PROVIDING CERTAIN BASIC AUTHORITY FOR USIA

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP75B00380R000700120002-4
• Release Decision: RIFPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 16, 2016
• Document Release Date: June 1, 2005
• Sequence Number: 2
• Publication Date: December 4, 1963
• Content Type: REPORT

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88TH CONGRESS
1st Session
REPORT
No. 677
PROVIDING CERTAIN BASIC AUTHORITY FOR USIA
DECEMBER 4, 1963.-Ordered to be printed
Mr. FULBRIGHT, from the Committee on Foreign Relations, submitted
the following
REPORT
[To accompany S. 22131
The Committee on Foreign Relations, having had under considera-
tion S. 2213, a bill to provide certain basic authority for the U.S.
Information Agency, reports the bill favorably to the Senate, with an
amendment, and recommends that it pass as amended.
1. MAIN PURPOSE OF THE BILL
The primary objective of S. 2213 is to supply basic legislative
authority to support certain items which have been included in past
acts providing appropriations for the U.S. Information Agency
(USIA). In the absence of such authority, any item concerned may
be stricken from an appropriation bill if a point of order is raised
against it.
2. COMMITTEE ACTION
Draft legislation received in the Senate on September 20, 1963,
from Mr. Edward R. Murrow, Director of the USIA, was introduced
as S. 2213 by Senator Fulbright, by request, on October 7.
At a hearing the Committee on Foreign Relations held on October
29, Mr. Ben Posner, Deputy Assistant Director, Office of Adininistra-
tion, accompanied by Mr. Eugene J. Skora, Office of the General
Counsel, USIA, appeared in support of S. 2213. Mr. David Marsh,
representing the Association of Casualty & Surety Companies, pre-
sented testimony on section 3 of the bill. On November 26, in ex-
ecutive session, the committee ordered S. 2213 favorably reported to
the Senate, with an amendment.
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3. PROVISIONS OF THE BILL
Except for section 3, which is discussed below, the provisions of
S. 2213 are explained in the appendix accompanying this report.
Several provisions which deal with an expansion of authority USIA
has had in the past are also discussed below.
Section 3 of the bill, as proposed by the executive branch, related to
indemnification of owners and operators of international radio stations
and facilities. The authority requested by USIA in this regard was
virtually identical to language which has regularly been carried in acts
appropriating funds for the Agency since 1953. No claims have been
made or paid pursuant to the indemnification provision carried in
prior USIA appropriation acts. At the present time, the only con-
tract in effect with an indemnification clause is one the Agency has
with the National Broadcasting Co. relative to the operation and
maintenance of a radio facility in Bound Brook, N.J.
In connection with its examination of the proposed section 3, the
committee decided it would be best to make the indemnification
authority substantially similar to basic authority now possessed by the
military departments (10 U.S.C. 2354). Section 3(a) specifies that
any contract for the use of international radio stations and facilities
may provide, with the approval of the Director of USIA, that the
United States will indemnify the owners and operators of the stations
and facilities against certain loss or damage arising out of the direct
performance of the contract and to the extent the loss or damage is
not covered by insurance or otherwise., The indemnification coverage
extends to (1) claims (including reasonable expenses of litigation or
settlement) by third persons for death, bodily injury, or loss of or
damage to property, from a risk that the contract defines as unusually
hazardous, and (2) loss of or damage to property of the contractor
from a risk that the contract defines as unusually hazardous. Indem-
nification pursuant to section 3 is subject, in the final analysis, to such
funds as may be thereafter appropriated for the purpose. Under
section 3(b) a contract providing for indemnification must also
provide for (1) notice to the United States of any claim or suit against
the contractor for the death, bodily injury, or loss of or damage to
property, and (2) control of or assistance in the defense by the United
States, at its election, of that suit or claim. And before any indemni-
fication payment may be made, the USIA Director must certify that
the amount is just and reasonable (sec. 3(c)).
Pursuant to section 3(d), each party to an indemnification agree-
ment must maintain financial protection of such type and in such
amounts as the USIA Director may require to cover liability to third
persons and loss of or damage to property. One witness appearing
before the committee expressed concern that the Agency's present
indemnification authority might result in having a competitive effect
upon private insurance carriers. The committee believes that USIA
will exercise diligence and care to avoid such a result.
In the following respects, S. 2213 would expand the Agency's
existing authority:
For the purpose of promoting and maintaining friendly relations
with peoples abroad, the Director of USIA would be authorized by
section 1(e) of the bill to pay meritorious claims against the Agency
arising overseas. Such claims may not exceed $15,000, and the
authority granted would parallel that contained in the Military Claims
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Act (10 U.S.C. 2734). Past appropriation acts have accorded USIA
claims authority equal to that of the administrative settlement author-
ity of the domestic Tort Claims Act which USIA has felt has hampered
the Agency by imposing upon it a virtually impossible requirement
of claims settlement "in accordance with the laws of the place where
the act or omission occurred."
Section 1(k) of the bill would ensble USIA to rent or lease, for a
maximum periof of 10 years, offices, buildings, grounds, and living
quarters for persons engaged in Agency activities abroad. Present
law limits rentals for leases to 5 years, and the 10-year term would
place USIA on the same footing as the Department of State and the
Agency for International Development, thus making it possible for
the three agencies to standardize their rental and leasing practices.
In addition, section 1(k) would have the effect of permitting the
Agency to rent or lease living quarters not only for its own officers
and employees overseas--as it currently can do-but also, when
circumstances require, for binational center grantees and contractor
personnel engaged in USIA activities abroad who encounter diffi-
culties in securing housing. In certain countries, particularly in
Africa, housing is available only on payment of several years' rent in
advance, and in many cases only on extensive renovation of quarters.
