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Demarest authorized The SUN to see the solicitation, offer and award form submitted by Dynamic and the Abstract of Bids, two sheets from a three-inch thick file.

Other sources earlier provided The SUN with documents also known to be in the procurement office Dynamic file.

Demarest advised those present that the U.S. Code exceptions to the Freedom of Information Act prohibit the release of procurement office correspondence with Dynamic or the Small Business Administration.

"However," he said, "if you want to see them or, possibly, get copies, you must submit a written request specifying exactly what you desire and the reasons for the request."

Demarest was advised verbally by The SUN that one reason for the request was to submit the data thus secured to the U.S. District Attorney for possible prosecution,


(By Earl Bradshaw) James Treece, U.S. attorney for Colorado, told The SUN Thursday he has received a complaint against Dynamic Enterprises, Inc., a contractor for trash at Ft. Carson.

"We refer these matters to the FBI," he said, "that's all we can do because we have no investigative staff of our own.'

Dynamic, of Dunn, N.C., is accused, Treece said, of obtaining a contract limited to small business when, it is alleged they do not qualify.

The SUN revealed the contract peculiarity in a story published Wednesday.

SUN syndicated columnist, Jack Anderson, drew attention to a still pending case in the U.S. Department of Labor involving Dynamic short-changing more than 1,200 employes in four states in his column March 11.

Anderson said Republican strings were pulled, so far successfully, to get Dynamic off the hook in that case.

Treece said Thursday the complaint, “from a Colorado Springs attorney" had been turned down to his assistant specializing in such matters Gordon Allott Jr.

The SUN asked Treece if it would expedite the investigation to turn the newspaper documentary file over to the FBI directly.

"Certainly, that might speed things up if you wish to give the FBI what you have,” he said.

An FBI spokesman told The SUN later Thursday that an agent would be in contact and arrange to pick up the file today.

Treece also suggested that The SUN contact the local attorney toward securin additional information relating to Dynamic and Ft. Carson procurement officials.

This was done, and that data also will be given to the FBI today.

Dynamic was awarded the Ft. Carson trash hauling contract July 24, 1970 on its declaration that it knowingly complied with small business requirements.

Those requirements specify the firm must have had no more than $1 million in sales or receipts during the preceding three year period.

Accordingly to the bid abstract, one of two sheets from a three inch file on Dynamic at Ft. Carson which The SUN was permitted to see, Dynamic was one of four bidders for the trash contract.

The firms and their total contract bids were: Commercial Sanitation, Colorado Springs $140,800; Ace Disposal-Colorado Springs-$155,100; Dynamic Enterprises, Dunn, N.C.--$141,895; Midland Maintenance, Inc., Lawton, Okla. $167,200.

Ft. Carson procurement contracting officer Hazen C. Kramer, during an interview Tuesday, was asked about the apparent low bid of one of the local firms.

He pointed out in the bid abstract that Dynamic also offered a 10 percent discount which made them low bidder.

According to a November letter from the Small Business Association to Kramer, a copy of which The SUN has, Dynamic did not qualify to bid under the contractural small business limitation on bidders.

The contract remains in force, however, because according to federal regulations cited by Kramer it is not required to effect termination after adverse facts have been disclosed.

“We do not disturb an existing contract," he said.

Since publication of The SUN story Wednesday complaints also have been received concerning Dynamic service at Ft. Carson.

In addition, the firm reportedly failed to comply with other federal regulations with respect to equipment and state licensing of its vehicles on the base.

Anoher local newspaper Thursday cited Ft. Carson Public Information Office data stating, "Before government contracts of this nature are accepted they are reportedly surveyed by Defense Contract Administration Services Region, Atlanta, Ga."

PIO Lt. Col. G. D. Barrante, Horace Demarest counsel general to the Staff Judge Advocate, Harry Haroldsen and Kramer of the procurement office advised The SUN Tuesday that the Defense Contract Administration completed a survey of Dynamic prior to the award.

That survey, they said, was favorable to awarding Dynamic the contract, and recommended the award be granted.

The survey, however, did not deal with S.B.A. restrictions, only with the competence of Dynamic to handle the contract, the Ft. Carson officials stated.

