[House Hearing, 107 Congress]
[From the U.S. Government Publishing Office]
FEDERAL GOVERNMENT COMPETITION WITH SMALL BUSINESSES
=======================================================================
HEARING
Before the
COMMITTEE ON SMALL BUSINESS
HOUSE OF REPRESENTATIVES
ONE HUNDRED SEVENTH CONGRESS
FIRST SESSION
__________
WASHINGTON, DC, JULY 18, 2001
__________
Serial No. 107-19
__________
Printed for the use of the Committee on Small Business
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COMMITTEE ON SMALL BUSINESS
DONALD MANZULLO, Illinois, Chairman
LARRY COMBEST, Texas NYDIA M. VELAZQUEZ, New York
JOEL HEFLEY, Colorado JUANITA MILLENDER-McDONALD,
ROSCOE G. BARTLETT, Maryland California
FRANK A. LoBIONDO, New Jersey DANNY K. DAVIS, Illinois
SUE W. KELLY, New York WILLIAM PASCRELL, New Jersey
STEVEN J. CHABOT, Ohio DONNA M. CHRISTIAN-CHRISTENSEN,
PATRICK J. TOOMEY, Pennsylvania Virgin Islands
JIM DeMINT, South Carolina ROBERT A. BRADY, Pennsylvania
JOHN THUNE, South Dakota TOM UDALL, New Mexico
MIKE PENCE, Indiana STEPHANIE TUBBS JONES, Ohio
MIKE FERGUSON, New Jersey CHARLES A. GONZALEZ, Texas
DARRELL E. ISSA, California DAVID D. PHELPS, Illinois
SAM GRAVES, Missouri GRACE F. NAPOLITANO, California
EDWARD L. SCHROCK, Virginia BRIAN BAIRD, Washington
FELIX J. GRUCCI, Jr., New York MARK UDALL, Colorado
TODD W. AKIN, Missouri JAMES R. LANGEVIN, Rhode Island
SHELLEY MOORE CAPITO, West Virginia MIKE ROSS, Arkansas
BILL SHUSTER, Pennsylvania BRAD CARSON, Oklahoma
ANIBAL ACEVEDO-VILA, Puerto Rico
Doug Thomas, Staff Director
Phil Eskeland, Deputy Staff Director
Michael Day, Minority Staff Director
C O N T E N T S
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Page
Hearing held on July 18, 2001.................................... 1
Witnesses
Eakes, John, Owner & President, Royal Laundry Systems............ 3
Hamerschlag, Arthur, Deputy CFO, Veterans Health Administration.. 4
Spates, Michael, Manager of Delivery Options, U.S. Postal Service 5
Tucci, Gregory, Past Owner, P.A.S.S. of Granville................ 7
Merritt, Rick, Executive Director, PostalWatch................... 9
Reisland, Scott, Owner & Manager, Denali Grizzly Bear Cabins/
Campground..................................................... 30
Mack, Tom, Owner & President, Tourmobile, Inc.................... 31
Mastromarco, Dan, Travel Council for Fair Competition............ 34
Hart, Clyde, Vice-President, American Bus Association............ 36
Appendix
Opening statements:
Manzullo, Hon. Donald........................................ 43
Velazquez, Hon. Nydia........................................ 44
Prepared statements:
Eakes, John.................................................. 46
Hamerschlag, Arthur.......................................... 53
Spates, Michael.............................................. 56
Tucci, Gregory............................................... 68
Merritt, Rick................................................ 72
Reisland, Scott.............................................. 144
Mack, Tom.................................................... 148
Mastromarco, Dan............................................. 165
Hart, Clyde.................................................. 177
Additional Information:
Statement of Mr. C. Jack Pearce, President, O.S.I.
Management, Inc............................................ 184
Letter to Matthew Szymanski, Special Counsel, from Michael
Jimenez, Strategic Impact, Inc............................. 196
Letter to Congressman Manzullo from Greg Felt, Canyon Marine,
Inc........................................................ 200
Letter to Mr. Spates from SBA................................ 217
Letter to Mr. Spates from Chairman Manzullo.................. 221
Letter to Chairman Manzullo from PostalWatch................. 225
Letter to Chairman Manzullo from USPS........................ 236
FEDERAL GOVERNMENT COMPETITION WITH SMALL BUSINESS
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WEDNESDAY, JULY 18, 2001
House of Representatives,
Committee on Small Business,
Washington, DC.
The Committee met, pursuant to call, at 10:15 a.m. in room
2360, Rayburn House Office Building, Hon. Donald A. Manzullo
(chairman of the Committee) presiding.
Chairman Manzullo. The full Committee on Small Business
will come to order.
Today, the Committee will examine the extent, impact and
fairness of direct competition by the government with small
businesses. We will hear testimony on a VA hospital in Illinois
competing with a private laundry owner; the Postal Service
competing with private mailbox services, including a couple
from Granville, New York, driving them out of business; the
National Park Service competing with private recreational
services, including an Alaskan campground owner and local
Tourmobile owner; and the Federal Transit Authority competing
with charter bus services.
We also have written testimony on the Air Force and Army
providing river rafting services in Colorado--the Air Force
providing river rafting services; I did read that right--in
competition with private outfitters there. That witness could
not be here today, but his statement is on the table, along
with other witness statements provided to the Committee.
The relevant federal agencies have also been invited to
participate. Two of these agencies will present witnesses
today, while the others have chosen only to present material
for the record. Evidently they do not have enough bureaucrats
to send one here to testify on their behalf.
These examples represent a larger pattern, a pattern that
costs small businesses contracts, revenues and jobs. Such
competition by the government seems unfair by definition since
the government shares little or none of the regulatory and tax
burdens that it imposes on these small businesses.
I look forward to the testimony of the witnesses before us.
On behalf of the Committee, I thank you all for coming,
especially those who traveled from quite a distance.
I now yield for an opening statement by the gentlelady from
New York, Congresswoman Velazquez.
[Chairman Manzullo's statement may be found in appendix.]
Ms. Velazquez. Thank you, Mr. Chairman. I am happy that the
Committee is examining this issue today because I believe these
problems are a core mission of advocating small business. This
Committee has addressed the burden of government regulation and
paperwork, which drain time and money from small business and
discourages them from competing for federal contracts.
In the past year, we have focused a great deal of attention
on the practice of bundling, which is the systematic exclusion
of small business from skilled federal contracts when they are
bought out and handled by prime contractors. We have proven
time and time again that this practice does more than just
discriminate and exclude. Bundling is costly, wasteful,
inefficient and more likely to procure lower quality goods and
services for the federal government.
In addition, this Committee and others have held a series
of hearings in past years on the Federal Prison Industries'
anti-competitive practices for government contracts. Last
month, we took a fresh look. We learned that UNICOR paid a
fraction of the federal minimum wage, remained exempt from OSHA
requirements and can dictate pricing. No company in this
country could possibly get away with that. All of these
practices hurt American entrepreneurs' right to compete and win
lucrative federal contracts.
Today we focus on an even more pernicious phenomenon: the
federal government's direct competition with small business for
goods and services. This is exactly opposite the ideal of the
market economy. No company should fear direct competition from
the government, which is more entrenched, subsidized, protected
and powerful than they could ever be.
These are difficult activities to ferret out because they
have been restricted for a generation first by the Office of
Management and Budget's Circular 876 and later by the 1998 FAIR
Act. Under scrutiny, anti-competitive government activities
have become more subtle. That is why we are here: to look a
little deeper.
We will hear the concerns of several small businesses here,
in particular both charter contracts, one by federally backed
public transit authority, as well as the practice of the post
office which imposed requirements on independent mailbox owners
that drove away customers.
Our aim here is simple; to continue to remove barriers and
obstacles the federal government has placed in the way of
America's small businesses. Our entrepreneurs have reason to
expect the government will not compete with them directly, just
as they expect the government to allow them to compete fairly
for federal contracts.
Thank you, Mr. Chairman.
Chairman Manzullo. Thank you very much, Congresswoman
Velazquez.
Our first witness is John Eakes.
Mr. Eakes. Yes, sir.
Chairman Manzullo. John is a constituent of mine, the owner
and president of Royal Laundry Systems in Marengo, Illinois. It
is interesting that none of the small business people in
Marengo, which is a very small town in the Midwest, had
proffered written testimony in our last hearing dealing with
competition from Federal Prison Industries.
John, we look forward to your testimony. The rules are you
will see a little light in front of you. When it gets to four
minutes the yellow light goes on, and then when the red light
goes on you should conclude by that time or very shortly
thereafter.
We look forward to your testimony. The testimony of all the
witnesses and all the Members of Congress will be incorporated
into the full record without objection.
Thank you.
STATEMENT OF JOHN EAKES, OWNER/PRESIDENT, ROYAL LAUNDRY SYSTEMS
Mr. Eakes. Mr. Manzullo, thank you very much. I appreciate
the opportunity----
Chairman Manzullo. John, could you put the desk mike closer
to you, please? Thank you.
Mr. Eakes. Thank you very much. I appreciate the
opportunity to be here.
My name is John. My last name is Eakes. I am the president
and owner of a company called Royal Laundry Systems of
Wisconsin, Inc. Years ago I had laundry plants in Wisconsin,
Janesville and Racine and on and on. That is why it is a
Wisconsin corporation.
I am here because I am very concerned about competing with
the United States Government, especially the V.A. hospital
system and especially the V.A. hospital located in Hines,
Illinois. I also compete with the prison system, and I have
lost business to the prison system. I have already lost
business to the V.A. hospital system.
Now, I pay a considerable amount of taxes. In fact, I would
rather have the tax and let the IRS have the government or the
profit, but it does not sound fair to me to compete with a
government entity with my tax dollars. It appears that I am
paying taxes to put me out of business.
Now, I have lost several competitive bids to the V.A.
hospital. They are bidding out of their minds. Number one, they
do not know how to bid. They do not know how to price it, and
it is not a level playing field. I do not mind competition. I
have been fighting competition all my life. But, I like a level
playing field, and the U.S. Government, the V.A. hospital
system, is not a level playing field.
They bid on an account, which is a state account. It is a
rehab center, and they bid a price of 23 cents a pound. Now,
attached to my attachment here in the back of the room you will
see a Laundry News article that was put out by the V.A.
hospital system that their cost is over 35 cents a pound, so
how can they bid 23 cents? When you do a half a million pounds
of linen times 11 or 12 cents, they are losing a lot of money.
What really concerns me is they are calling on one of my
largest medical centers in the Chicagoland area. If they get
that one, I will lay off about 40 people. These are God's poor
people. They make $7 or $8 an hour. They pay taxes along with
everybody else. That is the kind of jobs we are going to lose.
My laundry plant is located in Harvard, Illinois. That is
McHenry County. I also have a laundry plant in Rockford,
Illinois, which is Boone County. I still have one down near St.
Louis, Missouri.
I already mentioned that I pay a lot of taxes. You name it,
I pay it. Now if I happen to make a dollar, if I get real lucky
and make a dollar, the IRS wants 39 cents out of that dollar,
and then the State of Illinois wants another three cents, so
they get 41 cents.
I have never received any federal grants or any contracts
of any kind.
Thank you very much.
[Mr. Eakes's statement may be found in appendix.]
Chairman Manzullo. That is right to the point, John. We
appreciate that very much.
The next witness is Arthur Hamerschlag. Is that correct?
Mr. Hamerschlag. That is correct.
Chairman Manzullo. Thank you. He is the deputy CFO----
Mr. Hamerschlag. Correct.
Chairman Manzullo [continuing]. At the Veterans Health
Administration here in Washington. I look forward to your
testimony, Mr. Hamerschlag.
STATEMENT OF ARTHUR HAMERSCHLAG, DEPUTY CFO, VETERANS HEALTH
ADMINISTRATION
Mr. Hamerschlag. Thank you very much, Mr. Chairman. I have
a brief statement, but with your permission I will read an even
briefer summary.
I appreciate the opportunity to be here, Mr. Chairman. I
think the record of the Department of Veterans Affairs in
support of small business is a good one, and under the
leadership of Secretary Principi we are taking steps to further
improve that record.
The V.A. has authority to purchase health care resources
needed for the veterans' health care from community providers
and in limited circumstances to sell resources to other
community entities.
Let me first say that V.A. has one primary mission, and
that is to serve the needs of veterans and to do so in a cost
effective and efficient manner. It is not in V.A.'s interest to
enter into a contract that would have a negative impact on any
community provider of that service.
V.A. has taken several steps to ensure that the agency acts
responsibly with the contracting authorities it does have, and
basically we ensure that any resource to be sold is consistent
with statute, policy and common sense. As a matter of policy,
Mr. Chairman, V.A. is not interested in competing with any
other provider of a community health care resource or causing
any harm to any commercial provider of a health care resource.
Our policy and our practice is simple. If V.A. becomes
aware of an adverse impact to a commercial interest, we will
not provide those services. That was done when our laundry at
Hines considered contracting with Lorel University and will be
done for any proposal about which we receive notice of a
complaint. That is and will continue to be our practice. I
think this example proves that our policy is in place and in
fact does work.
