he is the senior partner has had for several years a high standing in the engineering and building construction in and radiating from New York City.

Mr. Strobel has been a member of the American Society of Civil Engineers since 1944. As I have served as a director of that society and am a life member thereof, I can assure you that Mr. Strobel's full membership is a sound measure of the integrity of his professional performances.

Personally I have been in a position for the last two decades to know pretty well the capacity and the character and integrity in New York City of engineers practicing in the manner that Mr. Strobel has.

I am retired now but for 30 years prior to 1951 was vice president and a director of the Turner Construction Co., of New York, Boston, Philadelphia, Chicago, and Cincinnati. For most of 1952 and 1953, I was Deputy to the Assistant Secretary of the United States Air Force charged with responsibility of stimulating the construction of United States airbases on a worldwide basis.

For nearly a year previous I was Chief of Construction of the Munitions Board of the Department of Defense and had several dealings with some of Mr. Strobel's predecessors in the General Services Administration and can assure you that from some contacts I have recently had with Mr. Strobel in his functioning with that organization the Congress and the United States Government should consider themselves exceedingly fortunate by constrast to have Mr. Strobel doing his present job.

JOHN P. H. PERRY.

(The following telegrams were furnished for the record:)

Hon. EMANUEL CELLER,

NEW YORK, N. Y., October 31, 1955.

Chairman, House Judiciary Committee,

Old House Office Building, Washington, D. C.:

I should like to present following character reference in behalf of Peter A. Strobel. I have known Strobel for more than 15 years and have had extensive dealings with him and his firm as consultant engineer. Have always found