Conflict of Intrest (full-time Government Employees)

(The statement referred to is as follows:)

MEMORANDUM IN RE CONTRACT NO. DA-49-129-ENG-260 (CORPS OF ENGINEERS) This contract was let by the Corps of Engineers to Strobel & Salzman in 1953. The contract called for the revision of drawings and specifications for warehouses and heating plants for warehouses. The work to be done under the original contract which was dated April 7, 1953, was set out in schedule A attached to that contract. The compensation of Strobel & Salzman under this contract and schedule was to be $66,035. On July 7, 1953, the contract was modified to provide for additional work under schedule A for which Strobel & Salzman was to receive $34,826. The total compensation payable to Strobel & Salzman was therefore $100,879. All work under this contract was completed by Strobel & Salzman before I came to Washington.

During the course of the work on the contract by Strobel & Salzman the Corps of Engineers made certain modifications in the original schedule A of April 7, 1953, and the additional schedule A of July 7, 1953. These modifications called for certain additional work by Strobel & Salzman. There is no question that the additional work was requested by the Government and performed by Strobel & Salzman. As the additional work was minor in comparison with the total contract, Strobel & Salzman went ahead and did it, without worrying at the time about how much the Government would pay for it, and without asking for a written modification of the contract.

Late in 1953, or early in 1954, I informally submitted a statement of the "extras" to Mr. Lyn Hench, of the Corps of Engineers. According to this list, Strobel & Salzman would have been entitled to about $7,500 for the extra work. My idea was to work the matter out without having any dispute about it and without causing the contracting officer and his staff any embarrassment by reason of the fact that there had been no written contract to cover the "extras." I left the list with Mr. Hench at that time.

After my talk with Mr. Hench in late 1953, or early 1954, the matter lay dormant for some time. In the spring of 1955, I talked to Mr. Hench and his assistant, Mr. Uhr, about it. They told me that Strobel & Salzman should formally submit the itemized list of extras and credits and they would review it. The itemized list was submitted by Mr. Salzman in a letter dated May 6, 1955, showing that Strobel & Salzman were entitled to compensation for extra work in the amount of $8,208. The difference between this figure and my original figure was caused by a recomputation of the hours spent on the extra work. After the submission of Mr. Salzman's letter of May 6, 1955, I had no further conversation with any representatives of the Corps of Engineers about the matter. On June 21, 1955, Mr. H. B. Zachrison, Sr., of the Corps of Engineers telephoned Mr. Schwarz in New York and said the Corps of Engineers would allow $3,097 for the extra work, and if this was acceptable to Strobel & Salzman, Mr. Zachrison would send along the required papers for signature. Mr. Schwarz accepted Mr. Zachrison's offer. Mr. Schwarz took this action without consultation with me; in fact, at that time I was on the Pacific coast. By letter of June 28, 1955, General Tully, of the Corps of Engineers, sent out the necessary papers, consisting of an itemized statement of the extra work and an agreement for payment of $3,097 by the Government. As the Corps of Engineers wanted to have the matter completed by the expiration of the fiscal year on June 30, the papers were not sent to Strobel & Salzman in New York but were sent to me in Washington by messenger and I signed for the firm.

Mr. MALETZ. May I ask one question, Mr. Chairman? The question is this:

There are two separate Corps of Engineers contracts that we are talking about, as I understand it. One is the warehouse contract which goes back to 1953, and the eventual compensation paid to Strobel & Salzman was $100,879; is that correct?

Mr. STROBEL. No. That was the fee negotiated for this contract. It actually was negotiated in two parts. The first one was $66,000, and the second part, $34,000. And that came to almost $101,000. Mr. MALETZ. And work on that contract, as you point out, was completed before you came to Washington?

Mr. STROBEL. That is correct.

Mr. MALETZ. And in 1955, you had some contact with the Corps of Engineers concerning a claim for extras on that?

Mr. STROBEL. That is correct.

Mr. MALETZ. Then there came a time, did there not, when on March 31, 1954, negotiation was completed on a new contract with the Corps of Engineers

Mr. STROBEL. Correct.

Mr. MALETZ. To design helicopter hangars; is that correct?

Mr. STROBEL. That is correct.

Mr. MALETZ. And in connection with that second contract, there was this disassociation question?

Mr. STROBEL. That is correct.

Mr. ROBB. That is correct.

Mr. MALETZ. And in the first contract of 1953, you had the problem about the claim for extras; in connection with the second, you had the problem about disassociation?

Mr. STROBEL. Right.

Mr. ROBB. I have one question about the other contract, the March 31, 1954, contract.

Mr. MALETZ. Yes.

Mr. ROBB. Mr. Strobel, you testified, I believe, that you conferred with Mr. Williams and agreed on the fee on that contract on March 31, 1954; is that right?

Mr. STROBEL. Correct.

Mr. ROBB. I show you these longhand notes and ask if these are your notes made at the time showing that fee, which you agreed upon?

Mr. STROBEL. That is correct.

Mr. ROBB. Now, this notation here, "Accepted by Mr. Williams, 3/31/54," with an arrow pointing to the figure, $71,050; is that your handwriting?

Mr. STROBEL. That is correct.

Mr. ROBB. Mr. Chairman, could this go in the record?

The CHAIRMAN. Could I see it?

Mr. ROBB. This is our only copy. I wonder if I might substitute a photostat.

The CHAIRMAN. You might make a photostat of it and then put it in the record.

Mr. ROBB. Yes, sir.

Mr. FINE. Those are the notes he made at the time, on March 31, 1954.

The CHAIRMAN. That is all right.