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Mr. PLAPINGER. I have no quarrel with that. And I can understand the reason for this expedition.

Mr. KALLIO. In most of our cases, that is the method used.

Mr. PLAPINGER. You do not maintain any office memorandums concerning your negotiations?

Mr. KALLIO. Not unless there is something unusual about the negotiations.

Mr. PLAPINGER. You are familiar with the provision in the Federal Property Administration Services Act requiring data concerning negotiations to be kept?

Mr. KALLIO. Yes. And our records are kept in the Department. Mr. PLAPINGER. What records, Mr. Kallio?

Mr. KALLIO. The complete file showing any correspondence in connection with the contract, and facts and findings and the contracts themselves.

Now, our procedure there, in order to avoid carrying duplicate records in the Department, as soon as the goods have been received, our entire contract file thén is sent to the Bureau of Finance for payment.

We retain no records in our office at all. The complete file was or is sent to them for payment.

They, of course, then maintain the file as required by law. We report periodically to GSA on all negotiated contracts.

Mr. PLAPINGER. If there is no correspondence, you would have no data concerning the negotiation except the contract itself?

Mr. KALLIO. That is right.

Mr. PLAPINGER. You do not think there is any implied obligation under the Federal Property Administrative Services Act to maintain such data?

Mr. KALLIO. If there were anything unusual that should be re

If it is a normal negotiation with nothing unusual about it, I see no reason for it.

Mr. MOLLOHAN. What sort of thing would you consider to be unusual? Is this not an unusual situation?

Mr. KALLIO. No, sir.
Mr. MOLLOHAN. You do not consider this unusual ?
Mr. KALLIO. No, sir.

In fact, this is one of the cleanest types of negotiations where you base your costs on figures obtained by open competitive bidding.

We were not aware of any deviations that certain manufacturers wanted to make. And in discussions with these manufacturers prior to bid opening, we assumed that a number of them were going to bid on our specifications. At the last minute, of course, they decided to show deviations; except Divco who did not plan on bidding our specifications at all.

Mr. PLAPINGER. You are talking about the competitive bid, not the negotiated bid?

Now, we are talking about

Mr. KALLIO. Of course, this is a negotiated contract, the costs of which are or were obtained by competitive bidding.

Mr. MOLLOHAN. Mr. Kallio, don't you feel that any oral discussions which you might have with a contractor or prospective con

corded; yes.

tractor which might develop information which you would ordinarily handle by correspondence, that there should be some record made of it, inasmuch as it really lays the basis for the final contract?

Mr. Kallio. Well, hindsight being better than foresight, if we felt that we were going to be criticized on any procurement, naturally we would maintain it in our files.

Mr. MOLLOHAN. I am not trying to suggest you are being criticized.

It seems to me when you enter into a three-quarter of a million dollar contract or any contract of that sort, that anything that is developed that has bearing on the contract which might under ordinary circumstances be handled by correspondence, that there should be some record made of it, some basis for it.

Mr. KALLIO. Well, in this case, this could just as well have been all handled by correspondence. But it could not develop, or wouldn't develop any more than we have developed in our file here.

The only question here, of course, was whether or not they would maintain the price they had previously bid on for the lot of 250 vehicles; whether they were still maintaining that price for 50 vehicles; and willing to take a calculated risk on getting any additional contracts.

Mr. PLAPINGER. You said before that you conducted negotiations with International Harvester and another. Wouldn't that be pertinent to have in your file concerning those negotations! Mr. KALLIO. A statement, yes, I agree; that probably could be con

; strued as being pertinent.

Mr. PLAPINGER. But that is not in your files?
Mr. KALLIO. No, sir.

Mr. CHRISTENSEN. I don't think you—I never did get the answer to my question as to why you switched to the negotiated contract, when under the law you could have insisted that the procurement be made on a competitive basis.

Mr. KALLIO. With a manufacturer insisting on providing us with a vehicle that we did not want, throwing the contract in litigation would have stretched it out, I would say, about a year.

, Mr. PLAPINGER. What litigation? You mean protests to the GAO? Mr. KALLIO. Yes; protests to GAO. Mr. PLAPINGER. Would that have taken a year? Mr. KALLIO. It runs a considerable length of time. And, of course, where it is necessary to start an experiment with the least amount of delay, then, of course, negotiations would be

Mr. PLAPINGER. Can we have somebody on the experimental aspect? Mr. MOLLOHAN. Let me ask a question first.

