Mr. HORWITZ. I will be glad to furnish it for the perusal of the committee. INTRAGOVERNMENTAL COMMITTEE ON INTERNATIONAL Mr. ROBACK. Mr. Horwitz, tell us about the Intragovernmental Committee setup and the contract made with the Stanford Research Institute to study this problem for the Government. You were a member of the committee? Mr. HORWITZ. I was a member of the committee. Mr. ROBACK. Tell us the purpose of it, the general membership, and what you tried to do. Mr. HORWITZ. The purpose of the committee was to this committee, first of all, was set up, I believe, at the request of the President under the joint chairmanship of Mr. O'Connell and the Chairman of the Federal Communications Commission, then Mr. Henry. Various agencies were asked to submit, to designate, a member to sit with the committee. The Department of Defense was asked to have a member, the Department of State and the Department of Justice, because we were primarily concerned with our international communications and the consideration of the problems that were involved. Mr. O'Connell, Mr. Henry decided that a certain amount of investigative work had to be done to give us a complete picture, and a contract was entered into with Stanford Research Institute to give us this complete picture. This was under the direction of General Blake who went with the institute for the purpose of conducting this study. Mr. ROBACK. General Blake, where is he from? Mr. HORWITZ. He is a retired officer who used to be head of the National Security Agency, which was his terminal assignment before he retired. Mr. ROBACK. He was assigned or he took a consulting or special assignment? Mr. HORWITZ. He took a job with Stanford Research Institute. They selected him for the study. Mr. ROBACK. How much, for the record, was the total cost in round figures? Mr. SOLOMON. Just under $1 million-I am sorry, half a million, excuse me. Mr. HORWITZ. It was a half million, that is what I thought. I believe the Department of Defense executed that contract. Mr. SOLOMON. They did. Mr. HORWITZ. To have this done. They prepared voluminous reports on all aspects of international communications that we have. This committee, of course, was designed to see if we could come up with an overall Government policy on what we do about our international communications. Mr. ROBACK. What was your concern and what was the term of reference, what were you trying to find out? Mr. HORWITZ. We were trying to find out whether we can improve the situation or to do the things, and what were the problems that were coming up because there are a large number of problems that seemed to be facing the industry, and the Government's interest in getting good communications, all kinds of problems, who does what, what is voice circuitry, what is data circuitry, and all of this thing, in light of the great developments that have taken place. Mr. ROBACK. Was the angle of inquiry, so to speak, a question of whether these carriers should be merged in the international field? Mr. HORWITZ. One of the questions was that this was an inquiry that was made to get various views as to whether the problem required a merger of one type or another, and whether the people should be allowed on a voluntary basis to see if they could make some sort of a rationalization out of the industry. This was the problem. Mr. ROBACK. What was the upshot and consequence of this study as far as the committee was concerned? Mr. HORWITZ. Let me ask. Mr. SOLOMON. The results of the study, Mr. Roback, have been transmitted to the Congress in a report which you see here, copies of the Stanford Research Institute report, which have been supplied. I understand that this fall they plan to have hearings on this subject. Mr. ROBACK. You are referring to the committees Mr. HORWITZ. Yes, Interstate and Foreign Commerce. Mr. ROBACK (continuing). That have jurisdiction over the legislation. Mr. HORWITZ. That have jurisdiction over this legislation. Mr. ROBACK (continuing). What was the essence of your recommendations to the Congress with regard to the status of the international carriers who are interested, you might say potential participants, in Government business? Mr. HORWITZ. The gist of the recommendation was that under certain restrictions laid down in the statute, and in light of those restrictions, that there should be permissive legislation passed which would enable the carriers to conduct negotiations among themselves, which they cannot do now, to see whether a more rational system could be developed. This plan to be subject to approval, if they could come up with any such plan, to be subject to the approval of the Federal Communications Commission. Mr. ROBACK. In other words, you were not as a committee for the Government making any recommendations as to the type of merger; as, for example, whether it should include or exclude Comsat or A.T. & T. or Western Union or whatever? Mr. HORWITZ, No, sir. We were absolutely not attempting to define what the end product should look like, but what we thought is that we ought to take the restriction off of industry to see if industry could not come up with something. Mr. ROBACK. There was an invitation to industry to see whether it could improve itself with relation to the provision, among other things, of Government services. Mr. HORWITZ. This is right. Mr. ROBACK. The chairman adds, and gain possible relief from the Antitrust Act. Is that an issue that is involved under the Communications Act? Mr. HORWITZ. This is one of the issues that is involved which has to be considered. But the point was that we believed, the more we listened, the more we looked at the studies that SRI gave us, the more we talked to industryand the more we talked to labor on these problems, and we held discussions with the heads of each of the carriers and with each of the affected unions, that this was a problem that basically the solution had to be proposed by the industry, but the Government had to have the last word on it. Mr. ROBACK. Do you have any observations that you are willing to make for the record as to how you think the industry ought to be organized for efficient performance for the Government? Mr. HORWITZ. At this time, at this point in time, I am not prepared to answer that question. Mr. ROBACK. You have got some personal views, but you do not want necessarily to be on the record. Mr. HORWITZ. I do not even think that my personal views, because I see that all of the various solutions that have been suggested present problems which are not resolved in my mind as satisfactory solutions, so I would like to see a specific, and in terms of those various issues, examine that specific. I have myself come to no conclusion of which direction we should go. As I have said, I myself have come to no conclusion that I would be willing to offer as a suggestion as this point in time. RELATION OF FAA/COMSAT PLAN TO NSC Mr. ROBACK. Now, under your directive or instruction you receive the NCS requirements, do you not? Mr. HORWITZ, Yes. Mr. ROBACK. That is to