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POST OFFICE DEPARTMENT PROCUREMENT OF
TUESDAY, JUNE 5, 1956
HOUSE OF REPRESENTAIVES,
Washington, D.C. The subcommittee convened at 10:25 a. m., in room 304, Old House Office Building, Representative Robert H. Mollohan presiding.
Present: Representatives Mollohan, Chudoff, Griffiths, Meader, and Minshall.
Also present: Curtis E. Johnson, staff director; Jerome S. Plapinger, counsel; Hal M. Christensen, associate counsel; J. L. Anderson, investigator, and Elizabeth D. Heater, clerk.
Mr. MOLLOHAN. A quorum being present this morning for the purpose of taking testimony, the hearing will come to order.
The purpose of our meeting this morning is to inquire into certain details of a purchase by the Post Office Department of 250 motor vehicles from the Twin Coach Co. of Kent, Ohio.
These vehicles were purchased under a negotiated contract as experimental after the General Services Administration had taken exception to the specifications on grounds that they were unduly restrictive and did not permit competitive bidding, and had failed to make an award because the price was considered excessive.
Negotiated contracts are permitted when the item procured is experimental. However, certain safeguards are established by statute to prevent indiscriminate elimination of competitive bidding. The statute requires that the findings justifying negotiation and the data with respect to the negotiations shall be preserved
for 6 years. The subcommittee has been supplied with the findings. However, the Solicitor's office has informed me that the negotiations were carried on by telephone and personal conversations and that no memoranda or letters exist recording the negotiations. The subcommittee staff has diligently attempted to learn who conducted the negotiations. Mr. Banton, formerly chief of the Department's section of industrial engineers, admitted to some connection with the negotiations. However, to date, the Post Office Department has failed to supply the subcommittee with the name or names of the negotiators.
We are faced then with a negotiated purchase for 250 trucks which cost about three-quarters of a million dollars on which, apparently, no record of the negotiations exist and the negotiators appear to be anonymous. We hope that this hearing will serve to clarify this picture.
The subcommittee has also attempted to learn the nature of the experiment which required such a large number of vehicles. From records which have been submitted to the subcommittee staff by the Post Office Department, it appears that only 24 vehicles were actually applied experimentally. As best as we can determine, the experiment involved supplying foot mail carriers with a motor vehicle—2 men to operate from 1 vehicle. The experiment has been referred to as “pony express.
This experiment, according to our information, was begun in July 1954, and discontinued in November or December 1954. It was operated in several cities in northeastern Ohio, namely Youngstown, Warren, Akron, and Canton.
Of the remainder of the vehicles, about 208 were used to replace contract vehicles owned by post-office personnel and used on mounted mail-delivery routes. The experimental data on this operation has not been made available to the subcommittee nor have the results of this experiment, other than the cost of operation—which is maintained on all post-office vehicles.
I have placed some emphasis on the limited information now in possession of the subcommittee. I have been informed by the subcommittee staff that the Solicitor, Mr. Goff, stated to members of the staff that he would not lend his cooperation to a politically inspired investigation in an election year. Assistant Postmaster General Kieb also suggested that this was a politically inspired investigation. Staff members suggested that if these gentlemen would confer with the Republican members of the subcommittee, their fears of a politically inspired investigation would be disspelled. To my knowledge, my colleagues were not consulted.
I have also been somewhat intrigued by the Solicitor's reasons for withholding information on this subject. In addition to the claim that the information was confidential to the executive branch, it has also been pleaded that opinions rendered by the Solicitor on the legality of the negotiated contracts were confidential as falling within the attorney-client relationship.
Ours is a government in which we have a separation of powerslegislative, executive, and judicial. However, it was also intended by the constitutional fathers that this separation of powers would create a system of checks and balances.
Under the Legislative Reorganization Act of 1946, this subcommittee has the duty of:
Studying the operation of Government activities at all levels with a view to determining its economy and efficiency.
Additional statutory authority has been given to the Committee on Government Operations in title 5, United States Code, section 105a, as follows:
Every executive department and independent establishment of the Government shall, upon request of the Committee on Expenditures in the Executive Depart. ments of the House of Representatives, or of any seven members thereof, or upon request of the Committee on Expenditures in the Executive Departments of the Senate, or any five members thereof, furnish any information requested of it relating to any matter within the jurisdiction of said committee.
I am convinced that these contracts are a legitimate concern of the Congress and of the American people. I cannot conceive of any circumstances under which their release for examination could in any way endanger the national defense or compromise the public welfare. I sincerely hope that this hearing will provide a complete picture of this entire transaction and also will serve to clarify the right of Congress to information on Government activity.
Our first witness this morning is Mr. Abe McGregor Goff, Solicitor of the Post Office Department.
Mr. Goff, I understand you have a prepared statement.