Mr. Chairman, you should also be aware that at this time
the Hines V.A. Medical Center does not rely on laundry services
of any other non-V.A. entity and does not propose to do so.
Mr. Chairman, I would like to say again I appreciate the
opportunity to be here. I would be happy to answer any
questions you or the Members of the Committee may have.
[Mr. Hamerschlag's statement may be found in appendix.]
Chairman Manzullo. We have a vote, so we are going to vote
and come right back. Thank you.
[Recess.]
Chairman Manzullo. Our next witness will be Michael Spates,
who is the Manager of Delivery Options, U.S. Postal Service, in
Washington, D.C.
Mr. Spates, we look forward to your testimony. Thank you
for coming this morning.
STATEMENT OF MICHAEL SPATES, MANAGER OF DELIVERY OPERATIONS,
U.S. POSTAL SERVICE
Mr. Spates. Good morning, Mr. Chairman and Committee
Members. My name is Michael----
Chairman Manzullo. Could you pull that mike closer to you?
Thank you.
Mr. Spates. My name is Michael Spates. I am the Manager of
Delivery Operations--I know it says options, but it does still
fit the description--for the U.S. Postal Service. I ask that my
full written testimony be submitted for the record. I will now
give you a brief overview of that testimony.
I am happy to be here today in response to your request to
address the issue of competition by the Postal Service with
small businesses. The request cited in particular competition
with a family owned commercial mailing receiving agency or
CMRA, as we call it. You are seeking to determine the extent,
impact and fairness of this competition, and I will address
these issues.
The Postal Service recognizes that small businesses help
drive our nation's economy. We are an important enabler of
small business, a vital communications and distribution link.
The Postal Service has a long, ingrained tradition of promoting
businesses, especially small businesses, offering services and
meeting their special needs. In fact, the Postal Service
website, usps.com, has a link entitled Tools to Help Small
Businesses. It is very educational and helpful.
In addition, the Postal Service has a long history of being
a leader in contracting with small and minority owned
businesses, a partnership that benefits us both. Small
businesses are critical to the ongoing success of the Postal
Service, and we are continuously looking for ways to strengthen
our relationship, not ways to diminish it.
At the same time, the Postal Service has to maintain a
delicate balance between meeting the needs of the business
customer and the consumer protection needs of the mailing
community. The commercial mail receiving agency rules improve
the security of the mail by strengthening the requirements
involved in the application and for use of a private mailbox.
The end result benefits both businesses and consumers by
reducing opportunities to use a private mailbox for fraudulent
purposes.
Provisions associated with private mailboxes, it is
important to note, mirror the same provisions and regulations
on post office boxes. Any perception that the Postal Service is
seeking to compete unfairly with CMRAs may arise from
allegations that recent rule changes were designed to make it
difficult for CMRAs to operate and thus create a competitive
advantage for the Postal Service. The rules in question were
intended to fulfill the U.S. Postal Service's consumer
protection responsibilities.
Small business interests participated in the development of
these new rules and standards. They were represented by the
CMRA industry, the Small Business Administration, the National
Federation of Independent Businesses and the National
Association of Self-Employed.
The evolution of CMRA rules, which include mutually agreed
upon modifications and compromises, is a result of ongoing
meetings with these various interest groups and the positive
support of the CMRA industry and their representatives.
During the discussion stages of developing the final rule,
there was opposition from small business representatives who
wanted to continue using the designator suite for a business,
implying that it was an office space when actually it was a
mailbox.
Critics of the small business proposal, primarily the law
enforcement representatives, strongly felt the use of suite
could be deceptive to consumers. Also, a representative of
Attorney Generals from 28 states supported the original
proposal of the Postal Service to use PMB, which means private
mailbox, just like PB or POB means post office box. It
designates a box.
In response to the revised proposal, 50 state Attorney
Generals plus the District of Columbia and the Virgin Islands
signed a letter opposing the allowance of an alternative to the
pound sign as a designator instead of PMB. Some states are
considering legislation at the state level to tighten these
requirements more.
As I stated previously, the Postal Service is attempting to
maintain a delicate balance. There is a significant input from
the regulatory agencies such as the Department of Justice, the
Federal Trade Commission, state and local law enforcement. The
initiative was not an effort of the Postal Service to compete
with CMRAs.
It is important to note what the CMRA industry themselves
are saying about fraud. I would like to reference the guidance
that is put out by a CMRA association known as the Associated
Mail and Parcel Centers. They represent 2,700 CMRAs. It was put
out in 2001, and it was written by its president and executive
director, Charmaine Finney, who is also the chair of the
Coalition Against Unfair U.S. Postal Service Competition. Ms.
Finney was a positive participant in our meetings.
I would like to quote their training manual. ``It is
important to note that CMRAs have historically been recognized
as safe harbor for criminal elements. The history of crooks and
rip off artists utilizing the CMRA is legion. The California
consumer protection law may appear to be onerous to many
operators, but if there had not been a high number of people
perpetuating scams in California CMRAs, it would not have been
passed.'' This is a quote directly from their training manual.
In conclusion, though some critics charge that the
enactment of CMRA rules create an appearance the Postal Service
misused its regulatory authority to hinder competition, the
Postal Service proudly believes it acted responsibly in
addressing the concerns of those impacted by the regulation.
The end result is a stronger, more effective working
relationship among the CMRA, small businesses, law enforcement
and the Postal Service, resulting in enhanced consumer
protection.
Thank you.
[Mr. Spates' statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
Our next witness will be Mr. Gregory Tucci, former owner of
the P.A.S.S. of Granville, New York. Mr. Tucci, we look forward
to your testimony.
Could you move the microphone closer to you? You might want
to lift it up a little bit there. Thank you.
STATEMENT OF GREGORY TUCCI, PAST OWNER, P.A.S.S. OF GRANVILLE
(DEFUNCT)
Mr. Tucci. Chairman Manzullo and distinguished Members of
the Committee, thank you for this opportunity to address the
Committee today and share with you my experience as a small
business owner who made the fatal mistake of opening a business
in competition with the United State Postal Service.
My name is Gregory Tucci, and in June of 1997 I opened a
mail and parcel center in the small town of Granville in
upstate New York. My business, named P.A.S.S. of Granville, was
the type of business the Postal Service refers to as a
commercial mail receiving agency or CMRA, but we offered more
services than this implied.
One week prior to opening the store, I went and visited
Roger Curtis, Postmaster of the Granville Post Office, to
discuss my new venture, and he informed me that all we needed
to do to receive mail for our customers was to file a list of
our customer names and box numbers with him once a year. He
made no mention of Form 1583. Hence, they had none on file when
the new regulations took effect.
Like many businesses, we got off to a slow start, but many
prospective customers were interested in the services we
offered over and above what they could get at the post office.
Unlike the post office, our facility was fully handicapped
accessible and provided customers with 24 hour secure access.
Several prospects expressed interest and indicated they were
thinking about switching to our service when their P.O. box
rental expired.
In late May, Postmaster Curtis personally delivered a copy
of the new regulations governing CMRAs to us. He admitted not
understanding the new rules and was unable to explain any of
the confusing and ambiguous details. He also presented us with
a single copy of a Form 1583 to be filled out and signed by
every one of our customers.
My wife, Elaine, the store manager, understood them
perfectly. She concluded that we could be in for big trouble.
She proved to be right. Every single one of our mailbox
customers refused to execute the Form 1583 after reading the
Privacy Act Statement on the back of the form, which stated
that their home address and personal information could be
released to anyone who asked for it if they were using our
mailbox for business purposes. They felt this was a massive
invasion of their privacy and violated their Fourth Amendment
rights, while posing a threat to their safety and the safety of
their loved ones.
Those not using the box for business could see no reason to
list the names and ages of their children. Parents are advised
not to release this information for the safety of their
children, and this was a major concern to them.
This was only the beginning of our problems. During the
next few months, at least two dozen people came to the store to
apply for mailboxes; however, when presented with Form 1583
changed their minds, citing the same reasons as our existing
customers. Several of our mailbox customers just decided
against the hassle and let their mailbox rental agreements
expire without renewing.
We started losing significant revenue, and our cash flow
became so critical that when tragedy struck and Elaine's mother
passed away in July of 1999, we could only afford to close the
store for one day in order to attend the funeral.
In August of 1999, we were notified by Postmaster Curtis
that our store did not comply with the CMRA regulations. We
filed a list of our customers, complete with addresses as
required, but we had no completed Form 1583 to offer him. We
had no feasible way to verify that each customer actually
resided at the address we had on file.
We received a certified letter from Postmaster Curtis on
September 29 threatening to shut off our mail delivery on
October 13 if we continued to be in non-compliance. We promptly
notified all our customers and stopped collecting rent from
them. Despite the threat of mail disruption, our customers
still refused to file the 1583 form, and on October 13, 1999,
all mail delivery was discontinued to our customers.
After the shutting down of our mail delivery in what could
be characterized as retribution for doing business with a
postal competitor, the post office made our customers jump
through hoops trying to collect their mail that was being held
hostage.
With the permanent loss of all mailbox income, as well as
the sales of other products and services to our mailbox rental
customers, our business began to hemorrhage red ink. Our
financial backer saw only disaster ahead and promptly withdrew
all support. P.A.S.S. of Granville closed its doors for the
last time on November 20, 1999.
Filing bankruptcy, combined with the loss of her mother,
our business and our house, devastated my wife, Elaine. She was
diagnosed with severe clinical depression and remains under a
doctor's care today.
The Postal Service used its regulatory powers to run us out
of business. It is as simple as that. The Postal Service
characterized all private mailbox customers as criminals while
claiming the CMRA regulations were necessary to prevent mail
fraud and identity theft. Our customers were not criminals.
They were lawyers, teachers, people with disabilities,
survivors of domestic abuse and small business owners: in other
words, Americans with constitutional rights.
What I find most disturbing about this entire ordeal is
that the Postal Service launched a regulatory assault on an
entire industry of small business competitors without ever
demonstrating any need for the regulations. A recent report
from the Postal Service's own Inspector General confirms this.
By the time we closed our doors, these regulations had
disrupted the entire private mailbox industry to such a degree
that I could not even sell our mailboxes at fire sale prices.
The Postal Service showed absolutely no regard for the
impact that these regulations could have on CMRAs and their
customers, requiring every small business in America who used a
private mailbox to change their address and purchase all new
stationery, marketing materials and business cards, potentially
driving them out of business. In the words of Timothy McVeigh,
our customers were ``just collateral damage.''
The USPS showed no concern for our customers' privacy
objections or for the expense of changing their address. They
took no pity on victims of domestic violence who had found a
safe haven. They did not care if we were driven into
bankruptcy. Frankly, I am of the belief that shutting down
small, private mailbox businesses such as mine was the sole
purpose of the regulations in the first place.
We ran an honest business and worked hard to build our
reputation. It is too late to save our business, but it is not
too late to save our fellow mailbox stores, their small
business customers or all the other small businesses that will
undoubtedly suffer a similar fate as the Postal Service
continues leveraging its vast regulatory power and exemption
from the Administrative Procedures Act to gain competitive
advantage over an ever increasing number of small business
markets.
[Mr. Tucci's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
Our next witness is Rick Merritt, who is the executive
director of PostalWatch out of Virginia Beach. We look forward
to your testimony, Mr. Merritt.
If you could take the mike? Thank you.
STATEMENT OF RICK MERRITT, EXECUTIVE DIRECTOR, POSTALWATCH
Mr. Merritt. Thank you, Chairman Manzullo and honorable
Members of the Committee. Thanks for this opportunity to appear
here before you today, and thank you for the very important
work that you do on behalf of the small business community
around the country.
My name is Rick Merritt. I am the executive director of
Postal-Watch, a grassroots organization founded to provide
small businesses with a voice in postal matters. My statement
was kind of short, but Mr. Spates brought up a few issues that
I would like to address before I get started.
Mr. Spates indicates that the Postal Service cooperated
with the small, private mailbox industry and small business
groups in preparing these regulations. The truth of the matter
is that these organizations only became involved after the
Postal Service promulgated the rules as final rules after
receiving over 8,000 comments opposing and only ten supporting
the rules.
I also might add that I find it interesting that Mr. Spates
brings up the Federal Trade Commission as the last time that we
checked they had no position on the private mailbox issue.
He mentions a consumer protection responsibility on the
part of the Postal Service. Unfortunately, I do not think the
Postal Service based on the last time that I read Title 39 has
the authority to decide what it perceives as deceptive and that
is in fact the domain of the Federal Trade Commission.
Moving on with my statement, a growing number of federal
establishments are attempting to grow their budgets outside the
appropriations process by entering a broad range of competitive
endeavors. Of federal competitors, the Postal Service, with $67
billion a year in revenues, is by far the largest and most
problematic. Its unique ability to regulate without protection
afforded by the Administrative Procedures Act and disrupt the
mail delivery of its competitors puts it in a class of its own.
