(6) Fiscal and audit controls of communications equipment procurement. Pursuant to the policy of the previous Executive Director of the Council, 1969 grants were not audited. All 1970 and 1971 grants for equipment exceeding $5,000 in value will be audited onsite; for equipment less than $5,000 in value copies of invoices and canceled checks are required to be submitted to the Council. This policy was implemented by the director of grant administration in mid1971. The matter of audit control of communications and other equipment purchases is presently under consideration.

(7) Amount and percentage of block action grant funds allocated toward purchase of communications equipment.

1 Based upon grants to date, totaling approximately $5,000,000. The amount figure does not include grants not yet released.

(8) Technical assistance provided to subgrantees in the evaluation and procurement of communications equipment. There is no formal technical assistance mechanism. Of course, the staff specialist on communications provides any requested assistance.

(9) Technical assistance provided to Council by LEAA.

None requested; none provided.

Mr. KELLY. First, the subcommittee has requested that we provide documents in addition to those which the investigators from the subcommittee obtained when they were in Wisconsin. I have those documents if the subcommittee would like to make them a part of the record, directly as they have been given to me by Sheriff Grant and Sheriff Simenson.

Mr. MONAGAN. We will receive them here. I do not know whether they should go in the record at this time.

Mr. KELLY. I think, when they are received, you may not choose to put hem in the record.

Mr. MONAGAN. Thank you.

Mr. KELLY. I think at the outset it might be helpful to the committee if I explained somewhat the history of the council in order that the committee will have some understanding of the change in administration, and I believe the consequent change in the policies of the Wisconsin Council on Criminal Justice.

As the plan which has been provided to you indicates, and as my statement also indicates, the council was orginally established by executive order in early 1969. The then Governor of Wisconsin, while he retained jurisdiction over the council, relinquished the administrative control of the council to the attorney general upon the advice of a government reorganization task force in Wisconsin, and because that task force had recommended that all justice functions be located in the one agency, that is to say, the Wisconsin Justice Department. At the change of administration in early 1971, the council was withdrawn from the administrative jurisdiction of the attorney general and brought back into the Governor's office by the executive order of Governor Lucey, which is attached to my statement. I believe that governmental change is the first step in what may be major changes of policy, although I cannot state them as a certainty at this point_because the major policy meeting of the council is not to take place until October 20.

I can, however, state that the recommendations of the executive director and his staff are a matter of great weight for the entire council, and that it is my inclination and also that of the Governor of the State of Wisconsin to move strongly into the areas of correctional and court reform, and away from the police area and particularly away from the police hardware area.

We most likely will be recommending an increase in police education funding and police community relations and in the service aspects of police work, with perhaps some emphasis on the consolidation of police services in various areas of Wisconsin, although that is a difficult, multijurisdictional matter. It may be functionally desirable but it takes time to put it as directly as I can. I think that the major thrust of your consideration here today is the question of equipment, and in particular police communications equipment, and I think that is a justifiable thrust. As my statement indicates there has been a substantial expenditure of moneys in the past in Wisconsin in the area of police communications equipment. I do not know what the outcome of the council's deliberations on the 20th of October will be with respect to the continuation of the upgrading of the police communications system in Wisconsin. I think some substantial arguments can be made that it is desirable to convert, for example, from a low band. method of communication to a high band clear channel method of communication.

I have my own doubts about the effectiveness of the distribution of the so-called handy-talkies to policemen on their beats, although I must say I think some reasonable caution has been exercised by Wisconsin in this respect in that handy-talkies in the police protection program has been almost entirely limited to Milwaukee which is the major metropolitan area in the State of Wisconsin and is its high crime area.

I think that it is probably very justifiable for this committee to concern itself with the question of the possible antitrust implications of the distribution of police communications equipment and also with respect to bidding and procurement practices. Attached to my statement are exhibits which indicate that the policy of the previous council has been a policy of leaving to the local jurisdictions the question of how they shall go about letting bids or otherwise procuring equipment for which grants have been made by the council.

