The results of our interviews were communicated to Mr. Bechtel in my letter of April 23, 1970, which reads as follows: UNITED STATES GENERAL ACCOUNTING OFFICE, CIVIL DIVISION, Washington, D.C., April 23, 1970. DEAR MR. BECHTEL: In response to your request of April 1, 1970, we interviewed key officials of four companies associated with the JOB Opportunities in the Business Sector (JOBS) program in New York City, New York. The interviews were conducted during the period April 8 through 10, 1970, for the purpose of getting some indication as to the extent to which supportive services were being provided to employees of these companies by American Learning Ssystems Co., Inc. (ALS), New York City, New York, under existing JOBS contract arrangements. The companies visited and persons interviewed were, as follows: Duralab Equipment Corporation, 303 Stanley Avenue, Brooklyn, N.Y., Mr. Joseph P. Ingarra, Vice President; Mr. Jerry Kashman, Vice President. International Appliance Corporation, 920 Stanely Avenue, Brooklyn, N.Y., Mr. William Litner, President. Peter Pan Nursery Products, Inc., 435 East 99th Street, Brooklyn, N.Y., Mr. Harry Ginsberg, President. Scottex Corp., 625 Wortman Avenue, Brooklyn, N.Y., Mr. Allan Goldman, President. "The above-named four companies are participating in the JOBS program under a contract awarded by the Department of Labor to the Manpower Training Consortium Inc. (MTCI) New York City, New York. MTCI received an MA 4 JOBS program contract, 34-9-4068–106 on May 15, 1969 for $6,675,310 covering 1,955 training positions. The consortium originally had seven participants offering job positions in Boston, New York City, Philadelphia, Newark, Baltimore, and Miami, but since then 13 new companies have joined and 3 companies have terminated, so that a total of 17 companies are currently participating in the program. MTCI has a subcontract with ALS to provide a full range of supportive services which are described in the cost summary for the overall JOBS contract as follows: Mr. ESCHWEGE. There follows a listing of costs which come up to $6,675,310. (The information referred to follows:) MANPOWER TRAINING CONSORTIUM, INC., MA-4 NATIONAL CONSORTIUM COST SUMMARY employees and trainees).... Other expense (administrative expenses and buddy system between regular 31,600 592,776 1 Represents amount to be paid by MTCI to participating employers for providing OJT and to cover nonproductive time. Mr. ESCHWEGE. [Continues reading.] In keeping with the limited scope of your request, we made no attempt to compare the amount of funds that had been paid to ALS through April 8, 1970 for providing supportive services to JOBS enrollees with amounts actually earned based on services actually provided; nor did we interview ALS officials concerning their subcontract operations. Results of interviews: The four employers advised us that no formal program had been initiated by ALS to provide the supportive services specified in the ALS subcontract. Comments on each supportive service component follow. Orientation: All four employers informed us that orientation was not provided by ALS in the employers' plants. However, one employer (Duralab) estimated that about 1 to 4 weeks of orientation was provided by ALS at the ALS training center on Linden Boulevard in Brooklyn before each employee was hired. MTCI's contract provides for 80 hours of orientation at an average cost of $553 for each trainee. Job related basic education: All four employers said that American Learning Systems did not provide any basic education in the employers' plants. Three of the four employers said that their employees were not given time off from work to attend basic education courses at the ALS training center, although one employer (Duralab) said that its employees received at least 1 hour of basic education each week for six to eight weeks at the training center. The employer said that Duralab trainees attend the basic education course during the first hour in the morning one day a week, and during such other times as the employee can be spared away from the job. After attending the basic education session, the Duralab trainees are transported from the training center to the plant by ALS. The training proposal for Duralab called for 290 to 320 hours of basic education to be provided to each trainee depending upon the occupation for which he was to be trained. The contract provides for 320 hours of job related basic education at a cost of $1089 for each trainee. Special counseling: Two of the four employers (Scottex and Duralab) said that no special counseling was given by ALS. One employer, (Peter Pan) estimated that each employee received 1 to 1 and 4 hours of counseling every three weeks. Another employer (International) said that some informal counseling was given to several employees at a time, during coffee breaks once each week. The contract provides $320 for special counseling for each trainee, for an overall cost of $625,600. Medical and dental services: The employers had no information as to whether medical or dental services were being provided by ALS. The contract provided $60 for medical or dental services for each trainee, for an overall cost of $117,300. Senator NELSON. Is that part of the contract? Mr. ESCHWEGE. Yes, sir. The contract provided for medical and dental services of $117,300, or $60 per trainee. Senator NELSON. Did American Learning Services get paid for that service, though it was not performed? Mr. ESCHWEGE. We did not go into this matter, since we were merely interested in interviewing the officials of the four companies involved. This was a rather short time review, which we performed over a period of 3 days. Senator NELSON. Your testimony is not addressed to the question of what American Learning Services was paid for? Mrs. ESCHWEGE. That is correct. Senator NELSON. You simply don't know? Mr. ESCHWEGE. We don't know. Senator NELSON. You just know what services these companies report that they received from American Learning Services; is that it? Mr. ESCHWEGE. Yes, and the results here are merely results of the interviews that we conducted with officials of the four companies. [Continues reading:] Supervisory and human relations