The CMRA regulations and rules that we have been discussing
with the last two witnesses, although modified, are still
problematic to the small businesses and their customers that
operate private mailbox facilities. Despite the changes that
have been implemented over the last two years, the rules remain
onerous, fundamentally flawed and ultimately unsustainable.
In executing this anti-competitive scheme, the Postal
Service, claiming exemption from the Administrative Procedures
Act, misused its regulatory power to the detriment of a
commercial competitor. It is clear private mailboxes compete
with the Postal Service for P.O. box rental business.
In 1995, prior to the implementation of these rules, the
Postal Service had an 8.7 percent annual growth rate in P.O.
box revenues. By 1997, the year these rules were first
proposed, the growth rate had fallen to 1.3 percent. In that
same year in November, the Postal Service in their five year
strategic plan referred to the industry as rapidly growing and
a significant competitor.
The fact that they are a competitor to the Postal Service
is clear. What is unclear is why the Postal Service chose not
to do the type of due diligence that a federal agency has a
public policy responsibility to do when regulating a
competitor.
These are responsibilities that were clearly put forth by
the U.S. Justice Department Antitrust Division in 1979 when the
Postal Service attempted to regulate magnetic computer tapes as
magically becoming letter mail. The Justice Department gave it
clear guidance on what its requirements were, one of which was
to demonstrate that there was a need.
The Postal Service has done no studies on the criminality
and, quite frankly, has no evidence as to any significant or
disproportional criminality taking place at private mailbox
facilities. It also did not conduct an impact study to
determine what the economic and, in the case of the Tuccis,
life altering effects these regulations would have on the small
business people that they were regulating.
Notwithstanding, the Postal Service has produced no factual
evidence as to any disproportional or significant criminality
emanating from CMRAs, and consequently they have created a
regulatory scheme that has damaged their competitors without
documenting a need or demonstrating that they gave any concern
for the impact of their regulatory policies. This is just poor
public policy and realistically cannot be tolerated.
The Postal Service unfortunately has a long history going
back to the Hoover Administration of anti-competitive
practices, referring to the airmail scandals in the 1930s. We
cannot give deference to the Postal Service saying that they
think these rules are important and necessary and thus we
should allow them to regulate their competitors without
documenting the need. That I think is the single, essential
aspect of this.
I see I have run out of time. Unfortunately, I have a lot
more to say, Mr. Chairman. Thank you very much.
[Mr. Merritt's statement may be found in appendix.]
Chairman Manzullo. Thank you for coming. I have just a
couple questions here.
Mr. Hamerschlag, did you say that Hines V.A. Hospital is
not engaged in doing the commercial laundry?
Mr. Hamerschlag. That is correct, Mr. Chairman. We checked
twice before the hearing and double checked. At this time, they
are not providing commercial laundry services, to our
knowledge.
Chairman Manzullo. Mr. Eakes, do you have anything to the
contrary on that?
Mr. Eakes. They do have and were processing it. If they
stopped, Mr. Chairman, they must have stopped just recently.
They had a state bid called John J. Madden, which is located
near Hines. They also have a large hospital on the south side.
I have attended the bid meetings. They received the bid, so
if they are not processing the linen I wonder who is?
Chairman Manzullo. Do you have any response to that, Mr.
Hamerschlag?
Mr. Hamerschlag. The Madden contract was terminated June
30. As far as I know, we checked with the Hines people, and
they say they are not considering any commercial work at this
point in time.
Chairman Manzullo. So they do no laundry other than just
in-house?
Mr. Hamerschlag. Yes. Correct. It is all through V.A.
facilities.
Chairman Manzullo. Okay. What about for other facilities?
Do you know for other hospitals or other not-for-profits?
Mr. Hamerschlag. No. They are not doing work for anyone
other than V.A. facilities.
Chairman Manzullo. Right there?
Mr. Hamerschlag. They may be doing work for other V.A.
facilities, but no non-V.A. facilities.
Chairman Manzullo. Okay. Okay. Evidently, the notice of the
hearing took care of your problem, John. We appreciate V.A.
jumping on this right away as soon as you got notice from us.
Mr. Eakes, if you have any further problems on that contact
us or, Mr. Hamerschlag, would he have the ability to contact
you directly on that?
Mr. Hamerschlag. Absolutely.
Chairman Manzullo. Okay. Thank you very much. I appreciate
that.
I have some questions. Mr. Spates, in your testimony you
said that the provisions associated with private mailboxes
mirrored the regulations associated with post office boxes. Is
that correct?
Mr. Spates. Yes, sir.
Chairman Manzullo. Do people who go into the U.S. Post
Office have to fill out a form similar to 1583?
Mr. Spates. Yes, sir, they do.
Chairman Manzullo. Is it the same form?
Mr. Spates. It is called a 1093. The 1583 is similar to a
1093.
Chairman Manzullo. It is similar?
Mr. Spates. The information is the same.
Chairman Manzullo. Does it ask for the names and the ages
of the children?
Mr. Spates. That I would have to check.
Chairman Manzullo. Well, you should know that. Do you have
that form with you?
Mr. Spates. No, sir, I do not, but I----
Chairman Manzullo. Why do you not have that with you? I
want it before you leave, or you are not going to leave the
room.
If anybody is here from the post office, I would like you
to retrieve that form immediately and bring it to my desk.
Is there anybody here with you?
Mr. Spates. Yes, there is.
Chairman Manzullo. All right. You can use our computers if
you want. I would expect you to get up and leave right now to
get that form. Could you instruct somebody to do that?
Could you take them to our computer so they could dig it
off the website? Thank you. We will come back to you on that.
Mr. Spates. All right.
Chairman Manzullo. Now, I noticed in your testimony that
you did not mention anything about the IG's report from Kenneth
C. Weaver, the Chief Postal Inspector, dated April 9, 2001. Is
that correct?
Mr. Spates. Are you talking about the IG's report that went
to Mr. Weaver and to Mr. Potter?
Chairman Manzullo. That is correct.
Mr. Spates. Right.
Chairman Manzullo. You mentioned nothing about that in your
testimony.
Mr. Spates. I will be glad to. I took an excerpt out of the
response. I am very familiar with it. Mr. Weaver and Mr. Potter
both responded to the IG's audit, taking exception to the fact
that they only interviewed in their audit people who were
opposed to regulations. They did not talk to a single one of
the state Attorney Generals involved or other consumer
protection interests.
Chairman Manzullo. So you are saying that there is a
problem with the Inspector General's Office and the post
office?
Mr. Spates. The conclusion, and I am speaking for myself
right now. The conclusion----
Chairman Manzullo. I would expect you to speak on behalf of
the post office----
Mr. Spates. All right.
Chairman Manzullo [continuing]. Because you are here in
that capacity. I appreciate your personal opinions, but you are
here representing the government.
Mr. Spates. I am very familiar with the IG's audit and the
various stages of that audit. We felt it was not objective in
the fact that it only interviewed opponents.
Chairman Manzullo. What we can do here is I can have a
special panel and bring in your people and then bring in the
people from the mailboxes that feel they got the brunt of it,
and then you could have testimony right here. We can draw the
conclusions ourselves, present that to Congress, and perhaps
they may want to have some kind of remedial legislation on it.
I am just astonished that you are dismissing outright the
report of your own IG. I mean, this is a very damaging report.
Mr. Spates. The IG said several things in that report, and
that is the Postal Service took extra steps. Even though they
were not required from a regulatory standpoint to do certain
things, the Postal Service took extra steps after they
published the first rule to get all the reactions from the
industry. We worked out compromises and put out subsequent
modifications to their rule.
Chairman Manzullo. No. This statement from the IG says,
``Our audit revealed the Postal Service complied with internal
rule making procedures, revising rules for commercial mail
receiving agencies. In some cases the Postal Service went
further and accommodated the affected parties than internal
procedures required. However, the Postal Service did not fully
assess the impact of revised rules on receiving agencies and
their box holders.''
Do you agree with that?
Mr. Spates. What they are referring to in that last
statement--the first statement is accurate, and that is what I
just paraphrased a moment ago.
What they are talking about on the impact was primarily the
cost. Mr. Merritt did a cost study that became quoted in the
industry press as far as how much it would cost these people to
change stationery and other costs.
Chairman Manzullo. Did the----
Mr. Spates. The IG--I am sorry.
Chairman Manzullo. Go ahead and finish your statement.
Mr. Spates. The IG reviewed that cost analysis, and it had
problems with it also. It said it was over exaggerated.
What the Postal Service did to help mitigate any cost
consequences for CMRAs is it delayed the implementation of the
requirements. They do not go into effect as far as the
addressing requirements until next week, so they have known
about this for almost three years as far as the addressing
changes.
During their normal turnover of stationery, depending on
whether they wanted to use the pound sign or the PMB sign, they
were well aware it was coming.
Chairman Manzullo. Well, there is more impact than changing
stationery. The other side of the impact is running people out
of business. That is what happened to Mr. Tucci.
Did the post office comply with SBREFA on this?
Mr. Spates. I am sorry. I did not hear the question.
Chairman Manzullo. Did you comply with SBREFA? Do you know
what that is?
Mr. Spates. No. I am sorry.
Chairman Manzullo. That is the Small Business Regulatory
Enforcement Fairness Act. It applies to government agencies,
but not to the post office.
We will have an amendment to make the post office fully
comply with all the other regulations that are required of
other federal agencies. I am sure that Mrs. Velazquez would
probably join me in that to make sure.
Would the post office mind, just as a matter of a courtesy
to the Chair, doing a cost impact analysis as if you had to
comply with SBREFA?
Mr. Spates. I will have to see what those requirements are.
Chairman Manzullo. See, now the shoe is on the other foot.
Those are rules and regulations that apply to all other
agencies that should apply to you. That is what these gentlemen
are talking about here.
Mr. Spates. We will do the cost analysis to the best of our
ability. We will meet the requirements.
I just wanted to point out we submitted in testimony in
October, 1999, our cost analysis, a critique of the cost
analysis done by Mr. Merritt. In there it shows what the real
consequences are.
Chairman Manzullo. What about Mr. Tucci? Is he a
consequence?
What happened to you, Mr. Tucci? Why did your customers not
want to fill out Form 1583?
Mr. Tucci. Among our customers, we did have an abused
spouse.
Chairman Manzullo. Could you put that closer to you?
Mr. Tucci. Among our customers, we had an abused spouse who
did not--she used her mailbox for business purposes, too. With
the way the regulations were, her spouse could find her by
going into the post office and asking where her physical
address is. It would be given to him.
Chairman Manzullo. Just a second. Mr. Spates, if somebody
comes to the Granville, New York, postmaster and asks, does so
and so have a post office box here, is the postmaster at
liberty to give the name of a post office box holder?
Mr. Spates. The regulations used to be if somebody was
doing business out of a post office box, a business, you could
provide the name of the business owner, but that is not true.
Chairman Manzullo. If they are doing business out of the
post office box?
Mr. Spates. Out of the post office box, yes.
Chairman Manzullo. Okay. Go ahead.
Mr. Spates. That is not true. That information will not be
provided just across the counter like it was before. It has to
come from some law enforcement agency through a request. The
same is also true for 1583.
Chairman Manzullo. This says in Box 12 on Form 1583, ``If
applicant is a firm, name each member whose mail is to be
delivered.'' Then there is a parenthesis, ``(All names listed
must have verifiable identification. A guardian must list the
names and ages of minors receiving mail at their delivery
address.)''
Does that mean that parents have to disclose the names of
their children?
Mr. Spates. To my understanding, yes. I am not the expert
on the requirements.
Chairman Manzullo. You are the expert on it. That is why
you are here.
Mr. Spates. I just want to clarify something, and that is
the reason for that is there could be mail received at that
house to Joe Smith. We do not know whether Joe Smith is a
person perpetuating a fraud, an older person, or is it one of
the minor children of the family?
Chairman Manzullo. But if they have the same last name? Do
you mean every time somebody has another kid they have to file
an amended 1583?
Mr. Spates. I do not think it has gone that far.
Chairman Manzullo. But that is what this says.
Mr. Spates. If there is a change in who is receiving mail
there, you have to list it.
Chairman Manzullo. Now, I am Rural Route, Egan, Illinois.
We lost our post office. It got merged with Leaf River. It
comes to 792 East Lightsville Road.
We get names of all kinds of people who supposedly live at
that household. I do not think the post office looks at the
name of each addressee and says, does that addressee live at
this house or receive mail at that box.
Mr. Spates. The point is a 1583 is filled out saying I am
giving permission for the CMRA to act as my agent. Other people
in your house can receive mail while they are staying there. It
does not mean that you are their agent.
Chairman Manzullo. A parent is the natural guardian and
agent with the ability to consent to medical care. Surely that
would carry over with the ability to consent to receiving mail
at the same P.O. box or residence as the child.