As best as I can tell based on telephone conversations with my staff and persons in the field, about 50 percent of the dollars spent on communications equipment has been spent by way of a bidding process in accordance with local law, or in accordance with local advice as to the purpose and demand of State law, and 50 percent of the expenditures in communications equipment has been in accordance with a theory of good management practices, which allows for the consideration of more factors than just the factor of lowest price, including service, the nature of the equipment, the availability of advice as to how the whole system should be integrated, and other factors of that sort.

After discussions with investigators from this committee, and in the course of preparing this testimony, I requested the Governor, in accordance with the bylaws of the council, to suspend the release of Federal funds the grants to which he had recently signed but the

funds had not yet been released. I do not have the exact dollar amount on that but I would guess it would be approximately $100,000 or $500,000. Just recently signed by the Governor, those funds will not be released until we are satisfied with respect to the question of bidding and procurement practices.

Second, I have also indicated that it should be the subject matter of the council's deliberations at its meeting on October 20, the question of whether or not we want to move toward a mandate of bidding, stating that we will pay only 75 percent of the lowest bid made to the locality involved, or possibly even consider the question of central procurement practices through the State agency, on the theory that unlike local services equipment may be standardized across the State and therefore there is no need for local procurement practices.

Finally, I have some figures-and I suggest that these figures be used with some care because they give rise to a number of inferences, some of those inferences if they materialize, would be quite serious. On the other hand, they may not materialize. I asked the director of the grant administration of the agency to prepare for me a list of all the communications grants for 1969, 1970, and 1971 as far as we have gone in 1971. The 1969 figures show that Motorola had 56 percent of the market in Wisconsin on communications equipment. General Electric had none, RCA had 43 percent, and miscellaneous others had 1 percent. The 43-percent market share for RCA is a reflection of the fact that the division of motor vehicles which received a grant in 1969 let bids and all of RCA's 43 percent comes from that percentage of the bids that they obtained from the division of motor vehicles. All other grants, the equipment was actually purchased from Motorola.

In 1970, which was the year of substantial expenditures in the communications area, Motorola had 96.1 percent of the market, GE had 0.4 percent, RCA 0.7 precent, Dictaphone 2 percent, and miscellaneous others, the remaining percentages.

I will come back to that percentage and discuss it with you after I give you the 1971 figures. In 1971 counting only those grants up to the most recent meeting of the council and the Governor's decision in mind to hold up the release of funds on the more recent grants, Motorola has 98.3 percent of the market, GE has 0.4 percent, and miscellaneous others, 1.3 percent. The reason I suggest some care with respect to these figures, first of all the way in which they were gathered. They were gathered on very short notice by way of telephone call from my staff to sheriffs and other local law enforcement personnel asking them the status of their communications grants, how they had gone about obtaining the equipment, had they actually brought the equipment in and was it operative yet and who had sold them the equipment. So it is not probative evidence in the legal sense. Secondly, I do not know that just from market structure in this respect we can draw any inferences. Rather I think we can draw perhaps a number of inferences which are really conflicting. It may be that Motorola is simply very successful in Wisconsin, they have the best sales organization, and that there has been nothing more than very aggressive and very effective sales representation.

Another possible inference is that there may have been some attempt. on the part of Motorola to influence local officials. I have received some

indication and again this is hearsay-that Motorola is assisting strenuously in the preparation of bid proposals on the part of the localities.

I am not yet satisfied, and the council has not yet taken any position, and I have not given the council any advice and I will not do so until I know more about what is going on in the field.

There is a final inference, and that inference is that there is an allocation of markets taking place with respect to the procurement of communications equipment.

That is something really that ought to be very much the concern of this subcommittee, as I see it, because until you can determine, for example, what is happening in other States, I do not see how you can answer the question of whether or not the manufacturers of police communications equipment are allocating markets in the United States as a whole. That is a question I cannot answer now. It is a question that I think you should direct your attention to. That concludes my general comments on the subject matter that you asked me to testify on today.

