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concurrent renegotiation of a parent and the subsidiary, each reporting separately. We set up a pro forma consolidation in that case and eliminate intercompany transactions, the profit therefrom. We do not double the amount of sales. Mr. RHODES. That is quite obvious. Mr. COGGESHALL. There is an argument on that point sometimes. Mr. RHODES. Perhaps you do not quite understand what I am driving at. If you have 10 subsidiaries of a prime contractor and you are able to look at the reasonableness of the costs of the subsidiaries, I think you can see the possibility there that by the device of using subsidiary corporations you can make your costs look like something entirely different from what they actually are.

Mr. COGGESHALL. That is why we have common control. All those companies come right in individually. Mr. RHODES. No matter what the size of the contract? Mr. COGGESHALL. When any one in the group has over $1 million, erery dollar is reported to us as subject to renegotiation. That is the common control feature of the law. They worked that out in 1943. The first act did not have such a provision and everybody was doing it.

CONTRACTS EXEMPT FROM RENEGOTIATION

Mr. FENSTERSTOCK. We should not leave you or Mr. Ostertag under a false impression. The provisions with respect to such matters as ICA funds are here. As you know, the act provides an exemption of any contract which the Board determines does not have a direct and immediate connection with the national defense. The act requires the Board to prescribe regulations designating those classes and types of contracts which are to be exempt under that provision.

Pursuant to that authority the Board has designated, among other classes, the following:

Contracts to the extent that they obligate funds of another agency of the Government, other than a department named in or designated pursuant to section 103 of the act, or to the extent that the contracting department is to be reimbursed by such other Government agency or other person.

The regulation also states: “Contracts which obligate funds appropriated under or to carry out the purposes of foreign aid programs, insofar as such funds are obligated for military assistance, are not exempt under this provision.”

Mr. Thomas. We thank you very much, gentlemen. It is always good to see you.

MONDAY, MARCH 13, 1961. NATIONAL CAPITAL HOUSING AUTHORITY

WITNESSES

WALTER N. TOBRINER, CHAIRMAN; PRESIDENT, BOARD OF COM

MISSIONERS, DISTRICT OF COLUMBIA WILLIAM E. FINLEY, VICE CHAIRMAN; DIRECTOR, NATIONAL

CAPITAL PLANNING COMMISSION GEORGE E. C. HAYES, CHAIRMAN, PUBLIC UTILITIES COMMISSION NEVILLE MILLER, CHAIRMAN, DISTRICT OF COLUMBIA REDE

VELOPMENT LAND AGENCY GERARD M. SHEA, DIRECTOR, DEPARMENT OF PUBLIC WELFARE WESLEY S. WILLIAMS, PRESIDENT, BOARD OF EDUCATION, DIS

TRICT OF COLUMBIA FRANCIS X. SERVAITES, EXECUTIVE DIRECTOR, NATIONAL CAPI

TAL HOUSING AUTHORITY HENRY F. DAVENPORT, DIRECTOR OF PROJECT DEVELOPMENT WALTER WASHINGTON, ASSISTANT DIRECTOR OF MANAGEMENT ALBERT J. HASKELL, DIRECTOR OF ADMINISTRATION HERMAN EDWARDS, BUDGET ANALYST

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Mr. THOMAS. Will the committee please come to order. We certainly have a distinguished group with us this afternoon, the National Capital Housing Authority and its board members.

Is Mr. Tobriner here? Mr. TOBRINER. Yes. Mr. THOMAS. We are certainly happy to have you here. We appreciate your taking time from a busy day to come here. Is Mr. Finley here? Mr. FINLEY. Yes. Mr. Thomas. You are William Finley, Vice Chairman and Director of the National Capital Planning Commission. We are happy to have you here.

And we have Mr. George E. C. Hayes, Chairman of the Public [tilities Commission; and Mr. Gerard M. Shea, Director of the Department of Public Welfare. It is good to see you, Mr. Shea. And Mr. Wesley S. Williams, President of the Board of Education.

Mr. SERVAITES. He is not here yet, Mr. Chairman. Jr. Thomas. Then we have Mr. Francis X. Servaites, Executive Director of the National Capital Housing Authority; Mr. Henry F. Davenport, Director of Project Development; Mr. Harvey V. Everett, Director of Management.

Mr. SERVAITES. Mr. Everett is not here, Mr. Chairman. Mr. Walter Washington, Assistant Director of Management, is here in his place.

Mr. Thomas. And we have Mr. Albert J. Haskell, Director of Administration; and Mr. Herman Edwards, budget analyst.

Mr. TOBRINER. We have also Mr. Neville Miller, Chairman of the Districtof Columbia Redevelopment Land Agency, Mr. Chairman.

Mr. THOMAS. Yes. I overlooked Mr. Miller. We are delighted to have you with us, Mr. Miller. .

JUSTIFICATION OF THE ESTIMATE

Let us put all of these justificaions in the record. There is a lot of meat in it. It deals mainly with title I, but there is some good information on title II.

(The matter referred to follows:)

BUDGET ESTIMATES : $40,000, FISCAL YEAR 1962 General statement

The National Capital Housing Authority was established in 1934 under the District of Columbia Alley Dwelling Act (48 Stat. 930, amended by Pub'ic Law 733, 75th Cong.). In accordance with this law the Authority is the local public housing agency in the District of Columbia and has as its objective the assurance, at the least practicable cost to the Government, of an adequate supply of dwellings for families of low income whose housing needs are not met by private enterprise. The Authority seeks to provide dwellings without profit or loss except for subsidy provided by law to reduce rents below cost levels. Summary of the two programs

The Authority operates two housing programs, known as title I and title II:

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The title II program is supervised by the Public Housing Administration and the subsidy requirements are included in the consolidated estimates of that agency. However, details of this program are furnished for informational purposes.

The title I program consists of 96 low-rent housing units constructed under the District of Columbia Alley Dwelling Act. Our budget estimate for fiscal year 1962 is $40,000. The expense estimates are uniformly less than the rental re ceipts which are covered monthly into the Treasury. Title I

In support of our estimate, we offer the following program performance schedule projected over a 5-year period:

1960 actual

1961 esti

mate

1962 esti

mate

1963 esti

mate

1964 esti.

mate

Rental receipts..
Total obligations..

Excess of receipts over obligations..

$43, 446
39, 959

$44,000
40.000

$44,000
40,000

$44,000
40.000

$44.000
40,000

3, 487

4,000

4.000

4,000

4,000

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