Mr. Spates. I do not know if you are talking about your
private mailbox. I am talking about----
Chairman Manzullo. No. I do not have a private mailbox.
Mr. Spates. I mean your personal mailbox.
Chairman Manzullo. That is correct.
Mr. Spates. I am sorry.
Chairman Manzullo. That is okay.
Mr. Spates. I am talking about the CMRA is acting as an
agent. That means they are entitled to receive mail for those
people who sign the 1583.
What happens sometimes in cases of divorce is somebody will
submit a fraudulent 1583 to get his or her spouse's mail. These
are the people who I am authorized to receive the mail for.
Chairman Manzullo. What I do not understand is that I, with
my mailbox, do not have to sign any form to receive any mail.
What about Occupant?
Mr. Spates. Where it says----
Chairman Manzullo. Yes. What about Rural Delivery? How
about the political junk mail that we send out?
Did you get your form yet? Did that form come yet? We can
check it later.
Mrs. Velazquez?
Mr. Pascrell. Would the gentlelady yield?
Ms. Velazquez. Sure.
Mr. Pascrell. Mr. Chairman, I wanted to go back to your
line of pursuit. I know Mr. Spates is the messenger.
In examining this form, it is a very serious accusation
that was made in the testimony that there was not a compelling
need to change the regulations. I do not know exactly where I
stand on whether there was.
What are the statistics? I mean, it would seem to me in
light of the questioning by the Chairman and the example of
children that was there an intent that there might be a front
organization and that literature may be getting to kids that we
would have no control over? What is the real reason for doing
this in the first place?
Mr. Spates. The real reason is if I put Joe Smith was a
minor child----
Mr. Pascrell. Right.
Mr. Spates [continuing]. And we did not know that, Joe
Smith could have been an adult in there receiving running some
kind of a scam. If we see Joe Smith and we know Joe Smith is a
child, we are not going to assume there is a possibility of a
scam.
There are certain indicators that CMRAs have put out for
looking for scams when mail comes into one of those----
Mr. Pascrell. But what was the original basis of changing
that particular regulation? Did you have a plethora of
information which led you to conclude that there were perpetual
frauds? I mean, did law enforcement come to you and say this is
what we recommend; you would make our job a lot easier. Is that
how that happened?
Mr. Spates. How the regulations got----
Mr. Pascrell. Or none of the above? Tell me.
Mr. Spates. A combination of all the above. The testimony
back in October, 1999, was the Inspection Service presenting
cases of mail fraud, significant cases. I will give you a
couple that made national news, and that was in the--that is
why Florida is changing their regulations or looking to change
their regulations.
The case of Medicare fraud that was covered on NBC News,
Policing of America, where post office boxes were set up to
look like doctors' offices, and false billing statements were
filed. That was on the news.
The case in New York recently where the gentleman was
stealing the identity of well-known people like the Forbes
family members, et cetera. That was all run through a CMRA.
Mr. Pascrell. So Mr. Tucci goes into business. He gets
those folks who want to participate in his business in that he
can establish for them a service, a particular service. Does he
have to investigate each of those potential customers of his in
order to see their background? I mean, does he have that
purview? Does he have that authority to do that? Do you want
him to do that?
Mr. Spates. No.
Mr. Pascrell. What do you want him to do?
Mr. Spates. Just to get two forms of identification just
like is required, one of them with a picture ID, to verify that
the person and the address where that person lives.
Mr. Pascrell. Mr. Chairman, I would thank the gentlelady.
Ms. Velazquez. Mr. Eakes, how has the Department of
Veterans Affairs responded when you have confronted them about
harming your business?
Mr. Eakes. Excuse me. How have they responded?
Ms. Velazquez. Yes.
Mr. Eakes. When you walk into the building, they all run
and hide. They do not even talk to you, so I do not know. I
cannot respond to that.
Ms. Velazquez. So you never have talked to them?
Mr. Eakes. Oh, yes. Yes.
Ms. Velazquez. What was the reaction? What was their answer
to you?
Mr. Eakes. I cannot remember. There really was not any kind
of a response to speak of. They just received the bid, and they
went and processed the laundry.
Now, the gentleman to the left of me here said they quit in
June. That is only about two or three weeks ago. They had the
business for about two or three years. They have another
account located on the south side of Chicago that is also a
state rehab center. I do not know if they are still down there
or they quit, but obviously they may have quit, which is good.
Ms. Velazquez. Okay. When you state in your testimony that
you have lost several competitive bids to the V.A., would you
please specify what bids you lost?
Mr. Eakes. One of them was----
Ms. Velazquez. Are they commercial contracts or government
contracts or city contracts?
Mr. Eakes. They are State of Illinois rehab centers--they
are owned by the State of Illinois--and their bids.
Ms. Velazquez. Mr. Hamerschlag, did the Department of
Veterans Affairs include any federal employees who are involved
in the laundry contracts on the list required by the activities
inventory reform, the FAIR Act?
Mr. Hamerschlag. I cannot answer that question. I can
either provide it for the record or consult with staff here.
Ms. Velazquez. Do you have staff here that can answer that
question?
Mr. Hamerschlag. Yes. Yes, I do
Ms. Velazquez. Mr. Chairman?
Chairman Manzullo. Sure.
[Pause.]
Mr. Hamerschlag. Yes. Our laundries are listed on the FAIR
Act.
Ms. Velazquez. They are?
Mr. Hamerschlag. Yes.
Ms. Velazquez. Were those employees considered to be
performing an inherent government function?
Mr. Hamerschlag. Yes, they are.
Ms. Velazquez. Did the V.A. receive any comments about any
of the employees listed on your FAIR Act submission?
Mr. Hamerschlag. We will have to provide that for the
record. I cannot give you an answer to that right now.
Ms. Velazquez. Okay. Mr. Hamerschlag, you state in your
testimony that the V.A. will back out of the commercial
contract if the V.A. receives a complaint by a small business.
Mr. Hamerschlag. That is correct.
Ms. Velazquez. What constitutes a complaint?
Mr. Hamerschlag. Mr. Eakes is a good example. He wrote the
President some time ago. We responded back to him in January of
this year. He was concerned at that time about Loyola
University. We took direct action and made it clear to the
folks in Hines that they would not compete for that business at
Loyola.
Ms. Velazquez. I have a couple of questions about the
V.A.'s contracting practices and how they relate to small
businesses.
Last year, the Democrats on this Committee released an
evaluation of 21 federal agencies on their achievements towards
their small business goals. We will be releasing the next
edition coming this summer.
In looking at the V.A.'s achievements, I know that the V.A.
set the women owned business goal and the small, disadvantaged
business goal below the statutory goal of five percent. In
fact, the small disadvantaged business goal is only 2.5
percent, half the statutory goal. Would you please explain to
me why did you set a goal below the statutory goal?
Mr. Hamerschlag. I have no direct knowledge of that. I will
be happy to provide that for the record if I might.
Ms. Velazquez. Well, you should have knowledge about that.
You knew that you were coming to this hearing and that we would
be discussing contracting practices within the V.A. You should
be able to answer this question.
Mr. Chairman, I would request that he submit for the
record----
Chairman Manzullo. That would be fine. I do not think that
Mr. Hamerschlag's area of expertise is the area that you are
questioning him on. We will go into that with the appropriate
witness.
Ms. Velazquez. Well, he has to prepare because he knows
that we would be--or at least the staff should know that we
will be asking this type of question.
Let me just ask you this simple question. You just said in
your testimony that you care about small businesses.
Mr. Hamerschlag. Yes, ma'am.
Ms. Velazquez. Yes. So why do you think, and you do not
have to be an expert on this, the field of federal procurement.
How can you explain why the V.A., if you care so much about
small businesses, set a goal below the statutory goal of five
percent?
Mr. Hamerschlag. I would like to answer that question, but
I have to tell you that is really not in the area I have any
direct knowledge of. I just cannot give you an answer.
Ms. Velazquez. Well, let me just say this to you. Not only
did you set a goal below the statutory goal, but then when you
set those goals very low you do not achieve them either.
You need to go back to the V.A. and talk to them and tell
them that not only are you not complying with the statutory
goal set by the United States Congress, but that we are going
to be releasing a report that is going to evaluate the
performance of the V.A. regarding federal procurement goals and
federal procurement practices.
Mr. Hamerschlag. You may rest assured I will carry that
back.
Chairman Manzullo. Would you like that in writing so you
know exactly what she is asking for?
Mr. Hamerschlag. If you would like to make it part of the
record, that would be fine.
Chairman Manzullo. Thank you very much.
Mr. Bartlett.
Mr. Bartlett. Thank you very much.
We have been discussing a lot of details relative to the
practices of specific government agencies and their competition
with small businesses. I would just like to ask a very generic
kind of question.
I notice here that we are receiving testimony relative to
the Department of Veterans Affairs, U.S. Postal Service. The
next panel will be the National Park Service and the Federal
Transit Authority and their competition with small business.
Not even listed here is another government agency entity
which I know has had a major impact on small business, and that
is the federal prison system in their employment. I have a
small business person in one of the counties I represent that
was almost put out of business because the prison system
decided just arbitrarily that they were going to make aluminum
containers. That was their business. Garrett Container. Had the
prison done that, they would have just put them out of
business.
Competition is good for everybody, and I know that many
government agencies now are deciding to compete for services
that they used to do themselves in-house. They have developed
procedures for commercial pricing so that they can be sure
cities, for instance, are now contracting with others to
collect their trash if they can do it cheaper than the
municipal employees can collect the trash.
They have developed commercial pricing procedures so that
you can make sure you are comparing apples with apples when you
are comparing the bid that you get from your municipal, state
or federal employees and the bids you are getting from the
private sector.
I do not know any small business that does not think they
can compete with a government agency and win if it is on a
level playing field, but I am very familiar with some of the
problems with the post office. The post office's motif for
their little stores looks very much like the motif for one of
their commercial competitors. You know, this is really the 700
pound gorilla that the little mom and pop shop is dealing with.
I remember when the home alarm people came in to talk with
me because they were concerned that the cable people or
telephone people and cable people also were going to get into
the home security alarm business. There were a bunch of these
private sector competitors. They were not afraid of
competition. They compete every day and stay alive.
What they were afraid of was competing were what they
referred to as a 700 pound gorilla. The phone company owned the
lines coming into the house. They just felt that they had an
unfair advantage. That was worked out to the satisfaction of
these small business people so that now the telephone company
can compete. They are competing on a level playing field.
I think the fundamental issue here is how do we get to a
point where there is a level playing field? I do not know
anybody in small business who does not think they can do a
better job than government can do if they are on a level
playing field.
Is that not what we need to do is to make sure that there
is a level playing field here? Is that not the concern of small
business: that it is not a level playing field?
Mr. Merritt?
Mr. Merritt. Yes, Congressman Bartlett. One of the problems
with the level playing field that is so often talked about is
that government establishments enjoy enormous human and
economic resources that dwarf those of even established small
businesses by multiple orders of magnitude, and realistically
they cannot be divorced from their competitive advantages.
I think we all would agree. At least the Members of the
Committee here I believe would agree that a government agency
using its federal privileges for competitive advantage is poor
policy. The problem is they cannot divorce themselves from them
because those advantages exist by the pure fact of them being a
federal entity. I think that is a significant problem for small
businesses.
I might point out that there is a very growing trend of
government agencies going in and competing with the private
sector. Last week, the AP ran a story about Amtrak, which
posted the largest loss in its history of $944 million, despite
generating a total of 46 percent of its total revenues from
non-passenger train operations.
When Amtrak gets to what, say 99 percent non-train
operations, is that when we decide that it is not really in the
public interest any more? I might point out that when they sell
souvenirs, somebody is not selling souvenirs.
When the Postal Service decided to sell passport photos,
those passport photos they sold came at the direct expense of a
small merchant down the street. They did not create any more
demand for international travel or passports when they went
into that business.
I think we have some problems with even the concept of
allowing federal agencies to compete with private sector
companies.
Mr. Bartlett. If your analysis is correct, and that is that
it is just inherently fundamentally impossible for a federal
agency to be on a level playing field with the private sector,
then they should not be competing.
I need to be convinced of that, and what I would like to do
is encourage you to submit to us some recommendations as to how
we can get to that decision point where we decide whether or
not a level playing field can be created. If it can be created,
then you need to tell us how that process should be conducted.
If it cannot be created, then federal agencies should not be
competing with the private sector.
I would like to believe that we can, at least in many
circumstances, create a level playing field so that competition
will do what it always does: make the product or service better
and make it cheaper. Goodness knows, government bureaucracies
could benefit by some competition, could they not?
Mr. Merritt. If it was on a level playing field.
Mr. Bartlett. If it is on a level playing field, yes.
Mr. Merritt. Unfortunately, again, my basic premise.
Mr. Bartlett. I think that is our challenge.
Thank you, Mr. Chairman.
Chairman Manzullo. Thank you very much.
Our search is on for the elusive Form 1093. We have been
advised that the Form 1583 is on the USPS internet site, but
Form 1093 is not.
