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(0) No evidence or testimony taken in executive session may be released or used in public sessions without the consent of the Committee.

(p) In the discretion of the Committee, witnesses may submit brief and pertinent sworn statements in writing for inclusion in the record. The Committee is the sole judge of the pertinency of testimony and evidence adduced at its hearing.

(q) Upon payment of the cost thereof, a witness may obtain a transcript copy of his testimony given at a public session or, if given at an executive session, when authorized by the Committee.

Mr. DINGELL. The Chair, in concert with other Members of the Congress, recently sent to the Chairman of the ICC a series of questions relevant to a portion of our inquiry today and the Chair inserts at this point the questions submitted in that correspondence to the ICC.

QUESTIONS SUBMITTED TO ICC

1. Why did the ICC seek an outside source to conduct the study? Is the internal capacity of the ICC not geared for such a study? If so, why isn't it? 2. In light of the above question, why haven't the funds for such a study been requested previously if ICC internal capabilities cannot handle such a project? 3. Was this contract put out for competitive bid?

4. If so, could you provide our offices with the ICC's staff evaluation of the other bidders' proposals?

5. If it was a sole source contract-what was the Commission's justification? 6. If it was a sole source contract, would you provide our offices with a copy of the findings and determination study and other analysis required for sole source?

7. Would you cite the authority from the Government Procurement Regulations used by the Commission for this contract?

8. What is the contemplated duration of this contract? 9. Is this a personal services contract?

10. It has come to our attention that a personal services contract was contemplated-however, after obtaining a ruling from the Civil Service Commission, it was determined that Mr. Allott could not receive his Senate annuity along with the $60,000 salary if it were a personal services contract. Also, if it were a personal services contract, Mr. Allott could only be entitled to $115 per day-about half of the $60,000 per year. Is this true? Is this normal procedure for the ICC, during contract negotiations, to be so solicitous to the interests of the contractor? Do you feel that these actions on the part of the ICC serve the best interests of the taxpayers in obtaining the lowest possible price on the contract? Would you provide our offices with the ICC correspondence with the Civil Service Commission concerning this matter?

11. Would you provide our offices with copies of the contract and a brief description?

12. The negotiations surrounding the appointment of Mr. Allott also raise serious questions. Who attended the negotiating sessions with Mr. Allott and Commissioner Brewer, ICC vice chairman?

13. What role did the 11 Commissioners have in deciding upon the choice of Mr. Allott? Why were the Commissioners not allowed to vote on such a major contract?

14. Would you provide our offices with the minutes and file memos of the negotiating sessions?

15. Would you describe Mr. Allott's qualifications for managing such a sizable contract?

16. What other contracts even approaching the magnitude of $650,000 has Mr. Allott managed?

17. In the last ten years, what is the largest contract the ICC has let prior to this contract and has the ICC ever negotiated a similar contract?

18. Has any consultant ever been paid $60,000 per year by the ICC? 19. Last year the ICC assured the House Appropriations Committee that an FY 73 appropriation of $1.4 million-which includes the $650,000 contract— would be sufficient to complete the railroad investigation. Now, however, we understand that in FY 74 budget, the ICC is requesting additional funds for the completion of the study. What happened? Did the Allott contract bust the budget? 20. We understand that Mr. Allott has already hired a staff director. If that is true, what functions will be carried out by Mr. Allott for $60,000 per year? Would you provide us with a copy of the work statement?

ANSWERS FROM ICC TO QUERIES

1. Why did the ICC seek an outside source to conduct the study? Is the internal capacity of the ICC not geared for such a study? If so, why isn't it?

At the time the funds were sought, a Government-wide freeze on employment was in effect. Consequently, in obtaining the additional funds a commitment

was made to OMB that they would not be utilized to increase our employment level.

Since the extraordinary research requirements in connection with economic studies were to be of limited duration, it was conducive to contract for these studies rather than augment the Commission's staff on a temporary basis. It was determined from the beginning that the independent and impartial participation required by the Special Counsel could best be performed by an outside source. In order to insure this objectivity, it was decided that the Special Counsel should be an independent contractor, free from control or direction of either the Commission or the parties.

2. In light of the above question, why haven't the funds for such a study been requested previously if ICC internal capabilities cannot handle such a project?

The concern over the possible adverse effects of the series of general rate increase cases in recent years highlighted the need for such an investigation. It was recognized from the beginning that the success of such an investigation was dependent on adequate financing. Additional funds were sought within one month of the identification of the problem. The Commission issued its report identifying the need for such an investigation in November, 1971, and negotiations for additional funding were initiated in December.

3. Was this contract put out for competitive bid?

4. If so, could you provide our offices with the ICC's staff evaluation of the other bidders' proposals?

5. If it was a sole source contract, what was the Commission's justification?

6. If it was a sole source contract, would you provide our offices with a copy of the findings and determination study and other analysis required for sole source?

