(c) Finalization of an operating agreement between WUI and the communications operating entity in Japan on or about, or prior to, April 1, 1967. The estimated charges for circuits from Hawaii to the Philippines are subject to (a) Approval by the Federal Communications Commission of the services, charges, divisions of tolls between WUI and the overseas correspondent, and of the collection and settlement rates; and (b) The availability of a fixed satellite earth station, as distinguished from a transportable station on or about April 1, 1967. WUI takes full cognizance that as of this date no entity has been authorized or franchised to construct a satellite earth station in the Philippines. The estimated charges for circuits from Hawaii to Thailand are subject to (a) Approval by the Federal Communications Commission of the services, charges, divisions of tolls between WUI and the overseas correspondent, and of the collection and settlement rates; (b) The availability of a fixed satellite earth station, as distinguished from a transportable station on or about April 1, 1967; and (c) Finalization of an operating agreement between WUI and the communications operating entity in Thailand on or about, or prior to, April 1, 1967. Thank you for contacting us and giving us the opportunity to submit this letter. Sincerely yours, HENRY G. CATUCCI, Vice President. COMMUNICATIONS SATELLITE CORP., Mr. ROBERT E. CONN, Vice President, Western Union International, DEAR MR. CONN: Reference is made to our letter of May 13 in which you were advised that Comsat is expecting to propose a rate for service to interested common carriers of $48,000 a year per half circuit for the Hawaii earth stationto-satellite portion of two-way voice circuits between Hawaii and Japan, Hawaii and the Republic of the Philippines, and Hawaii and Thailand. You were advised in that letter that this figure could change as determinations of cost are refined, in which case you would be notified. This is to inform you that, as a result of its cost refinements, Comsat now plans to propose to authorized carriers a rate of $45,600 per year ($3,800 per month) for each of the above-mentioned two-way voice circuits between Hawaii and the satellite. In order that you may be in a position to evaluate the significance of this change with respect to the submission you may have made in response to DCA's request for service to the Far East, this is to advise you that, in submitting its response to DCA's request, Comsat based its submissions on the same rate material as was used in arriving at the previous quotation to the carriers of $48,000 per annum, and the rate quoted to DCA was higher than the $48,000 which was quoted to the carriers. Very truly yours, GEORGE P. SAMPSON, WESTERN UNION INTERNATIONAL, INC., Maj. Gen. GEORGE E. PICKETT, Deputy Director for Defense Communications System, Department of Defense, Washington, D.C. DEAR GENERAL PICKETT: This refers to your recent inquiry regarding 10 leased channels for the Department of Defense via satellite from Hawaii to each of the following: Japan, Philippines, and Thailand. Since last contacting you regarding this matter, two significant developments have occurred. On June 22, 1966, we were advised by the Communications Satel lite Corp. of a downward revision in its estimated charges to us for satellite circuits in the Pacific. On June 23, 1966, the Federal Communications Commission announced that Comsat may furnish satellite services and channels only to authorized common carriers, including Western Union International, except in unique circumstances. In view of these developments, we respectfully request that you reopen the matter of the 30 Pacific satellite circuits and extend to Western Union International the opportunity to submit revised quotations for these circuits. Western Union International is now reviewing its rate schedules in line with the directive of the Commission, contained in its June 23 announcement, and in line with the information received from Comsat on June 22, concerning reduced satellite circuit costs to us. We fully expect to develop attractive rates for the Department of Defense. In addition, we wish to take every step available to us in order to qualify for our apportionment of your oversea circuits under the DECCO apportionment policy. Accordingly, we respectfully request that we be accorded the opportunity to submit revised quotations for the 30 Pacific circuits. Such quotations could be submitted on or before July 6, 1966, if this meets your approval. Sincerely yours, HENRY G. CATUCCI. DEFENSE COMMUNICATIONS AGENCY, WESTERN UNION INTERNATIONAL INC., (Attention Mr. H. G. Catucci, Vice President). DEAR MR. CATUCCI: Your response to our May 2, 1966, request for a proposal to provide certain communications services in the Pacific ocean area has been evaluated together with those received from the other carriers. No revision to your proposal was submitted in response to our offer of June 13, 1966, to allow a revised price quotation by June 17, under the provisions of ASPR section 3-805.1. However, your request of June 24, to be allowed to submit revised price quotations was carefully considered. After evaluation of all the above, the Department of Defense has concluded that the carrier whose proposal offers the greatest advantage to the Government and affords the greatest assurance of providing the earliest possible service is the U.S. Communications Satellite Corp. (Comsat). The Department of Defense intends, therefore, to initiate immediately negotiations to definitize a contract with Comsat. The Defense Commercial