The post office has been called, and the fax is on its way.
Is that correct?
Mr. Spates. She is not in the room here, so she must be out
looking for it.
Chairman Manzullo. All right.
Mr. Spates. I do not know why that is not on the web also.
Chairman Manzullo. I do not know why you did not bring it
with you because you made the statement that the regulations
for 1583 are the same as the USPS. I would have expected it
with the memo.
Mrs. Tubbs Jones?
Mrs. Tubbs Jones. Thank you. Good morning, Mr. Chairman,
Ranking Member, gentlemen on the panel.
I am going to stay with the United States Postal Service
but come from a different perspective. I come from a
prosecutor/Judge background, having worked with law enforcement
in the past, and the experience of having had a lot of dilemma
with post office boxes and lack of identification for many of
those situations.
I am reading, Mr. Spates, the government relations
statement. It looks like a statement from the United States
Postal Service that you worked with the CMRA industry to
promote some of these changes. Is that correct, Mr. Spates? Who
from the industry did you in fact work with?
Mr. Spates. We had representatives from Mail Boxes, Etc. We
had representatives from the Association of Mail and Parcel
Centers. That is the one I referred to earlier that represented
27 of the smaller CMRAs. We had two other representatives--I do
not have their names handy right now--that represented
different franchises.
Mrs. Tubbs Jones. And would you restate again what your
purpose in promulgating these regulations was, sir?
Mr. Spates. The purpose to begin with--first, there is one
thing I want to add to make sure everybody understands. The
1583 is generating a lot of discussion. The 1583 has been
modified, but it has been in effect for CMRAs for over 30 years
that you had to file a 1583.
There is also now a form for CMRAs to formally apply as the
agent. That was very informal before, but the 1583----
Mrs. Tubbs Jones. What was the original purpose for the
1583, Mr. Spates?
Mr. Spates. It is to sign off that I am legally saying that
this person can act as my agent to receive my mail in my name,
especially if it is certified or something to that effect.
Mrs. Tubbs Jones. Go ahead. You were saying that you met
with the CMRA representatives, and as a result of those
discussions what occurred?
Mr. Spates. Let me go back. Do you mind if I go back a
little bit in time?
Mrs. Tubbs Jones. No. Go right ahead.
Mr. Spates. Mr. Merritt brought it up about the initial
rule and all the comments. The initial rule apparently did not
get as much wide circulation among the industry members as we
thought. We got 8,000 responses, but most of them were form
letters.
What we did after the first filing is the Chief Postal
Inspector, Ken Hunter, who was the Chief Postal Inspector at
the time, because this was all done under consumer protection
and fraud protection, called together industry members, anybody
who had interest in these regulations, and that includes small
business representatives, state Attorney Generals--the group
got rather large--to see what we could do to modify the
regulations to reach a compromise between protection and impact
from small businesses.
Those meetings, there has been at least a half a dozen
large meetings that Mr. Hunter was chairing that pulled
together compromises on these regulations. As they reached
compromises, new proposals went out. Issues on privacy, typing
up the privacy restrictions on what can be released, was added
to it, working with the Coalition Against Domestic Violence and
representing their interests from a Protective Order
standpoint. If they are running a business out of their home,
they did not want any information released.
That has all been included in these regulations, so they
have evolved to get better over time. Are they perfect? Maybe
not, but they are significantly improved from the initial
regulations and what existed prior to the regulations.
Mrs. Tubbs Jones. Thanks, Mr. Spates.
Mr. Merritt, do you believe that the Postal Service, the
UPS, the--let me say this correctly--CMRAs, have any obligation
to assist law enforcement in deterring fraud through mailboxes
or people using fraudulent addresses or making
misrepresentations as to how they are or what they represent?
Mr. Merritt. That is obviously a very long and
complicated----
Mrs. Tubbs Jones. No, it is not a long and complicated
question. The question merely is do you believe that they have
any obligation to assist law enforcement in dealing with that
issue? It is very simple.
Mr. Merritt. Oh, absolutely. I am sorry. I wanted to go
into more detail. Absolutely. I do.
Where I part company with the Postal Service is where the
Postal Service in its role as a regulator takes it upon itself
to regulate in this case a particular competitor using that
particular reasoning without justifying it as necessary. That
is where our problem comes from, not from----
Mrs. Tubbs Jones. So you do not--I am assuming you own a
CMRA. You personally do that?
Mr. Merritt. No. I was just a customer for 12 years that
was forced to change my address----
Mrs. Tubbs Jones. Okay.
Mr. Merritt [continuing]. Unfairly and supply information
that I did not feel was necessary.
Mrs. Tubbs Jones. So you merely come here as someone who
you believe your privacy has been invaded, not as a
representative of one of these CMRAs that has had to deal with
law enforcement where there have been fraudulent addresses and
the like?
Mr. Merritt. Right.
Mrs. Tubbs Jones. I am just trying to be clear on who you
represent.
Mr. Merritt. That is correct.
Mrs. Tubbs Jones. I do not mean to denigrate that. I think
it is a great idea that if you believe your privacy has been
invaded that you should be here, but I am trying to get on the
table as well the whole issue of how do we address the issues
that are raised by the Postal Service and others with regard to
fraud and people who are constantly on the internet and all
kinds of places where particularly in my community senior
citizens who are put in a terrible situation as a result of
being bilked by people who represent that they are something
that they are not, and they use the mail service to do it.
I am out of time. I am sorry. Thank you very much. If the
Chairman will allow me time for you to respond, I would be glad
to have you respond.
Chairman Manzullo. Go ahead. Please.
Mr. Merritt. Mr. Chairman, with your permission. Fraud is a
big problem. There is no doubt. It does negatively impact the
most vulnerable of our society.
The problem is that with these regulations if you want to
look at it from a fundamental standpoint, we have a commercial
enterprise, the United States Postal Service, which has
tremendous regulatory authority and their own in-house law
enforcement, fully empowered law enforcement organization, not
reporting to the Justice Department, but to potentially
commercially minded executives.
The point here is that if there is a particular problem
that needs to be addressed, then they should have done the due
diligence that SBREFA and REGFLEX and the Administrative
Procedures Act put in place to protect small businesses.
The other point is that for the first time with these
regulations the Postal Service has embarked and set a precedent
for changing our address driven mail delivery system to a
resident recipient driven system that requires identification,
and the privacy consequence is another issue of much
consternation these days.
Chairman Manzullo. Thank you, Mr. Merritt. I know that you
are very energetic, and we appreciate that. That is why you are
here.
Congresswoman Napolitano?
Mrs. Napolitano. Thank you, Mr. Chairman. I was just
looking at the 1583 and reading the testimony of Mr. Tucci in
regard to his customers not willing or able to fill out the
form is concerned.
What type of client usually is a box rental client?
Mr. Tucci. I can give you several examples. One of our
customers was a lawyer. Another one--we had mention of the
internet. It was a girl who did a lot of communicating with
people on the internet, and she wanted a safe haven for mail so
that they would not know where she actually lived because she
was leery, and we have all heard the stories.
As I said, we did have an abused spouse who wanted a safe
place where she could get her mail without her spouse being
able to sit outside the post office for eight hours. It would
only take eight hours. Our post office is not even open that
long to get mail. She could come in any time, 24 hours a day.
She could stagger her times coming in and be safe.
We had several small business people who preferred that the
mail came to a box rather than to their house. It just enabled
them to separate business from home a little bit. As a business
owner, you do not necessarily want everybody knowing your home
address and bothering you at home at any hour of the day. By
having a private mail, even a P.O. box or a private mailbox, it
just gave them a little more privacy at home.
Mrs. Napolitano. Was there any indication or at least were
you aware that any of your customers might have been involved
in some kind of fraudulent type of operation?
Mr. Tucci. None of our customers did. To be honest with
you, we had identification from all of our customers on file.
If the post office had a problem with a customer they could
come to us, and we could give them all the information they
had. Our customers trusted us with that information. They were
not trusting the post office with that information.
The biggest objection they had was the Privacy Act
statement that is on the back of 1583. We heard that the post
office will not give that out. Well, the post office has made
it a rule to not give that out. They have not made it part of
the regulations that that information will not be given out.
Therefore, two years down the road they could change that rule
without going through the whole process.
Mrs. Napolitano. Mr. Merritt, could you answer that?
Mr. Merritt. The Postal Service, as they interpret their
regulatory power, is exempt from even posting notice and
requesting comment to the rule making, so Mr. Tucci is in
effect correct. They could change the rules at will any time
they wanted to.
Mrs. Napolitano. Mr. Spates?
Mr. Spates. We would not change the rule, especially
pertaining to privacy, without following the process. I have
the lawyer here with me who helps us on that process. He can
verify that. We would file a proposed notice to get comments.
In fact, we tightened up the privacy rules, and we put out for
comment back when we were tightening up the privacy rules.
Mrs. Napolitano. But this form has been in effect 30 years.
Why has it not been done?
Mr. Spates. It has been done. If I may point out, on the
privacy statement on the 1583 it says about two-thirds down in
kind of small print, ``Information concerning an individual who
has filed an appropriate Protection Order, for example, will
not be disclosed in any of the above circumstances except
pursuant to the Order of a Court of competent jurisdiction.''
This is one of the revisions.
Mrs. Napolitano. Yes. You are talking about a Protective
Order. I am talking about any client.
Mr. Spates. This information will not be released.
Mrs. Napolitano. It just does not make sense.
Mr. Spates. It used to be released, but not now.
Mrs. Napolitano. The last statement in the last few lines
indicates that, ``If the form is not completed, the mail will
be returned to sender.''
Mr. Spates. If a 1583 is not filled out then that CMRA
cannot legally act as the agent for that person, so we cannot
give that mail to the CMRA.
Mrs. Napolitano. Is that not stretching it a little bit
far? These people have opted to have a recipient of their mail,
and they verified name, address, drivers license or whatever it
is that they used to be able to get up the account.
Mr. Spates. And had not signed the 1583?
Mrs. Napolitano. Correct.
Mr. Spates. We do not have any evidence to show that they
authorized----
Mrs. Napolitano. But they do.
Mr. Spates. The CMRA does?
Mrs. Napolitano. I am assuming they are.
Mr. Tucci. Yes. We had all that information on file. If the
post office questioned whether we were able to, we could show
it to them, but we would want to keep it on file. We only
turned over a list of names and box numbers of our customers
receiving mail.
If there was any question as to whether we were in
agreement with these people, they could come in and ask us and
check it off their list or something, but the information our
customers trusted us to keep private. They did not trust the
post office to keep it private.
Mr. Spates. But the point is the Postal Service is turning
over mail to an independent third party that we have no
evidence to show that they have the authority to receive the
mail for that person.
Mrs. Napolitano. Then the question, Mr. Spates, from me,
would be, have you found areas or times or instances where
there has been a problem for a recipient of a piece of mail
that is dated that has gone through a mail service unbeknownst
to them?
Mr. Spates. Unbeknownst to them? Yes, ma'am. The case in
point got a lot of publicity several years back on the 60
Minutes show where the identity theft of----
Chairman Manzullo. Would you yield on that?
Mrs. Napolitano. Yes. Certainly.
Chairman Manzullo. Do you have something more specific than
a TV show? Do you not have real, live examples of fraud to
which you are referring?
Mr. Spates. We can provide them.
Chairman Manzullo. I mean, why do you not have that now?
That is why we are having the hearing.
Mr. Spates. I have one case with me that just broke in the
Washington, DC, metropolitan area. If you want me to outline
it, I can.
Chairman Manzullo. Your time is up, but if you want to take
a minute now. You know, I am not interested in what 60 Minutes
or one of those shows have on there. I mean, that is
interesting, but I would expect that you would have a portfolio
of abuse after abuse after abuse.
Mr. Spates. We do have that. That was provided in the
October of 1999 testimony. We have updated that.
Chairman Manzullo. Can you update for us?
Mr. Spates. Yes. Yes.
Chairman Manzullo. Okay. I finally got this Form 1093, and
I can assure you that when I was elected to Congress--our
family maintains two residences--and I went to the PO in
Alexandria, they gave me this form. Do you know what I put on
here? I put my name and address and signed it. No one asked me
for a picture ID. No one asked me for the name of my children.
I mean, I have a very difficult time believing, Mr. Spates,
that the Form 1583 is the substantial equivalent. I mean, first
of all, it does ask Name of Person Applying and Name of
Organization.
Mr. Spates. I am not sure that this 1093----
Chairman Manzullo. This came from your office.
Mr. Spates. I am just saying I am not sure this is the
latest one.
Chairman Manzullo. All right. You are not going to leave
the room until somebody makes a verification. Does anybody know
if this is in fact the form in effect from the USPS, Form 1093
dated July, 1998? Is this the one that is in effect? Does
anybody know from your organization? Ask them, please.
Mr. Spates. Jeff? Is Jeff back there? There he is.
Chairman Manzullo. Does anybody know? How many are here
from USPS? How many people do you have with you?