7. Would you cite the authority from the Government Procurement Regulations used by the Commission for this contract?

The unique qualifications of Special Counsel are such that they do not lend themselves to the evaluation of competitive proposals. However, an intensive search was undertaken to find an individual uniquely qualified to perform services of a Special Counsel on a contractual basis in connection with the investigations. Informal inquiries were made in connection with those individuals who, in our opinion, would meet the qualifications and, in several instances, direct contacts were made concerning their availability. For numerous reasons (identification with special interests, prior commitments, personal reasons, etc.), the individuals considered declined or were eliminated from consideration. The Commission's justification for negotiating an individual contract, as authorized by 41 U.S.C. 252(c) (10), is contained in its Determination and Findings, a copy of which is attached as Exhibit A.

8. What is the contemplated duration of this contract?

The Letter Contract began February 26, 1973. It is contemplated that the Definitive Contract, which is expected to be executed on or before April 1, 1973, will continue until the investigations are ended. The maximum amount for which the Commission will be liable, if the Letter Contract is terminated, is $55,000. The maximum amount of the Definitive Contract will not exceed $650,000, including the $55,000 obligated by the Letter Contract. It is anticipated that this amount will fund the contract for a period of two years. If the investigations are not completed by that date, an extension of the Definitive Contract would be contingent upon the availability of funds.

9. Is this a personal services contract?

10. It has come to our attention that a personal services contract was contemplated— however, after obtaining a ruling from the Civil Service Commission, it was determined that Mr. Allott could not receive his Senate annuity along with the $60,000 salary if it were a personal services contract. Also, if it were a personal services contract, Mr. Allott could only be entitled to $115 per day—about half of the $60,000 per year. Is this true? Is this normal procedure for the ICC, during contract negotiations, to be so solicitious to the interests of the contractor? Do you feel that these actions on the part of the ICC serve the best interests of the taxpayers in obtaining the lowest possible price on the contract? Would you provide our offices with the ICC correspondence with the Civil Service Commission concerning this matter?

From inception of the concept to retain Special Counsel, it has been the Commission's consistent intention not to enter into a personal services contract for the compelling reasons, among others, that the employer-employee relationship achieved by a personal services contract could be alleged, upon judicial review of our final orders, to have destroyed Special Counsel's independence and impartiality, and to have infected the proceedings with reversible error because the Commission directed and controlled his presentation and recommendations.

As an independent contractor and party to the investigation proceedings, Special Counsel is in the same position as any other litigating participant and must communicate with the Commission on the record with opportunity for rebuttal by opposing parties.

Mr. Allott has been retained as an independent contractor to produce a work product and will not be supervised or directed by the Commission, its members, or any other Federal employee. His sole responsibility is his own work product which will be presented through his nonpartison participation as a party in the interest of the public in those proceedings.

We know of no legal restrictions on the amount of pay for personal services obtained under contract by the Federal Government. The only pay limitation we know of applies to experts and consultants. Unless an agency has specific authority, 5 U.S.C. 3109 limits the amount an agency may pay an expert or consultant to the highest rate payable for Grade GS-15. That rate is currently $134.48 per day. In the past, many agencies were authorized by their appropriation to pay a rate of $115.00 per day, which at the time was in excess of a GS-15. However, when the daily rate of the top of a GS-15 exceeded $115.00 per day, those authorizations became meaningless and subsequently have been dropped from the language of most appropriation bills.

In view of the urgency to proceed with the investigations and the lack of precise information on the estimated costs involved, a Letter Contract has been executed. We are currently conducting negotiations leading to a definitive contract. You may be assured that throughout these negotiations and during performance of the contract the best interests of the taxpayer will be protected. Compensation for personnel under the contract, other expenses, subcontracts, and special consultants will be carefully appraised for reasonableness consistent with the nature of the expense involved.

Compensation, not to exceed $60,000 a year for the Special Counsel, was a condition precedent to executing the letter contract. When compared with the compensation received by top individuals of either the industry we regulate, the legal profession which practices before us, and other highly qualified personnel whose services are routinely obtained by contract by both Government and the private sector, we consider such compensation entirely reasonable.

The purpose of our discussions and correspondence with the Civil Service Commission was twofold. Primarily, we were interested in the Commission's views on the appropriateness of contracting for Special Counsel, including necessary staff. These discussions preceded our identification of Mr. Allott as a prospective contractor. Secondly, our inquiry regarding Mr. Allott's annuity was to obtain an advanced ruling relative to a nonpersonal services contract, and was done so at Mr. Allott's request. Our correspondence with the Civil Service Commission and their reply are attached as Exhibits B and C.