Government housing provided for an individual pursuant to section
1(k) will be in lieu of the quarters allowance he would otherwise
receive.
Section 4 of the bill would authorize the appointment or assign-
ment to the Agency of Foreign Service Reserve officers without re-
gard to the 10-year statutory limitation on tenure contained in
section 522 of the Foreign Service Act of 1946, as amended. USIA.
has no authority to make appointments to the Foreign Service
Officer Corps which is the career officer category for the Foreign
Service. It does have, however, authority to make Foreign Service
Reserve appointments, and appropriations acts have regularly in-
cluded a yearly extension of these appointments in order that the
Agency might retain senior Reserve officers who have served more
than 10 years. The authority in section 4 would eliminate the possi-
bility of a point of order being raised against these annual extensions.
4. CONCLUSION
The annual cost to the U.S. Government of this legislation is
expected to approximate $5,000 a year resulting from the settlement
of meritorious claims.
The committee believes S. 2213, by providing a firm base of sub-
stantive authority for various USIA activities, will remove uncer-
tainties and facilitate the Agency's performance of its administrative
and other tasks. Most provisions in the bill deal with matters for
which money has been appropriated in the past, and the new authori-
ties granted seem reasonable. Therefore, the committee recom-
mends Senate passage of S. 2213.
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APPENDIX
HEARING BEFORE THE COMMITTEE ON FOREIGN RELATIONS, U.S. SENATE, ON
S. 2213, A BILL To PROVIDE CERTAIN BASIC AUTHORITY FOR THE U.S.
INFORMATION AGENCY, OCTOBER 29, 1963
U.S. SENATE,
COMMITTEE ON FOREIGN RELATIONS,
Washington, D.C.
The committee met, pursuant to notice, at 10:10 a.m., in room S-116, U.S.
Capitol Building, Senator J. W. Fulbright (chairman) presiding.
Present: Senators Fulbright, Sparkman, Humphrey, Lausche, Symington, and
Aiken.
(After considering other matters, the committee proceeded to consideration of
S. 2213.)
The CHAIRMAN. The next item is S. 2213, a bill to provide certain basic
authority for the U.S. Information Agency.
The CHAIRMAN. Our first witness is Mr. Ben Posner, Deputy Assistant Direc-
tor, Office of Administration, USIA, who is accompanied by Mr. Eugene J. Skora,
Office of the General Counsel, USIA, Mr. Posner, do you have a statement you
wish to make?
STATEMENT OF BEN POSNER, DEPUTY ASSISTANT DIRECTOR, OFFICE OF
ADMINISTRATION, USIA; ACCOMPANIED BY EUGENE J. SKORA, OFFICE
OF THE GENERAL COUNSEL, USIA
Mr. POSNER. Yes, sir; we have a prepared statement which has, I believe,
been submitted to the committee. It is 10 pages, Mr. Chairman. Perhaps I
could abstract the highlights and ask that the statement be included.
The CHAIRMAN. All right.
Mr. POSNER. Mr. Chairman and members of the Senate Foreign Relations
Committee, my name is Ben Posner and I am the Deputy Assistant Director for
Administration of the U.S. Information Agency.
I am here today, at the kind invitation of the committee, to testify in support of
S. 2213, to provide certain basic authority for the U.S. Information Agency.
Accompanying me is Eugene Skora, an Assistant General Counsel with our
Agency.
PURPOSE OF S. 2213
The purpose of the bill is to provide basic legislative authority for certain
housekeeping activities necessary for the day-to-day operations of the Agency.
Except for sections 1(e), 1(k), and 4, which have been modified somewhat, the
items contained in the bill have been carried regularly in the Agency's annual
appropriation acts and do not consitutute any new authority.
These items are subject, however, to a point of order under the rules of both the
Senate and the House which provide, in effect, that no appropriation for a purpose
not previously authorized by law shall be included in any appropriation bill.
The purpose of S. 2213, therefore, is to overcome this legislative deficiency by
providing continuing basic legislative authority for the activities specified in
the bill.
Similar remedial action has already been taken by the Congress with respect to
the Department of State in the enactment of Public Law 885 in the 84th Congress.
CATEGORIES OP BILL'S PROVISIONS
The provisions of the bill fall into two general categories: (1) those which
authorize the Agency to perform certain functions which it is performing at the
present time, by authority contained in appropriations act rather than in basic
legislation, and (2) another category, those which authorize the Agency to make
4
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expenditures for certain purposes which, according to rulings of the Comptroller
General, must be specifically included in basic legislation or appropriations acts.
I should point out, however, that those categories authorized by appropriations
acts are subject to the point of order to which I previously referred.
I refer to three sections which are somewhat different from the authorities
included in the Agency's annual appropriations acts. They are essentially the
same authority, but broadened somewhat.
AUTHORITY TO SETTLE MERITORIOUS CLAIMS
Section 1(e) would authorize the settlement of meritorious claims abroad up to
$15,000 whereas our current appropriation act authorizes the settlement of tort
claims abroad up to $2,500.
It is an integral part of the Agency's function to promote and maintain friendly
relations with people abroad. It is essential in such regard to be able to make
prompt settlement of oversea claims when the damage or injury results from the
conduct of activities of the Agency.
Our present authority-in appropriation acts-has been limited to "payment
of tort claims, in the manner authorized in the first paragraph of section 2672,
as amended, of title 28 of the United States Code when such claims arise in foreign
countries."
It is not anticipated that there would be many instances in which settlements in
excess of $2,500 would be made. Since the Agency was established in 1953, there
have been only three or four claims which were in excess of that amount. Thus,
the Agency believes that authority to settle claims up to $15,000 would be adequate
for all but the most exceptional claims. In addition, the authority to settle
claims on their merits without regard to difficult questions of legal liability under
various systems of foreign law will help promote good will and friendly relations
for the United States.
