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Essentially the Commission will be acquiring a given number of man years of effort. Thus, it is highly relevant that at the oral presentation RMC made clear that the services of a highly regarded econometrician-David Nissen of Rice Institute-would be made available for a substantial amount of time, if we desired.

2. In dealing with the areas of rate of return and cost of capital, RMC was superior to any of the other bidders. In responding to questions, Dr. Ture, who will act as a consultant to Systan, a sub-contractor, was much more impressive than was Dr. Hughes, his counterpart for CRA. Dr. Ture demonstrated both a superior understanding of the economic theory underlying rate of return concepts and a superior ability to translate theory into useful form as well as an appreciation of the practical difficulties facing the Commission. It is important to move ahead quickly in this phase of the contract because, while we have received initial statements of position in Ex Parte No. 271, an extension of time was granted until October í for the verified statements of fact and argument. December 1 is the date for reply statements. This extension was granted because a rail expert witness is unavailable, but also because of the pendency of this contract effort. The two tasks can and must be dovetailed.

3. At the oral presentation RMC had available the individuals who would take a major part in the day-to-day conduct of the studies which they propose to perform. CRA, on the other hand, had available the management people who would have the responsibility for overall direction of these tasks. However, they would themselves commit relatively small amounts of their own time to the actual work. The RMC presentation was presided over by Dr. Armando M. Lago, who would be the project director and would be committed for 89 percent of his time over the course of the two-year contract. Presiding at the CRA presentation was Dr. William Hughes, who would be the project leader, but who would be committed for only about 13 percent of his time. As far as personnel is concerned, CRA may well have arrangements with people with more impressive backgrounds, and may have assembled a more impressive group of big-name consultants. However, the combined time of these key personnel would be much less than that to be spent by only three members of the RMC top team. The availability on a continuing basis of staff of known competence was perhaps the most important single factor leading to the Board's recommendation to award the contract to RMC.

4. One of the lesser factors that went into weighing the proposals was performance of contracts for other government agencies. An attempt was made to obtain an evaluation of RMC's and CRA's performance of contracts of similar scope and size. RMC did not fare well in the comments received from some technical personnel of DOT about a contract for about $650,000 which is nearing completion. However, DOT staff were unanimous in praising the competence of three of the top RMĆ staff members, including Lago and Nissen, who will be spending substantial amounts of time on the ICC studies. (If RMC is selected we expect to minimize any problems by establishing a monitoring officer to keep in close touch with the contractor to make certain the studies are proceeding on the right track and within the cost constraints imposed.) CRA received exceedingly good reports from other agencies which had used its services. However, in view of their inadequate oral presentation, it does not appear possible that the studies which it had performed satisfactorily had been directed and prepared by the same people who who would be involved for a substantial amount of time on our contract. Rather amazingly CRA has 65 percent of its time allocated to low level personnel.

5. A matter of some importance is the fact that RMC and some contractors are all located in the Washington area whereas CRA, principally based in Boston, would have to establish local offices here in Washington. The proximity of RMĆ should prove valuable in view of the expected working arrangements whereby the contractors' work will be specified by individual tasks with close monitoring of their effort by ICC personnel.

It is the considered judgment of the Board that RMC is the preferred contractor and that the managing director, with the assistance of Mr. Wilbur Wilson, should be instructed to commence negotiations with RMC leading to a contract committing the available funds.

I concur in this recommendation and I vote to approve the recommendation of the Contractor Evaluation Board. In view of the shortness of time available, I will clear this proposal as approved by the Commission unless I receive objection by 4:00 p.m. Wednesday, June 21.


Mr. POWERS. What was the next one?

Mr. BREWER. On February 26, 1973, I addressed the following document to the entire Commission:

Although I believe that I may properly enter the attached order, in view of my administrative responsibility in these proceedings, considering the extraordinary nature of the action, I am circulating the proposed order for your review. In the absence of objections on or before noon tomorrow, February 27, I propose to enter the order as soon as it will be appropriate.

That order is signed by Robert Oswald, our secretary, and it has to do with making Senator Gordon Allott a party to these proceedings and notifying them that he was now-well, I will read it to you.

It be further appearing that the Commission has now contracted the Honorable Gordon Allott, a former Senator of the United States, to serve as special counsel in these proceedings, and to employ the necessary staff, consultants and subcontractors for the purpose of producing such evidence and pleadings as he deems appropriate, necessary and practicable for the development of a full record for representation of the public interest; therefore, it is ordered that Special Counsel Gordon Allott be and hereby is made a party of these proceedings, and shall be served with all the papers entered by this Commission and served by the parties herein. Dated Washington, D.C., the 27th day of February 1973.

