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OGDEN Foods, Inc.,

Toledo, Ohio., May 31, 1968. ARCHITECT OF THE CAPITOL, Washington, D.C. (Attention Mr. Phillip Roof, Executive Assistant to the Architect).

DEAR MR. Roof: We are pleased to submit our proposal for operating the total food services at the U.S. Capitol Building.

We feel it is of extreme importance to demonstrate our ability to perform in the three main areas of service which are carried on in the various segments of the House of Representatives food services, cafeteria and dining room service, party catering service and carryout (snack bar) service. Later on we will cover these in more detail.

The specific items outlined in your invitation to prepare a proposal which defines the responsibilities of the Government and the firm are understood and will be complied with.

In the short time allotted to make a survey of the facilities and prepare a proposal, we have been able to develop a plan so that it will be possible that the House of Representatives food service facilities can be operated without cost to the U.S. Government. We are cognizant that such a plan will require coordination and cooperation of the various committees now involved with the operation of the food service facilities. We are prepared to discuss these plans in detail and submit supporting data to the subcommittee at the subsequent interview with them as indicated in the bid proposal invitation.

We are fully aware of the need to satisfy the job stability of those employees now working in the various food service areas and would retain these employees at no less than their present hourly rate of pay and pass on any of the company fringe benefits now in existance to other workers in our employ.

It is our policy to utilize all employees that we take over from other operators because we have found that it is important to receive the assistance of as many knowledgeable people as possible when beginning a new facility.

As you review the other information submitted, it should be recognized that Ogden Foods and its various affiliates are widely diversified and maintain the highest standards and goals within our industry. It will be our pleasure to serve you in the future. Sincerely,

ROBERT BASSETT,
Vice President, Business and Industry Services.

Mr. Roof. Ogden Foods, Inc., say:

In the short time allotted * * * we have been able to develop a plan so that it will be possible that the House of Representatives food service facilities can be operated without cost to the U.S. Government. We are cognizant that such a plan will require coordination and cooperation of the various committees now involved with the operation of the food service facilities. We are prepared to discuss these plans in detail and submit supporting data to the subcommittee at the subsequent interview with them as indicated in the bid proposal invitation.

We are fully aware of the need to satisfy the job stability of those employees now working in the various food service areas and would retain these emplove.s at no less than their present hourly rate of pay and pass on any of the company fringe benefits now in existence to other workers in our employ.

Mr. YATES. That seems rather encouraging, does it not?

Mr. RooF. Yes, as far as it goes. All of these people I interviewed would seek additional time to make studies.

Mr. Yates. To work it out?

Mr. RooF. Yes. Most say it will take them 3 months to prepare a meaningful bid on this.

Mr. ANDREWS. I assume this is a reputable firm with substantial backing?

Mr. Roof. Yes, according to their literature.

Mr. ANDREWS. This one does two things. First, it says "We can satisfy the job stability of those employees now hired.” I think this is crucial in what this committee and the Congress want to do. There is

no justice in firing people who have been working for years and have built up pension rights and all the rest. They acknowledge they can do this.

Secondly, they say they can run it without cost to the U.S. Government. The fact they will need 3 or 4 months to study it out, after all it is a $12 million to $2 million operation. This is reasonable.

I think in our planning we anticipated that this committee's checking into this is but a beginning and certainly somebody will do it and do it right and it would take them some time. This satisfies the two big criterias.

Mr. HENLOCK. You mentioned pension rights. Of course, if a concessionaire takes over, such rights will not be preserved. Their existing pension benefits would go out the window because they would no longer be Government employees.

Mr. ANDREWS. This is why we want to discuss this with these companies but it would seem to me that there might be an arrangement worked out wherein these people could be retained as Government employees and the vendor could compensate the Government in some way for the employees' benefits, salary, or whatever else. This is one of the things we will have to check into pretty closely.

Mr. YATES. Go ahead, Mr. Roof.

Mr. Roof. They say in the various food service areas they would keep the people. They do not define that terminology.

Mr. YATES. I assume that will be clarified and you will be asking them for definitions. Mr. Roof. It does not necessarily mean everyone.

