GENERAL ACCOUNTING OFFICE AUDIT FOR 1967 Mr. CowAN. The General Accounting Office audits our accounts on a fiscal year basis. We do have the 1967 audit. Mr. Roof may have it. Mr. ROOF. Here is their last audit report, for the fiscal year 1967. Mr. ANDREWS. This report of the General Accounting Office covering House restaurants for the period July 3, 1966 to July 1, 1967, prepared February 19, 1968, shows you had total sales of $1,512,512, and that there was an appropriation of $332,000 making total funds provided of $1,844,512. Is that correct? Mr. HENLOCK. Yes, it is. Mr. ANDREWS. So the deficit for that year was $332,000? Mr. COWAN. The deficit for that year was $244,000 in round figures, Mr. Chairman. Mr. ANDREWS. Does not the appropriation mean the deficit? Mr. ANDREWS. Why would we appropriate $332,000? Mr. CowAN. Because we missed our estimate for the year. We did not lose as much as we thought we would, that particular year. Mr. Roof. That is the reason we had funds to, in effect, overexpend this year. CONDITIONS CONTRIBUTING TO DEFICITS Mr. ANDREWS of North Dakota. In other words, the deficit for this year is about twice the deficit for last year, but the appropriations don't show it because some funds appropriated last year went to take care of some of the deficit in this year, so what we are looking at is something moving in geometric proportions rather than moving slowly? Mr. CowAN. It is not slow any more, it is snowballing, and if you look closely, you will find it is mostly labor costs. Mr. ANDREWS of North Dakota. You have gone from a loss in 1960 of $11,600 to a net loss of $43,000 in 1962; $140,000 in 1963; $111,000 in 1964; $144,000 in 1965; $219,000 in 1966; $243,000 in 1967; and now you are up to half a million dollars, is that correct? Mr. ROOF. $354,000 would be the next figure and then for next. year, $400,000. Mr. ANDREWS of North Dakota. Do you feel the prices for your noon meal are about the same as you could buy it in the nearby restaurants and hotels? Mr. COWAN. At this time last year they were, Mr. Andrews. They may have gone up some outside, I don't know. We may be somewhat comparable. Mr. ANDREWS of North Dakota. But you are trying to be comparable? If you were not comparable, the quick solution would be to raise prices but you've already done this. In other words, your retail cost to the consumer is not materially less than what someone could go to a hotel in Washington and buy it for? Mr. Cowan. I would say it is not materially less. BREAKDOWN OF LOSSES-FISCAL YEAR 1967 AND 1968 Mr. ANDREWS of North Dakota. Do you have a breakdown of your losses? Mr. COWAN. Yes. Mr. ANDREWS of North Dakota. Mr. Chairman, if there is no objec tion I would like this statement included in the record. Mr. ANDREWS. Without objection it will be inserted in the record at this point. (The statement follows:) Losses first 8 accounting periods, July 2, 1967 to February 10, 1968: House restaurants -$132,862 Carryout, Cannon Building-- Carryout, Longworth Building. Cafeteria, Longworth Building_ -20.1 Cafeteria, Rayburn Building.... +16,063 Equipment expenditures- Carryout, Rayburn Building.. Members' dining room, Rayburn Building +4.918 -49.242 -15,635 +10,865 Total -2.185 Cafeteria, Capitol.. Losses for the fiscal year 1967: Main dining rooms, Capitol__ Members' dining room, Capitol.. Cafeteria, Longworth Building Carryout, Cannon Building Carryout, Longworth Building. -18.529 -40,362 Cafeteria, Rayburn Building. +22,801 Equipment expenditures__ Carryout, Rayburn Building- Members' dining room, Rayburn Building +10.10 -1,876 -36,952 +18,421 Total -3,643 243.597 OPERATION OF RESTAURANT BY CONCESSIONAIRE Mr. ANDREWS of North Dakota. Have you made any efforts to contract the operation out to restaurant people in the area? Mr. CowAN. No, I have not. This would be under the Architect's jurisdiction. They may have in the past. Mr. ROOF. We never have on the House side. The law says the Architect shall operate the restaurants. LAW GOVERNING OPERATION OF HOUSE RESTAURANT Mr. ANDREWS. What authority? What is the law? Mr. HENLOCK. Public Law 812 of the 76th Congress whic carried out House Resolution 590 of that Congress. That resolutie was sponsored by Congressman Warren, chairman of the House Com mittee on Accounts, just before Mr. Warren became the Comptrol general. The subsequent legislation was sponsored by Congress Cochran, who succeeded Mr. Warren as chairman of that committe The restaurant has operated in that fashion for the last 27 yea Mr. ANDREWS. Insert that resolution and law at this point in t record. (The resolution and law follow :) H. RES. 590, 76th Congress, agreed to SEPTEMBER 5, 1940 "Resolved, That effective October 1, 1940, until otherwise ordered by the House, the management of the House Restaurant and all matters connected therewith shall be under the direction of the Architect of the United States Capitol under such rules and regulations as he may prescribe for the operation and the employment of necessary assistance