Mr. HAWKINS. RCA has for a great many years provided service between the United States and Moscow. This service is provided jointly with the Russian Government, Ministry of Communications. Mr. ROBACK. They do not object to working with a capitalistic enterprise.

Mr. HAWKINS. No; not at all. As a matter of fact, Mr. Roback, RCA operates with just about all the countries around the world, including Cuba, Red China, and Russia, and many of the other Íron Curtain countries.

Now, I think this is quite an example of countries of the world cooperating in providing an essential service like international communications even though they may have differences in ideology.

With respect to our part of the "Hot Line," RCA operates the facilities in New York and in Long Island which are used for transmission and reception across the Atlantic. It is part of RCA's global system. As indicated on the map I have submitted to you, we also operate a large relay station in Tangier, Morocco, and the "Hot Line" is automatically routed through the Tangier station on to Moscow because that route is far more reliable than operating directly.

Mr. ROBACK. And you provide the service on the contract to the Government?

Mr. HAWKINS. Yes. We provide service to the Government under contract on the same basis that we do any other leased channel services. In other words, it is a tariff service on a month-to-month basis.

Mr. ROBACK. Is that a standby line or does somebody actively communicate over it?

Mr. HAWKINS. I know that it is being used, but the extent to which it is used, I guess, depends on the people at the other end.

Mr. ROBACK. Well, Mr. Hawkins

Mr. HAWKINS. And at the U.S. end, as well. This is a highly critical emergency type of circuit.

Mr. ROBACK. But this is only a data circuit, is it not?

Mr. HAWKINS. It is a teleprinter circuit.

Mr. ROBACK. They do not want to talk directly, because they might be too excited.

Mr. HAWKINS. There might be a misunderstanding.

Mr. ROBACK. They want to have it go by message and have a chance

to look it over.

Mr. HAWKINS. It is an ordinary teleprinter or teletype circuit, a 66-word-a-minute circuit, and I might say that this circuit is given tremendous priority in our own operations.

We do have a policy of giving very critical coverage to all Government circuits, and we have this one right up to the top of the line, as you can very well imagine.

RCA ROLE IN COMPETITION

Mr. ROBACK. You referred, in your statement, about page 9, I believe, as to when this issue emerged so far as DCA's discussions with Comsat were concerned.

But also you say that on May 2, you got an invitation to participate. What was the role of RCA in prior developments, that is, did your

company learn about this, and when, and when it did learn about it, what did it do? Did it approach DCA and knock on the door?

Mr. HAWKINS. We did have a meeting with DCA in April.

Mr. ROBACK. If I recall correctly, Mr. McCormack said that the carriers were briefed on the preliminary discussions. A team was sent overseas to work out some kind of arrangement with the foreign entities, and on March 1 the carriers were briefed.

Were you briefed in that?

Mr. HAWKINS. Yes. There was a briefing meeting in March, Mr. Roback.

We did hear, at about that time, that Comsat was busily seeking to expand satellite communications into these areas, but what was not clear at that point in time was the role in which Comsat was funetioning.

Comsat has an entirely proper role and responsibility to extend satellite communications into these areas.

Mr. ROBACK. It was disarming to you in the sense you knew they were the representatives of the United States in their dealings with these people for consortium purposes, but not necessarily as a competitor for a given procurement; is that true?

Mr. HAWKINS. Yes. You see, there are a number of functions and Comsat wears a number of hats, and this is where we get into problems. Mr. ROBACK. They were wearing their international hat, Intelsat. Mr. HAWKINS. Yes; their international hat.

Mr. ROBACK. Not their hard-nosed competitor's hat.

Mr. HAWKINS. That is right. It was only later that we began to suspect that maybe there was more to this than we had thought originally.

Mr. ROBACK. Of course, there should not be any imputation that there was anything wrong about it, because, at the time, and the testimony is clear, the Government made no bones about going to Comsat.

In fact, the directive that General Starbird had from the Deputy Secretary of Defense in January of 1966 was to this effect: We believe we need these circuits. We have a war going on." They discovered a war in January, 1966, and they said, "We ought to have these circuits," and said, "Proceed immediately to deal with Comsat." There were not any bones about that. So, I mean, nobody should make an imputation that there was anything improper about Comsat's actions.