Communications Office contracting officer will provide separately the information to unsuccessful offerors required by ASPR 3.508(b). Your timely response to our request for proposal for these urgently needed services is greatly appreciated. Sincerely, GEORGE E. PICKETT, Deputy Director for Defense Communications System. WESTERN UNION INTERNATIONAL, INC.. July 13, 1966. Re Code 350. Maj. Gen. GEORGE E. PICKETT, Deputy Director for Defense Communications System, Department of Defense. Washington, D.C. DEAR GENERAL PICKETT: This refers to your letter of July 1, 1966, in which you advised as follows: "(T) he Department of Defense has concluded that the carrier whose proposal offers the greatest advantage to the Government and affords the greatest assurance of providing the earliest possible service is the U.S. Communications Satellite Corp. (Comsat). The Department of Defense intends therefore to initiate immediately negotiations to definitize a contract with Comsat.” The context of your letter indicates that you have not yet granted our request of June 24, 1966, for an opportunity to submit revised quotations for the 30 Pacific circuits. This request was submitted because of two significant developments which occurred subsequent to June 17, 1966, the date for submission of revised price quotations. As outlined in our June 24 letter, these developments were: (a) Notice from Comsat on June 22 of a reduction in its estimated charges to WUI for satellite circuits in the Pacific; and (b) the announcement of June 23 by the Federal Communications Commission that Comsat may furnish satellite services and channels only to authorized common carriers, including Western Union International, except in unique circumstances. You refer, in your letter of July 1, to the Armed Service Procurement Regulations (ASPR). We submit for your consideration several questions which arise from application of the ASPR to your proposal "to definitize a contract with Comsat." The view of the Commission's announcement of June 23, we respectfully submit that Comsat is not a “qualified" source of supply for these channels in accordance with ASPR 1–302.2, nor is Comsat "qualified and eligible to receive an award under applicable laws and regulations," as required by ASPR 1-903.1 (v). Moreover, in view of the Commission's announcement, Comsat would not be in a position to execute a contract containing the following standard provision inserted by the Department of Defense in its contract for communications facilities and services: "The services and facilities furnished hereunder shall be in accordance with all tariffs, rates, charges, rules, regulations, or requirements which may be lawfully established and applicable to similar services and facilities furnished or offered by the company to the general public or its subscribers, or at rates, terms and conditions of services as may be agreed upon, subject, where appropriate, to jurisdiction of Federal, or State regulatory bodies." (Emphasis added; see article 6a in contract No. DCA-20-6, Oct. 1, 1963.) We would appreciate an explanation of the above-quoted statement in your letter of July 1 to the effect that Comsat offers the greatest assurance of the earliest possible service. Comsat is under a mandate from Congress to establish the commercial communications satellite system "as expeditiously as practicable." (Communications Satellite Act of 1962, sec. 102(a).) This duty of Comsat is not conditioned upon its providing channels direct to entities other than authorized communications carriers. In view of the above circumstances, Western Union International again respectfully requests that we be accorded the opportunity to submit revised quotations for the 30 Pacific circuits. Very truly yours, Mr. H. G. CATUCCI, H. G. CATUCCI, Vice President. DEFENSE COMMUNICATIONS AGENCY, Vice President, Western Union International, Inc., DEAR MR. CATUCCI: I am in receipt of your letter of July 13 in which you request an opportunity to submit revised price quotations and question the authority of DCA to contract directly with Comsat for satellite communications circuits in the Pacific area. The DCA is well aware of the Comsat notice on June 22 relating to the reduction in its estimated charges to record carriers for satellite circuits in the Pacific and the announcement on June 23 by the Federal Communications Commission of its intent to issue an opinion and order in docket No. 16058. Specifically, you refer to ASPR 1-302.2 and 1-903.1(v) and a provision of DCA's basic agreement as basis for disqualification of Comsat as a contractor of the DCA in view of this. The DCA views Comsat, in accordance with the requirements of ASPR, as a qualified source of services and qualified and eligible to receive an award of contract, if selected. The Federal Government has stated as you know, in FCC docket No. 16058, that as a matter of law it has a right to contract directly with Comsat as an "authorized user," if such is in its best interest. Further, DCA has no reason to believe that Comsat will not file a tariff with the FCC as re quired by its basic agreement. Accordingly, the DCA sees no contradiction to its determination that Comsat offers the greatest assurance of the earliest possi ble service. In view of the above, there appears to be no justification for a request by DCA for submission of revised quotations for the 30 Pacific circuits. Sincerely, GEORGE E. PICKETT, Major General, U.S. Army, Deputy Director, DCS. WESTERN UNION INTERNATIONAL, INC., August 2, 1966. Col. LEE M. PASCHALL, U.S. Air Force, Assistant Director, Programs and Requirements, Defense