11. Would you provide our offices with copies of the contract and a brief description? The Commission has instituted the most searching investigations of the railroads in its entire history. Independent participation by an impartial Special Counsel is both desirable and necessary to assure that an adequate record is produced and that all conflicting views are considered without sacrifice of the public interest. Special Counsel is obligated to formulate issues and obtain, compile and analyze available information and data and present the results of his analysis in the course of the proceedings. Upon analysis of the entire record, he shall take a position on the issues presented with a full statement of his views and supporting reasons therefor.

In sum, Special Counsel's role is to provide an unbiased appraisal of the existing rail rate structure and to recommend changes in the law or ratemaking policy which will effectuate the public interest and the National Transportation Policy's goal of developing and preserving adequate, efficient and economically sound rail transportation service as part of a viable national transportation system.

Several parties to the proceedings strongly urged the appointment of Special Counsel (See 340 I.C.C. 868, 883-4). An early precedent was the appointment by the Commission of the Honorable Louis D. Brandeis, prior to his appointment to the Supreme Court, as special counsel in the Five Percent Case, 31 I.C.C. 351 (1914). A copy of the contract is enclosed as Exhibit D.

12. The negotiations surrounding the appointment of Mr. Allott also raise serious questions. Who attended the negotiating sessions with Mr. Allott and Commissioner Brewer, ICC Vice Chairman?

During the various sessions of the negotiations conducted with Mr. Allott, Vice Chairman Brewer was accompanied by one or more representatives from the

Chairman's Office, the General Counsel's Office, the Managing Director's Office, the Office of Proceedings and the Bureau of Economics. The Commission staff was augmented by two contract specialists.

13. What role did the 11 Commissioners have in deciding upon the choice of Mr. Allott? Why were the Commissioners not allowed to vote on such a major contract?

In his search for a man of integrity to undertake the duties of Special Counsel, Vice Chairman Brewer continuously kept Chairman Stafford and the other members of the Commission advised as to his progress. Initially, each member was requested to submit names of candidates. The Commissioners were kept aware of the preliminary negotiations with all candidates, as well as the final negotiations with all candidates, as well as the final negotiations with Mr. Allott. In view of this, no formal vote was taken nor was one considered necessary inasmuch as each had a continuing opportunity to raise objections.

14. Would you provide our offices with the minutes and file memos of the negotiating sessions?

There were no minutes taken or file memos prepared in connection with the negotiating session. Most discussions involved the explanation and clarification of the language used in standard government contracts.

15. Would you describe Mr. Allott's qualifications for managing such a sizable contract?

Senator Allott's unique qualifications for Special Counsel are:

(i) A person highly esteemed by government and the parties to the proceeding,

(ii) a person with broad knowledge of national economic problems and policy,

(iii) a person trained in the law, of unquestioned integrity, of judicious temperament, of national prominence and without past identification with special interests involved in the proceedings,

(iv) a person who will ensure that all aspects of the cases are impartially reviewed, considered and recorded, and that any aspect of such cases which, in his judgment, requires further investigation or emphasis will be investigated or emphasized before decision is made by the Commission, and

(v) a person who has proven his management ability through many years as a practicing attorney, elected county and state official, U.S. Army Air Corps Officer, U.S. Senator and Congressional leader.

16. What other contracts even approaching the magnitude of $650,000 has Mr. Allott managed?

Since Mr. Allott was a Senator from the State of Colorado for the past 18 years, he has not managed any government contract during that period of time. However, part of his responsibility in that capacity was overseeing appropriation requests and budgetary justification of billions of dollars. Also, there is no significant question of contract management involved. Rather the contract calls for the performance of a lawyer's classic function of representing a client-in these proceedings the public interest of the entire Nation.

17. In the last ten years, what is the largest contract the ICC has let prior to this contract and has the ICC ever negotiated a similar contract?

The largest contract the Commission has let in the past ten years was awarded to RMC, Incorporated, of Bethesda, Maryland, for economic research and studies reflecting rail rate structures and related areas in support of the investigations. It is anticipated that the total cost of this contract will amount to approximately $884,000. To date, $575,000 has been obligated and an additional $155,000 has been allocated for obligation later this fiscal year. The remaining funds are contained in the Commission's 1974 budget request currently pending before Congress. The only other contract of any magnitude is one awarded annually for stenographic reporting services. Our present contract is with C. S. A. Reporting Corporation of Washington, D.C. The total cost of this contract is based upon the actual number of pages of transcript furnished during the fiscal year. At the present time, we have $360,000 budgeted for this year's contract.

Both of these contracts were put out for competitive bid. The Commission has never before negotiated a contract similar to the one let for the Special Counsel. 18. Has any consultant ever been paid $60,000 per year by the ICC?

No. However, it should be noted that the contract in question pertains to a nonpersonal service and is not to be confused with a "consultant."

19. Last year the ICC assured the House Appropriations Committee that an FY 1973 appropriation of $1.4 million—which includes the $650,000 contract— would be sufficient to complete the railroad investigation. Now, however, we understand

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