STAR ROUTE CARRIERS

THURSDAY, MARCH 14, 1940

HOUSE OF REPRESENTATIVES,

COMMITTEE ON THE POST OFFICE AND POST ROADS,

Washington, D. C. The committee this day met at 10:15 a. m., Hon. Milton A. Romjue, chairman, presiding, for consideration of S. 1214, which reads as follows:

[S. 1214, 76th Cong., 1st sess., Report No. 1018]

[Strike out all in black brackets and insert the part printed in italic]

A BILL To provide for a more permanent tenure for persons carrying the mail on star routes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, [That (a) section 3951 of the Revised Statutes, as amended by the Act of August 11, 1876 (amending sections 246 and 251 of the Act of June 8, 1872) (U. S. C., 1934 edition, title 39, sec. 434), is hereby amended by striking out the last sentence of such section and inserting in lieu thereof the following: "In any case in which a regular contract for carrying the mail upon any star route was sublet or transferred and the subletting or transferring of such regular contract was approved by the Postmaster General prior to January 1, 1939, the Postmaster General may, in his discretion and in the interests of the Postal Service, upon the expiration of the term of the contract so sublet or transferred, enter into a contract for carrying the mail upon such route with the person to whom such regular contracts was last sublet or transferred. Any such contract so entered into shall be for a period of four years and shall provide for compensation to the new contractor at the rate prevailing at the end of the term of the sublet or transferred contract. In all other cases of regular contracts for carrying the mail upon star routes, the contract may, in the discretion of the Postmaster General, and in the interests of the Postal Service, be renewed for single periods of four years from date of expiration, at the rate prevailing at the end of the contract term, and like renewals of such contracts may thereafter be made as often as the interests of the service may require. Any regular contract may be continued in force beyond its express terms for a period not exceeding six months, until a new contract with the same or another contractor shall be made by the Postmaster General."

[(b) Such section 3951 is further amended by adding at the end thereof the following new paragraphs:

["The Postmaster General may, in his discretion, and in the interests of the Postal Service and under such regulations as he may prescribe, allow extra compensation to a star-route contractor for necessary increased travel caused by obstruction of roads, destruction of bridges, or discontinuance of ferries occurring during the contract term, when such increased travel is for not less than one mile and is for a period of not less than five consecutive days. No extra compensation allowed under the provisions of the preceding sentence shall be proportionately greater than the rate established by the contract involved. The provisions of section 3960 of the Revised Statutes (U. S. C., 1934 edition, title 39, sec. 440) that no compensation shall be paid for additional service in carrying the mail until such additional service is ordered, the sum to be allowed therefor to be expressed in the order and entered upon the books of the department, and that no compensation shall be paid for any 1

additional regular service rendered before the issuing of such order, shall not apply to any service authorized under this paragraph.

"In any case in which the mileage on any star route is increased or decreased, the contractor then under contract to carry the mail on such route shall have the option of continuing to carry the mail on such route at a compensation increased or decreased in the same proportion that the mileage of such route is increased or decreased. If such contractor determines that he does not desire to carry the mail on such route, he shall be released from the obligations of his contract and the Postmaster General may, in his discretion, readvertise such route.

["In any case in which a change in schedule for carrying the mail on any star route is ordered, the contractor then under contract to carry the mail upon such route shall continue to carry the mail on such route under his contract if he so desires; but if such change in schedule is not acceptable to the contractor and if the Postmaster General finds that such change in schedule will result in substantial hardship to said contractor, then said contractor shall be released from all obligations under such contract and the Postmaster General may, in his discretion, readvertise such route.

["In any case in which two or more star routes are consolidated, the contractors then having the contracts for carrying the mail on such routes shall be entitled, if they so desire, to receive a contract for carrying the mail upon such consolidated route issued to them jointly. If any one or more of said contractors do not desire to contract jointly to carry the mail upon such consolidated route, then the remaining contractor or contractors shall be entitled to a contract for carrying the mail upon such consolidated route. The compensation for carrying the mail upon any such consolidated route shall be equal to the compensation previously paid to all of the contractors for carrying the mail upon the routes included in such consolidated route. No application under this section, by any person (1) to renew a contract, (2) to contract to carry the mail upon any route upon which such person is carrying the mail under a contract which has been sublet or transferred to him, or (3) to carry the mail upon a consolidated route, shall be considered by the Postmaster General unless such application is filed with him within such time as he may prescribe by general regulations."

[SEC. 2. As used in sections 3945 and 3946 of the Revised Statutes (U. S. C., 1934 edition, title 39, secs. 426 and 427) and in section 8 of the Act entitled "An Act to amend the Act approved June twenty-five, nineteen hundred and ten, authorizing the Postal Savings System, and for other purposes," approved May 18, 1916, as amended (U. S. C., 1934 edition, title 39, sec. 344), the term "bidder" shall include (1) a contractor who is an applicant for renewal of his contract under section 3951 of the Revised Statutes as amended, (2) a person to whom a contract for carrying the mail upon any route has been sublet or transferred and who is an applicant under such section for a contract to carry the mail upon such route, and (3) an applicant or applicants under such section for a contract for carrying the mail upon a route formed by the consolidation of two or more routes.