Mr. Spates. Three.
Chairman Manzullo. There are three people here? Who was
called at USPS for this Form 1093?
Mr. Zelkowitz. We have been calling the Retail people and
Delivery. The Delivery expert is not in the office today.
Chairman Manzullo. What is that person's name?
Mr. Zelkowitz. Roy Gamble.
Chairman Manzullo. Roy Hamble?
Mr. Zelkowitz. Gamble.
Chairman Manzullo. Campbell?
Mr. Zelkowitz. Gamble with a G.
Chairman Manzullo. Gamble?
Mr. Zelkowitz. Right.
Chairman Manzullo. And that person's official capacity?
Mr. Spates. He works in Delivery. He has been heavily
involved with modifications to the form from the standpoint of
identification requirements and working with our Retail people.
Chairman Manzullo. And he reports to you?
Mr. Spates. Yes, he does.
Chairman Manzullo. Why did you not bring him with you?
Mr. Spates. He is on annual leave. He is away out of town.
Chairman Manzullo. And there is no one else that has the
answer on that?
Mr. Spates. The Retail Operations folks, as Jeff mentioned.
Mr. Zelkowitz. I have not been successful in reaching those
people yet.
Mr. Spates. This is a Retail Operations proposal.
Chairman Manzullo. I would just like to say that I am not
done with this yet. For the hearing, that is fine.
I am going to give Ms. Velazquez a couple more minutes if
she wants to follow up----
Ms. Velazquez. Yes.
Chairman Manzullo [continuing]. And then we will go to the
next panel.
Ms. Velazquez. Mr. Spates, the preamble in the final
regulation on commercial mail receiving agencies dated March
25, 1999, states that, ``A number of commentors for `the new
rule' questioned the intent of the undertaking to amend the
rule. There are assertions from CMRAs that compliance with the
regulation would put them out of business. Customers of CMRAs
assert that the rule making appears to discriminate against
them because of their choice of an address. These claims are
erroneous.''
This is what appears on your report. Now that you are aware
that the rule could indeed in fact put CMRAs out of business,
will you amend the rule?
Mr. Spates. Since that time, we have amended the rule to
make some changes. The PMB designation. The CMRAs felt like
that was a scarlet letter identifying them as a possible
problem address. That is when Ken Hunter, working with the CMRA
industry, came up with a compromise allowing you to use PMB or
pound sign. A lot of them do use pound sign today.
What you are not allowed to use, and in fact the State of
California prohibits it for CMRAs already, is the word
``suite.'' That was a real concern for hiding behind, saying I
have an office space. That is what suite implies. That was some
of the concerns.
We made other changes, and privacy issues was one of them,
that answered the concerns of Mr. Tucci. There have been
significant modifications.
We have also extended the time line of when this goes into
effect so that they can turn over, you know, their stationery
stock and business advertising. A lot of modifications were
made.
There was also a modification made where it originally said
in the rule we will return mail that did not have those
designations.
Ms. Velazquez. Mr. Spates, the modifications were made
after you put out the rule.
Mr. Spates. Right, because that is when everybody came out
of the woodwork, all the special interest groups, and we wanted
to--we made a mistake, and we----
Ms. Velazquez. But Mr. Tucci was put out of business
because of the rule.
Mr. Spates. 1583 was in effect when Mr. Tucci opened his
business. That has been in effect for over 30 years. If someone
did not want to fill out a 1583, that has been there. The
CMRAs, there are roughly 10,000 of them today. They are still
growing. They have had that requirement all along. I do not
think we can blame it on 1583.
Ms. Velazquez. Mr. Tucci, you did not know about the Form
1583?
Mr. Tucci. No. Before I opened the business, the week
before that I went to our local postmaster. I asked him what I
needed in order to receive mail from my customers.
All I was told was that I had to report their names and the
box numbers that they were using once a year. No mention was
ever made of the original 1583, which I have never seen a
original 1583.
Ms. Velazquez. Is there a process in place, Mr. Spates,
where you explain?
Mr. Spates. There is a reference to explain it. I would
like to ask Mr. Tucci a question if I can.
Ms. Velazquez. Sure.
Mr. Spates. Were you a franchise, part of a franchise?
Mr. Tucci. No.
Mr. Spates. You were just totally independent?
Mr. Tucci. Yes.
Mr. Spates. We have literature that is provided to
postmasters to provide to CMRAs as far as what the----
Ms. Velazquez. Did you get a copy of that?
Mr. Tucci. No, I did not.
Ms. Velazquez. What do you have to say to that, Mr. Spates?
Mr. Spates. If he did not, it is very unfortunate. Very
unfortunate.
Ms. Velazquez. Well----
Mr. Spates. You are talking about a small post office deep
in the ranks of the Postal Service. I apologize that they made
a customer error, but----
Chairman Manzullo. Excuse me a second. I come from a small
town, and I take great exception to reference even to a small
post office as somehow being second class to a larger city post
office----
Mr. Spates. I was not----
Chairman Manzullo [continuing]. Because the people that I
deal with at our post office have answers for every question.
In fact, at times he has even helped me fix my tractor. He
knows the name of my dog. Some carry biscuits.
Whenever a business person goes to a postmaster, regardless
of the size, and says I want to comply with the law I would
expect that postmaster to have the information and not have to
rely upon an association. It is not the job of the association
to instruct people in small businesses going into this. It is
the job of the post office.
Mr. Spates. I totally agree with you. I apologize that I
gave the impression. To show you just what a small town, 5,000
people roughly, postmaster did for Mr. Tucci and his customers,
those people were concerned that they were not getting their
mail. He separated the mail and personally carried it down to
Mr. Tucci's organization separated for the people who had a
1583 and gave it to Mr. Tucci.
You are right. The postmaster does bend over backwards in
the local communities to help them out, so while I do not know
exactly what transpired that first day they met, but Mr. Curtis
kept bringing him up to date on what was required, and there
still was not any compliance.
Ms. Velazquez. Mr. Tucci, would you like to comment on
that?
Mr. Tucci. Yes. First off, if there was a problem with us
not filing a 1583 in the first place, our customers were
receiving their mail for two years up until the new regulation
took effect.
As for hand delivering our mail, that was after the mail
was cut off. In order for our customers to get their mail
before it was sent back to the sender, they went down to the
postmaster, filled out a 1583. Instead of Mr. Curtis handing
them the mail then, he made them come back to our store. He
brought the mail back down to our store and handed it to them
there.
Ms. Velazquez. Yes?
Mr. Spates. From my conversation with Mr. Curtis, they
filled out the 1583, and then he brought the mail down to them
on several occasions. It was not just you had to come to the
post office every day. He brought it down on several occasions.
He also allowed them to file a change of address if they
wanted to go somewhere else, to have their mail sent somewhere
else. He was helping the customer out who had a 1583.
Mr. Tucci was given plenty of advance notice, although it
has to be approved all the way up to the district manager
level, to correct the situation. Nothing was done, so we could
not deliver the mail for the other people.
Chairman Manzullo. If you would yield?
Ms. Velazquez. Sure.
Chairman Manzullo. Evidently nothing was done because
people did not want to reveal the names of their children and
their ages, and they would not fill out the form. Is that
correct, Mr. Tucci?
Mr. Tucci. Yes.
Chairman Manzullo. That is why nothing was done. I would
defy anybody to take a look at the 1093 dated July of 1998,
while you are trying to find out if this is current, and Form
1583. There is no language similar on here to indicate you have
to list the names of your children. I would never fill out a
1583 that listed any of my children. That is no one's business.
That is not the business of the post office.
I doubt very much, Mr. Spates, whether or not if the name
of my children were on a form and I had a box and a document
came addressed to them that you would think there was some kind
of a fraud. If that is where you are spending the time to look
for fraud, I can think of better places where it could be done
than that.
We want to thank the first panel for coming, and we will
continue to work on it. Mr. Spates, I appreciate your patience
and everybody else here.
Mr. Hamerschlag, I appreciate the fact that the V.A. jumped
on this as soon as Mr. Eakes got a hold of you. I appreciate
looking forward to any other problems that may arise.
We have a vote here. During the period of time, the staff
could get the second panel ready.
[Recess.]
Chairman Manzullo. We are going to start our second panel.
We continue this hearing on federal government competition with
small businesses.
Our first witness will be Scott Reisland, owner and manager
of Denali Grizzly Bear Cabins and Campground in Denali, Alaska.
He came all the way from Alaska to testify here today. Is that
correct?
Mr. Reisland. Yes, sir.
Chairman Manzullo. And along with your son? Is he here?
Mr. Reisland. My son and I are very excited to be here.
Chairman Manzullo. We are honored that you came here and at
your own cost.
Mr. Reisland. Yes, sir.
Chairman Manzullo. We have a five minute rule, but we are a
little bit flexible. We appreciate your testimony. Why do you
not go ahead and start, Mr. Reisland?
STATEMENT OF SCOTT REISLAND, OWNER/MANAGER, DENALI GRIZZLY BEAR
CABINS/CAMPGROUND
Mr. Reisland. Thank you. My name is Scott Reisland. I am
from Denali, Alaska. My parents moved to that area in Alaska
during the territory days and developed a small cabin and
campground business, which our family of five run to this day.
I am here also representing eight neighboring campgrounds
in the Denali area, along with the National Association of RV
Parks and Campgrounds, ARVC, which is our trade association. We
have concerns with National Park Service infringement on
private enterprise nationwide.
The campgrounds around Denali and gift shop people and
businesses in the tourist industry are very gravely concerned
and are being threatened by specifically Denali National Park
and Preserve. The Park Service developed a plan for growth in
the Denali area with an increase in campsites, camper amenities
such as delis, gift shops, showers, a liquor store and other
conveniences.
This development plan--Denali National Park was required to
do an economic impact on the surrounding businesses and an
environmental impact. The environmental impact performed by the
U.S. Wildlife Service showed that this was critical moose
habitat where they planned to develop the campground and new
facilities at and that it was a very critical habitat and would
have negative impacts on the animals in the park.
No economic study was done to see or realize an impact with
the private sector. There was simply a statement that it was
under-provided by the private sector. This was brought to the
attention of Superintendent Steve Martin of Denali National
Park, and with him the people voiced their concerns,
businesses. The Denali Borough wrote resolutions in opposition
of this growth.
I have a whole packet of letters from campground owners and
gift shop people in the Denali area, all private business,
which I would like to give to you in support of small business
and the damage that this development at Denali Park would do to
us.
Chairman Manzullo. Could you suspend for a second, Scott?
The National Park Service was invited to participate at this
hearing and specifically refused to get involved.
You are telling me that they never did conduct an economic
impact study?
Mr. Reisland. No, sir.
Chairman Manzullo. And they have never requested any
documents from any of the affected businesses?
Mr. Reisland. We got together and had a hearing with
Superintendent Martin. I set up the meeting. The Denali Borough
was present. We sent documents to them saying please look at
our occupancy rates. Please look at the impact you will have on
us. We were hoping that this would be solved in-house, the
problem solved, and they would not continue with the
development.
This summer they are bulldozing huge areas of the park. I
have pictures I have brought with me from Alaska showing all
the new development. They disregarded our pleas and our
occupancy rates and our information and moved forth.
Chairman Manzullo. Why do you not go ahead and continue
with your testimony?
Mr. Reisland. Okay. The Denali National Park says well, we
want to build rustic campsites. There are none available in the
private sector. The outlying campgrounds, we are only two or
three or five miles from this proposed development area.
The private campground owners have developed showers,
amenities, trying to draw visitors out of Denali Park and into
the private campgrounds. We have a difficult time with this
because the Park Service, with their large budgets, can offer
small dollar costs for a campsite. We cannot come close to what
they can offer because we have a host of taxes and maintenance,
and we just do not have the budgets that the park has to run
the business.
The size. Superintendent Martin said that the growth is
nominal. Well, he is talking 50 sites which equates to 5,500
campsites which we will lose in the Denali area because the
park fills up. We survive only off the overflow after the park
has absolutely no vacancies, so we are taking the scraps left
from the Park Service in the tourist industry, what is left
over.
We are talking about 5,500 camp nights. A season is about
110 days in Denali. Everything is closed in the winter. This
equates to about $100,000 that the nine campgrounds are going
to lose directly from this development, and that is a lot of
money for us.
As I say, we are small mom and pop campgrounds, families
that have been there, homesteaders from the early territory
days of Alaska. Several. There are new people that have come in
to develop since there has been a growth in tourism, which we
are not seeing today. Tourism has actually dropped. Alaska is
now below average in visitation for states nationwide in
tourism.
We have offered and we have shown the Park Service that we
can accommodate the extra tourist load, which we do not really
see. We are just very upset. I am here as a last resort to
request some help from this Committee and the people that I am
meeting here in Washington.
We just have a lot of family businesses whose livelihoods
are on the line directly because of the negative ramifications
of the Park Service competing with us.
Thank you.
[Mr. Reisland's statement may be found in appendix.]
