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lite Corp. of a downward revision in its estimated charges to us for satellite circuits in the Pacific. On June 23, 1966, the Federal Communications Commission announced that Comsat may furnish satellite services and channels only to authorized common carriers, including Western Union International, except in unique circumstances.

In view of these developments, we respectfully request that you reopen the matter of the 30 Pacific satellite circuits and extend to Western Union International the opportunity to submit revised quotations for these circuits.

Western Union International is now reviewing its rate schedules in line with the directive of the Commission, contained in its June 23 announcement, and in line with the information received from Comsat on June 22, concerning reduced satellite circuit costs to us. We fully expect to develop attractive rates for the Department of Defense. In addition, we wish to take every step available to us in order to qualify for our apportionment of your oversea circuits under the DECCO apportionment policy.

Accordingly, we respectfully request that we be accorded the opportunity to submit revised quotations for the 30 Pacific circuits. Such quotations could be submitted on or before July 6, 1966, if this meets your approval. Sincerely yours,

HENRY G. CATUCCI.

DEFENSE COMMUNICATIONS AGENCY,

Washington, D.C., July 1, 1966. WESTERN UNION INTERNATIONAL INC., Washington, D.C. (Attention Mr. H. G. Catucci, Vice President).

DEAR MR. CATUCCI: Your response to our May 2, 1966, request for a proposal to provide certain communications services in the Pacific ocean area has been evaluated together with those received from the other carriers. No revision to your proposal was submitted in response to our offer of June 13, 1966, to allow a revised price quotation by June 17, under the provisions of ASPR section 3–805.1. However, your request of June 24, to be allowed to submit revised price quotations was carefully considered.

After evaluation of all the above, the Department of Defense has concluded that the carrier whose proposal offers the greatest advantage to the Government and affords the greatest assurance of providing the earliest possible service is the U.S. Communications Satellite Corp. (Comsat). The Department of Defense intends, therefore, to initiate immediately negotiations to definitize a contract with Comsat.

The Defense Commercial Communications Office contracting officer will provide separately the information to unsuccessful offerors required by ASPR 3.508(b).

Your timely response to our request for proposal for these urgently needed services is greatly appreciated. Sincerely,

GEORGE E. PICKETT,

Major General, USA, Deputy Director for Defense Communications System.

WESTERN UNION INTERNATIONAL, INC.,

July 13, 1966. Re Code 350. Maj. Gen. GEORGE E. PICKETT, Deputy Director for Defense Communications System, Department of Defense,

Washington, D.O. DEAR GENERAL PICKETT: This refers to your letter of July 1, 1966, in which you advised as follows:

“(T) he Department of Defense has concluded that the carrier whose proposal offers the greatest advantage to the Government and affords the greatest assurance of providing the earliest possible service is the U.S. Communications Satellite Corp. (Comsat). The Department of Defense intends therefore to initiate immediately negotiations to definitize a contract with Comsat."

The context of your letter indicates that you have not yet granted our request f June 24, 1966, for an opportunity to submit revised quotations for the 30 Pacific circuits. This request was submitted because of two significant developnents which occurred subsequent to June 17, 1966, the date for submission of revised price quotations. As outlined in our June 24 letter, these developments were: (a) Notice from Comsat on June 22 of a reduction in its estimated charges to WUI for satellite circuits in the Pacific; and (b) the announcement of June 23 by the Federal Communications Commission that Comsat may furnish satellite services and channels only to authorized common carriers, including Western Union International, except in unique circumstances.

You refer, in your letter of July 1, to the Armed Service Procurement Regulations (ASPR). We submit for your consideration several questions which arise from application of the ASPR to your proposal “to definitize a contract with Comsat." The view of the Commission's announcement of June 23, we respectfully submit that Comsat is not a "qualified" source of supply for these channels in accordance with ASPR 1-302.2, nor is Comsat "qualified and eligible to receive an award under applicable laws and regulations," as required by ASPR 1-903.1(v).

Moreover, in view of the Commission's announcement, Comsat would not be in a position to execute a contract containing the following standard provision inserted by the Department of Defense in its contract for communications facilities and services:

“The services and facilities furnished hereunder shall be in accordance with all tariffs, rates, charges, rules, regulations, or requirements which may be lawfully established and applicable to similar services and facilities furnished or offered by the company to the general public or its subscribers, or at rates, terms and conditions of services as may be agreed upon, subject, where appropriate, to jurisdiction of Federal, or State regulatory bodies." (Emphasis added; see article 6a in contract No. DCA-20-6, Oct. 1, 1963.)

We would appreciate an explanation of the above-quoted statement in your letter of July 1 to the effect that Comsat offers the greatest assurance of the earliest possible service. Comsat is under a mandate from Congress to establish the commercial communications satellite system was expeditiously as practicable.” (Communications Satellite Act of 1962, sec. 102(a).) This duty of Comsat is not conditioned upon its providing channels direct to entities other than authorized communications carriers.