Mr. HAWKINS. It is true that there were negotiations and discussions going on with Comsat. But, you see, this service could have been provided in a number of different ways. Comsat could have functioned in its intended role of getting on with consortium menbership and in its role as a carrier's carrier and, in due course, the requirements for the service could have been obtained by DCA in the way in which it has been traditionally done; namely, that DCA asks for inquiries and gives the carriers an opportunity to bid, and they submit proposals.

The important distinction here, Mr. Roback, is that as this matter evolved, it evolved into a total single package which included not only the consortium membership, but also ground stations in the foreign country, and the end-to-end service on a total basis.

DCA PROCEDURES

Mr. ROBACK. You say that it is a customary thing to have RFP's for long-haul service?

Mr. HAWKINS. Yes. It is DCA's established practice to send RFP's to the carriers, inviting them to bid on particular circuits, or more than one circuit.

Mr. ROBACK. Are there different prices for the same service bid? People keep telling me that for the same service, you have got to have the same rate; otherwise, it is discriminatory.

Now, I gather if the bids with price variations are permissive, then it is up to the FCC to take the low price and make it the universal tariff; is that right?

Mr. HAWKINS. Well, I think I can answer your question by saying this, that in the last couple of years or so, there have been, I think, over 60 procurements by DCA of long-haul communications services. Most of these have been out in the Pacific area, because the cables are newer there.

But there also have been some procurements in the Atlantic area. The way this works is that DCA puts out an RFP to the carriers.

Mr. ROBACK. I thought they used a CSA and a master contract? Mr. HAWKINS. Well, we have a master contract, but that master contract provides for the issuance of CSA's covering individual circuits as they may be ordered.

Now, the reason for the procedure is that the CSA procedure makes it simple to order an additional circuit, because then we do not have to execute a detailed contract.

What usually happens is that, where DCA is seeking to obtain a circuit from an existing facility, there is a tariff already on file with the FCC and, since all the carriers, for competitive reasons, obviously, have to have competitive rates, there are occasions where the carriers bid in accordance with their tariff.

There have also been cases where there have been variations in the bidding, and DCA has awarded the circuits to the lowest bidder.

Mr. ROBACK. Then, does that low bid become a tariff for the service? Mr. HAWKINS. The carrier then files a tariff in accordance with its particular bid.

Mr. ROBACK. Have you been a frequent bidder on services, and have you been awarded contracts on a price basis?

Mr. HAWKINS. We have been a frequent bidder on circuits. I suspect there have been a few cases where we have been the lower bidder and got the business on that basis.

Mr. ROBACK. You say in your statement that this procurement is a benchmark. Does that mean-or do you mean if Comsat is allowed to get this one, they will get them all?

Mr. HAWKINS. It is benchmark, because we are in the process of determining what the procedure will be for the future. If Comsat does get this one, it sems to be pretty clear they will have a mighty good chance of getting the next one, too.

I might say, Mr. Roback, that at this point Comsat has got 100 percent of the Government's satellite business.

Mr. ROBACK. Well, after all, they are the company that was set up to provide it. There is nothing surprising about that, is there? You cannot provide any satellite service directly.

Mr. HAWKINS. But we can certainly provide it with Comsat functioning as a carriers' carrier.

RCA PROTEST

Mr. ROBACK. I understand that that is what the issue is.

Now, you say you protested the award. You made a protest after or before the award?

Mr. HAWKINS. Before the award had actually been made.

Mr. ROBACK. You protested the proposed award.

Mr. HAWKINS. Yes.

Mr. ROBACK. You were given to understand that the award would be made to Comsat.

Mr. HAWKINS. That is right. DCA informed us that it proposed to definitize the contract with Comsat.

Mr. ROBACK. You protested to DCA.

Mr. HAWKINS. Yes. We protested to DCA in a letter, which I believe was dated July 8. We said that if DCA did not agree with our protest, we asked that our protest letter be forwarded to the Comptroller General.

