formed and I think accurately, that this came up in connection with the negotiation of a new contract after the old one had expired which would, of course, make inoperative the provision that we could demand new facilities. Mr. BROOKS. This, of course, is the case of Fred Harvey with a renewal of existing contracts. How about the Sequoia case where you were in the middle of a contract where they did not occur in the middle of a contract? It had 13 years to run when you made the agreement. This is prior, Mr. Secretary, to your taking over, but it is a problem still with us. Secretary UDALL. I am very much aware of it and it is brought in to me from time to time. Mr. CARVER. This, Mr. Chairman, is precisely the point: We are engaged now in trying to relate the matter of the franchise fees-the policy concerning improvements to be made as a practical matter, as I think the question of the chairman indicates, even at the maximum rate which we charge as a franchise fee Mr. BROOKS. Which is low Mr. CARVER. That is what I am saying. The maximum we charge to anybody is not a significant item in the total cost structure of that particular thing. So we are really arguing a kind of a de minimis proposition here anyway. What we are really concerned with is what ought the U.S. Government, what kind of standards ought it apply where it is in the interest of the Government to get these facilities furnished to the public at reasonable prices? Ought we to control this, in effect, through the fluctuation of the franchise fee or ought we to control it in terms of fixing the charges or ought we to control it in terms of asking let's say the Appropriations Committee to guarantee a reasonable return and then for us to take out all the risk, so to speak? These are the alternatives which are presented. Mr. BROOKS. You can see, then, that this is a problem that is going to require some pretty drastic revision and some hard decisions on what kind of policy we are going to stay with. Secretary UDALL. Let me make a statement to you, Mr. Chairman, on this. This whole matter of the policy we have had in the National Park Service, as I have said, goes back about 40 years and it has sort of grown up like Topsy and it is now a big thing and I don't think we have Mr. BROOKS. It is going to get bigger, too, as more and more people go out. As your responsibility increases and we have more people who like to get out in the open, as you and I do. Secretary UDALL. These business opportunities also vary a great deal. I think any of us in the room here would like to have a concession on the rim of the Grand Canyon. It is one of the most visited places s-it is visited the year around. And the Fred Harvey Co. happens to be one of the few concessionaires we have that is in this favorable position-it has other businesses, it is a major concern. And deciding whether we treat them the same way we do other concessionaires or whether we handle their books in a different way, these are problems we are just beginning to come to grips with. Frankly I think the inquiry of the committee already is focused on some things where we have to do some sweating and we have to do perhaps a better job of auditing some of the operations. I would personally regret it if we ever reached the point where, if the average American citizen who goes to some of these parks-if he goes to Grand Canyon and wants to stay overnight he has to pay $20 a night for a room in a place that is on public property where we can have the power to regulate what is charged. Mr. BROOKS. There is no danger of your allowing them to set a rate like that, is there? Secretary UDALL. We do not want to. What we have been trying to do, of course, is to keep the rates low. But in the meantime we have encountered some of the problems that you are raising here today which may not be good stewardship in terms of the type operation we are making. I don't know of any National Park Service problem that Secretary Beasley, Secretary Carver, and some of the administrative people in the Park Service have spent more time on since I took over as Secretary. I am not satisfied yet that we have the answers. Mr. BROOKS. You are still working on it? Secretary UDALL. We are still working on it as far as I am concerned and we appreciate the questions you have asked. I think you are helping you are helping me certainly as far as I am concerned. Mr. BROOKS. Let me put two exhibits in, showing the details on the Harvey and Sequoia operations. (Exhibits 1 and 2 follow:) EXHIBIT 1-EXAMPLE OF CONCESSION CONTRACTS WHERE FEES WERE REDUCED FOR BUILDING COMMITMENTS This is an example where the Park Service reduced the franchise fee in a renewal contract in return for a building commitment from the concessionaire. Contractor: Fred Harvey, Grand Canyon National Park. Previous contract Current contract Nov. 9, 1954. Date of contract.. Contract period. Amount of franchise fee. Amount of construction to be undertaken. Undated. Jan. 1, 1933 to July 31, 1954.. Aug. 1, 1954 to July 31, 1974. 3 percent of gross receipts over $600,000.