When you went before the Office of Management and Budget for your request for release of funds, how much had they previously impounded?

Mr. BREWER. I'll have to ask Mr. Fitzwater, but we got $740,000 of their impounded funds, and I think there was something beyond that, and I'm not quite sure but what it might have been $1.4 million, or something. I think we got half.

We got half of what they impounded, I think. I believe that is

correct.

Mr. DINGELL. How much did they impound?

Mr. BREWER. I am under oath. I'll have to give you a guess. I think it was about $1.4 million.

Mr. DINGELL. And this was when, if you please?

Mr. BREWER. I think it was in May-April or May. I'm not sure of the date on that.

Mr. DINGELL. This is April or May of last year?

Mr. BREWER. Yes.

Mr. DINGELL. Of 1972?

Mr. BREWER. Of 1972.

It may have been March, but along in there because we were under great pressure. As Mr. Wilson talked about this morning, that money had to be obligated by June 30 is the reason for the great push, or we would have lost it because that was previous year's money, you see, and we had to get it obligated. That was part of the push in trying to get the RMC thing worked through.

Mr. DINGELL. Are we talking about RMC or

Mr. BREWER. RMC. We couldn't go on the Special Counsel because we didn't have our supplemental money yet.

Mr. DINGELL. I see.

Mr. POWERS. Well, what I am curious about is that you have a package here of $1,460,000, and you sought the release of $700,000 and said you would get the rest of the $1,460,000 or a total of $760,000 in a supplemental appropriation.

Why did you find it necessary to ask for a supplemental appropriation if there were extra funds available that could be released? Why didn't you seek their release from OMB?

Mr. BREWER. Well, I'd better let Mr. Fitzwater

Mr. STAFFORD. Mr. Fitzwater.

Mr. DINGELL. Well, then, I guess we'd better swear you.

Raise your right hand.

Do you solemnly swear the testimony you are about to give is the truth, the whole truth, and nothing but the truth?

Mr. FITZWATER. I do.

Mr. DINGELL. All right.

Mr. Powers?

Mr. POWERS. What was the balance of the funds that had been impounded by OMB from which you were seeking the release of $700,000 on this contract?

Mr. FITZWATER. In fiscal year 1972 the Congress appropriated $1,700,000 over and above the amount included in the President's budget for ICC salaries and expenses. OMB impounded the total amount. They then released some funds for our operations, leaving about $1,460,000 still in reserve.

95-151-73-9

Mr. DINGELL. This is fiscal 1972 money.

Mr. FITZWATER. During that year we also had a pay raise which went into effect in January. This pay raise cost us approximately $760,000 of the $1,460,000 which was still held in reserve by OMB. When we had the pay raise, in lieu of going for supplemental appropriations, they released $760,000 for pay raise purposes. This was at the same point that we were going to OMB for a total of $1,460,000 for this investigation.

At that point OMB said, well, we will release the remaining $700,000 of the reserve. However, you will still have $760,000 difference. We will approve a supplemental appropriation for you for $760,000 in fiscal year 1972. This supplemental was sent forward.

However, the delay in the appropriation bill in 1972-they were considering the 1973 appropriation by the time they considered the 1972 supplemental bill-and at the request of the Senate Appropriations Committee, this was converted to a budget amendment to our 1973 budget, and consequently, we end up with $760,000 in our 1973 appropriation and $700,000 in our 1972 appropriation which was released from reserve.

Mr. POWERS. So it's just a coincidence then that this adds up to $1,460,000.

Mr. FITZWATER. That is the amount that was released when requested, yes, sir.

Mr. POWERS. Was it the decision of OMB that this $700,000 would be leased only for an independent contract rather than for additional staff?

Mr. FITZWATER. It was our understanding from the time we initially solicited funds at OMB that they would not approve the release of the additional funds if we were going to increase our personnel. Beginning in fiscal year 1971, the Congress tried to increase our employment ceiling, both fiscal year 1971 and 1972 appropriations in excess of the President's budget, were authorized for the Interstate Commerce Commission, each year authorizing 140 positions over and above the President's budget.

Each year these funds were placed in reserve and the OMB refused to increase our end of year employment ceiling to take this into consideration.