[SEC. 3. No proposal for carrying the mail on a star route shall be considered unless the person submitting such proposal is a legal resident of the State or States traversed by the roads over which the mails or to be carried, or a legal resident of one of the States adjoining such State or States. A firm, company, or corporation shall be deemed to be a legal resident, as such term is used in this section, of any State or States within which it is actually engaged in business.]

That (a) section 3951 of the Revised Statutes, as amended by the Act of August 11, 1876 (amending sections 246 and 251 of the Act of June 8, 1872) (U. S. C., 1934 edition, title 39, sec. 344), is hereby amended by striking out the last sentence of such section and inserting in lieu thereof the following: “In cases of regular contracts for carrying the mail upon star routes, the contract may, in the discretion of the Postmaster General, and in the interests of the postal service, be renewed for single periods of four years from date of expiration, at the rate prevailing at the end of the contract' term, 'and like renewals of such contracts may thereafter be made as often as the interests of the service may require. Any regular contract may be continued in force beyond its express terms for a period not exceeding six months, until a new contract with the same or another contractor shall be made by the Postmaster General by regular advertisement as required by existing law."

(b) That section 3951 of the Revised Statutes, as amended (U. S. C., 1934, edition, title 39, sec. 434), is hereby amended by the addition of the following: "The Postmaster General may, in his discretion and under such regulations as he may prescribe, allow additional compensation to a star-route contractor for necessary increased travel caused by obstruction of roads, destruction of bridges, discontinuance of ferries, or any other cause occurring during the contract term, but such additional compensation allowed shall not be proportionately greater than the rate established by the contract involved: Provided, That the provisions of section 3960 of the Revised Statutes (U. S. C., title 39, sec. 440) that no compensation shall be paid for additional service in carrying the mail until such additional service is ordered, the sum to be allowed therefor to be expressed in the order and entered upon the books of the department, and that no compensation shall be paid for any additional regular service rendered before the issuing of such order, shall not apply to any service authorized under this paragraph.

"The Postmaster General may, in his discretion and in the interest of the Postal Service, readvertise and award new contracts for the purpose of releasing contractors and their sureties under the following conditions: (a) Where a change is ordered in the service involving a material increase or decrease in the amount of service required to such extent as to impose undue hardship on the contractor; (b) where an abnormal or sustained increase in the quantity of mail develops during a contract period or after a bid has been submitted, necessitating larger capacity equipment to maintain the service; (c) where a change in schedule is ordered that will necessitate the contractor being away from the initial terminal an excessively longer or an excessively shorter period than was required in the advertised schedule."

Sec. 2. As used in sections 3945 and 3946 of the Revised Statutes (U. S. C., 1934 edition, title 39, secs. 426 and 427) and in section 8 of the Act entitled "An Act to amend the Act approved June twenty-five, nineteen hundred and ten, authorizing the Postal Savings System, and for other purposes", approved May 18, 1916, as amended (U. S. C., 1934 edition, title 39, sec. 344), the term "bidder" shall include a contractor who is an applicant for renewal of his contract under section 3951 of the Revised Statutes as amended.

No proposal for a contract for Star Route Service shall be considered unless the bidder is a legal resident of the county or counties traversed by the roads over which the mails are to be carried, or a legal resident within the counties adjoining such county or counties; except that proposals for carrying the mail tendered by firms, companies, or corporations shall be considered: Provided, That such firms, companies, or corporations are actually engaged in business within the counties in which individuals are herein restricted as to residence: And provided further, That the terms "county", as used herein, shall include parish or other similar primary subdivision of a State. (A departmental report on this bill follows:)

Hon. MILTON A. ROMJUE,

POST OFFICE DEPARTMENT, Washington, D. C., March 6, 1940.

Chairman, Committee on the Post Office and Post Roads,

House of Representatives.

MY DEAR MR. ROMJUE: This Department has given careful consideration to the provisions of S. 1214, a bill to provide for a more permanent tenure for persons carrying the mails on star routes.

Approval cannot be given to section 1 (a) of the measure as it would be too great a departure from the underlying basis of this type of service which is its competitive basis.

We are in sympathy with the last paragraph of section 1 (b) of the bill but believe that the following substitute therefor would be preferable:

"The Postmaster General may, in his discretion and in the interest of the Postal Service, readvertise and award new contracts for the purpose of releasing contractors and their sureties under the following conditions: (a) Where a change is ordered in the Service involving a material increase or decrease in the amount of service required to such extent as to impose undue hardship on the contractor; (b) where an abnormal or sustained increase in the quantity of mail develops during a contract period or after a bid has been submitted, necessitating larger capacity equipment to maintain the service; (c) where a change in schedule is ordered that will necessitate the contractor being away

from the initial terminal an excessively longer or an excessively shorter period than was required in the advertised schedule; (d) where it is found after full investigation that the compensation of such contractors is wholly inadequate and that the continuation of the contract would impose undue hardship upon the contractor: Provided, That provision (d) shall be effective only upon the giving by the contractor of 90 days' advance notice of his desire to be released: And provided further, That such contractor shall waive the 1 month's extra pay authorized by law where contracts are canceled under section (d)."