Chairman Manzullo. Thank you very much.
We have some fights going on on the Floor. I beg your
forgiveness for the inconvenience, but I have to run and go
down and vote. I will be right back.
[Recess.]
Chairman Manzullo. James Madison said that the Constitution
was set up with a lot of hoops and loops and made purposely
complex for the purpose of having good government. Forgive us.
Our next speaker will be Tom Mack. Tom is the owner and
president of Tourmobile, Inc., of Washington. Mr. Mack?
STATEMENT OF TOM MACK, OWNER/PRESIDENT, TOURMOBILE, INC.
Mr. Mack. Thank you, Mr. Chairman, for the privilege of----
Chairman Manzullo. Mr. Mack, could you bring the mike
closer to you?
Mr. Mack. Thank you, Mr. Chairman, for the privilege of
being present and to share with you and the Committee a real
life example of how government can step in and provide unfair
financial subsidies and support for a non-profit organization
that intends to compete head on with a long time, tax paying,
private company that is already under contract with an agency
of the federal government to provide the same transportation
service.
It is longstanding federal government policy, as expressed
in OMB Circular A-76, the government should not compete with
its citizens. Our company, Tourmobile Sightseeing, began its
operation in 1969 after having won a contract from a prospectus
presented by the Park Service nationally, and after having won
that contract we were sued by some agencies of the federal
government, as a matter of fact, claiming that the Secretary of
the Interior did not have the authority to issue such a
contract.
It is ironic that our relationship from that time on I
would say for 20 years or more has been excellent, outstanding,
but recently it is not what it has been, and communications
have been poor.
The organization that has threatened us now is called D.C.
BID, District of Columbia Business Improvement District. This
is a non-profit organization, but has enlisted the support of a
large number of agencies of the federal government such as
WMATA, the U.S. Department of Transportation, GSA, National
Capital Planning Commission, and we even have information that
the Smithsonian Institution had intended to join this
organization as, as they call it, a stakeholder.
We acquired this information under the Freedom of
Information Act because we had heard rumors that our
organization was being threatened, and we simply did not know
how it could be threatened in that we had a contract that does
not expire for another four and a half years.
Nevertheless, the Washington Post, the Washington Business
Times, the Washington Journal, all wrote stories about the
intention of BID, which is largely represented by the District
of Columbia, to propose and operate a service directly
competitive with ours. The first time frame that I had was in
the year 2001. They have since moved it to 2003 and later to
2005. They change a lot, but their objective remains the same.
It is to operate a competing service as ours on the national
mall.
In the beginning, and this is ironic, the Secretary of the
Interior was challenged, questioning his authority to issue
such a contract. The Supreme Court made a decision, which the
Congress considers, the way it is, the way it is going to be,
that the federal government has control over the federal
enclave and certainly not an organization such as BID, which
strongly represents the District of Columbia.
The Park Service now appears to at least hold serious
discussions with this organization, BID, and we learned under
Freedom of Information that it has been doing so, communicating
with them, for two years. Although the Park Service has written
a letter to BID, to the mayor of the District, telling them in
fact that our organization has a legitimate contract that will
not be abrogated, we have the right to do what we are doing, it
took them more than two years to write such a letter.
During that time, some of my managers, certainly some of
our employees, felt severely threatened. They did not know
whether the stories printed in the media and the electronic
media also were true and whether they would have a job.
In a case like that, our company has been threatened to the
point of possible destabilization. When the personnel are
unhappy, when they are uncertain of what they may be doing,
even in the face of attack that we have a contract, and I, of
course, discussed that with them and told them, they
nevertheless were shaken when they saw these articles in the
newspaper and heard about it on television and on the radio.
The downtown Business Improvement District has no
experience operating a transportation operation. In its own
statements it has indicated that it proposes hiring someone to
do it for them on federal land. One of those is WMATA, the
metro system. The metro has its hands full doing what it is
presently doing. BID indicated that if Metro could not do it,
it would take the authority to find someone else to do so.
We were simply surprised that an organization like the
National Park Service with whom we surely have had a close
partnership would take more than two years to address this
organization and tell them clearly and forthrightly you cannot
do this, you cannot operate on the national mall, there is a
concessionaire there who has operated 32 years and each and
every year received high marks for performance.
That again is disheartening when one works under those
circumstances. The Park Service knows that this is unfair,
unreasonable, but it did that.
The real culprit here, however, I feel is BID, which was
able to organize, to talk with and to get federal agencies to
sign on as, as they call them, stakeholders, and sign
documents, which we received again under Freedom of
Information, that they would support such an operation.
It is not possible for these organizations not to have
known that a contract was already in existence. As a matter of
fact, they even addressed the question arrogantly, in my
opinion, feeling that they can get around it and especially
since the National Park Service was present at their meetings I
believe from the very beginning.
We are continuing our operation now. We expect to continue
it. We feel that after having served 50 million people over the
32 years that the quality of service speaks for itself, and we
hope that even after our contract ends in four and a half years
a service similar to ours can continue to operate consistent
with the Supreme Court decision that pointed out very clearly
that the Secretary of the Interior had undeniable control over
the federal mall and national parks.
Chairman Manzullo. How are you doing on time there, Mr.
Mack?
Mr. Mack. Sir?
Chairman Manzullo. How are you doing on time?
Mr. Mack. I am fine.
Chairman Manzullo. Okay. Did you finish your thoughts?
Mr. Mack. I did, sir. I simply wanted to thank you and the
Committee for this opportunity and to share an unfair
competition plight in which I and my company are the intended
victims.
[Mr. Mack's statement may be found in appendix.]
Chairman Manzullo. Our next witness is Dan Mastromarco.
That is a good Swedish name like Manzullo.
Mr. Mastromarco. That is exactly right.
Chairman Manzullo. He is with the Travel Council for Fair
Competition. We look forward to your testimony.
STATEMENT OF DAN MASTROMARCO, TRAVEL COUNCIL FOR FAIR
COMPETITION
Mr. Mastromarco. Thank you. I appreciate it. I want to
begin by thanking you, Mr. Chairman, and also your staffer,
Matthew Szymanski, for putting this hearing together and
focusing on this very important issue.
My name is Dan Mastromarco, and I am executive director of
the Travel Council for Fair Competition, which is a coalition
of several small business trade associations that includes the
National Tour Association, the American Society of Travel
Agents, the American Bus Association, the American Hotel and
Motel Association, America Outdoors and the National Park
Hospitality Association.
We are formed to accomplish two objectives. First, to raise
public awareness of the problem of unfair competition both with
respect to government competition and non-profit unfair
competition, second, to defeat misguided public policies which
contribute to that problem.
Mr. Chairman, two small business owners, as you know, have
joined me on this panel. One has literally crossed the tundra
during his peak business season to tell his story. The other is
the general manager of Tourmobile, a fixture in this nation's
capital. Let me also introduce, as you pointed out, Mr.
Reisland's son, Donovan, who is sitting behind me, who is
exercising his own sort of oversight over our function today.
What we are here to do is to prevent Mr. Reisland and Mr. Mack
from becoming Mr. Tucci on the first panel: in other words, put
out of business because of federal competition.
Let me begin by saying that I hope this Committee can help
their individual concerns. If you cannot, who will? Their
presence here demonstrates the degree to which their
livelihoods are so deeply affected by unfair competition. In a
larger sense, however, these gentlemen did not come here to
represent their special interests or their business. They come
to symbolize the national threat of an abuse that cries out for
constant vigilance and prioritization.
Allow me to make a few observations. First, unfair
competition is not localized, not sporadic and not confined to
one business or industry. It is burgeoning, it is widespread,
and if you so chose to you could extend these hearings several
days on the problem confronting small business in the travel
industry alone. Broaden that to affected industries, and you
would not have to leave this room.
Second, Mr. Chairman, it is not new. If we were to imply
that this is a new issue, the ghosts of the 1933 and 1955
Congress would visit upon us. The history of unfair competition
is marked with a cavalcade of abuses and failed efforts to
correct them over more than three-quarters of a century.
Third, the position of small business is not wishy-washy.
It is unequivocal. Mr. Chairman, TCFC members possess a
fundamental philosophy that has deep roots in the tenets of our
republic. Government should not be engaged in activities that
can be fulfilled by private enterprise. The existence of small
businesses are proof positive that government need not be
duplicating their efforts.
We share this philosophy with good company. More than two
centuries ago, Thomas Jefferson had this to say. ``Let the
general government be reduced to foreign concerns only except
to commerce, which the merchants will manage the better the
more they are left free to manage for themselves, and our
general government may be reduced to a very simple organization
and a very inexpensive one; a few plain duties to be performed
by a few servants.''
Let us compare his words to no less an authority than the
manifesto of the Communist party by Karl Marx and Fredrick
Engels. It describes a state of affairs that would come to
fruition once Communism takes root as, ``Centralization of the
means of communication and transport in the hands of the
government . . . extension of factories and instruments of
production owned by the state . . . and establishment of
industrial armies.''
Mr. Chairman, government competition is fundamentally
unfair because the government enjoys numerous and
unquantifiable advantages. It is inefficient. As comedian P.J.
O'Rourke said, effectively translating Jefferson's words into
the modern age, ``You cannot get good Chinese take out in China
nor Cuban cigars, and Cuban cigars are rationed in Cuba.''
Well, let me in the interest of expediency move to what I
think this Committee should look toward and seek to accomplish.
First, it is important, Mr. Chairman----
Chairman Manzullo. You are about a minute overdue now.
Mr. Mastromarco. Oh, okay.
Chairman Manzullo. Could you finish up in a minute so we
can make sure Mr. Hart testifies----
Mr. Mastromarco. I certainly will.
Chairman Manzullo [continuing]. Before the bells go off
again?
Mr. Mastromarco. All right. I think that it is important
that this Committee exercise constant vigilance by jealously
and liberally using your oversight function.
Second, concentrate on specific agencies as you have done
in this hearing.
Third, work with the Administration to develop a cohesive
national strategy for reliance on the private sector. You know,
nearly a quarter of a century ago GAO recommended a single
national policy endorsed and supported by both the legislative
and executive branches, and their report is as valid then as it
is today.
Let me just conclude in the following way. As your staff
advances into this issue, they will hear from naysayers that
the problem cannot be solved. That is the time in which you
wish to look back to this hearing and think about our industry,
a quintessentially commercial industry.
Why is the government more cost effective in operating a
tour bus or means of transportation, running campgrounds, mass
transit, rafting trips? These are quintessential commercial
activities.
We appreciate your time.
[Mr. Mastromarco's statement may be found in appendix.]
Chairman Manzullo. Thank you very much. It is kind of hard
to get everything into five minutes.
Our next witness is Clyde Hart, Jr. Clyde the vice-
president of the American Bus Association. He is here at the
request of Ms. Velazquez dealing with a very interesting
situation going on in New York.
Mrs. Velazquez is tied up in a meeting. She extends her
apologies. We appreciate the fact that you are here. Go ahead,
Mr. Hart. We look forward to your testimony.
STATEMENT OF CLYDE HART, JR., VICE-PRESIDENT, AMERICAN BUS
ASSOCIATION
Mr. Hart. Thank you, Mr. Chairman. Good afternoon. My name
is Clyde Hart, and I am the vice-president of government
affairs for the American Bus Association.
The ABA is a national trade association representing the
interests of the private intercity motorcoach industry. ABA is
comprised of approximately 3,400 member companies that operate
buses and provide related services to the motorcoach industry.
A.B.A. members provide all manner of bus services to 775
million U.S. bus passengers annually. Our roster of members
includes nationally known intercity bus passenger carriers,
regional carriers and family owned businesses across the
nation.
I am here to make you aware of a serious problem that
affects the private bus industry, specifically the problem of
unfair competition from publicly funded transit agencies,
universities and national parks.
First a few words about the motorcoach industry represented
by ABA. The industry serves more than 4,000 communities
directly with scheduled or fixed route service. The industry is
a small business success story, comprising almost 4,000
companies of which 90 percent operate fewer than 25 buses. The
motorcoach industry accomplishes all this and more with the
highest safety rating of any commercial passenger
transportation mode and all without benefit of government
subsidy.
This lack of subsidy is the core of my testimony. ABA
members face increased competition from transportation
providers that are subsidized. Not a week goes by without a
call from an ABA member company complaining of a transit agency
that has failed to provide proper notice as required by federal
law of their intent to compete for a charter job or, worse,
having lost their job to a subsidized carrier.
Many times ABA is not notified of the charter bid, again as
required by law. In addition, there have been instances where
the FTA has advised transit agencies how to structure proposed
charter operations to circumvent the charter regulations and
pass legal muster.
The ABA keeps a record of examples of public transit agency
incursions into charter operations. There are many. Just a few
examples include: in Oregon local transit agencies provided
free passes and charters, compliments of local transit
agencies, to conventioneers and guests.