In all instances and on a number of occasions, I regret that other questions were not asked of the Commissioners, and I hope there will be an opportunity for you to ask these questions orally, they were kept completely informed of the progress, step-by-step, and I think they will confirm that, and there were no objections from any of the Commissioners, and on a number of occasions, at least six, at our special conferences, I asked the chairman to indulge me to bring everybody up to date on our progress in the negotiations.

Mr. POWERS. Were minutes kept of these special conferences?

Mr. BREWER. No, sir. They were special conferences in connection with other cases, and I ask the chairman for permission to explain these, and I think that can be confirmed by other Commissioners.

Mr. STAFFORD. Under our procedures at conference, we list the items to be especially considered, and then after we have finished that, then I ask if anyone, if any one of the Commissioners has anything he desires to bring before the Commission on an informative basis, or anything of this kind, and it is under this

Mr. DINGELL. Wouldn't the minutes reflect that?
Mr. STAFFORD. No, sir.
Mr. DINGELL. They would not?

Mr. KAHN. Mr. Chairman, the Commission does not keep minutes of its conferences. It records the votes as the votes are taken, and the votes are a matter of public record.

Mr. DINGELL. I am not an expert in the matter of the interior conduct of affairs of the Commission, but it does strike me that on a matter that was important enough to become a part of a special proceeding by the Commission, it does occur to me that matters relative would appear in the minutes.

I don't challenge that this did in fact transpire, but it just strikes me as rather curious that it did not appear in the minutes.

Mr. STAFFORD. In jest, or almost in jest, the other day one of the Commissioners said he thought he was never going to quit talking about it.

Mr. BREWER. One of the Commissioners said I almost overdid it in keeping them informed, and I am sorry that Commissioner isn't here at this moment, but I can give you his name and I'm sure he'll come and testify to that effect.

There was no effort at any time to keep anyone in the dark in this case, and it was thoroughly and carefully explored, and on two different occasions during negotiations I invited Senator Allott to be my guest in the Commissioners' dining room where the Commissioners were present, and no one else, just the Commissioners and Senator Allott, and they all got a chance to be acquainted with him. They knew that we were negotiating. They knew what the salary was going to be, they knew the amount that was set forth in this correspondence I gave you before lunch, and every Commissioner, as far as I know, was aware of what was going on.

Mr. POWERS. And you say they did so meet with Mr. Allott?

Mr. BREWER. At luncheon, at a luncheon engagement he was my guest in the executive dining room on two occasions.

Mr. Powers. But you did not consider that a negotiating session. Mr. BREWER. No, sir.

Mr. POWERS. Did you have any other sessions that you didn't construe as a negotiating session?

What I am concerned about is we asked for the attendance at negotiating sessions and none of the other Commissioners appeared on that list.

If it is strictly construed, your luncheon session was not a negotiating session.

Mr. BREWER. There was no business transacted at luncheon. He was a guest. I wanted them to meet him to evaluate him so we could talk later about it. There was no mention of this case at all. We were very specific about that, very cautious.

Mr. POWERS. So there have only been three documents, then, in connection with the proceedings to employ special counsel, commencing in March 1972, and then there was a void until May 11, 1972, and then a further void until February of this year.

Is that correct?

Mr. BREWER. With the exception that I kept the chairman informed of

every draft of every contract that there was. And I remember there was a hiatus in there when we were negotiating with the Congressman for so many months, but there was no progress to be made except verbally we're still talking, that we hope we're going to get him.

Mr. POWERS. Did you receive during the course of this time any memorandums or other written communiques form your fellow Commissioners?

Mr. BREWER. No, sir. I asked on a number of occasions, written and otherwise, to please supply me with names of people who could be considered for this job.

Mr. DINGELL. Did you communicate with any of the committees in Congress or any of the Members of Congress, either the Commissioners or you, Commissioner Brewer, with regard to this particular contract?

Mr. BREWER. I did not personally, but, let me say, if I may use hearsay in this I recognize - I'm not a lawyer but I recognize what is hearsay evidence.

Senator Allott told me—and I have no reason to doubt that he conferred with Senator Norris Cotton and Senator Norris Cotton gave him complete approval. He conferred with Senator Proxmire, and Mr. Proxmire gave him approval. He conferred-he didn't-Senator Norris Cotton, I believe, conferred with Senator Magnuson and got his approval, and I'll ask the chairman now to testify about a conversation he had with Chairman Staggers.