I know that you may have a number of questions pertaining to either particular grants or to the general matters that I have discussed. I would like to add one comment. I do not know what the scope of these hearings is, but I would like to be on the record as saying that it seems to me that one of the most important aspects of reform of the criminal justice system is going to have to be a substantial allocation of Federal funds to the area of juvenile delinquency. I am a strong supporter of the amendments to the 1970 statute and in particular the notion of putting a primary emphasis on corrections through part E.

I have read the various legislation that has been submitted with respect to the treatment of juvenile delinquency, and I would like to see a subsection (f) similar to that proposed by Senator Mathias added to the act so that the proper emphasis on juvenile delinquency would be reflected in the legislation.

That is all I have.

Mr. MONAGAN. Thank you very much, Mr. Kelly.

Your testimony has been most frank, and you have, I think, saved a lot of time by anticipating many of the questions that we would have asked. I might say in general the scope of the inquiry of this subcommittee is to look into the efficiency of operations of the LEAA program under our jurisdiction, which includes the Justice Department, and therefore we are primarily concerned with the operational phase of the program rather than the broad policy which is the jurisdiction of other committees of the Congress.

First of all, may I begin with what you said about inferences. Certainly we agree as to any inferences, and we make no suggestion as to the reasons for the position and preeminence of Motorola in doing business in your State. What we want to do is to ask the questions, certainly looking at the record, as you have stated, and one does ask why is this so? Are there competitive bidding practices, and if not, why not? If one company does come up with 96 percent in 1 year and 98 in another, and there are other reputable companies in the field, is this the proper way to proceed?

I certainly agree with you, and I am sure the committee does, that until all the evidence is in we are not going to draw any inferences.

But we do ask the questions, and therefore welcome your explanation as to what the situation is. Also, we welcome your statement that the matters of central procurement, of possible standardization throughout the States and mandatory competitive bidding are going to be discussed this month.

Mr. KELLY. Mr. Chairman, one of the interesting aspects of the evidence that I have thus far is that if indeed 50 percent of the money spent is being spent in accordance with bid and 50 percent in accordance with sound management practices, and if uder those circumstances Motorola is still doing as well, it may be that we will find really that the mountains roar and give forth with a mouse. We can stay with the policy of the previous council. Again I am very concerned and I do think it is worth looking into. I am just not inclined to make any final judgment at this juncture.

Mr. MONAGAN. We do not ask you to do it, nor do we make one. We do think that the questions should be asked and that is why we did ask the question. After all, what we are interested in is getting the best equipment at the lowest rate, if equipment is desirable.

There are a few questions that I would like to ask. How were the requirements and the communications policy of the State and local law enforcement agencies established?

Mr. KELLY. My understanding is that the council really took no position until it began to receive applications from the localities in substantial amounts requesting communications equipment grants. As an aside, I will tell you that I think one of the differences between the early years of the council and the present is that the council is not moving away from what I might call a passive, or a reactive method of treating grants.

Originally if a grant came in it would get treated. Now we are trying to turn that around, build programs, and go out and find grantees who we think will assist in carrying forth the objectives of those programs. At any rate, with respect to communications equipment in particular, they began receiving grant applications for substantial amounts of moneys. Really, nobody in the council, and I think probably no one in the staff, had a full understanding of the technical aspects of the communications equipment. So the staff and the executive director recommended to the chairman of the council, who is an associate justice of the Wisconsin Supreme Court, that he appoint a technical advisory committee, or call it what you will-it was a group of men who advised the council with respect to policies and practices regarding communications equipment.

Attached to my statement is really the work product of that communications technical advisory committee which put forth a general policy statement and the communications task force added to that and decided on certain of the priority elements of communications improvement.

In particular, they decided to try and convert the entire State from low band to high band, and to be responsible for preparing a police emergency radio network. Finally, providing what is called an on-line service to the developing data banks with respect to criminal justice information by adding the availability of teletype machines for all of the various jurisdictions in the State in order that they would have on-line contact with each other and with the central de