In North Carolina, a local transit agency provided charter
transportation for college basketball tournaments and
conventioneers. And in Maine, when a local transit agency bid
out a fixed route service, private companies did not win the
bid because the local transit agency's true overhead, as well
as higher tax exemptions on fuel, were not calculated fairly.
These practices by public transit agencies have a
deleterious effect on our members and on the riding public.
Having one's business peeled away like an onion means that the
operation will, in time, lose the ability to provide service
elsewhere along its system.
The FTA has actively encouraged the subsidized competition
in the past. For example, the charter restrictions do not apply
to transit service that is scheduled service rather than
charter. As long as the transit agency can plausibly claim that
the service falls outside the definition of charter service
then the private operator may not challenge the transit
service.
There is a growing problem with public transit agencies
providing intercity service. While there is nothing in the law
that allows public transit agencies to offer such service while
receiving FTA grant money, there is nothing in the law that
expressly prevents it. This is because there is simply no
workable definition of intercity service in the law.
Indeed, FTA has determined that intercity service is merely
scheduled service for the general public with intermediate
stops over fixed routes connecting two or more urban areas.
Given this limited definition, it is no wonder that we are
treated to the spectacle of public transit systems offering
intercity system.
A.B.A. needs Congress and the FTA to establish a workable
definition of intercity service for all types of bus
operations. Greyhound Bus Lines, for example, has complained of
local public transit systems linking together to provide
intercity service in California. Indian Trails Bus Company has
lodged a similar complaint in Michigan. Without such a workable
definition, it may quite literally be possible for the New York
transit system to offer intercity service between New York City
and Chicago, Illinois.
Even unlikely publicly subsidized organizations are
beginning to encroach on the private market. The Flagstaff
Public School System, which owns and operates its own bus fleet
in cooperation with Northern Arizona University, also provides
charter service. The school district states they do ``this to
keep their drivers employed'' during the summer.
Congress can resolve these concerns in two ways. First,
require FTA to establish a clear definition of inter city
service that is not eligible for federal funding. Second,
specifically provide that transit agencies may not provide
regular route service beyond their urban area boundaries.
On behalf of the ABA and its members, I want to thank you
and the Committee for the opportunity to address these issues.
[Mr. Hart's statement may be found in appendix.]
Chairman Manzullo. We appreciate that very much.
Again, I ask your apology for these beepers going on and
off with the votes. That is the reason why other Members are
not here as they had to hurry off to other engagements.
Scott, I have some problems with the way this whole issue
of information and making the park land into a recreation area
came about and what was furnished to the small business people.
My understanding is that you and was it seven other retail
owners are clustered around Denali? Is that correct?
Mr. Reisland. That is correct. We are located all within--
our personal business is right on the south boundary of Denali
Park, which is six miles from the visitors center where
everyone goes at the entrance to the park.
Within an eight mile radius of that visitors center there
is the north boundary of the park, and there are campgrounds
and all types of camper amenities, gift shops, book stores. We
are right within a six, seven, eight mile area as close as we
can get to the park itself without being in the park, of
course, yes. There are quite a few businesses aside from camper
parks that are also being affected.
Chairman Manzullo. Denali, prior to this major
construction, did offer campsites? Is that correct?
Mr. Reisland. Yes.
Chairman Manzullo. How many sites did they offer?
Mr. Reisland. Riley Creek, which currently has existed for
many years, is 100 campsites, and that is the largest
campground in all the area.
They also have a campground about a couple miles away from
Riley Creek, which is called a rustic camping site, Marino
Campground, which is run by the park. That is 60 sites. They
also have campgrounds on into the park.
Chairman Manzullo. And those have been there for some time?
Mr. Reisland. Yes, they have.
Chairman Manzullo. How many spaces, how many sites, do they
want to add?
Mr. Reisland. Fifty.
Chairman Manzullo. Fifty. But they also want to add a bunch
of amenities? Is that correct?
Mr. Reisland. Correct.
Chairman Manzullo. My understanding also is that normally
the park fills up first, and then the eight retailers have
enough of the overflow?
Mr. Reisland. Absolutely. The park fills up first for
camping, and then the people cannot find a spot to camp so they
start trickling out to the boundaries of the park and going to
the public or private campgrounds. Private campgrounds.
Also with the park developing the 50 more sites, we will
lose the ancillary benefit of campers in our campgrounds, you
know, buying from our gift shops, from our little grocery
stores, so we will also lose money not only on hard camp nights
and the money from paying for a campsite, but also in ancillary
propane sales and that sort of thing.
Chairman Manzullo. When people buy items inside the park,
do they have to pay sales tax?
Mr. Reisland. No, they do not.
Chairman Manzullo. So the local communities become deprived
to a great extent of sales tax revenues by these items being
purchased inside the park?
Mr. Reisland. That holds true also with the camping
facilities. The private campgrounds outside the park boundaries
pay taxes to the Denali Borough, which runs the ambulance
services, the fire and a whole host of different programs,
which the park is tax exempt from paying anything to the Denali
Borough, yet they reap the rewards of our tax dollars for
getting ambulance service in the park and fire department
service. That is correct.
The Denali Borough has written a resolution. You will get a
packet as soon as we can copy it that shows resolutions from
the Denali Borough and the mayor strongly opposing the park in
this development because they will lose what is called
overnight tax, overnight accommodation tax that we have in
Alaska.
Chairman Manzullo. The National Park Service, though,
complains that they are 20 years behind in construction and
about what, $8 billion short of the money that they need just
to maintain their present facilities. Have you heard those
figures, Scott?
Mr. Reisland. I imagine they were behind. At one time the
park was the only thing out there and so there was a reason for
them to have a liquor store and offer a little store and
amenities because that was it. It was all wilderness, several
hundred miles away from Fairbanks or about 400 miles away from
Anchorage. If you were to go to Denali, you needed those
services.
Since then, the highway has come through between Fairbanks
and Anchorage, and it has become a lifeline between the two
with Denali Park in the center. Private enterprise has
developed unbelievably in that area to take up and provide
services for folks traveling to Denali.
I do not see why they need to expand any more of their own
facilities because private enterprise is more than willing to
supply anything the park can provide and more.
Chairman Manzullo. Who is the person with whom you were
having conversations at the National Park Service?
Mr. Reisland. Superintendent Steve Martin.
Chairman Manzullo. And he is at Denali?
Mr. Reisland. At Denali.
Chairman Manzullo. Has he been cooperative with you?
Mr. Reisland. What he has told us--we have had meetings. We
have really wanted him to do a real economic impact study, so
we gave him what we have in our facilities, how many campsites
we have, how many electric RV sites, how many dry camping
sites.
We gave him all this information hoping that he would look
at it and see the light that hey, there is a--we can
accommodate the increase in terms of outside the park in the
private sector, but he has taken a position that we are 100
percent occupied, and they need to do the development.
Chairman Manzullo. Is that his decision to make, or does it
come from higher up in Washington?
Mr. Reisland. I do not know.
Chairman Manzullo. It would be interesting to find out.
Mr. Reisland. We have worked and tried very hard. The
borough and the private sector has worked very hard to try to
persuade Superintendent Martin to not go through with this.
Chairman Manzullo. At what stage is the construction?
Mr. Reisland. They are currently bulldozing, plowing trees,
clearing land for this development.
Chairman Manzullo. What we are going to do is, I would like
you to get the information on the loss of business, the fact
that you are not 100 percent occupied, and get that to Attorney
Szymanski.
We will send a letter to the superintendent and request
that he answer within a relatively short period of time. If he
does not, then he might be sitting here in Washington under
subpoena.
I am very disappointed with the fact that the National Park
Service is discourteous in not sending somebody here to
represent them. I just cannot, you know, blowing off a
Congressional Committee on items this critical.
Is anybody in this room here from the National Park
Service? No representatives at all?
Mr. Mastromarco. If they were, I am not sure they would
admit it.
Chairman Manzullo. You know, they would have been sent
here. I did not say that to embarrass anybody, but not having
anybody here to testify is not--you do not do that.
Mr. Reisland. Sir, we have the list of all documents in
support.
Chairman Manzullo. Matt, if you could write that letter? We
will get on that right away. I have a question to ask you, Mr.
Mack. We hear nothing but great compliments of the Tourmobile.
As people contact our office, we let them know that this is the
best way to get around in Washington.
My first question to you is, is there a need for another
service? In other words, are all your coaches filled all the
time? Are there people that are turned away from your service
that would necessitate another line coming in?
Mr. Mack. No, there is not a need for another service. We
are well serving those people who are interested in getting on
our service.
We at one time carried upwards of two million people
annually. Presently we are carrying about 1.4 million or 1.5
million.
Chairman Manzullo. Is there a reason for that?
Mr. Mack. Increased competition. You know, really the Park
Service could address a question like this, but one thing is
very clear. Information that we received, again from a Freedom
of Information request, is that our operation does not do as
well as it might because the Park Service has not done what it
said it intended to do in the first place, which was under the
old and esteemed McMillen Plan, the federal plan, was intended
to be a pedestrian mall with a mass transportation system
operating throughout with an absence of traffic and parked
cars.
I know that the Park Service has tried to some extent to do
that. They do acknowledge that it is a problem. They have not
been able to achieve it. That to a fair extent decreases our
ability to accomplish what we might otherwise do.
There is no need certainly, absolutely not, for a service
similar to ours there now as we are there.
Chairman Manzullo. Would they be running the same routes as
you?
Mr. Mack. The one proposed by BID covers our route, yes, in
addition to others throughout the city. Their objective, as
clearly stated in their information, which we have, is their
title suggests what they intend to do, business improvement
district.
At the top of their circulator plan they state their
intention, and their intention is to take people, tourists, off
the mall and take them throughout the city of Washington.
Chairman Manzullo. In the information that you gave us
appears this interesting statement by BID. It says, ``The
purposes of the Tourmobile and the circulator are different.
However, as the Tourmobile is an interpretive service to
present and explain the area to visitors, the circulator's
function is transportation and marketing.'' Come on.
Mr. Mack. That is their intention. However, they are
relegating the importance of a very old Park Service tradition
I believe started by----
Chairman Manzullo. That is like giving them straight As.
Mr. Mack. President Theodore Roosevelt, and that is one of
interpretation. That is part of the Park Service's job to
interpret. You find Park Service personnel at monuments,
memorials, battlefields, various places, historic houses. I am
pleased to say that it was the Park Service's very good idea.
Chairman Manzullo. That is how they are trying to
circumvent breach of contract is to say it is something
different.
What does Tourmobile have, 22 or 23 different stops
throughout the----
Mr. Mack. Yes, sir. Twenty-five.
Chairman Manzullo. Twenty-five different stops. The people
get on and off. They get back on with shopping bags full of
stuff and do all kinds of things on that tour, do they not?
Mr. Mack. Yes. Yes, sir.
Male Voice. And learn a lot about the District.
Chairman Manzullo. They learn a lot about the District, buy
a lot of things and pay a lot of sales tax.
I cannot see any qualitative distinction between what you
are doing and what they are trying to do.
Mr. Mack. I see their intention is to expand their
business. They are into a lot of things. We got their annual
report--it is a financial report--off of the web and discovered
some of the things that they are doing. They are doing a lot of
things, but they are subsidized.
Chairman Manzullo. For example?
Mr. Mack. Helping the homeless, cleaning streets, offering
information to tourists, among other things, but it is
subsidized by the District government primarily. And now they
feel that, whether that has been successful or not I am not
qualified to say, but it is clear here that their next
intention is to get into the transportation business.
Chairman Manzullo. Did you have some questions from Mrs.
Velazquez that you wanted me to ask to Mr. Hart on the issue in
New York?
Female Voice. No.
Chairman Manzullo. Okay. There is some kind of a conference
coming up in New York that a bid went out recently with a
private carrier in the city?
Mr. Hart. Yes. I am confused a little bit, Mr. Chairman,
because there are conferences in New York City all the time,
but I do remember Rochester Transit getting a bid to provide
transportation to a conference while in New York City.
Chairman Manzullo. That is correct.
Mr. Hart. Yes. Again, we think that is just something that
a private business could do.
Chairman Manzullo. Do you have more details on that?
Mr. Hart. I could certainly provide them for you, Mr.
Chairman.
Chairman Manzullo. Okay. If you could, I would appreciate
it very much.
Mr. Hart. Certainly.
Chairman Manzullo. I appreciate you all coming here. I
again appreciate the indulgence of the time.
Scott, you came all the way. You literally crossed the
tundra to come here. How long are you going to be in
Washington?
Mr. Reisland. I will leave, sir, on the 21st, so I will get
to do some sightseeing, which I am very excited about and my
son is very excited about.
Chairman Manzullo. Well, if there is anything that our
office can do personally, stop on by. We will give you tickets.
I expressed to Mr. Young here, a Member of Congress, that
you were here, and I know he wanted to stop by and exchange
hellos with you, but that just was not possible.
Again, I want to thank all of you for coming. All of your
statements will be made part of the permanent record.
This Committee is adjourned.
[Whereupon, at 1:40 p.m. the Committee was adjourned.]
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