Under the present law the Post Office Department is required to accept the lowest bid, the only restriction being that the Postmaster General shall not be bound to consider the bid of any person who has willfully or negligently failed to perform a former contract and that a contract shall not be made with any person who has entered into a combination of bidders to fix the rate of Star Route Service. In order that the Department may be relieved of the necessity of accepting the low bid where circumstances justify the conclusion that it is highly probable the bidder will not be a satisfactory contractor, the amendment of exsiting law in this particular is considered desirable. Accordingly the inclusion in section 2 of the bill of the two following paragraphs is recommended:

Section 1 of the act of July 26, 1892 (27 Stat. 268; title 39, sec. 422, U. S. C.) is amended to read as follows:

"After providing by general advertisement for the transportation of the mails in any State or Territory as authorized by law, the Postmaster General may secure any mail service that may become necessary before the next general advertisement for said State or Territory by posting notices, for a period of not less than 10 days, in the post offices at the termini of any route to be let, and upon a bulletin board in the Post Office Department, inviting proposals, in such form and with such guaranty as may be prescribed by the Postmaster General, for the performance of the proposed service. The contract for such service shall be made to run to the end of the contract term under the general advertisement, shall be made with the lowest responsible bidder whose proposal is in due form, and who, under the law, is eligible as a bidder for such postal service."

Section 3949 of the Revised Statutes, as amended (title 39, sec. 429, U. S. C.) is amended to read as follows:

"All contracts for carrying the mail shall be in the name of the United States and shall be awarded to the lowest responsible bidder tendering sufficient guaranties for faithful performance in accordance with the terms of the advertisement. Such contracts shall require due celerity, certainty, and security in the perfomance of the service; but the Postmaster General shall not be bound to consider the bid of any person who has willfully or negligently failed to perform a former contract."

It has been ascertained from the Bureau of the Budget that if section 1 (a) and the first paragraph of section 2 are stricken from this bill and it is otherwise amended as hereinabove suggested, it would not be in conflict with the program of the President.

Very truly yours,

JAMES A. FARLEY,
Postmaster General.

STATEMENT OF FRANK RUSSELL, NATIONAL STAR ROUTE

CARRIERS' ASSOCIATION

The CHAIRMAN. We have met this morning for consideration of S. 1214, which is a bill to provide for a more permanent tenure for persons carrying the mail on star routes.

As gentlemen of the committee will remember, both the House and the Senate have held very complete hearings concerning this subject, therefore we do not this morning wish to rehash everything that has gone before. Mr. Russell, the representative of the starroute carriers, is here and we will hear from him first.

Mr. RUSSELL. Mr. Chairman and gentlemen of the committee, I have not very much to say this morning, inasmuch as this subject has been so thoroughly covered, as has been stated by your chairman. The star-route carriers and their representatives have been before the committee with this legislation several times and, having the pleasure of knowing most of the gentlemen of the committee personally, and their views in regard to this matter, I know they recognize the need for some remedial legislation.

The fact that the legislation which has been before the committee in this regard heretofore is not law, is not at all the fault of this committee, because you passed it. You gentlemen know that story too well to require repetition.

In discussing this matter over a period of considerable time with the Post Office Department, they also recognized the necessity, in the interest of justice, for some change in the present law. That, of course, is a matter for determination by gentlemen of the committee and the other Members of the Congress.

I understand that the Department has made a statement of the things to which it will agree, and we are in agreement with that proposal. A representative of the Department is here this morning to submit the Department's proposal, and I think it probably would be well to hear him at this time. I think that procedure would expedite this matter. There is no use of my going into details that are perfectly familiar to the committee.

After you have heard the representative of the Post Office Department, if I can be of any service or help to the committee in any way, I shall be very glad to extend it.

The CHAIRMAN. Who is here from the Post Office Department?

Mr. MARTIN. I am from the Bureau of the Second Assistant Postmaster General. I am assistant general superintendent of the Division of Railway Mail Service. Unfortunately, Mr. O'Connell, Second Assistant Postmaster General, is unable to be present at this moment. He was imperatively engaged when we left the Department, but he expected to come here very soon. I had expected him here before this time. If it is agreeable to members of the committee, I think it would be well to wait until he arrives, which will be only a matter of a very short time, as I believe.

Mr. MASON. Do you know about the agreement that was arrived at between the representatives of the Post Office Department and the representatives of the star-route carriers?

Mr. MARTIN. I am not thoroughly familiar with that matter, because Mr. Cole, Deputy Second Assistant Postmaster General, and Mr. Hardy, the General Superintendent of the Division of Railway Mail Service, have handled this matter, and those gentlemen are unavoidably absent, being out of the city.

Mr. MASON. I wanted to know if somebody could tell us something about this from the Department's standpoint while we are waiting for the Second Assistant Postmaster General.

(Thereupon Mr. Ambrose O'Connell, Second Assistant Postmaster General, entered the room.)

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