Mr. DINGELL. Well, now, just a moment. Just for the record, I notice that Chairman Stafford has been nodding affirmatively as you have been commenting, but go ahead.

Mr. STAFFORD. I really wasn't trying to guide him. He is way ahead of me.

Mr. DINGELL. I'm not saying you're trying to guide him. I'm just saying that you indicated agreement.

I must say, as Counsel advises me here, this doesn't sound like an arm of the Congress. It sounds like an arm of the OMB or the Executive, which I must confess to you gentlemen, very much distresses me.

Mr. POWERS. Well, Mr. Stafford, when it was decided to go independent contractor on this, did you have in mind the fact that it would be easier to get these funds released from OMB so that you could hire outside help rather than expand your staff?

Mr. STAFFORD. Right. There was a freeze on at that time.

Mr. POWERS. Would it be fair to say that you would prefer to do this in-house were it not for the freeze?

Mr. STAFFORD. No. I think, as we look at it, that this was the proper way to do it.

Mr. DINGELL. Now here, you have during the past year, Mr. Stafford, made a number of comments. For example, before a Senate Committee last year, in fact, the Senate Subcommittee on Intergovernmental Relations, the Committee on Government Operations, you pointed out that your agency, and I'm quoting here, now, "was pared right down to the bone."

Mr. STAFFORD. That's right.

Mr. DINGELL. I think one of the gross problems that we are beset with today insofar as your agency functioning is

Mr. STAFFORD. Well, I said it and I meant it and I still mean it for that time.

Mr. DINGELL. Well, you said that in your opening statement. You had a small, devoted and grossly overworked staff.

Mr. STAFFORD. That's right.

Mr. DINGELL. And I think that's wrong. I am much against this concept of White House impoundment. I am much afflicted with the idea that the OMB dictates to you not only the numbers of people that you have, which they have done to you as I am sure that you will agree.

Mr. STAFFORD. However, this was an order across the board, sir. Mr. DINGELL. It's an order across the board from the executive, but somehow they got mixed up and they directed it toward an arm of Congress, which you happen to be at the ICC.

Mr. STAFFORD. Right.

Mr. DINGELL. But I am troubled about them not only dictating questions of budget, questions of money, questions of the number of staff, which they do do.

Don't they do this now, the White House, the OMB, don't they. dictate these questions to you?

Mr. KAHN. Personnel ceilings?

Mr. STAFFORD. Well, I'd have to let my budget man-but I guess you could say that. This is the purpose of the OMB, I presume, is to limit the number of Federal employees, yes, sir.

However, we have been under this kind of a situation, you know, we went 10 years, starting in 1961, I believe it was, with cutting back of employees every year, that the OMB did that to us.

Mr. DINGELL. I'm keenly aware of that, but it is also the practice of the OMB to dictate your policies by approving projects in which you engage, is it not?

Mr. BREWER. It might be fair to say, if I might at this point, that we do have an increase up to 1,800 this year, and we've been able to cut down our workload very materially in our last couple of weeks.

Mr. DINGELL. I applaud that. I think that is good. But in point of fact they actually go through and they approve on a project by project basis, don't they, at the OMB?

Mr. BREWER. It's categories.

Mr. FITZWATER. Only in the case of a supplemental appropriation would they be actually ruling on a specific item such as the case of this investigation.

Mr. DINGELL. Well, this investigation was approved on an item. by item basis, was it not, by the OMB?

Mr. FITZWATER. Yes, sir. It was sent over as a request to release the reserve funds, so that the only item before them was this one item, so they either had to rule it yes or no. So the one item they did

vote on

to

Mr. DINGELL. Well they approve at OMB whether or not FTC sends out a single questionnaire. They've been doing it for years, my vast outrage.

Do they approve the programs in which you folks are engaging? Mr. BREWER. You see, we're not a programatic agency. We don't generally have programs. It's almost a steady kind of thing. It's unusual, and that's probably the reason, if we have stumbled here a little bit on this, it's because we are inexperienced in this kind of thing.

Mr. DINGELL. Well, I'm delighted to see you do it, but I'd much rather see you do it in-house so that you'd have a continuing staff so that you could keep on doing some of the things like heading off future Penn Centrals or some of the bankruptcies that are afflicting us in the railroad business or some of the other problems we've got.