They are also saying it would require the coordination and collaboration of the various committees involved, such as the Speaker and others, which means, I assume, they would want to change the ground rules.

Of course, a lot could be done by our management if we change the ground rules.

Mr. YATES. What do you have in mind?

Mr. Roof. Increase in prices, better control of portions, closing of certain facilities earlier, et cetera

Mr. YATES. Why have you not been able to do that?

Mr. Roof. These are some of the possibilities we previously mentioned to your committee. I think change is implied in all of these letters.

Mr. YATES. That is what we want to find out.

Mr. ANDREWS. The big thing we are finding out is that there are reputable firms who say they can take over, they can maintain the present employees, and they can eliminate or substantially reduce the deficit.

Mr. Roor. They don't tell you the means by which they can do this. That is the key to the whole thing.

We think we possibly can do that, too, if you say “You gentlemen run the restaurants, period.”

Mr. HENLOCK. I know some of these questions came up when the Canteen Food Service took over running the Senate Restaurants in 1947. For anyone to be a Government employee, obviously he must be an employee of the Government in every sense. Every pay increase, every benefit that the Government authorizes for its employees, the management would have to give the restaurant employees, if they continue as Government employees, whether or not they wanted to give it to them, because they would be Government employees entitled to the same benefits as other Government employees.

I do not wish my remarks to be interpreted as an obstruction. We were, however, not able to work out a plan in the case of the Senate Restaurant whereby an employee could preserve his status as a Government employee and at the same time be under the control of a concessionaire because of many statutes which affect Federal employees, including, for instance, the Federal Tort Claims Act.

Mr. ANDREWS. There is no doubt it will be difficult to arrange this and probably, as you point out, there will be a conflict because there are Government employees and they would be subject to direction by a non-Government supervisor.

But certainly these people well realize what we are trying to do to help them, and because they realize this they should be more than cooperative with the new supervision that is put in if it means maintaining their job security and also their government pension rights.

I think a little understanding on both sides will possibly solve this. At least that is the goal we are aiming to.

Mr. HENLOCK. It would have to be done by statute. The statute would have to be worded in a way to make such an unusual arrangement possible. To me, working out such a statute appears, offhand. to be a very complex matter.

Mr. Yates. These are Government employees. Is there a civil service classification for employees of this type?

Mr. HENLOCK. No, sir. They are employees of the House of Representatives. The Architect of the Capitol has, for all these years, been ruled by the Comptroller General to be simply an agent of the House, in carrying on this functon for the House. Some of the personnel are white-collar employees and paid on the same basis as your committee staffs.

The others are paid on the Wage Board system. Prior to adoption of the Wage Board system, a year or two ago, all of the restaurats: employees were paid under the same system as other congressional employees. Mr. ANDREWS. Off the record. (Discussion held off the record.)

RESPONSE OF MARRIOTT CORP.

Mr. Roof. The next proposal is from Marriott. (Letter from Marriott Corp. follows:)

MARRIOTT CORP.

Washington, D.C., June 4, 1358 Mr. Philip Roof, Assistant to Architect of the Capitol, Washington, D.C.

DEAR Mr. Roof: We very much appreciate the opportunity to submit this tentative proposal for the management, by the Mariott Corp., of the HR Restaurant facilities. We also want to thank you for your time and that of . splendid associates.

We have studied your "Request for Proposal" and, as you know, have made 3 brief on-site analysis of the House Restaurant facilities. We are confident $$$ result of this analysis and of our ability to achieve maximum sales levels oss

operational efficiency to be able to manage these facilities without an operating deficit. This proposal is based on the following basic assumptions:

(a) That we have complete control over all food and vending services provided in the House Restaurant facilities;

(b) That we have complete responsibility for and authority over the employees working in the House Restaurant facilities; and

(c) That we have jurisdiction to use supply sources of our own choice. We have found from our experience that an operation, the size and scope similar to the House of Representatives, will generate an annual sales volume of approximately $1,500,000 to $1,700,000 as a minimum. Needless to say, at this volume, a profit would be realized by the House.