Communications Agency, Washington, D.C. DEAR COLONEL PASCHALL: By letter dated July 26, 1966, the Defense Communications Agency notified Western Union International, Inc., that the Communications Satellite Corp. was awarded a contract to provide 30 satellite circuits in the Pacific. At a debriefing in your office yesterday, you indicated that copies of the CSA and the general contract with Comsat could be made available to Western Union International only upon written request. Accordingly, would you kindly arrange to furnish this corporation with a copy of the CSA covering the 30 circuits and the general contract with Comsat. We understand that both of these documents are unclassified. There are two reasons for this request. First, we require these documents in order to completely evaluate the award which was made to Comsat. As an unsuccessful bidder whose quoted prices were lower than those of Comsat, at least for the first year, we feel that we should be afforded every opportunity to inquire into and determine the basis of the award. Although we were afforded some opportunity yesterday to discuss this matter we find it difficult if not impossible to completely evaluate this award unless we have copies of these documents for review. As long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award. In order to dispel these questions and doubts, it would appear to be in our mutual interests that these documents be made available. Secondly, inasmuch as it is possible that Western Union International may become an assignee of all or part of this contract, we need to know as soon as possible the full extent and nature of the obligations which we may assume. In the interest of facilitating possible assignments of this contract and the expeditious establishment of service to the Department of Defense, we would very much appreciate the early granting of this request. Again, let me thank you for giving us the opportunity yesterday to discuss some of the aspects of this award. Very truly yours, HENRY G. CATUCCI, Vice President. WESTERN UNION INTERNATIONAL, INC., August 25, 1966. Col. LEE M. PASCHALL, Assistant Director, U.S. Air Force, Programs and Requirements, DEAR COLONEL PASCHALL: On August 2, 1966, I wrote you a letter requesting a copy of all the communication service authorizations and the general contract with Comsat covering the 30 Pacific satellite circuits to Thailand, Philippines, and Japan. Since we have not yet received these documents, it would be appreciated if you would have them sent to us as soon as possible. Warm personal regards, Sincerely yours, HENRY G. CATUCCI, Vice President. Mr. HENRY G. CATUCCI, DEFENSE COMMUNICATIONS AGENCY, Vice President, Western Union International Inc., Washington, D.C. DEAR MR. CATUCCI: Receipt is acknowledged of your letter requesting a copy of the CSA and general contract entered into by DCA with Comsat for communications satellite service in the Pacific. As you are aware, the matter of the award to Comsat and its legality were subjects of discussion with DCA in the hearings held on August 15, 16, and 17 by the Military Operations Subcommittee of the Government Operations Committee of the House of Representatives. Further, the legal authority of DCA to enter into this contract was upheld in a decision (opinion No. B-159632) rendered on July 26 by the Comptroller General. Accordingly, there appears to be no basis for your conclusion that "as long as these documents are withheld there will exist serious questions and doubts in our minds regarding the award." A discussion of the assignment clause in the CSA, its purpose and legality, was also made a matter of public record by the subcommittee. The conclusion that you now "need to know as soon as possible the full extent and nature of the obligations which (you) may assume (under the assignment clause)" is premature. The Government is not at this time considering an assignment of the contract. For the above reasons, release of the CSA and general contract at this time would not appear to be justified. Sincerely, LEE M. PASCHALL, Mr. HOLIFIELD. The next witness is Mr. Bertram B. Tower, ITT World Communications, Inc. Mr. Tower, would you take your place and introduce your associate for the record. STATEMENT OF BERTRAM B. TOWER, CHAIRMAN OF THE BOARD, ITT WORLD COMMUNICATIONS, INC.; ACCOMPANIED BY JOHN A. HARTMAN, JR., VICE PRESIDENT AND GENERAL COUNSEL, AMERICAN CABLE & RADIO CORP. (ITT) Mr. TowER. Thank you, Mr. Chairman. With me is Mr. John A. Hartman, Jr., who is our vice president and general counsel. Mr. HOLIFIELD. You may proceed with your statement. Mr. TOWER. Thank you, sir. I am Bertram B. Tower, chairman of the board of ITT World Communications, Inc. ITT Worldcom is a wholly owned subsidiary of American Cable & Radio Corp., and is the international telecommunications operating arm of International Telephone & Telegraph Corp., in the United States. We appreciate the opportunity the committee has accorded us to present our views. ITT Worldcom operates a record communications network of cable and radio channels, including satellite channels, and in cooperation with correspondents abroad we provide communications services to virtually every area of the world. Affiliated companies provide record and voice communication services in Puerto Rico, the Virgin Islands, other Caribbean locations, Central and South America and also in the Philippine Islands. We also operate transatlantic record communication services in England and Canada. Together with our affiliates and connecting carriers, we provide voice-data transmission services, leased telegraph |