In view of the above circumstances, Western Union International again respectfully requests that we be accorded the opportunity to submit revised quotations for the 30 Pacific circuits. Very truly yours,

H. G. CATUCCI, Vice President.

DEFENSE COMMUNICATIONS AGENCY,

Washington, D.C., July 18, 1966. Mr. H. G. CATUCCI, Vice President, Western Union International, Inc., Washington, D.C.

DEAR MR. CATUCCI : I am in receipt of your letter of July 13 in which you request an opportunity to submit revised price quotations and question the authority of DCA to contract directly with Comsat for satellite communications circuits in the Pacific area.

The DCA is well aware of the Comsat notice on June 22 relating to the reduction in its estimated charges to record carriers for satellite circuits in the Pacific and the announcement on June 23 by the Federal Communications Commission of its intent to issue an opinion and order in docket No. 16058. Specifically, you refer to ASPR 1-302.2 and 1-903.1(v) and a provision of DCA's basic agreement as basis for disqualification of Comsat as a contractor of the DCA in view of this.

The DCA views Comsat, in accordance with the requirements of ASPR, as a qualified source of services and qualified and eligible to receive an award of contract, if selected. The Federal Government has stated as you know, in FCC docket No. 16058, that as a matter of law it has a right to contract directly with Comsat as an "authorized user,” if such is in its best interest. Further, DCA has no reason to believe that Comsat will not file a tariff with the FCC as required by its basic agreement. Accordingly, the DCA sees no contradiction to its determination that Comsat offers the greatest assurance of the earliest possible service.

In view of the above, there appears to be no justification for a request by DCA for submission of revised quotations for the 30 Pacific circuits. Sincerely,

GEORGE E. PICKETT, Major General, U.S. Army, Deputy Director, DC8.

WESTERN UNION INTERNATIONAL, INC.,

August 2, 1966. Col. LEE M. PASCHALL, U.S. Air Force, Assistant Director, Programs and Requirements, Defense Com

munications Agency, Washington, D.C. DEAR COLONEL PASCHALL: By letter dated July 26, 1966, the Defense Communi. cations Agency notified Western Union International, Inc., that the Communications Satellite Corp. was awarded a contract to provide 30 satellite circuits in the Pacific. At a debriefing in your office yesterday, you indicated that copies of the CSA and the general contract with Comsat could be made available to Western Union International only upon written request.

Accordingly, would you kindly arrange to furnish this corporation with a copy of the CSA covering the 30 circuits and the general contract with Comsat. We understand that both of these documents are unclassified.

There are two reasons for this request. First, we require these documents in order to completely evaluate the award which was made to Comsat. As an unsuccessful bidder whose quoted prices were lower than those of Comsat, at least for the first year, we feel that we should be afforded every opportunity to inquire into and determine the basis of the award. Although we were afforded some opportunity yesterday to discuss this matter we find it difficult if not impossible to completely evaluate this award unless we have copies of these documents for review.

As long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award. In order to dispel these questions and doubts, it would appear to be in our mutual interests that these documents be made available.

Secondly, inasmuch as it is possible that Western Union International nay become an assignee of all or part of this contract, we need to know as soon as possible the full extent and nature of the obligations which we may assume. In the interest of facilitating possible assignments of this contract and the expeditious establishment of service to the Department of Defense, we would very much appreciate the early granting of this request.

Again, let me thank you for giving us the opportunity yesterday to discuss some of the aspects of this award. Very truly yours,

HENRY G. CATUCCI, Vice President.

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WESTERN UNION INTERNATIONAL, INC.,

August 25, 1966. Col. LEE M. PASCHALL, Assistant Director, U.S. Air Force, Programs and Requirements, Defense Communications Agency, Washington, D.C.

DEAR COLONEL PASCHALL: On August 2, 1966, I wrote you a letter requesting a copy of all the communication service authorizations and the general contract with Comsat covering the 30 Pacific satellite circuits to Thailand, Philippines, and Japan.

Since we have not yet received these documents, it would be appreciated if you would have them sent to us as soon as possible. Warm personal regards, Sincerely yours,

HENRY G. CATUCCI,

Vice President.

DEFENSE COMMUNICATIONS AGENCY,

Washington, D.C., August 30, 1966. Mr. HENRY G. CATUCCÍ, Vice President, Western Union International Inc., Washington, D.C.

DEAR MR. CATUOCI: Receipt is acknowledged of your letter requesting a copy of the CSA and general contract entered into by DCA with Comsat for communications satellite service in the Pacific.