Senator MORSE. May I interrupt with one question before you move on to the
next section. These tort claims involve what-automobile accidents, slipping in
headquarters, and typical court actions?
Mr. POSNER. Yes, sir; precisely.
AUTHORITY TO LEASE PROPERTY ABROAD
Section 1(k) as proposed in the bill is identical with that authority contained in
our appropriation except that it would authorize Agency lease of property abroad
for offices and living quarters for a maximum of 10 years instead of the 5-year
ceiling included in the current Agency appropriation act. The proposed change
would place the Agency on the same footing as the Department of State and AID,
which have leasing authority for periods up to 10 years, and would, we believe,
permit us to enter into more advantageous arrangements in the countries where
we operate abroad.
Since the three foreign affairs agencies lease property abroad on a centralized
basis under uniform regulations, it will facilitate such joint procurement if the
Agency's authority conforms to that of its sister agencies. Also, it is anticipated
that rentals for the longer term will result in economies to the Government in
some instances.
AUTHORITY TO PROVIDE LIVING QUARTERS FOR PERSONS ENGAGED IN USIA ACTIVITIES
ABROAD
Section 1(k) of the bill differs from the Agency's current appropriation act in
another respect in that it would authorize living quarters abroad to be provided
to persons engaged in Agency activities who are not employees. Binational
center grantees and employees of Agency contractors, particularly in Africa,
have found it difficult or impossible financially to lease living quarters. The
Agency believes it would be in the Government's interest in appropriate cases
to provide living quarters to such persons in lieu of quarters allowances.
AUTHORITY RELATING TO FOREIGN SERVICE RESERVE APPOINTMENTS
Section 4 of the bill also differs somewhat from authority contained in the
Agency's current appropriation act.
At present, the Agency is authorized to appoint persons to the Foreign Service
Reserve and the Foreign Service Staff Corps-this was given to us in our reor-
ganization plan and the Executive order which accompanied it at the time the
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Agency was established-it is not authorized to make appointments to the Foreign
Service Officer Corps which is the career officer category of the Foreign Service
system. Pursuant to section 522 of the Foreign Service Act of 1946, as amended
(22 U.S.C. 922), Foreign Service Reserve appointments are limited to two 5-year
periods or a maximum tenure of 10 years. Accordingly, the Agency appropriation
acts have regularly included language authorizing the extension for an additional
year of appointments which expire in the course of the given fiscal year.
Under the proposed section, the Director of the Agency is authorized to appoint
or reappoint Foreign Service Reserve officers without regard to the 10-year statu-
tory limitation on tenure. This will protect the careers of 23 senior officers who
have served more than 10 years and the growing number of such officers as they
reach the statutory ceiling. As of now, the raising of a point of order would place
all these careers in jeopardy.
The remaining sections of the bill merely restate the ex-sting Agency authorities
as contained in appropriation acts, substantially without change.
I will review each of the remaining sections and explain very briefly why the
authorities are necessary.
AUTHORITY RELATING TO EMPLOYMENT OF ALIENS ABROAD TO PERFORM SERVICES
IN THE UNITED STATES
Section 1(a) authorizes the Agency to employ aliens abroad for service as a
narrator or translator. For example, it may not be possible to find in the United
States announcers who have the proper accent or who are familiar with the up-
to-date idiom of certain exotic languages or dialects. In such instances, the
Agency can recruit and employ qualified narrators and translators directly from
abroad.
The language of this subsection authorizes the employment of aliens abroad
for narration and translation services in the United States only "when suitably
qualified U.S. citizens are not available." Naturally the Agency attempts to fill
all domestic positions with U.S. citizens. When qualified citizens are not avail
able, we attempt to recruit qualified aliens resident in the United States. It is
only when neither qualified U.S. citizens nor aliens can be found in the United
States that the Agency employs aliens abroad for services in the United States.
The employment of aliens within the United States for narration and transla-
tion of colloquial speech in a foreign language when suitably qualified U.S. citizens
are not available is authorized in section 801(5) of the U.S. Information and
Educational Exchange Act of 1948, when such employment is provided for by
appropriation act.
Agency appropriation acts have regularly provided for employment of aliens
within the United States as well as from abroad for the above purposes, even
though the basic law referred to above authorized such employment only within
the United States. Accordingly, the propcsed section would provide a substan-
tive legal basis for employment of aliens abroad.
Section 1(b) is complementary to subsection 1(a) and simply authorizes the
Agency to pay travel expenses of alien narrators and tran=slators employed abroad
and their dependents to and from the United States and their country of residence.
AUTHORITY RELATING TO ENTERTAINMENT EXPENDITURES
Section 1(c) authorizes the expenditure of a limited amount of appropriated
funds for entertainment in the United States.
Agency appropriation acts have regularly included authority similar to that
proposed in subsection 1(c) for entertainment within the United States in specific
amounts. Under the proposed language, expenditures for entertainment are
authorized only when, and to the extent, specifically provided in an appropriation
act.
A statutory basis for expenditure of appropriated funds for entertainment is
necessitated by a Comptroller General ruling that appropriated funds are not
available for purposes of entertainment within the United States in the absence
of a specific statutory authorization therefor (26 Comp. Gen. 283).
AUTHORITY RELATING TO INSURANCE COVERAGE
Section 1(d) authorizes the Agency to secure liability i:isuranee on official ve-
hicles operated abroad. It is common practice for Embassy vehicles, both State
Department and USIA, to carry liability insurance. III many foreign countries
such insurance Coverage is mandatory under local law.
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The Comptroller General has consistently ruled that funds of a Government
agency may not be expended, in the absence of statutory authority, to purchase
insurance to cover the Government's possible tort liability (19 Comp. Gen. 798).