for the conduct of said restaurant by such business methods as may produce the best results consistent with economical and modern management. "SEC. 2. The Committee on Accounts after the close of business September 30, 1940, is hereby authorized and directed to transfer to the jurisdiction of the Architect of the United States Capitol all accounts, records, supplies, equipment, and assets of the House Restaurant that may be in the possession or under the control of the said committee in order that all such items may be available to the Architect of the United States Capitol toward the maintenance and operation of the House of Representatives Restaurant." SECTION 208-PUBLIC LAW 812, 76TH CONGRESS, APPROVED OCTOBER 9, 1940 "SEC. 208. (a) The Architect of the Capitol is hereby authorized and directed to carry into effect for the House of Representatives, and to exercise the authorities contained in, the Resolution of the House of Representatives numbered 590, adopted September 5, 1940, and any other resolution of such House amendatory thereof or supplementary thereto hereafter adopted. Such authority and direction shall continue until the House of Representatives shall by resolution otherwise order. "(b) There is hereby established with the Treasurer of the United States a special deposit account in the name of the Architect of the Capitol for the House of Representatives Restaurant, into which shall be deposited all sums received pursuant to such resolution or resolutions and from the operations thereunder and from which shall be disbursed the sums necessary in connection with the -exercise of the duties required under such resolution or resolutions and the operations thereunder. Any appropriation hereafter made from the Treasury of the United States for such restaurant shall be a part of the appropriation 'Contingent Expenses, House of Representatives, Miscellaneous Items', for the particular fiscal year involved and each such part shall be paid to the Architect of the Capitol by the Clerk of the House of Representatives in such sum as such appropriation or appropriations shall hereafter specify and shall be deposited by such Architect in full in such special deposit account. "(c) Deposits and disbursements under such special deposit account (1) shall be made by the Architect, or, when directed by him, by such employees of the Architect as he may designate, and (2) shall be subject to audit by the General Accounting Office at such times and in such manner as the Comptroller General may direct; Provided, That payments made by or under the direction of the Architect of the Capitol from such special deposit account shall be conclusive upon all officers of the government. "(d) The Architect, Assistant Architect, and any employees of the Architect lesignated by the Architect under subsection (c) hereof shall each give bond in he sum of $5,000 with such surety as the Secretary of the Treasury may approve for the handling of the financial transactions under such special deposit account." QUESTION OF OPERATION BY CONCESSIONAIRE Mr. ANDREWS of North Dakota. Is it the opinion of legal people you have consulted that the authority of the Architect to operate the resaurants on the House side would preclude the Architect from leasing hem out? Mr. HENLOCK. Yes, because the law authorizes and directs that we mploy the personnel and deposit all receipts from operation in the Treasury and make payments from an account set up in the Treasury or that purpose. When the Senate put their restaurants under a con 92-655-68- -23 cession in 1947, I believe, they had to repeal a similar law, by resolution, to the one we are operating under now in order to go to a conce-sion procedure. Mr. ANDREWS of North Dakota. When was the last time you checked with commercial enterprises in the Washington area as to whether or not they might be interested in leasing this restaurant operation! Mr. ROOF. We have not checked at all because the law requires Mr. Stewart to operate it as a part of the House functions, just as we maintain the office buildings and give you light and power and other building services. Mr. ANDREWS. Will the gentleman yield? Mr. ANDREWS of North Dakato. I will be glad to yield. Mr. ANDREWS. In other words, do you tell the committee that as long as that resolution adopted in the 76th Congress remains a law you have no choice about the operation of the restaurants, you cannot lease them out, is that correct? Mr. ROOF. Yes, sir. Mr. ANDREWS. It would take a repeal of that resolution for you to have authority to lease out the operation, is that correct? Mr. ROOF. Yes, sir, repeal plus authority to the Architect or other House agency to so operate the restaurants. Mr. ANDREWS. You say the Senate operated under a comparable law or resolution and they repealed the law or resolution and did lease the operating of their eating facilities to a private concessionaire! Mr. Roof. That is right, some years ago. Mr. ANDREWS. How long did they operate under a private conce