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Major contractors for the initial defense communications satellite project

Contractor

Item

Obligations

through June 30, 1966

$391, 712

237, 500

177, 700

86, 526

88, 786

Do..

22, 914, 119 4, 446, 397

373, 294

803, 911 3, 181, 648 1, 847, 993

Army:

Air Inflatable Projects Co., East Haven, Radomes for AN/MSC-46..

Conn.
Astro Systems, Inc., Mount Vernon, Antenna position programer

N.Y.
Communications Systems, Inc., Para- Data reduction...--

mus, N.J.
Electric Space Structures, West Concord, Space frame radome..

Mass.
Hewlett-Packard, West Conshohocken, Test equipment for AN/TSC-54.

Ps.
Hughes Aircraft Co., Fullerton, Calif... 14 AN/MSC-46's.

Spares, engineering services, training for AN/

MSC-46.
Do..

Mod/demod equipment for AN/FSC-9's...
Lenkurt Electric Co., San Carlos, Calil.. Interconnect facilities.
Magnavox Co., Torrance, Calif..

AN/URC-55's...
Do.

Engineering services, training, integ and

spares AN/URC-55. Do.

AN/URC-61.
Philco Corp., Palo Alto, Calis.

SCCF
Do..

Engineering Services, R. & D. test earth

complex, IDCSP. Radiation, Inc., Melbourne, Fla. Modification of AN/FSC-9. Do.

AN/TSC-54.
Stelma, Inc., Stamford, Conn.

Teletype terminals..
Subtotal.
Air Force:

Philco Corp., Western Development Satellites and dispensers..

Laboratories, Palo Alto, Calil.
TRW Systems, Inc., Los Angeles, Calif. Major subcontractor to Philco for satellite

engineering design. Watkins-Johnson, Inc., Palo Alto, Calif. TWTA development. Eitel-McCullough, Inc., San Carlos, --...do...-

Calif.
Aerospace Corp., El Segundo, Calif..... Systems engineering and technical direction

of Air Force portion of DCSP Martin Co., Denver, Colo...

Titan III-C interface.
Subtotal..

3, 619,000

274, 991 583, 676

2, 956, 255 9, 568, 783

204, 694

51, 756, 985

32, 607,000

3, 405,000 1,694, 000 1,850,000

2, 281, 000

41, 837, 000

7,098, 000

Navy:

Hughes Aircraft Co., Fullerton, Calif.... AN/SSC-3..
DCA:

System Sciences Corp., Falls Church, System engineering and technical assistance
Va.

to DCA for system design criteria and

performance specifications for the DCSP. Grand total..

11, 300,000

111, 991, 985

Mr. ROBACK. Also, come prepared to discuss the comparative offers that were submitted, showing the markups, the resubmittal and related matters in the 30-circuit buy.

General STARBIRD. These are the details of the proposals.
Mr. ROBACK. Right.
General STARBIRD. All right.

Mr. RoBACK. I think we can excuse Mr. Horwitz to go about his other business, and we will just pound on General Starbird for a while tomorrow.

Mr. HOLIFIELD. General Starbird is used to the pounding and he takes it very well and is very responsive to the questions, and the Chair appreciates it.

The committee will convene in this room tomorrow morning at 10 a.m., and it stands adjourned.

(Whereupon, at 12:55 p.m., the subcommittee recessed, to reconvene at 10 a.m., August 17, 1966.)

GOVERNMENT USE OF SATELLITE COMMUNICATIONS

WEDNESDAY, AUGUST 17, 1966

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON MILITARY OPERATIONS
OF THE COMMITTEE ON GOVERNMENT OPERATIONS,

Washington, D.C. The subcommittee met, pursuant to adjournment, at 10 a.m., in room 2247, Rayburn Office Building, Hon. Chet Holifield (chairman of the subcommittee) presiding.

Present: Representatives Holifield, Frank Horton, and William L. Dickinson.

Also present: Herbert Roback, staff administrator; Douglas G. Dahlin, counsel; and J. P. Carlson, minority staff.

Mr. HOLIFIELD. The committee will be in order.
Mr. Roback?

Mr. ROBACK. We were discussing in some detail, General Starbird, the details of contract arrangements and we also made some requests for information. Do you have any information that you can supply the committee this morning? STATEMENT OF LT. GEN. ALFRED D. STARBIRD, U.S. ARMY, DIREC

TOR, DEFENSE COMMUNICATIONS AGENCY; ACCOMPANIED BY REAR ADM. FRANCIS D. BOYLE, U.S. NAVY, DEPUTY DIRECTOR, DEFENSE COMMUNICATIONS AGENCY; COL. LEE PASCHALL, U.S. AIR FORCE, DEFENSE COMMUNICATIONS AGENCY; AND WALTER H. MORSE, COUNSEL-Resumed

General STARBIRD. I brought with me, sir, two things. You asked for details on the contracts and contract amounts on the IDCSP. That I have given to the committee.

(The information referred to appears on p. 109.) General STARBIRD. You also asked for a discussion on the assignability clause, and I think we have given that to the committee.

I can go on, if you would like, on the other question you had which was what was the nature of the several proposals that were made by the carriers in connection with the request for proposal.