AUTHORITY RELATING TO ADVANCES OF FUNDS
Section 1(f) permits advance of funds to grantees, contractors, and others
engaged in activities which further the basic purposes of the Agency program.
Specific authority for advance payments is required under the provisions of
section 3648 of the Revised Statutes (31 U.S.C. 529) which reads in part:
"No advance of public money shall be made in any case unless authorized by
the appropriation concerned or other law * * *."
AUTHORITY TO CONTRACT WITH ALIENS ABROAD
Section 1(g) authorizes the Agency to contract with aliens abroad. The nature
of the Agency's program involving such varied activities as exhibits, lectures,
periodical distribution, etc., requires the use of local contractual services.
Specific statutory authority is necessary for employment of personnel services
by contract as a result of numerous decisions of the Comptroller General (18
Comp. Gen. 529; 19 Comp. Gen. 594) to the effect that all employment of personal
services must be by appointment in accordance with the civil service and classi-
fication laws in the absence of statutory authority for employment by contract.
OTHER AUTHORITIES
Section 1(h) authorizes the expenditure of Agency funds for ice and drinking
water. The Comptroller General has ruled (3 Comp. Gen. 828) that in the absence
of specific statutory authority, appropriated funds cannot be used for such
purchases.
Section 1 (i) authorizes the Agency to pay excise taxes on negotiable instruments
abroad. The Comptroller General has held (19 Comp. Gen. 625) that in the
absence of specific statutory authority therefor appropriated funds are not avail-
able for payment of excise taxes on checks drawn on op U.S. Government deposits in
foreign banks.
Section 1(j) authorizes the Agency to transport to their former homes the
remains of persons, not Government employees, who die while participating in
Agency activities.
While statutory authority exists for the transportation of remains of employees
from abroad to the United States, no similar authority is available for persons
engaged in Agency activities abroad who are not U.S. Government employees.
Section 1 (1) and (m) authorizes the Agency to expend appropriated funds for
the maintenance and repair of rented premises and for fuel, water, and utilities
for Government owned or leased premises.
Section 1(n) authorizes Agency personnel attending international conferences
abroad to be paid travel expenses and per diem at the rates established by the
Secretary of State for the particular conference.
Section 2 authorizes the Agency to charge the appropriation for the fiscal year
in which travel begins for all expenses of such travel even though not concluded
until sometime in the succeeding fiscal year.
AUTHORITY TO INDEMNIFY OWNERS AND OPERATORS OF RADIO STATIONS AND
FACILITIES
Section 3 authorizes the Agency to agree, in contracts for the use of international
radio stations and facilities, to indemnify owners and operators of such radio
stations and facilities against claims arising out of broadcasting operations. The
words "short wave." which have appeared in Agency appropriation acts, since we
have instances where this may result in the operation of medium-wave facilities,
we ask that the reference to "short wave" radio stations be eliminated and that we
simply refer to international radio stations and facilities.
STANDARD ENABLING PROVISION
Section 5 is the standard enabling provision authorizing appropriations to carry
out the purposes of the bill and authorizing appropriations without fiscal year
limitation when so provided in the appropriation.
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PURPOSE OF S. 2213
In conclusion, I would like to state that except for the three sections which I
discussed above, this bill does not provide additional authorities for the U.S.
Information Agency. Rather, it is in effect a recodificat:ion in substantive legis-
lation of administrative authorities which have regularly been made available in
annual appropriation acts.
The CHAIRMAN. Senator Sparkman.
Senator SPARKMAN. No questions.
The CHAIRMAN. Senator Morse.
Senator MORSE. No questions.
The CHAIRMAN. Senator Lausche.
AUTHORITY TO PROVIDE LIVING QUARTERS FOR PERSONS ENGAGED IN USIA
ACTIVITIES ABROAD
Senator LAUSCHE. Are you making in this bill a change in the law dealing with
allowances for quarters?
Mr. POSNER. No, sir.
Senator LAUSCHE. I thought I saw something in your statement to that effect.
"Section 1(k) of the bill'differs from the Agency's current appropriation act,"
you say, "in another respect in that it would authorize living quarters abroad to
be provided to persons engaged in Agency's activities who are not employees."
What type of employees do you have that fall into that class?
Mr. POSNER. We have, sir, binational center grantees, who are individuals
that we send to binational centers in Latir. America, who are paid on a grant
basis, and therefore do not have the same benefits as regular employees of the
Agency.
We also have persons abroad who teach English under contract, particularly
in the newer countries of Africa, and there have been instances where the complete
lack of housing in these countries has been of considerable harm to the Agency
in carrying out this English teaching program. We are asking here that we be
permitted to lease housing.for these individuals who are not technically employees
of the Agency.
Senator LAUSCHE. Do you provide living quarters for all of your people abroad?
Mr. IOSNER. No, sir. Our policy is essentially the same as that of the
Department of State. We authorize quarters allowances to the individual where
those quarters are available. In certain parts of the world where there are no
quarters available, the Government may lease housing.
Senator LAUSCHE. That is all.
The CHAIRMAN. Senator Symington?
USIA'S RELATIONSHIP TO THE DEPARTMENT OF STATE
Senator SYMINGTON. What is the relationship of the USIA with the State
Department?
Mr. POSNER. We are a separate agency, Senator, operating under close policy
guidance of the Department of State.
Senator SYMINGTON. What does that mean, "close policy guidance"?
Mr. POSNER. It means, as I understand it, sir, that everything we originate
with respect to the foreign policy of the United States is in accordance with
guidances given us by the Department of State.
Senator SYMINGTON. How is that done?
Mr. POSNER. This is done through daily consultation with the Department
of State in which we sit with representatives of the Department. They give Us
in effect the current policy issues and advise us with respect to the official U.S.
position on each issue.