Will you recount to the reporter the names and the titles of those people in the Post Office Department who participated to your knowledge in the negotiations!

Mr. KALLIO. The negotiations were carried on with the--the final negotiations were carried on between Mr. Carlson, the regional manager of Twin Coach, and myself.

Mr. MOLLOHAN. There was no one else from the Post Office Department involved ?

Mr. KALLIO. No, sir.

Mr. MOLLOHAN. You say final. I assume there were some preliminary discussions with Twin Coach?

a

Mr. KALLIO. I have to say final, because that was a negotiation that ended with this. I know of no other people in the Department negotiating.

Mr. MOLLOHAN. Mr. Goff, will you take it from there? Could you contribute to the names of any others in the Post Office Department that participated in preliminary negotiations!

Mr. GOFF. Well, I don't believe there was anybody else.

Mr. MOLLOHAN. In other words, there was nobody that discussed this negotiation

Mr. GoFF. Well, directly with the Twin Coach Co., not that I know of.

Now, I have inquired about this myself. There was some discussion, naturally, in the staff of, you know, what they would do with this matter. But as to the company, as I understand it, certainly to the best that I have been able to find out, it was entirely by Mr. Kallio.

Mr. PLAPINGER. You mean that out of the clear blue on a vehicle of such radical design that there had been no prior discussions with Twin Coach prior to the signing of the contract?

Mr. GOFF. That is right.
The industrial engineer may have discussed it.

Mr. KALLIO. Specifications are one thing. We are discussing the final contract as to price. Specifications had already been established.

Mr. MOLLOHAN. One of the things I am interested in here is:

It seems to me rather unusual that on a vehicle of this type which is experimental in design and new, that 13 days prior to the execution of the contract, construction would actually begin. Now, assuming that the information we have is true, 13 days prior to the actual letting of the contract, construction has actually begun on the vehicle. And then on a later group, a later number that was requisitioned later, purchased later, the contract was entered into on October 26.

But actual construction in the company's plant begins on September 15. In a month and a half you can build a lot of trucks.

Mr. YOUNGER. May I suggest in that connection that we call the officers of the Twin Coach and find out from them why they started.

Mr. MOLLOHAN. I think that is a good suggestion, Mr. Younger.

Mr. YOUNGER. These people would not know anyway. Let's find out from the source.

Mr. MOLLOHAN. Not unless there had been some understanding reached that we are going to go and purchase these vehicles and you go ahead and gear yourself accordingly.

Mr. YOUNGER. Let's find out from them where they got their instructions. Mr. KIEB. Mr. Chairman, if I may.

. Mr. MOLLOHAN. Certainly, Mr. Kieb.

Mr. KIEB. I believe that Twin Coach made a prototype of this type of vehicle. Whether they did it at their own cost and expense to try to interest the Department, knowing that the Heller Associates were working on a lighter vehicle across the board, I think you will find that Twin Coach may have built a prototype; and from that prototype helped develop some of these specifications.

They have been a company that has specialized in highway post offices, in the development of a very specialized vehicle. They are not a standard production line company in the sense that any of the big manufacturers are. They build some limited number. But still in some production, specialized vehicles, they have been in that field.

I think they built a prototype of this type of vehicle. And some discussions were held with the industrial engineers and with Mr. Gunther with respect to that.

Now, they may have felt—and Mr. Fageol and Mr. Carlson were in to see me during some of this discussion-they may have been taking their own business risks on their ability to sell this vehicle and to provide it to the Department.

Mr. PLAPINGER. I think the records that were submitted by Mr. Abrams in a memorandum prepared by Mr. Banton indicated that there had been a prototype vehicle which the Post Office had rejected, but also subsequent to that there had been four vehicles of the functional type design that the Post Office Department had experimented with. Am I not correct, Mr. Banton ?

Mr. BANTON. That is correct.

Mr. KIEB. This is the outgrowth of that. And I would like the committee to know that these fellows have been very aggressive business getters. And they have been willing to take a business risk not only in this vehicle but in highway post office development which we no longer purchase.