Mr. STAFFORD. I called the chairman of our substantive committee to tell him that we did have Mr. Allott under very definite consideration, and asked if he had any objections, and his answer was no, he was a fine gentleman, and he would be happy to have him—well, no, he didn't. He said he is a fine gentleman and I approve of your choice.

Mr. DINGELL. Well, I, as you are well aware, am a senior member of that particular committee. I'm a senior member of the Transportation Subcommittee, and the first I ever saw of this was when I read it in the papers. Another colleague of mine who joined me in correspondence to you, Mr. Chairman, also became aware of it through the newspapers, and called me long distance in Detroit, Mich.

Mr. STAFFORD. I stand reproved on that, sir.
Mr. BREWER. So do I, sir. It was unintentional.

Mr. DINGELL. Well, the thing about which I find myself curious is, doesn't it strike you to be really a good kind of procedure if you keep your substantive committees informed when you do something of this type?

You are keenly aware of my long interest in the problem. As a matter of fact, some of the rate work that you are doing now is in large part related to the fact that I demanded that you folks do this kind of thing.

Mr. STAFFORD. That's right.

Mr. DINGELL. Largely to the exclusion of the Department of Transportation, which has been elbowing further and further into your affairs over my protest. I don't think they ought to be in this economic rate policy business at all. But this, gentlemen, is not criticism. It is just a friendly comment that you do have folks up here on the Hill who are desperately interested in this matter, and who want to see that you have the authority to do the things that you want.

And I really think that this is the kind of thing that men who are on your substantive committee, not just the chairman, but other committee members, should be aware of.

Mr. BREWER. I think we stand corrected, sir.
Mr. DINGELL. Thank you.

Mr. POWERS. Do you have an extra copy of that February 26, 1973 memo with you?

Mr. BREWER. No, I don't. I just have this one here.
Would you like to examine it?
We can submit it for the record.
Mr. POWERS. If you will, submit it for the record.

Mr. DINGELL. Without objection, the document referred to will be put in the record at this point.

[The document referred to is contained in Appendix A, page 177.]

Mr. POWERS. May I ask you why this matter of the contract involving well in excess of $1 million by the time you add in the extra studies, was not submitted for formal Commission action or an up or down record vote?

Mr. BREWER. Are you talking about the RMC or this one?
Mr. POWERS. This one.
Mr. BREWER. Well, this wasn't a million; $650,000.

Mr. POWERS. Well, by the time you add in the special studies to be performed, we are dealing with $1.4 million.

Mr. BREWER. That includes RMC. That is two contracts, separate contracts totally. The RMC is $800,000 and some, and this is $650,000.

Mr. DINGELL. Well, in point of fact, the two are totally related. Mr. BREWER. Well, they are in a sense, sir, but if I may explain, sir. Mr. DINGELL. Sure. Mr. BREWER. The special counsel has no responsbility for the RMC contract.

Mr. DINGELL. But the Commission has very direct responsibility for both the special counsel and the RMC.

Mr. BREWER. That's right, but they were negotiated under two separate contracts, two separate times, and they're totally separate.

Mr. DINGELL. Yes, but the fact of the matter is they are part of a whole proceeding before your agency.

Mr. BREWER. Well, I would like to say to you, sir, that the RMC contract was voted by the Commission on a no objection basis.

Mr. POWERS. What was the dollar amount of the RMC contract?

Mr. BREWER. I'll have to see if Brother Fitzwater is here, but I think it's $575,000 up to now.

Mr. DINGELL. It is $884,000.

Mr. BREWER. Well, we intend to do that if we get the money we asked for the other day, but it is now at this time $575,000 or somewhere in that neighborhood.

Mr. DINGELL. Well, if you will yield to me, Mr. Powers.

I'm troubled. I get the impression that you view these as part of two entirely divergent and different matters and I don't so view them.

Mr. BREWER. Well, they will dovetail at the end.

Mr. DINGELL. No, they won't dovetail at the end; they'll be intertwined throughout. If the're not, then you're not doing your job right down there.

Mr. BREWER. Well, the difference, if I may respectfully, sir, as I see it-and I can stand corrected as I see it-we are administering the RMC contract.

Mr. DINGELL. Yes; but the facts of the whole business, what Mr. Allott is going to do, his appearances before the Commission, the several studies that he may or may not undertake under the broad discretion he is afforded, and the RMC contract is going to yield, hopefully, data and information and procedural actions by the Commission that are ultimately going to lead to substantive changes in the rate structures, which are going to very broadly affect your responsibilities in the transportation field.

Now, if I'm in error on that, tell me, because maybe we'd better take a different look.

Mr. BREWER. Well, I agree. That's where we're coming at the end. Mr. DINGELL. No, they are intertwined throughout because Senator

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