training: All four employers stated that their regular workers had not attended any supervisory or human relations training courses. The contract provides $107,400 for 895 employees to attend 10 2-hour seminars at a cost of $120 each. Transportation: None of the four employers were providing trainees with transportation assistance from their homes to the plant. Also, they did not know whether transportation assistance to and from work was being provided by ALS. The contract provides $50 for transportation assistance for each employee for an overall cost of $97,750. Senator NELSON. Under the contract, who is to provide that transportation? Mr. ESCHWEGE. That would be the American Learning Systems co. [Continues reading:] Day care: None of the four employers were providing day care and were not aware of any day care that may have been provided by ALS. The contract provides for day care for 1,034 employees at an overall cost of $31,600. Senator NELSON. Again, was that an obligation of the American Learning Systems under the contract? Mr. ESCHWEGE. Yes. [Continues reading:] Other matters: All four employers stated that ALS representatives would stop by to compute the amount of billable days for each month. The employers receive a check from MTCI each month to cover the on-the-job training portion on the basis of the ALS computation. All four employers said that the jobs they had provided were either low- or semi-skilled and that the type of individuals they were hiring now under the JOBS program were no different than those they had hired in the past. Three of the four employers stated that they did not feel that ALS was providing any significant supportive services. The president of Peter Pan stated, however, that ALS was doing a fair job, and that the counseling had reduced terminations by 5 to 10 percent. He stated further that the limited supportive services provided by ALS were doing some good, although he said he did not know whether the Government was getting its "money's worth." The president of International summed up his discussion by telling us that the positions available to JOBS trainees at his plant were the "lowest type jobs you can get" and that providing supportive services such as basic education "would be ridiculous." One vice president of Duralab summed up the JOBS program as "a waste of time" and felt that the Government was "not getting anything for the money." The other vice president stated that providing basic education would be a "waste of effort" at his plant because of the low skill nature of the jobs available to the trainees. The president of Scottex said that ALS did not provide any supportive services, but he did not offer any opinion or general comments on the JOBS program. We trust that the above information is satisfactory to your needs. Sincerely yours, HENRY ESCHWEGE. Senator NELSON. Do you have anything to add to that, Mr. Schmitt? Mr. SCHMITT. No, I don't, Mr. Chairman. Senator NELSON. Thank you very much. We appreciate your coming. Mr. SCHMITT. Thank you. Senator NELSON. Our next witness is Mr. Charles Hope of the American Learning Systems of New York, Inc. Is Mr. Hope here? STATEMENT OF JACK HOWARD, ON BEHALF OF AMERICAN LEARNING SYSTEMS, INC., ACCOMPANIED BY MORTIMER GERBER, NEW YORK, N.Y. Mr. HOWARD. Mr. Chairman, my name is Jack Howard, and this is Mr. Mortimer Gerber, an associate of mine, and I ask that we be together. Senator NELSON. Is either of you part of the company? Mr. HOWARD. I am an officer of the parent company, which is Educational Sciences Programs, Inc. Senator NELSON. And American Learning System is a subsidiary then? Mr. HOWARD. Yes. Denator NELSON. Mr. Hope could not be here? Mr. HOWARD. He had operational requirements in the New York area, and therefore it was thought, because I have a broader experience with the entire company, including operations in Washington, D.C., that perhaps I could be helpful to the subcommittee. Senator NELSON. Do you have a prepared statement? Mr. HOWARD. Yes, sir. Senator JAVITS. Could we find out what the connections are here? Senator NELSON. Yes. Senator JAVITS. Would you give us some picture of what the relationships are between the parent company and the subsidiary now? Mr. HOWARD. American Learning Systems was created in August of 1968, financed by the parent corporation. It is a wholly owned subsidiary. Senator JAVITS. Is the parent corporation a public corporation? It is incorporated in the State of Delaware. Its seat of business is New York City. Senator JAVITS. Does it have public stockholdings? Mr. HOWARD. Yes. It is listed over the counter. Senator JAVITS. How many shares does it have? Mr. GERBER. 1,100,000. Senator JAVITS. How many shares are in the hands of the public? Mr. GERBER. About 150,000. Senator JAVITS. Who controls the company? Mr. GERBER. It is controlled by a gentleman named Thomas Souran. Senator JAVITS. How much stock does he own? Mr. GERBER. Approximately 160,000 shares. Senator JAVITS. Is he an officer of the company? Mr. GERBER. He is chairman of the board of the parent company. Senator JAVITS. In size, what relationship does it have to the aggregate asset character of the company? Mr. GERBER. I would characterize the sales as being insignificant compared to the sales of the parent company. Senator JAVITS. What is the realtionship in terms of aggregate sales last year of the parent company? Mr. GERBER. I would say American Learning contracted for less than half a million dollars in sales, and the parent company probably $311⁄2 to $4 million, Senator JAVITS. Thank you very much, Mr. Chairman. Mr. GERBER. By the parent company, I mean on a consolidated basis with the subsidiaries. Senator JAVITS. Isn't Mr. Hope the principal officer of American Learning Systems? Mr. HOWARD. He is vice president. John H. Douglas, president, is the chief officer. Senator JAVITS. He is not here? Mr. HOWARD. No. Senator JAVITS. Who is the principal executive officer? Mr. HOWARD. John H. Douglas. Senator JAVITS. The same gentleman. But you are fully informed? Mr. HOWARD. I believe I can be helpful to the subcommittee I have a brief statement which I would submit for the record. (The prepared statement of Mr. Howard follows:) |