We hope this preliminary information will meet with your approval, and we will be prepared to discuss the many aspects of our proposal with you at your convenience. This discussion would be considered “off the record” until a firm solicitation is received from your office. Sincerely,

FRANK R. LYONS, Jr.,

Business Food Service Division. Mr. Roof. Marriott says:

We are confident as a result of this analysis and of our ability to achieve maximum sales levels and operational efficiency to be able to manage these facilities without an operating deficit.

This proposal is based on the following basic assumptions:

That we have complete control over all food and vending services provided in the House Restaurant facilities, that we have complete responsibility for and authority over the employees working in the House Restaurant facilities, and that we have jurisdiction to use supply sources of our own choice.

Then he says that he is basing this on an estimated level of sales volume of approximately one and a half million dollars up to $1.7 million.

He says "Needless to say, at this volume a profit would be realized by the House."

Mr. ANDREWS. I like that. That is the most refreshing statement I've heard in a long time.

Mr. Yates. You can see by the smile on Mr. Roof's face he doesn't believe it.

Mr. ANDREWS. They say they have to have complete control over food and vending. They have to have.

They say they need responsibility for and authority over the employees. They have to have this, too.

They didn't say they wanted to replace the present employees with other employees, and they didn't say they would cut down service in a meat-axe type of approach.

Mr. HENLOCK. You mention retention of employees. In the table we gave you, we have, for instance, head cooks rated under the Wage Board system. We use District Government and other Government agency Wage-board rates for restaurant employees. Our range for a head cook is from $2.62 to $3.00 an hour. The normal commercial restaurant around here which is unionized runs from $1.60 to $2.40 an hour. Even though someone tells you they might retain the personnel they do not tell you they will retain them at the present salary rate. There could be substantial salary reductions.

Mr. Roof. One firm did say that they would retain them at not less than the present salary wage but they didn't say for how long.

Mr. ANDREWS. You come to a basic point. Why should the taxpayers of the United States be required to pay a cook in the House of Representatives Restaurant more than they pay a cook in the Statler Hilton Hotel? Whose choice is this and why should this be done and how can we justify this?

We can sit back here happy and gay and play little games. It is OK if we will raise the rates and set it up so we pay for it. Then nobody has any complaints. However, I do not think you can justify socking the taxpayers and going gayly on our way. This is not justifiable.

Mr. HENLOCK. It is based on other comparable Government restaurant wages, is it not, Mr. Roof?

Mr. RooF. Yes. How could the House justify paying our people less than the District government pays its people who work in food institutions here in Washington?

Mr. ANDREWS. But the taxpayers do not make up the deficit.

Mr. Roof. The taxpayers pay District government employees-there is always a Federal contribution to funds for operating the District government.

Mr. YATES. We should explore these last two propositions more.

You have two other companies you will check, Szabo and another one?

Mr. Roof. Mr. Yates, I think, though, if we go ahead and let everybody and anybody explore and explore it will just result in bedlam. You will never get an answer.

Mr. YATES. You have two responsible people who came in late. Mr. RooF. Yes, sir.

Mr. YATES. We are not interested in management fee arrangements because of the unhappy experience the Senate has had in the past, I think you are likely to get the same deficits and an operating fee to boot.

Off the record.
(Discussion held off the record.)

QUESTIONS OF PERSONNEL NEEDS Mr. Yates. Mr. Cowan, do you need any figures that you do not have with you?

Mr. Cowan. I don't have any figures with me, at all, Mr. Yates. I didn't expect this call.

Mr. Yates. Do you want us to wait while you get them? We want figures on the cost of operation of the restaurants. We are trying to find out if you are overstaffed in management; if you are overstaffed in the kitchen; if there are any reductions that should be made, not through forcible reductions by firings and so forth, but by way of not filling jobs when people leave. I understand there is a fairly high turnover of the help?

Mr. Cowan. There are reductions that can be made through attrition.

Mr. Yates. Why haven't you been making them? Mr. Cowan. Because, I suppose, some of my unit managers seem to think they are understaffed and when we come up on a given day when a good many people are out it is very difficult to operate. In the actual operation there are many days when we think ourselves we are understaffed.

Mr. ANDREWS. What do you mean by days when a good many people are out?

Mr. Cowan. On a typical Monday there may be 31 or 32 people oul. Mr. ANDREWS. That just don't show up?

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