Now, gentlemen, I want you to know that this inquiry that we're having today is a friendly one. It may not seem that way when you're sitting down there, but I am troubled about the whole overall situation that you people are afflicted with.

Now, I happen to have here an appendix that comes out of-I think it is out of your submissions to the Senate Government Operations Committee, showing the problem that you've had in terms of getting money out of the Office of Management and Budget. For example, in 1972, you requested 2,600 employees, 2,600 in 1972, $34,275,000. You got you were permitted to request to the Congress 1,725 employees. OMB cut you 500 employees and gave you a budget of $28 million. That's fiscal 1972.

The Congress prudently appropriated for 1,865 employees, $30,640,000 budget, and the Office of Management and Budget won the ball game. They gave you 1,725 employees, $28,940,000, the same amount as they told you you could ask Congress for.

So you marched up the Hill and tumbled back down again.

Now, in 1973, you requested 2,212 employees and $34,625,000. The Office of Management and Budget said you could ask for 1,765. They gave you $29.4 million. The Congress made its appropriation and you wound up, I think, with about the same number of employees.

Now, would you submit to us for the record-I'll make this available to your folks down there, Mr. Kahn, and you can give us an update as to how you fared at the hands of the OMB, because I'm satisfied it's been rather poorly.

Mr. Powers?

Mr. POWERS. Thank you.

In addition to the RMC contract, have you let any other major contracts for studies?

Mr. BREWER. Before I answer, may I check?

A reporting contract, a small one.

How much was that?

Mr. FITZWATER. We had one other contract of any significance. It is with the CSA Reporting Service, which provides transcripts of all

of our hearings. Currently it is estimated in the neighborhood of $360,000.

Mr. DINGELL. Just out of curiosity, is that competitive?

Mr. STAFFORD. Well, it can't be very competitive.

Mr. FITZWATER. I might say that the transcript bids are not very competitive.

Mr. POWERS. Do the Commissioners vote on the letting of this reporting contract?

Mr. FITZWATER. No, sir,

Mr. STAFFORD. This is just a business function, and I don't think it is a very competitive contract.

Mr. POWERS. Can you briefly tell us what this RMC contract is for? Mr. BREWER. Well, first, may I introduce Mr. Fred Dolan, who started back with Commissioner Walrath at the beginning of this, and he's very articulate. He's an administrative law judge now, and let him lead up to where Mr. Rhodes took over.

Mr. DINGELL. You have not been sworn, Mr. Dolan?

Mr. DOLAN. No, I have not.

Mr. DINGELL. Do you solemnly swear the testimony you are about to give will be the truth, the whole truth and nothing but the truth? Mr. DOLAN. Yes, I do.

Mr. DINGELL. Mr. Dolan, if you would bring a chair up, we'd be glad to receive your testimony.

Mr. POWERS. Mr. Dolan, what is you position with the RMC contract, or what was it, I guess would be the proper question.

Mr. DOLAN. I was assigned to be in charge of the task force to start the investigation in Ex Parte 270, and we determined that after the report was adopted that we would have to venture on to some economic studies, and after procuring the money from the OMB, it was decided that we had to obligate the money within a short time.

The Commission has no contracting office. We have little experience in this. We were directed to find throughout the Government the best people who could help us with this. This was our advice from the Civil Service Commission and others, and they told us the best people were those available at NASA.

We went to NASA and they said, to obligate all this money in this short amount of time would be quite difficult to them, and they have an established team of people who pass on contracts all the time. However, they did, after much talk with them, agree in view of the immensity of the project and the fact that it was so worthwhile, that they would make an employee available to us in order to save time and give us the benefit of their expertise, and that is when we acquired Mr. Wilson, who had been at the Price Commission, and he had negotiated some 34 contracts for them and was very experienced in his field.

I for one was very delighted to have him with us because of his experience in this area.

Mr. POWERS. May I interrupt for a moment?

Do you mean he was with the Price Commission or the Interstate Commerce Commission?

Mr. DOLAN. He was an employee of NASA. He had been loaned to the Price Commission for a while because of his expertise in negotiating contracts, the mechanics of it, his familiarity with all the Government regulations regarding contracts. And then he had worked through