Mr. PLAPINGER. I want Mr. Goff to provide us with somebody to talk about the experimentation.

Mr. GoFF. Mr. Schlegel, would you know about that? Mr. SCHLEGEL. The experimentation, I think-it is related to the committee's inquiry. I think Mr. Banton would be—I can talk about the mechanical adequacy or inadequacy of the truck and what we found out about it. I think that is far afield right now.

Mr. GOFF. Mr. Graddick is here who was directly in charge of this. Weren't you, Mr. Graddick?

Mr. GRADDICK. Not of the Twin Coach, until the Heller people left.
Mr. PLAPINGER. Can we have Mr. Banton?
Mr. Banton has come down at the request of the subcommittee.
Will you identify yourself for the record ?

Mr. BANTON. M. W. Banton, citizen of the State of Massachusetts, retired.

I was former chief industrial engineer.

Mr. GOFF. For the record, I must leave to go to my meeting. Somebody else will take over. So, you go right ahead.

Mr. PLAPINGER. In Mr. Gunther's testimony before the subcommittee at our last session, he indicated that there was widespread experimentation. And that there had been voluminous data. And when we requested the Department for experimental data, all we got was a graph of time studies in Florida, and the results of experimentation on 5 days of a comparative study of 5 days in Warren, Ohio.

Do you know that there is other experimental data available within the Department, sir?

Mr. BANTON. I am not aware of any extensive experimental records being kept of those various experiments.

Mr. PLAPINGER. You understand that Mr. Gunther told us there was?

Mr. BANTON. That is conceivable, that some of the group out there may have kept a lot of records for their own benefit while they were making the experiment.

Mr. PLAPINGER. I specifically asked whether these were made available to the Department. And he said “Yes."

Mr. BANTON. I am not aware of any.

Mr. PLAPINGER. You do not know of the existence of any experimental data ?

Mr. BANTON. No.

Mr. PLAPINGER. Also, Mr. Gunther indicated in his testimony that the hopscotch experiment was tremendously successful. The Heller report is dated December 31; and, as a matter of fact, prior to the date of the Heller report, that the hopscotch experiment was discontinued.

Mr. BANTON. Well, the hopscotch experiment was started in early October, the early experimental work was started—I say early October; some time in the fall. I will put it that way, I do not remember the dates exactly. And then there was, as in any experiment of that kind, you will find that some of your original conceptions are not practical. And you make a lot of changes.

And sufficient changes had been made in the various arrangements of those routes so that we felt it would be delaying to the Christmas mail if we continued it. And we stopped it about Thanksgiving time in order to prevent interference with the volume of Christmas mail.

And we abandoned it. We never resumed it after Christmas in Youngstown, Akron, and Canton, except with one isolated route in Canton where we maintained it.

In Warren, Ohio, we maintained that hopscotch until the early spring of 1955.

Mr. PLAPINGER. And then abandoned it?
Mr. BANTON. Yes.
Mr. PLAPINGER. When did the experiment end, Mr. Banton?

Mr. BANTON. Well, the hopscotch experiment I would say definitely ended in the spring of 1955.

Mr. PLAPINGER. When did the experiment with the 250 trucks

Mr. BANTON. I wouldn't say that experiment is finished now. We are still using those trucks for experimental purposes. Or we were at least 2 months ago when I severed my connection with the Department. That is a continuing—that experiment with vehicles on delivery routes is a continuing experiment.

It should be for years and years with potential saving that is available.

Mr. PLAPINGER. Is that your understanding also, Mr. Goff?

I do not want to entrap you. I just would like to point out that in a memorandum dated September 23 of the year 1955, I believe, in connection with the lease, you noted that the experiment has ended.

Mr. GOFF. Now, that was my impression. But I, of course, just took it from the best I knew about it. Mr Banton undoubtedly knows a lot more about it than I do. I was surprised, as you were.

Mr. BANTON. I do not think the Department can afford to abandon experiments with vehicles. There is just too much potential saving in them.

Mr. PLAPINGER. In a breakdown of these vehicles furnished on March 22, 1956—as of March 4, 1955, you detail in a number of pages the disposition of these trucks, and indicate whether they are used on mounted service or experimental service or not assigned or trans

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