Senator SYMINGTON. How do you do that? Do you have a meeting every
morning?
Mr. POSNER. Yes, sir; immediately following the meeting with the State
Department people, our representatives return to the Agency. The representa-
tives of our various media then meet with the people w.ao have attended the
guidance sessions.
Senator SYMINGTON. Who goes to these daily meetings from your Agency?
Mr. POSNER. The representatives of our Office of Policy. I do not know the
name of the specific individuals at this moment, sir.
Senator SYMINGTON. Is it one representative?
Mr. POSNER. I believe that there are more than one.
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Senator SYMINGTON. The title is Assistant Director for Administration, is it
not?
Mr. POSNER. Yes, sir.
Senator SYMINGTON. Presumably you would know your organizational setup.
I don't mean to be critical.
Mr. POSNER. Yes, sir. My impression is that we send more than one person
to these meetings.
Senator SYMINGTON. Do you know their names?
Mr. POSNER. I do not have them immediately available, sir.
Senator SYMINGTON. Do you know how many changes there have been in that
position? Has it had the same people since it started?
Mr. POSNER. There have been changes in the individuals, sir.
Senator SYMINGTON. And who do they talk with in the State Department?
Mr. POSNER. They talk essentially to the public affairs officers of the De-
partment.
Senator SYMINGTON. And those people are the same people in the State De-
partment, or do they change?
Mr. POSNER. They also change, sir.
Senator SYMINGTON. And they meet every morning?
Mr. POSNER. They meet every morning, yes, sir.
Senator SYMINGTON. Do they keep minutes of the meetings?
Mr. POSNER. I believe there are no formal minutes.
Senator SYMINGTON. Actually what you do is operate under the directions of
the State Department, but it is all informal; is that correct?
Mr. POSNER. I believe - the requirement that we operate under the policy
guidance of the State Department is included in the act which establishes the
Agency, sir.
Senator SYMINGTON. And to whom does the Director of the USIA report?
Mr. PosNER. The Director of the U.S. Information Agency reports to the
President.
Senator SYMINGTON. Why doesn't he report to the Secretary of State?
Mr. POSNER. That was a result of USIA's becoming an independent agency
in 1953.
Senator SYMINGTON. I am not criticizing. I am just asking. You wouldn't
have to go through all this and have all this costly extra bureaucracy if it was just
a department in the Department of State. All these things you can't do that you
list here in detail the Department of State can do you would thereupon do as the
Department of State; and you would not have to have all these extra people.
If you operate under the direction of the Department of State, it is hard for me
to see how they can control you if they don't control you.
But if you were in the Department of State, you would not have -to have all
these people. That occurs to me from the standpoint of trying to save the Govern-
ment a little money.
Mr. POSNER. Sir, actually we have made no change in the way we were oper-
ating overseas at the time that the Agency was created. The representatives of
the Department of State abroad still do nearly all of our administrative activities,
and we believe that there have been no extra.costs as a result of this change in
organization.
Senator SYMINGTON. If they do them abroad, why can't they do them at home?
Mr. POSNER. In some instances, such as with respect to communications where
it is clear that there are economies from a joint operation, they do, sir.
Senator SYMINGTON. But why can't they do them all if they do them abroad?
Why can't you just function as an arm of the State Department and let them
handle your housekeeping? That is my question basically.
Mr. POSNER. This was considered at some length at the time that the separation
of the U.S. Information Agency from the Department was settled by the Congress,
and at that time it was our position that there were advantages to having the
information function handled by a separate agency.
Senator SYMINGTON. As you know, we get criticized for constantly adding
people to the Federal payroll.
I notice you are asking authority for drinking water. Can't you get drinking
water from the State Department? Do you have to have a special law for that?
Mr. POSNER. As a practical matter, sir, the same person who would make the
arrangements for the Department of State abroad would make the arrangements
for our employees abroad, so that it is just a matter of our funds being available
for that purpose.
Senator SYMINGTON. As I understand it, then, the way you interpret the law
is that abroad the State Department can supply ice and drinking water but over
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here you have to have separate legislation to do that for your own people; is
that correct?
Mr. POSNER. No, sir. I think that we are dealing here only with the purchase
of ice and drinking water abroad.
Senator SYMINGTON. I refer you to the bottom of page 8. Don't misunder-
stand. me. I am all for you getting the water.
Senator MORSE. And the ice, too?
Mr. POSNER. The explanation is incomplete, sir. Section 1(h) says, "to
provide ice and drinking water abroad." It does not give us the authority in
this country.
Senator SYMINGTON. I did not hear that last part. I am sorry.
Mr. POSNER. The provision, section 1(h) in the law, states that we seek
authority to provide ice and drinking water abroad. It does not give us the
authority to purchase it domestically.
Senator SYMINGTON. How would you handle that if you don't get this passed?
Mr. PosNER. At the moment, sir, the authority is contained in our appropri-
ation act. If we did not have the authority in our appropriation bill to pay for
ice and drinking water abroad, we would be prohibited from making expenditures
for that purpose.
- AUTHORITY TO INDEMNIFY OWNERS AND OPERATORS OF RADIO STATIONS AND
FACILITIES
Senator SYMINGTON. My final question is this. You say that section 3 author-
izes the Agency to agree to a contract for the use of international radio stations to
indemnify owners and operators against claims arising out of broadcasting
operations.
If you only function under the direction., the policy direction of the State
Department, why wouldn't they be the ones to indemnify the owners, if there
was any indemnification needed? Wouldn't they have to set it up with lawyers
and so forth to handle it?
Mr. POSNER. I think, sir, it is a matter of which funds are used. These are
our appropriated funds. Again, as a practical matter in any case which might
arise abroad, we would use the existing staff,-, of the Department of State abroad.