say, members of the NCS or the National Communications System have requirements, they state them to you. The FAA, the Federal Aviation Agency is interested in air-ground communication for certain purposes. Does that come to you? Mr. HORWITZ. Yes, that comes to us. It will come directly to the manager. Mr. ROBACK. Well, they have been dealing with Comsat. Comsat has put out a request for proposal. Have you passed on that? Mr. HORWITZ. No. Mr. ROBACK. Why not? Mr. HORWITZ. I cannot answer that because it has not been brought to my attention. Was it brought to your attention? General STARBIRD. I know they have been conducting discussions. I do not know the details of it. It has not been brought to us as a requirement. Mr. ROBACK. Well, the directive says that you shall receive requirements. Either that is not a requirement of the NCS or they are bypassing you, one or the other. Mr. HORWITZ. Well, it could be. I do not know whether the FAA requirement here is an NCS requirement because I do not know if this part of the FAA system is within Mr. ROBACK. In other words, this possibly could be likened to tactical communications. Mr. HORWITZ. It might be. Mr. ROBACK. And you would consider that as a part of the NCS; is that a possibility? Mr. HORWITZ. That is correct, that is a possibility. General STARBIRD. That is a possibility. Mr. ROBACK. Has your office made any observations or rendered any judgment on the matter, General Starbird? General STARBIRD. We have not rendered any judgment, so far as I know. Mr. ROBACK. If you will check your records, if there is any correspondence that enlightens that issue, will you submit it? General STARBIRD. Yes. I have a dim remembrance, but I cannot answer it, so I would like to supply it for the record. (The following information was supplied for the record:) 1. On 18 January 1966 a representative of the Office of the Executive Agent noted in the Electronic News of 17 January an article concerning FAA interest in a UHF-satellite combination. It stated that both Comsat and NASA had been approached by the airlines for aid in developing such a satellite system. The staff member of the Executive Agent called the Office of the Manager, NCS, to determine whether the Manager's Office was coordinating this work. Staff contact was then made with FAA. In this connection, FAA pointed out : a. That the communications were for air-ground-air use and not for fixed point-to-point. b. They were replacing high frequency air-ground-air. At the time original recommendations were made concerning the composition of the NCS, these communications were excluded from the NCS. c. The Administrator felt that he had authority under Section 307(b) of the Federal Aviation Act of 1958 (Public Law 85-726) to procure communications services to meet its operational requirements. d. The DTM had been briefed on 22 December concerning this project, was in accord with the planned FAA actions, and considered this was not an NCS subsystem. 2. In view of the above facts, it was concluded that the requirement was not for NCS circuitry and, therefore, fell outside the delegation by the White House to arrange satellite communications service for the NCS. USE OF ASSIGNMENT CLAUSE IN DOD/COMSAT CONTRACT Mr. ROBACK. If the FCC decides that the Government cannot go through with a contract that it has made, what recourse is there to the Government? Mr. HORWITZ. What do you mean, what recourse is there? Mr. ROBACK. Well, you have made a contract with an agency, I mean a contractor, commercial contractor, and the FCC, another Government agency, regulatory commission, has come in and said, "You cannot move one shovel of earth or pass one bit of traffic unless you have a license or an authorization to do it, and we have not given you that authorization, and you have got to come in and show us why you ought to have that authorization." Now, suppose and this is only a hypothetical-they say that Comsat cannot execute this contract. What recourse does the DCA or the Department of Defense have? Mr. HORWITZ. Well, we have put into the contract, a matter which General Starbird addressed himself to, an assignability clause whereby this contract can be taken over by one of the authorized carriers in the event that it should ultimately be determined that Com sat does not meet the requirements in this particular case for furnishing the service to the Government. Mr. ROBACK. Do I understand clearly that the assignability clause in the contract is in anticipation of a possible adverse decision and not for any change in subsequent contractual relationship among the carriers? Mr. HORWITZ. No, this is in anticipation of a possibility of an adverse decision. We feel that we can sustain a unique and otherwise in the national interest position. But in the event that it should ultimately be determined, whether it be by the FCC or by the courts, whichever way this is handled, that it is not subject, then it is provided so that this contract can be assumed, assigned and assumed, to one of the record carriers. Mr. ROBACK. If this contract is authorized Mr. HORWITZ. Yes. Mr. ROBACK (continuing). Or execution of the contract is authorized, then at a later date are you saying that is a mooted issue as far as assignment goes, you won't make any assignment under those circumstances? Mr. HORWITZ. I cannot answer that because I do not know what the circumstances will be. Mr. ROBACK. Is the assignability clause in the contract prospective as well as retrospective? Mr. HORWITZ. If it says it is hereafter it is determined to be in the national interest then it will be assigned. May I have it? I will give you the exact language. Mr. ROBACK. We don't want the whole thing read in the record. What we want is an understanding of whether the assignability clause is operable in the event even after you make a contract, if you do, with Comsat, whether that assignability clause could allow you to or inspire you, perhaps, to assign the contract to another carrier. Mr. HORWITZ. I think it is broad enough for that; just let me read you a phrase. Mr. ROBACK. But you do state, though, that it wasn't intended for that? Mr. HORWITZ. Well, our basic purpose for putting it in was in the event of an adverse decision, but the language is broad enough to take care of the prospective determination later because it says Mr. ROBACK. Read the language. Mr. HORWITZ (reading): In the event it is determined that it will be in the national interest to obtain the services covered in this CSA and subsequent detailed service CSAs through an international record carrier or carriers rather than the company directly, the company agrees upon request by the Government it will assign the contract. Mr. ROBACK. Is there any advantage to the Government having that operable after a contract, if it is signed or executed with Comsat, any advantage in having that operable, General Starbird? General STARBIRD. Well, the contract is signed. Mr. ROBACK. But you added a clause, which is paragraph 18, saying that the contract can be assigned. |