Mr. ROBACK. Are we in a position now to talk about the prices on these offers?

PRICES QUOTED IN NEGOTIATIONS General STARBIRD. We can talk on the prices on the up-link, and by the up-link I mean the link which is controlled by the the costs of which are controlled by the U.S. carriers, and the FCC.

On the down-link-in other words, the link from the satellite to the foreign entity station, or foreign nation—the prices themselves are controlled by the foreign nation rather than our own carriers and our Federal Communications Commission.

The final agreements on those are still in the state of negotiation.

I would prefer, therefore, not to make those public at the present time.

We did something in contract evaluation in connection with those down-links, realizing that they were still subject to negotiation but they would become the same in all probability no matter the carrier furnishing the service to the United States. We informed all carriers on the 13th of June when we asked if they desired to submit further proposals that we would equalize in their bid the cost of the down-link. In other words, the efect of this would be in the eraluation dollar-wise of the proposal we would be disregarding the cost of the down-link.

Mr. ROBACK. Would the presumption on the down-link be that carriers, depending on who it might be, each one might have a different negotiation, or would the down-link costs be the same whoever was the carrier?

General STARBIRD. The logic was about like this, Mr. Roback: That once a rate was negotiated with any carrier, that same rate would apply for the other carriers involved and, therefore, we could afford to make a fair evaluation, we could disregard any preliminary figures that were contained in the proposal.

Mr. RoBACK. On that presumption the foreign entity wouldn't necessarily object to an assignability clause, they would get the same price whoever was involved.

General STARBIRD. Presumably not. They would get the same in any case.

This is Colonel Paschall who did the detailed negotiation and discussion with the carriers, and I would like to have him elaborate, please.

Colonel PASCHALL. One addition to General Starbird's statement is that this equalizing the down-link charges applies to the recurring charges, the monthly charges.

There are other liabilities that were not equalized. Secondly, by a condition of the CSA, that is a part of the CSA which takes the form of a contract, any reduction in charges of the foreign entity are passed directly to the Government.

General STARBIRD. Let me clarify one thing more on these recurring charges. In connection with the recurring charges, they are the costs which apply month to month for the service.

Now, in connection with the installation of facilities to meet this governmental requirement there were certain termination liabilities if we did not go through with the full contract until the termination liabilities were exhausted. Naturally, carriers would have different methods of approaching the putting in of the temporary ground station or possibly even the permanent ground station. So Colonel Paschall is right. What I was referring to was the monthly recurring charges and not the termination liabilities.

Mr. ROBACK. How did you standardize, in the bid evaluation, the down-link? Was that in terms of making an estimate of what the cost would be and in keeping that cost with the different bids?

General STARBIRD. We just disregard the recurring-
Mr. ROBACK. Just disregard !

General STARBIRD. The recurring charges, and considered only the termination liability.

Mr. HIOLIFIELD. On the basis they would be controlled by the foreign nation?

General STARBIRD. Right, sir.

Mr. HOLIFIELD. And would probably be the same to whatever carrier had the contract; is that right?

General STARBIRD. That is exactly right.

Mr. Holifield. Then you were convinced that there would be no differences in ability to negotiate by the carrier with each nation?

General STARBIRD. This is correct, that there was some ultimate price that would be negotiated, and no matter what that price was it would apply to any carrier that was leasing service from them.

Mr. HOLIFIELD. Well, it seems like a reasonable procedure to me. I can't see how you could factor into a bid, prices which are in the control of some other nation than the United States and also which were in the process of negotiation.

So you really made your determination on the up-linkGeneral STARBIRD. On the up-link, sir. Mr. HOLIFIELD (continuing). Alone and ignored the other. General STARBIRD. We did consider termination liability that the C.S. carrier would be passing on to us in connection with any fixed installation in the far end, transportable or fixed in the far end.

Mr. ROBACK. Under those circumstances, and without any wish on the part of the committee to compromise any negotiations which have not been completed with any foreign entity, what can you tell us now about the bid prices?

General STARBIRD. I can give you a summarization of the bid prices. For the up-link Comsat initially in its May 31 proposal, bid $4,200 per month. I'hat is including both the cost of the lease proper and a service charge, the service charge being about $200 of that a month.

However, Comsat revised that downward on the 22d of June in its quote both to the Government and to all other carriers. So that the rounded Comsat number, the number, became $1,000 including the service charge per month, per voice grade circuit, and you will remember there were 30 circuits involved.

Mr. ROBACK. Are we talking about half circuits now?
General STARBIRD. We are talking about full duplex circuits now.
Mr. ROBACK. Full circuits?

General STARBIRD. Full duplex circuits. Hawtelco, and you will remember they were judged nonresponsive on certain other conditions, but for, the Hawaiian Telephone Co. for the up-link bid $12,500 per circuit per month.

ITT World Communications bid $10,000 per circuit per month, and Western Union International bid $11,195 per circuit per month.

To clarify what you said, Mr. Roback, it is the half circuit up to the satellite and not down.

Mr. ROBACK. You are talking about up-link now, these are half-link prices?

General STARBIRD. That is right.
Now, RCAC, in its initial bid, bid $11,000 per circuit per month.

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