USIA EMPLOYEES IN ATTENDANCE AT FOREIGN SERVICE INSTITUTE
Senator SYMINGTON. How many members of the USIA have attended and are
attending a foreign service academy?
Mr. POSNER. I don't have the precise number, sir. I would have to guess.
At the Foreign Service Institute all of our new junior officers undergo a period of
training. - Also, our people who would take language training would be there.
Senator SYMINGTON. You say you would guess?
Mr. POSNER. I would guess, sir, that at any moment we would have at least
200 people attending the Foreign Service Institute.
Senator SYMINGTON. Would you file a statement at this point for the coin-
mittee as to how many in the past 5 years have gone to the Foreign Service
Institute, and how many are there now and what is the policy?
Mr. POSNER. Yes, sir; I will be very happy to.
(The statement referred to follows:)
tit
t
I
i
S
ees attendance at Foreign erv ce ns u e
lo
USIA em
p
y
N,,rnber of
participants
Namber of
Fiscal year--con. participants
Fiscal year:
679
1959
---------------------
325
1962------------------------
--
1960
-------------------
319
1963-------------------------
631
----
1961-----------------------
309
Present (as of Oct. 28) -------
248
The Foreign Service Institute is the primary training facility for Agency
employees and is used almost exclusively for foreign language instruction, regional
studies, training pertaining to Communist strategy and tactics, and junior officer
basic training. Only training which is peculiarly applicable to CTSIA operations
or which may not be available at the Institute is provided directly by the Agency.
The Agency does maintain language self-training facilities at a convenient location
for the use of its employees to supplement facilities of FSI.
Senator SYMINGTON. Thank you, Mr. Chairman.
The CHAIRMAN. Anything further, Mr. Posner?
Mr. POSNER. Nothing, sir.
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COST OF PROPOSED LEGISLATION
Senator LAUSCHE. I just want to ask one question. Are there any new moneys
involved in this bill?
Mr. PosNER. Sir, we estimate that one provision, the provision which would
give us a bit broader authority to meet meritorious claims could result in addi-
tional cost of $5,000. Other than that, there would be no extra costs involved
in this bill.
Senator LAUSCHE. In substance what you are trying to do is to get continuing
authorization so that you will not be in constant difficulties when it is sought to
place in the appropriations bill an authorization.
Mr. POSNER. Yes, sir. We feel that these items should not be included in the
appropriations bill. They should be in basic legislation.
Senator LAUSCHE. That is, it will possibly cost $5,000 as far as one aspect of
it is concerned. Otherwise, it deals merely with procedure.
Mr. POSNreR. Precisely, Senator.
Senator LAUSCHE. All right.
The CHAIRMAN. Anything else? Mr. David Marsh, Association of Casualty
& Surety Companies, wishes to be heard.
Mr. Marsh.
STATEMENT OF DAVID MARSH, MANAGER, WASHINGTON OFFICE,
ASSOCIATION OF CASUALTY & SURETY COMPANIES
Mr. MARSH. Mr. Chairman and gentlemen, it is a privilege to be here. I am
David Marsh, manager of the Washington office of the Association of Casualty &
Surety Companies.
Senator SYMINGTON. What?
LETTER TO THE CHAIRMAN
Mr. MARSH. The Association of Casualty & Surety Companies, sir. I believe
you have before you, sir, a letter dated October 29, 1963, addressed to you as chair-
man, sir, which forms the basis for a brief statement. If I may summarize that
portion of the letter that contains our comments on S. 2213 and respectfully request
that the letter be submitted for the record.
The CHAIRMAN. We will include the letter in the record.
(The letter referred to follows:)
ASSOCIATION OF CASUALTY & SURETY COMPANIES,
Washington, D.C., October 29, 1963.
Hon. J. W. FULBRIGHT,
Chairman, Committee on Foreign Relations,
U.S. Senate, Washington, D.C.
DEAR SENATOR FULBRIGHT: This will reply to Mr. St. Claire's letter of October
26, 1963, regarding hearings on S. 2213, introduced by yourself (by request) on
October 7, 1963.
The Association of Casualty & Surety Companies is a nonprofit public service
organization having a membership of 128 capital stock insurance companies, all of
which do business throughout the United States and many of which provide
casualty and surety coverages abroad. Our member companies do business
exclusively through the services of independent insurance agents.
Briefly, we are primarily concerned with the impact that section 3 of S. 2213 may
have on the privately owned capital stock insurance companies that are members
of this association.
As you know, the subject of indemnification by the Federal Government of its
contractors has been under study for some time, both by the Congress and by other
interested groups, universities, associations, and Federal agencies.
As presently written, we believe that section 3 of S. 2213 needs clarification in
several respects. First, it is uncertain whether domestically operated "inter-
national radio stations and facilities" are within the purview of section 3. Second,
no limit of liability for such "loss or damage on account of injury to persons or
property" is specified in the section (we recognize that this is primarily a problem
for the Congress and the USIA). Third, we are uncertain as to the types of
coverage which may be provided under that section through the avenue of Federal
indemnity and, therefore, the competitive effect that the section may have upon
the private insurance carriers which are members of this association.
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To sum up, we are simply requesting that we be permitted to compete in those
instances in which our member companies are providing insurance coverage at
home or abroad at a reasonable cost, on reasonable terms and to the satisfaction of
their customers' needs. Therefore, we urge that the committee give consideration
to the points mentioned above in the course of its deliberations on S. 2213.
We stand ready to meet and consult with whomsoever the committee deems
appropriate on this matter.
Respectfully submitted. DAVID M. MARSH,
Manager, Washington Office.