The other newspaper also quoted Ft. Carson officials as saying all information pertaining to the contract is legally authorized for release, has been available, and is available to the American public.

The SUN was told the same thing, except the U.S. code provides many exceptions, and even much which might be available to a citizen, Barrante said, Would not be available to a newspaper reporter covering an investigative case like this.” And it was not made available.,

I have no knowledge of whether these articles are correct or incorrect, but I just want to bring them to the attention of the Committee because I think they are related in a way to the kinds of problems we went into this Act and they relate to another Act.

The articles charge that the firm obtained a service contract by fraudulently certifying that it was a small business.

It was a small business set aside contract. And the articles indicate that the F.B.I. has entered into that investigation.

Mr. THOMPSON. Of course, that could involve a criminal violation, wouldn't it?

Mr. O'HARA. Yes, it could, Mr. Chairman.
Mr. Chairman, I hope you have invited Mr. Moran to see us.
Have you?
Mr. THOMPSON. Yes, he has been invited.

Mr. O'HARA. He must be truly a man of generous heart, Mr. Chairman, although Dynamic Enterprises has been soundly condemned in the documents I have submitted for repeated and flagrant cheating of maids, bus boys and dishwashers, Mr. Moran has detected the good under the surface that has eluded the rest of us.

According to an article appearing in the Washington Post a few days ago, Mr. Moran may have had help in making this discovery from sources outside of the Department.

But we will save that until Mr. Moran is here. I am delighted that you have invited Mr. Moran to appear before us, Mr. Chairman, and I look forward to discussing the procedures involved in these kinds of determinations with him when he comes. . '

Mr. THOMPSON. Mr. Dellenback, do you have any questions?
Mr. DELLENBACK. May I ask two brief questions, Mr. Chairman?
Thank you.

May I first of all, as one who in another subcommittee of this Committee has been very much concerned with the involvement of women in higher education and business institutions, I am delighted to see a woman before this Committee holding a high rank in private enterprise.

Two questions, Mr. Franklin:

I note from your testimony you indicate that you are members of this particular Government Services Contractors Association but you are not speaking for the Association.

Do they have in that Association or in those associations, because you refer to two associations of which you are a member, any of these fly-by-night contractors or are there any rules, of admission to the associations which help to leave these out?

Mr. FRANKLIN. I am speaking for the Government Service Contractors Association at this time. They have a committee which rules on the acceptability of a contractor who is usually recommended by a contractor in the business at that time, although you can apply in person for admission.

At this particular time, Dynamics has been in the organization, is in the organization now, but it is before the Ethics Committee for debarment.

. One of Dynamics vice presidents appeared before the Board of Directors and said, “How can you throw me out of your organization when I have not been proven guilty because the Labor Department says that I am home free?"

I do think and we have spoken with the Association that we should put more teeth into our own organization in that when they find violations like this, that their members should be taken out, regardless or put on a suspended list until such time as he goes one way or the other and not just hang your hat on the fact that he hasn't been proven guilty.

Mr. DELLEN BACK. So there are expulsion procedures within the Associations' By-Laws?


Mr. DELLENBACK. You are trying to make them firmer than they are at the present time and there are proceedings thereunder pending at least for this one particular concern?

Mr. FRANKLIN. Yes. .

Mr. DELLENBACK. Secondly, a general question, Mr. Franklin, about the current prevailing standards.

When a successor contractor is involved, do you find that predecessor contract is taken into consideration in helping establish the prevailing standards?

Mr. FRANKLIN. It is not, no, sir.

Mr. DELLENBACK. Is it never taken into account under those circumstances?

It would seem to me if we are going to be talking about prevailing standards, instead of cutting a contractor quite so readily, there should be some consideration given to what is already in existence that would help establish the prevailing standards which would give help of undercutting by successor, and which would give protection to the contractor who is already in business.

Mr. FRANKLIN. What I tried to bring out just briefly in my report here or testimony was that we lost a number of contracts last year because we had contracts with the union that said you are going to pay a certain wage, you are going to pay so much holiday, you are going to pay so much sick leave, and while I am speaking of sick leave, this is something that is really very important, most important to these people here.

Most everybody gets a cold or they are sick 2 or 3 days out of a year, maybe a couple of times or what have you.