As you are aware, the matter of the award to Comsat and its legality were subjects of discussion with DCA in the hearings held on August 15, 16, and 17 by the Military Operations Subcommittee of the Government Operations Committee of the House of Representatives. Further, the legal authority of DCA to enter into this contract was upheld in a decision (opinion No. B-159632) rendered on July 26 by the Comptroller General. Accordingly, there appears to be no basis for your conclusion that was long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award."

A discussion of the assignment clause in the CSĂ, its purpose and legality, was also made a matter of public record by the subcommittee. The conclusion that you now “need to know as soon as possible the full extent and nature of the obligations which (you) may assume (under the assignment clause)" is premature. The Government is not at this time considering an assignment of the contract.

For the above reasons, release of the CSA and general contract at this time would not appear to be justified. Sincerely,

LEE M. PASCHALL,

Colonel, U.S. Air Force,

Chief, DCS Programs and Requirements. Mr. HOLIFIELD. The next witness is Mr. Bertram B. Tower, ITT World Communications, Inc.

Mr. Tower, would you take your place and introduce your associate for the record.

STATEMENT OF BERTRAM B. TOWER, CHAIRMAN OF THE BOARD,

ITT WORLD COMMUNICATIONS, INC.; ACCOMPANIED BY JOHN A.
HARTMAN, JR., VICE PRESIDENT AND GENERAL COUNSEL,
AMERICAN CABLE & RADIO CORP. (ITT)
Mr. TOWER. Thank you, Mr. Chairman. With me is Mr. John A.
Hartman, Jr., who is our vice president and general counsel.

Mr. HOLIFIELD. You may proceed with your statement.
Mr. TOWER. Thank you, sir.

I am Bertram B. Tower, chairman of the board of ITT World Communications, Inc. ITT Worldcom is a wholly owned subsidiary of American Cable & Radio Corp., and is the international telecommunications operating arm of International Telephone & Telegraph Corp., in the United States. We appreciate the opportunity the committee has accorded us to present our views.

ITT Worldcom operates a record communications network of cable and radio channels, including satellite channels, and in cooperation with correspondents abroad we provide communications services to virtually every area of the world. Affiliated companies provide record and voice communication services in Puerto Rico, the Virgin Islands, other Caribbean locations, Central and South America and also in the Philippine Islands.

We also operate transatlantic record communication services in England and Canada. Together with our affiliates and connecting carriers, we provide voice-data transmission services, leased telegraph circuits, teleprinter exchange service, message services, and ship-shore marine radio services. Additionally, we furnish various specialized press, facsimile, and broadcast program services. We operate our own high frequency radio systems. We both own and lease channels in transatlantic, transpacific, and Latin American area coaxial cables.

In terms of satellite operations, we provide, through the Early Bird, communication services with Europe, including television operation. With the support of ITT Federal Laboratories, we made possible live television coverage of the Project Gemini reentry and recovery operations through our transportable earth station abroad U.S. Navy aircraft carriers. These historic broadcasts have been witnessed by millions of American and foreign television viewers. I might add here, that our station is aboard the carrier Guam at this moment, and we hope to provide the coverage of the splashdown on Thursday.

Our company and other companies within the ITT system have been closely associated with space communications technology since its inception, both in terms of hardware and operations. The ITT Federal Laboratories' earth station at Nutley, N.J., was the first licensed by the FCC for experimental earth-space communications. Apart from providing the shipboard systems for the Gemini splashdown TV broadcasts, ITT transportable earth terminals are in use in the United States and abroad. ITT equipment has played an important role in the Relay, Telstar, Syncom, and Early Bird satellite programs. In addition, ITT has contributed much of the scientific instrumentation aboard the Nimbus, OGO, Ranger, and Snap space vehicles.

A further example of our commitment to the satellite communications field is the fact that our parent, ITT, is the second largest stockholder in the Communications Satellite Corp.-Comsat.

In short, we are dedicated to the advancement of satellite technology, the development of satellite communications, and the success of Comsat as the U.S. vehicle designated by Congress to develop the space segment of the global satellite communications system.

Despite our active interest in and support of the satellite program, however, we have been confronted with various activities and positions of Comsat which are of considerable concern not only to us but to the other international carriers as well. These problems primarily relate to the role which Comsat has played and that which, in our opinion, they should play in the provision of communications services in the international field. I shall cover this matter in more detail later on in my testimony, particularly with respect to the "authorized user” question and the award of a communications service authorization by DCA to Comsat for 30 Pacific satellite channels. At this point, I wish only to make our position clear—we fully endorse the FCC's policy decision regarding the use of the established carriers by Government entities to meet their satellite communications requirements.

Before getting into this subject and in order to bring the factual situation more sharply into focus, I should like briefly to describe the services my company provides to the U.S. Government and why it is that satellite communications are important, in fact vital, to our present and future operations.

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