sionaire? Mr. ROOF. About 15 years and they had an agreement with the concern that the Senate would subsidize the loss-much the same as you are subsidizing the House restaurants now and the same way the Senate is subsidizing the Architect's operations on the Senate side now. They gave the Senate restaurant back to us in 1961. Mr. ANDREWS of North Dakota. We are going back to a resolution passed when the restaurant wasn't losing one-half million a year. We can't sit here and subsidize this eating place by half a million dollars. I know nothing about restaurant costs but it would seem to me you have a number of people in Washington in the restaurant business that might be able to take this over and provide the same service at a considerable saving to the taxpayer, since the retail cost of food is as high here as anywhere in the area. I called one outfit in town one morning-I only had about 10 minutes to do this and asked if they would be interested and they said ther would be very much interested in sitting down and talking to the Architect of the Capitol or whoever the proper person was. I cannot see way clear to vote for a $500,000 subsidy for eating places here unt:" we have exhausted any alternative we may have to remedy this site ation. I don't think the public expects us to be subsidizing this, ar il! would hope we could request the Architect of the Capitol and M Cowan to negotiate or visit with some reputable restaurant peo in the Washington area and come back to us with a report that t` have gotten from these people so that we can look at this in the 1-* of having additional facts before we go ahead and stumble into a & cit that is rising at hair raising proportions. Could this be d Mr. ANDREWS. I don't know why it could not. Mr. ROOF. Mr. Chairman, this operation comes under the Speaker of the House. Mr. Stewart has no right to go out and negotiate with these people. And you are asking Mr. Cowan to negotiate himself out of existence. This is a big move and I doubt that we would be the ones to do it. We are charged by law to run the restaurants as a House function. Mr. ANDREWS. Let us take a look at that law. Mr. HENLOCK. Mr. Chairman, the House first passed a simple House resolution and the question immediately arose as to whether the House, by a simple House resolution, could impose such a duty, involving financial transactions of the House, on the Architect of the Capitol. The conclusion reached was "No," with the result that within a month joint legislation was passed covering this operation, contained in Public Law 812 of the 76th Congress. Mr. ANDREWS. Let me see that law. I have asked that you place it in the record. Mr. HENLOCK. May I make a statement, having been one of the men who sat in on the writing of that legislation? As you know, normally, once it became a Public Law, it could only be amended, supplemented, or superseded or repealed by a Joint Act of Congress. In order to leave the House in full control of its operations, we wrote in the law that the House could make any change it wanted by a simple resolution, which it ordinarily could not do once the law had been passed. Mr. ANDREWS of North Dakota. I think the key words in this whole thing are "for the conduct of said restaurant by such business methods as may produce the best results consistent with economical and modern management." I can't imagine for the life of me that back in 1940 the Congress that passed this resolution-and which has been followed up by other Congresses that put it firmly in the hands of the ArchitectI do not believe these people had any idea we would be having a half a million dollar deficit. Back in North Dakota our people are plainspoken, as they are in your district, George, and this half million dollar deficit would bother the dickens out of them. I will not vote for it until we have explored the possibility of going some other route, and if we find out it is possible to lease this out and save the government $500,000 and have essentially the same service we now have, I feel sure the Congress would be willing to pass the necessary resolution to do this. I don't think we are doing our job on this committee until we call a halt and ask for this information so we can make the proper decision. Mr. HENLOCK. All we were pointing out is that we ourselves could not make any change in the operation. We wanted to point out we could not do it administratively because of the provision in the House resaurant law that all receipts from operation of the restaurant must e deposited in a special account established in the Treasury of the nited States for such purpose and that all disbursements must be nade from that account; also that all deposits and disbursements must be made by the Architect of the Capitol or employees of the Architect lesignated by him to so act. Mr. ANDREWS. You do not believe that under the provision that says good business methods must be followed you could go out and seek a rivate caterer to come in and operate the restaurants? |