STATEMENT OF ABE MCGREGOR GOFF, SOLICITOR, POST OFFICE
Mr. GOFF. Mr. Chairman and members of the committee, I do have a short preliminary statement. Actually, I think you understand that, as to the actual negotiations and handling of the contract, I had nothing to do with these, except as to such papers as passed over my desk.
I want to say we have here those that were actually active in the contracts, with the exception of Mr. Banton, who is retired and whom we were unable to get here, but we do have a statement. I was out in the Pacific Northwest when the notice came. You very kindly consented to put off the hearing for a day: I was in a position where I couldn't get back sooner. We are, I think, in a position to give you a complete picture.
I think, first, I would like to give my preliminary statement. Then I notice in the chairman's statement that he wants to get all the details in regard to it.
The purchases were under an experiment. We have here Mr. Robert Gunther, from the Heller Associates, who originally recommended the experiment. It was something that was recommended by the first Hoover Commission in 1949, and the Heller Associates prepared that report for the Hoover Commission and were then employed by the Post Office Department in connection with this experiment.
We also have here Mr. Charles B. Graddick, postal operations specialist from the Office of the Industrial Engineer. As a matter of fact, he knows more about the real details than Mr. Banton does, because he is the one who did all the work in connection with it.
There is one request I would like to make. My statement is merely preliminary. We had great difficulty in getting Mr. Gunther here. I would like permission to make this brief opening statement, then for Mr. Gunther to present what he has and then ask any questions you have of him, and reserve questions for me later.
Mr. Gunther is engaged in a very important work for a private concern. If possible, I would like to get his testimony out of the way. Any questions you have to ask him
Mr. MOLLOHAN. Is Mr. Gunther an employee of the Post Office Department?
Mr. GOFF. No; his contract has long since terminated.
Mr. GOFF. He was employed by Robert Heller & Associates, Inc., that were under contract to the Post Office Department. That contract has long since been terminated.
Mr. MOLLOHAN. Mr. Goff, we have no objection to your standing, but we would like you to be comfortable.
Mr. GOFF. Thank you. I have got to that stage where I have to wear trifocals and it is a lot easier for me to sit closer to the papers.
The research and development program in the Post Office Department had its origin in an appropriation act. However, the 81st Congress, recognizing that the program was not a continuous one, passed Public Law 231 (39 U.S. C. 847, 847a), which made it mandatory that there be established and maintained within the postal establishment a research and development program.
Since that time the Congress in making appropriations to the Department, earmarked a specific sum of money to be used exclusively for the research and development program.
In the report of the Appropriations Committee of the House of Representatives, on the appropriations for the Post Office Department for the fiscal year 1954, it is stated that (p. 22):
Departmental officials requested the elimination of certain language carried in the current year's appropriation act holding that such language constituted a limitation beyond which amount named in the language they could not go. The language which it is requested be eliminated is as follows: "$250,000 to be available exclusively for procurement by contract of things and services related to design, development, and construction of equipment used in postal operations, and for contracts for management studies ;”.
The language in question was originally proposed by this committee not as a limitation but as a requirement that at least $250,000 be used for the purposes named. It was the view of the committee at the time that the Department was moving too slowly in this field and it was to encourage greater activity that the provision was included in the current year's appropriation language.
At the present time it appears to be the purpose of the Department to move more rapidly in the fields of design, development, construction of equipment, and management studies and it was felt that if construed as a limitation the language would hamper their activities in that direction. Since it is not the purpose of the committee to hamper such activities it is recommended that instead of eliminating the language above quoted that the words “at least" be added at the beginning thereof which will remove any thought of limitation and make it a requirement that "at least” $250,000 be utilized for the purposes designated and more may be so used if additional funds can be found for the purpose.
In the fiscal years 1955, 1956, and 1957, all references to a specified sum to be available exclusively for the research and development program was omitted. It may be
be of interest to you that the amount in specific projects outlined to the Appropriations Committees for this work for the fiscal year 1957 is $2,382,000.
Just prior to April 1954, Twin Coach Co. of Kent, Ohio, at its own expense, built one experimental lightweight, sit-stand vehicle for departmental tests. The vehicle was unsatisfactory but the company then proposed to build a prototype vehicle according to departmental specifications.
The Department in April 1954 contracted for two twin coach prototype vehicles. The contract was negotiated on the basis of the vehicles being for experimental, developmental, or research work.
On May 6, 1954, the Department through GSA issued an invitation (4G43020R) for bids on 250 sit-stand, right-hand-drive vehicles. The two low bidders, Divco at $2,264.52 (tax included) and International Harvester Co. $2,379.14 (tax included), took exceptions to the specifications, and the third bidder, Twin Coach Co., was the only bidder to be responsive. The bids were rejected. Negotiations were undertaken to obtain the vehicles in accordance with departmental specifications.