CONCERN WITH IMPACT OF INDEMNIFICATION AUTHORITY IN SECTION 3 OF S. 2213
Mr. MARSH. The Association of Casualty & Surety Companies is a nonprofit
public service organization having a membership of 128 capital stock insurance
companies, all of which do business throughout the United States and many of
which provide casualty and surety coverages abroad. Domestically our member
companies do business exclusively through the services, saleswise, of independent
insurance agents,
Briefly, we are primarily concerned with the impact that section 3 of S. 2213
may have on the privately owned capital stock insurance companies that are
members of this association.
As you know, the subject of indemnification by the Federal Government of its
contractors has been under study for some time, both by the Congress and by
other interested groups, universities, associations, and Federal agencies.
NEED FOR CLARIFICATION OF SECTION 3
As presently written, we believe that section 3 of S. 2213 needs clarification in
several respects. First, it is uncertain whether domestically operated "inter-
national radio stations and facilities" are within the purview of section 3. Second,
no limit of liability for such "loss or damage on account of injury to persons or
property" is specified in the section (we recognize that this is primarily a problem
for the Congress in consultation with the USIA). Third, we are uncertain as to
the types of coverage which may be provided under section 3 through the avenue
of Federal indemnity and, therefore, the competitive effect that the section may
have upon the private insurance carriers which are members of this association.
To sum up, we are simply requesting that we be permitted to compete in those
instances in which our member companies are providing insurance coverage at
home or abroad at a reasonable cost, on reasonable terms, and to the satisfaction of
their customers' insurance.needs. In this instance, of course I might add that the
customers would be Government contractors to the USIA. Therefore, we urge
that the committee give consideration to the points mentioned above in the
course of its deliberations on S. 2213.
We stand ready to meet and consult with whomsoever the committee deems
appropriate on this matter.
In this regard I might also thank the staff of the committee and the staff of the
USIA for expending every effort to iron out this problem.
INSURANCE PURCHASES OF USIA CONTRACTORS
The CHAIRMAN. I am not clear what the problem is. Do you presently insure
these companies?
Mr. MARSH. We are not certain, sir. This is our problem.
The CHAIRMAN. Under the existing situation, without this law, are you writing
insurance on these contracts?
Mr. MARSH. We offer a multiplicity of things that could fall within loss or
damage on account of injury to persons or properties.
The CHAIRMAN. For USIA?
Mr. MARSH. Whether we do this specifically with regard to what this bill is
int,ended to do, I am not absolutely certain, sir. This may be no problem at all.
Senator LAUSCHE. You did not answer the question. Are you actually now
selling policies of indemnity to reimburse for damages suffered through the
misdeeds of this Agency or by its contractors? Are you now selling insurance?
Mr. MARSH. We were unable to gather that informatio-a, sir. We are selling
liability insurance, of course, to Government contractors. We are selling work-
man's compensation insurance.
Senator LAUSCHE. Are you actually selling it to contractors who do business
with the USIA?
Mr. MARSH. I would have to defer. I am sorry.
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Senator LAUSCHE. You don't know?
Mr. MARSH. I do not know. I would be glad to submit that for the record.
The CHAIRMAN. May we ask Mr. Posner. Do you know anything about this?
Mr. POSNER. I do not know whether any of the insurance companies with
which Mr. Marsh is associated cover our contractors, sir.
Senator LAUSCIIE. Do you buy insurance coverage?
Mr. POSNER. Our contractors do.
Senator LAUSCHE. Or do you have your own reserves out of which you make
the payment?
Mr. POSNER. We do not ourselves buy insurance, sir. The contractors with
whom we do business-and it happens that by October 30 the number will be
reduced to one, which is the National Broadcasting Co. at our plant in Bound
Brook, N.J.-do buy liability insurance, and we reimburse them as a part of our
contract with them. I don't know whether they buy insurance from any of the
companies involved here.
The CHAIRMAN. I am not clear, Mr. Marsh, what you want the committee
to do.
Mr. MARSH. Sir, I can only say that our companies are right sensitive when
you talk Federal indemnification of its contractors. This is different from the
Government doing it alone.
QUESTION OF INDEMNIFICATION AUTHORITY OF OTHER GOVERNMENT AGENCIES
Senator SYMINGTON. Mr. Chairman, could I ask a question. Do you have
any relationship with the State Department?
Mr. MARSH. Yes, sir.
Senator SYMINGTON. Is this matter satisfactory in the State Department to
you now?
Mr. MARSH. I am not sure whether the State Department has this specific
authority. What I was referring to is that we write bonds on-
Senator SYMINGTON. The question I am asking, Are you asking on this contract
for the extension of something that is already satisfactory in the State Depart-
ment or are you asking for something that is new and different as to your rela-
tionship with the State Department?
Mr. MARSH. As the Senator will recall, when NASA came to the Space Com-
mittee of the U.S. Senate, Senator Clinton Anderson, I believe, Senator Hicken-
looper and others-
Senator SYMINGTON. Wait a minute. I may not recall it because I may not
have been there, and if I was I may have forgotten it. Let's get back to the
question. My question is, Do you have the same position already in the State
Department that you would like to have under S. 2213?
Mr. MARSH. No, sir.
Senator SYMINGTON. Or are you asking for a special position for the USIA as
against what you have with the State Department?
Mr. MARSH. We are asking for no special position, Senator. We are simply
asking to compete.
Senator SYMINGTON. Then do you have this position in the State Department
that you are asking for with USIA? ,
Mr. MARSH. No, sir; not to my knowledge.
Senator SYMINGTON. It is very hard for me to get to work now because they
are building so many new buildings, and I have to detour three or four times, and
I can see how this is all very beneficial to a group of people, but I am not sure why
you would want---I am not talking about you but people in traditional Government
employment-I don't see why you would want to use this bill and get something
out of the USIA that you don't have with the other agencies involved with the
State Department.
Mr. MARSH. As the Senator knows, these coverages are reimbursable costs to
Department of Defense contractors and NASA contractors.