- $5,000 a year and 4 of 1 percent of gross receipts. $1,000,000 to be completed in the 1st 5 years. Based upon the concessionaire's gross receipts from August 1, 1954, through December 31, 1961, the adjustment in the fee over the period of the renewal contract will result in a total fee reduction of about $1,140,000. EXHIBIT 2-EXAMPLES OF CONCESSION CONTRACTS WHERE FEES WERE REDUCED FOR BUILDING COMMITMENTS This is an example where an existing contract was amended to reduce the franchise fee in return for a building commitment from the concessionaire. Contractor: Sequoia & Kings Canyon National Park Co. Based upon the concessionaire's gross receipts for the 3-year period 1959-61, the adjustment of the fee over the period of the amended contract will result in a total fee reduction of about $143,000. FREE ACCOMMODATIONS FOR GOVERNMENT EMPLOYEES FROM CONCESSIONAIRES Mr. BROOKS. Several months ago the Honorable William L. Dawson, chairman of our full committee, asked us to take up with the Department the propriety of the Park Service regulations and the practice of authorizing employees to demand and receive free meals and other accommodations at reduced rates. I did not know a lot about it. We looked into it. We had considerable correspondence and I would say it was largely unsatisfactory. We think there is a serious conflict of interest problem here and no real justification for continuing the practice. I have gotten no response to the letters which I wrote you on May 21 and 31, and I think that the Park Service should have been giving better answers prepared for you to take a look at. They should have looked into them and checked them. I would like to submit this correspondence for the record. EXHIBIT 3-LETTERS AND NEWSPAPER ARTICLES RELATING TO THE PRACTICE OF AUTHORIZING EMPLOYEES TO DEMAND AND RECEIVE FREE MEALS AND OTHER ACCOMMODATIONS AT REDUCED RATES Hon. STEWART L. UDALL, HOUSE OF REPRESENTATIVES, COMMITTEE ON GOVERNMENT OPERATIONS, Washington, D.C., August 9, 1961. DEAR MR. SECRETARY: At this committee's request, the Comptroller General recently investigated allegations (1) that Mr. John C. Preston, Superintendent at Yosemite National Park, had received a free television set from the Yosemite Park & Curry Co., which is a concessioner in that park; (2) that the TV set was installed free of charge by a company employee and a Park Service employee; and (3) that the Park Superintendent had received free meals for himself, his wife, and others at the company's Ahwahnee Hotel. The Comptroller General has reported to this committee as follows: (1) Mr. Preston received a 17-inch table model RCA television set in February 1959 from Mr. George Oliver, transportation manager of the Yosemite Park & Curry Co. This set had been purchased from the Leo J. Mayberg Co., Fresno, Calif., in December 1958 on an invoice for $188.16 to the Yosemite Park & Curry Co. The amount of this invoice was charged by the Curry Co. to Mr. Oliver's account. Mrs. Preston on February 2, 1959 paid $196.80 to Mr. Oliver. Mr. Oliver paid $188.16 to the Curry Co. on February 4, 1959. The $8.64 difference apparently covered the cost of some lead-in cable and other materials used in the installation. (2) The TV set and antenna were installed by Mr. Oliver and Mr. James W. Gann, the National Park Service's electrical supervisor, without charge for the labor. (3) From October 3, 1958, through February 27, 1961, Superintendent Preston and his guests received, on 98 occasions, a total of 167 meals without charge at the Ahwahnee Hotel and other company restaurants. Mr. Preston stated to the GAO investigator that on other occasions he paid for his meals at a discount rate. The receipt of these personal benefits were presumably under the policy which the National Park Service has for some time followed of requiring the concessioner to "furnish available transportation within the park free of charge, and other accommodations at reduced rates, to Federal and State employees visiting the park on official business and to the employees of the park away from their regularly assigned stations," and also the provision in the National Park Service Concessions Management Handbook (ch. 3, p. 13) that the Superintendent shall be furnished meals without charge when performing necessary inspections of concession facilities. It seems to us that Government employees who, on behalf of the Government, exercise supervisory responsibilities over private interests should avoid any conflict of interest and also the appearance of any conflict of interest which may arise by receiving from such private interests any personal favors, gifts, or perquisites in connection with the performance of their official duties. We think that requiring concessioners to provide free transportation for Government employees on official business raises no question of conflict of interest. Since such cost would otherwise be payable by the Government on transportation requests, no personal benefit accrues to the individual Government employee. However, the provision under which the concessioner provides other accommodations to Federal employees at reduced rates is more questionable insofar as concerns those Federal employees who have official responsibilities with respect to the concessioner's operations. Providing personal accommodations to them at reduced rates tends to create in them a sense of personal obligation to the company or person providing the reduced rate. Such reduced rate has sometimes been justified on the ground that the Government's per diem payments to its employees while on official travel have been inadequate. Whatever validity this argument may have has been substantially reduced by the legislation (H.R. 3279) recently approved by this committee and by the Congress and now awaiting the President's approval, raising the maximum per diem to $16 and increasing other travel allowances. In his opinion of October 24, 1960 (B-143189) to your predecessor, the Comptroller General suggested that your Department ought to take a close look at this "reduced rates accommodation" practice, and we concur in that suggestion. The practice of providing free meals or other personal accommodations has even less justification. The furnishing of free personal benefits inevitably tends to create at least an appearance of direct conflict of interest between the Government employee's duty to protect the Government's interest in its relationships with the concessioner, and the sense of personal obligation which flows from the receipt of such personal benefit from the concessioner. It is possible, also, as the Comptroller