Mr. ROBACK. Then, DCA denied your protest.

Mr. HAWKINS. Yes.

Mr. ROBACK. And, then, responsive to your request, conveyed the protest to the Comptroller General.

Mr. HAWKINS. Yes.

Mr. ROBACK. When was that, on the 12th of July?

Mr. HAWKINS. Yes.

Mr. ROBACK. Now, the Comptroller General also had before him then or shortly thereafter a protest from ITT.

Mr. HAWKINS. Yes.

Mr. ROBACK. And the grounds of the protest from ITT were that the Defense Department had no business making a contract without getting an authorization; in effect, that this service could be provided only on approval from the FCC. It was the narrow legal issue of whether they could make a contract. You are familiar generally with that?

Mr. HAWKINS. I am familiar generally with it. I do not believe I ever actually saw the ITT protest, but that is generally my understanding.

Mr. ROBACK. You are familiar with the fact that the Comptroller General said, in effect, in his opinion, that there is no reason under the procurement laws why DCA could not make a contract with Comsat. What happens to that contract when it gets to the FCC is another matter which will be decided when it gets there.

Mr. HAWKINS. Yes, I read that.

Mr. ROBACK. In other words, ITT posed the issue on a legal ground of whether the contract could be made. You posed the issue on the merits of the offer, that is to say, you wanted an adjudication of the proposal.

What happened to your protest?

Mr. HAWKINS. Well, in the interests of brevity I have not gone into details of each of the protests. We really protested on two grounds. We protested on the same ground that ITT did, but we also protested

on the merits of the award, namely, that we felt we were the lower bidder.

Now, as of this moment, the Comptroller General has not yet ruled on this second point, although he has it under consideration.

Mr. ROBACK. In other words, the issue is open as to whether the contract that DCA made with Comsat is a valid contract, from the standpoint of the Comptroller General's opinion?

Mr. HAWKINS. That is still open, yes, sir.

Mr. ROBACK. Have you conferred with the Comptroller General? Mr. HAWKINS. Yes, and the Comptroller General

Mr. ROBACK. Have you submitted supplementary material to your original protest?

Mr. HAWKINS. The Comptroller General has asked us for additional comments which are in the process of being prepared. I anticipate those will probably be submitted, hopefully, this week, or as soon as possible. I think you are probably familiar, Mr. Roback, with the general procedure whereby the Comptroller General requests comments, and also a procedure which gives the parties an opportunity to hold a conference.

Mr. ROBACK. Do you get to see the views of the Defense Department?

Mr. HAWKINS. Yes.

Mr. ROBACK. And then you are allowed to comment on them?
Mr. HAWKINS. Yes.

Mr. ROBACK. I have a copy of the original protest letter. That is to say, I have a copy of the DCA letter that was conveyed to the Defense Department along with the protest in response to your request, and I had a chance to look at it. Have you commented on it, that is, to the Comptroller General?

Mr. HAWKINS. Well, this is the letter which we are now in the process of preparing and expect to submit to the Comptroller General, hopefully, later this week or early next.

In fact, let me clarify one point, Mr. Roback. There are two letters from DCA. One is dated July 12, 1966. We actually received a copy of that letter only on September 6.

There is another letter of it is undated, but I think it was about August 15, which we received on August 17.

(The correspondence referred to in the discussion appear at the end or Mr. Hawkins' testimony, pp. 581-607.)

Mr. ROBACK. Well, the letter of the DCA, the first letter was dated July 12.

Mr. HAWKINS. Yes.

Mr. ROBACK. General Starbird, in conveying that letter, said that DOD intended to deny the protest

Mr. HAWKINS. Yes.

Mr. ROBACK (continuing). Which they already did on that day, and also he says that this is an urgent matter and he wants expeditious action from the Comptroller General. But now, it is about 2 months later, and they have not gotten any decision. So, apparently, the Comptroller General was not carried away by the plea of urgency. Mr. HAWKINS. Well, the Comptroller General did promptly rule on the first point, namely, the point that had been raised by ITT.