Senator SYMINGTON. I am not sure. We are asking for information, but my
point is I don't see why you pick this particularly relatively inconsequential bill
to get a position for a group of insurance companies, if it isn't the same position
you have with the established agencies. That is my point.
Mr. MARSH. I think what we are asking for is the same thing, sir. We are
not attempting to get anything.
Senator SYMINGTON. If we give it to you on the USIA, you will probably ask
for it in the Defense Department and the State Department; is that correct?
Mr. MARSH. No, sir.
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Senator SYMINGTON. Then why should this Agency be singled out to give it
to you?
Mr. MARSH. Because section 3 of the bill, taken on its face, allows USIA to
preempt insurance companies, I believe.
Senator SYMINGTON. Is this different from-
it? The CHAIRMAN. It is already doing it. All that does is raise the limit, doesn't
Senator SYMINGTON. I give up.
The CHAIRMAN. Any other questions?
USIA CONTRACTS FOR THE USE OF INTERNATIONAL RADIO STATIONS AND FACILITIES
Senator LAUSCHE. I would like to get the situation clarified. It is completely
confusing. What type of claims are embodied in this indemnity authority that
you ask for in the bill, Mr. Posner?
Mr. POSNER. I will ask Mr. Skora to speak to that, sir.
Mr. SKORA. Perhaps I can answer. We are not asking; for any new authority.
This is the same language that has been included in our appropriation acts for
several years.
Senator LAUSCIIE. I understand that; but do you pay the claims for which you
become obligated out of yourown funds or do you buy insurance policies?
Mr. SKORA. Perhaps I can explain it this way, Senator. We have a cost-plus-
fixed-fee contract with NBC which operates a radio facility for us.
Among the reimbursable items are included premiums for insurance for public
liability coverage. NBC will take out its own insurance and be reimbursed
for those premiums by the Government, by USIA.
In addition to this, however, the contract includes an indemnification clause
which will indemnify NBC for claims over and above those which are covered by
their insurance protection.
Senator LAUSCHE. Then, under existing law, the insurance companies who
want to sell policies are able to sell them to your contractor.
Mr. SKORA. Yes, sir.
Senator LAUSCIIE. And that right will continue.
Mr. SKORA. Yes, sir.
ASSOCIATION'S CONCERN WITH SECTION 3
Senator LAUSCIIE. Do you say that it will not continue or that the language
isn't adequately clear? What are you asking, Mr. Marsh?
Mr. MARSH. Senator, I can only say that on the face of it section 3 appears to
preempt this continuing type of coverage for Government contractors, which
every other agency has, the Department of Defense, the Atomic Energy Coln-
mission, and so forth.
Senator LAUSCHE. What do you want us to do in this bill? Will you tell
me in words?
Mr. MARSH. Allow us to compete and not be preempted by the Federal Govern-
ment to furnish insurance- which the contracting officer of the USIA deems and
the State insurance department deems not too high in the premium, and not too
low.
Senator LAUSCHE. That is all understandable. Now what is your answer to
that statement of his, Mr. Skora?
Mr. SxoRA. It is my understanding, Senator Lausche, that our contracts
presently in fact do provide for the contractor to take out insurance with the
premiums reimbursable by the Agency.
Senator LAUSCHE. Do you understand that to be the fact? And that is what
you want, isn't it?
Mr. MARSH. Yes, sir. We are not asking for compulsory insurance. As a
mat
Senator LAUSCHF. We, can take a look ter of fact, we fight that rather vigorously.
ought to have the right to sell, but I don't a see anything this her e that would think
bar the
contractor from buying insurance.
Senator SPARKMAN. It seems to me that a record could be made of that in the
report on the bill or even a colloquy on the floor of the Senate when that is being
considered, which would clear up that point. I would suggest'that that course be
followed.
The CHAIRMAN. Any other questions? Thank you very much, Mr. Marsh.
Mr. MARSH. Thank you, sir.
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Senator LAUSCIIE. Send for the record a letter telling what arrangements you
made with these contractors. That is, do you reimburse them for their premium
of insurance, and do you also indemnify them for expenditures in excess of the
coverage. Give the facts as they are, will you please?
Mr. POSNER. Yes, sir.
(The following statement was subsequently submitted for the record by USIA:)
U.S. INFORMATION AGENCY UTILIZATION IN CONTRACTS OF INDEMNIFICATION
AUTHORITY CONTAINED IN SECTION 3 OF S. 2213
The indemnification authority requested by the Agency in section 3 of S. 2213
is identical (except for the deletion of the word "shortwave") with authority
previously contained in Agency appropriation acts since the Agency was estab-
lished in 1953.
State Department appropriation acts also included such authority prior to 1953,
when the information function was conducted by the Department.
At the present time, the Agency has only two contracts for the operation and
maintenance of radio facilities, one with the Crosley Broadcasting Corp. and the
second with the National Broadcasting Co., both of which include an indemnifi-
cation clause.
Under these cost-plus-a-fixed-fee contracts the Agency compensates the con-
tractor for such public liability insurance as it deems necessary for the contractor
to have. Normally, the coverage includes automobile liability insurance and
general comprehensive liability coverage under the contractor's policy covering
all his operations. Accordingly, the indemnification by the Government to the
contractor excludes claims covered by such insurance and workmen's compensa-
tion claims.
In effect, the indemnification would have application to situations not normally
the subject of liability insurance and to claims in excess of the limits of the appli-
cable insurance.
The Agency has no record of any claims made or paid pursuant to the indemnifi-
cation clause.
Effective November 1, 1963, the Crosley contract will expire and the only radio
facility which will be operated by a contractor will be the Bound Brook, N.J.,
facility operated by the National Broadcasting Co.
(The committee proceeded to the consideration of other business.)
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