General has recently suggested in a letter to a member of our committee, that the furnishing of free hotel accommodations, including meals, and acceptance thereof by Interior Department officials in connection with the performance of their official duties, conceivably could constitute a violation of the criminal provisions of 18 U.S.C. 1914. This statute penalizes the giving to, and the receipt by, Government officials, of "any contribution" to, or any supplement of salary of, a Government employee for services performed by him for the Government of the United States. This prohibition would be further expanded in the conflict-of-interest_codification (H.R. 8140) passed by the House on August 7, 1961 (Congressional Record daily issue, pp. 13737-13745); (see H. Rept. 748, 87th Cong., July 20, 1961). In this bill, the substance of 18 U.S.C. 1914 would be retained in a new 18 Ú.S.C. 209; and, in addition, the bill would enact a new 18 U.S.C. 201 which would, in subsections (f) and (g), penalize the giving to, and the receipt by, a public official of "anything of value *** for or because of any official act performed or to be performed by" such public official, otherwise than as provided "by law" for the proper discharge of official duty. We shall appreciate your considering this matter and advising us of your views. WILLIAM L. DAWSON, Chairman. Sincerely, U.S. DEPARTMENT OF THE INTERIOR, Hon. WILLIAM L. DAWSON, OFFICE OF THE SECRETARY, Washington, D.C., February 15, 1962. Chairman, Committee on Government Operations, DEAR MR. CHAIRMAN: Your letter of August 9 to Director Wirth of the National Park Service, together with your letter of same date to Secretary Udall, acknowledged in my letter to you of August 28, has how been reviewed and the following information in respect to your inquiries is furnished as enumerated in your letters. First, your letter to Director Wirth: The park superintendent is to furnish, on a reimbursable basis, all types of utility service to concessionaires, contractors, permittees, or other users of such service. The power service is the property of the U.S. Government and as such no payment is required for the powerline. You are correct in stating that reimbursement should be made for the electricity previously furnished. The Park Service has been directed to have full reimbursement made for electricity used in the past and to collect each 3-month period for present use of power. Second, your letter to Secretary Udall: 1. In response to the statement that Mr. Preston received a 17-inch table model RCA television set in February 1959 from Mr. George Oliver, transportation manager of the Yosemite Park & Curry Co., Mr. Preston responded to this inquiry by producing for examination a canceled check dated February 2, 1959, drawn from his account by his wife, Betty M. Preston, in payment for the television set in the amount of $196.80. The check was endorsed by Mr. Oliver and deposited in the American Trust Co. of San Francisco, Calif., to the credit of the Yosemite Park & Curry Co. on February 9, 1959. 2. In reference to the statement that the television set and antenna were installed by Messrs. Oliver and Gann on Mr. Preston's residence, Mr. Oliver states that he does this work as a hobby and Mr. Gann took annual leave in order that there would be no possibility of this being considered as official duty. These were personal arrangements and as such compensation would be a factor for these parties to determine among themselves. 3. The statement that from October 3, 1958, to February 27, 1961, Preston and guests received a total of 167 meals without charge at the Ahwahnee Hotel and other company restaurants: Preston was acting under the provisions of the National Park Service Concessions Management Handbook which authorizes, in connection with routine or special inspection of the facilities of the park concessionaire, that when an employee is not in travel status, he is to be furnished without charge such facilities as meals and so forth, as are considered by the employee to make a satisfactory inspection. The handbook states, "Mere rate approval for food does not assure either quantity or quality control. The Superintendent will exercise systematic and constant practical inspections to see that the quantity and quality of food served to the visitors are maintained at the rates he has approved." It is not felt that Mr. Preston abused this privilege in receiving the 167 meals as is indicated in your letter. A copy of the departmental manual release which furnishes, in pocket-size style, the regulations on employee conduct and outside work, is being attached for your information. The Park Service is presently in the process of modifying its regulations to conform to the provisions of the departmental regulations. With respect to your comments on free meals and lodging, a final determination has not been made as it relates to individuals outside the Department. For employees within the Department it has long been the practice to deduct 80 percent of their per diem for meals and lodging furnished by the concessionaire. We feel this is not inconsistent with the provisions of Government travel regulations wherein it states: "Where meals and/or lodging are furnished without charge or at a nominal cost by a Federal Government agency at a temporary duty station, an appropriate deduction shall be made from the authorized per diem_rate.' For Park Service employees performing the inspection program of the Service, where no per diem is authorized they shall be reimbursed for out-of-pocket expense. We feel that any comments pertinent to the pending legislation presently before the Congress would be untimely. If you should desire more information we shall be happy to furnish it to you. Sincerely yours, D. OTIS BEASLEY, Administrative Assistant Secretary. |