And with these employees, when they are out, their cost of living still goes on, the rent goes on, the groceries go on, and not only that, but they have additional doctor bills and here they are not covered by sick leave.

I think there should absolutely be into your amendment of your bill that sick leave be covered and it would be on a pay-out basis.

Mr. DELLENBACK. There are several recommendations that you have made. If I may return to my question, I am thinking in terms of some protection for the people who are working on the job now under contracts of the type to which you have alluded with the contractor who is operating.

Instead of permitting a successor bidder to come in and just undercut what is already in existence, shouldn't the contract provisions which have been in existence of the type that you are talking about be considered as part of the prevailing wages and standards in that locality in considering what ought to be involved in the bidding by the successor or would-be successor?

Mrs. FRANKLIN. Yes, sir, and no later than last week both of us personally appealed to the people in the Department of Labor, particular at this time when we are bidding so many contracts, to please at least consider the cost-of-living increases.

I might say that we were more or less given to understand that whatever the wage is now, there is every good indication it is going to stay that way for some time.

In no instance would they honor any provisions of our existing union contracts which, as Mr. Franklin said, in most cases do include sick leave and not an exorbitant amount of sick leave.

Mr. DELLENBACK. There has not been consideration by and large given to the terms of the prevailing contract?

Mrs. FRANKLIN. That is correct.
Mr. DELLENBACK. In considering this type of bid by a successor ?

Mrs. FRANKLIN. They were not able to include these things as they determined the wage determination.

Mr. DELLENBACK. Thank you very much, Mr. Chairman.

Mr. THOMPSON. Now, in connection with this Dynamics case, I might note that Mr. Moran has just been nominated as Chairman of the Occupational Health and Safety Commission, which is a promotion. This is the enforcement body for the new act.

His prospective leaving of his present position might perhaps induce the Secretary to make a final determination in this case.

Mr. O'HARA. Mr. Chairman, I want to say that I think Mr. Dellenback's points were good, very good points, and I am glad that he brought them out here.

In connection with that, I had earlier written the Secretary about this case and, as I understand it, a decision is not yet imminent in the matter. And about Mr. Moran, I am sure Mr. Moran is an honorable and decent man and I know that he has doubtless done what by

the legislation.

It wasn't the intent of the legislation that this part of the twopronged penalty would be relieved on the flimsiest of circumstances.

Mr. THOMPSON. Well, we will go into that with Mr. Moran. I didn't mean to indicate that I have reached any conclusion about the gentleman because I have never met him.

He will, I am sure, when he comes before us, explain his interpretation of the Act.

I would like to thank you very much, Mr. and Mrs. Franklin.
Mrs. FRANKLIN. Thank you, sir.

I would like to add one other thing to what we have said here, Mr. Chairman, and that is this:

We have nothing to gain by criticising a particular contractor. We have many competitors. So what ever happens to Dynamics, we are still in a competitive situation.

I want you to clearly understand that is not why we bring this case before you. There are many contractors in this business and we have worked long and hard to try to uphold the law, to try to do a good job for the military, to show that our industry can and does work well.

But, when this type of thing happens as in the case of Dynamic Enterprises, this is where we get the fly-by-night contractor that we referred to.

When he see this kind of thing happening, it makes it a very good field for him to run into on a one-year contract, take what he can get and run, and I would like to give you a specific in this regard.

Last year at the Mather Air Force Base, California, a contractor who had never heretofore bid on this type of a contract was in fact a low bidder at Mather Air Force Base.

Not only has he not carried out the terms of the Service Contract Act about which we are speaking today, the unions have had con

the Labor Department has, in fact been in there making investigations, but here, again, I am firmly convinced that this type of thing is happening more and more because people see continuous violations, repeatedly in all parts of the country, nothing being done about them, so they obviously feel Congress is not going to see to it that the laws that they have passed are in fact fulfilled.

Mr. THOMPSON. Well, this is a particularly difficult situation because you are in a terrifically competitive business, and history shows something like a 90 to 95 percent turnover in contractors. It indicates what close margins you must have to work with.

You will be in one year and out the next and back in the third, perhaps.

Thank you very much. Mr. THOMPSON. The Chair might note that those three bells are a quorum call. The House went in at 11:00 today.

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