The director of grant administration during the period between the departure of the former executive director and my own coming took it upon himself to indicate that henceforth for any grant in excess of $5,000 there would be a complete onsite audit. Any grant less than $5,000, invoices and canceled checks are to be provided to the fiscal staff of the council in Madison and there will be no onsite inspection of those grants. So that the present posture of the fiscal evaluation process is that the 1970 and 1971 grants will be reviewed by the fiscal staff, but we have no results at the moment.

In direct response to your question, the answer is, no, no one at the agency has as yet done that kind of a detailed comparison between the bid documents and the actual purchase of equipment. As the exhibits to the statement indicate, this is very, very much a function of the position taken by the previous council that really all matters of local subgrants and in particular communication equipment subgrants were matters to be governed and controlled by the local governments. So if there was any bidding discrepancy, or any claim either on the part of the public or on the part of an alleged losing competitor, the remedy was to be found by local law.

Mr. INTRIAGO. Mr. Kelly, in the document you submitted from Pierce County, it shows that the firm which was awarded the contract, Motorola, bid a total amount of $24,953. A voucher from the county to Motorola indicates that the firm was paid $26,584, or roughly $1,700 more than was bid. Do you have any explanation of that?

Mr. KELLY. I have a letter which I received from the sheriff. Perhaps I should just read the contents of the letter.

Mr. INTRIAGO. At that point if I may interrupt, the prevailing bid had a trade-in allowance of $3,030. Yet the county received the amount that you stated, $2,633. Would there be any reason why the county did not receive the full trade-in allowance that was proposed in the accepted bid?

Mr. KELLY. There is no reason that I can yet determine from any conversations. I will say this: As a general matter of the grant application and grant-making process, very, very frequently there will be this type of discrepancy between the original grant application that comes in and the actual expenditures. It is something that we consider to be almost a daily operational matter. A phone call will come into the director of grant administration and somebody will say something, we sent the application $3,000, it will cost us four or two, is that OK with you, and we will say yes, and will not even formalize it with a documentary record. Were I you, I would be careful again about drawing inferences from these facts. I would like to finish the paragraph.

This resulted in lowering the amount paid by the county but it increased the overall price of the system from $24.953, to $26.584, 1970-71. This procedure may not meet with the approval of those who are administering the program, but it certainly had no bearing as to GE not receiving the bid.

Mr. INTRIAGO. Could you supply that letter for the record?

Mr. KELLY. Certainly.

Mr. MONAGAN. It may be placed in the record at this point, without objection.

(The document follows:)

OFFICE OF SHERIFF OF PIERCE COUNTY,
Ellsworth, Wis., October 1, 1971.

Re Grant Award No. 70-04-01-08

WISCONSIN COUNCIL ON CRIMINAL JUSTICE,
State Capitol, Madison, Wis.

DEAR SIR: We are enclosing copies of everything pertaining to the above grant award received by this county for the installation of a new communication system. Included in the enclosed material are copies of the ad for bids which ap peared in all six of our weekly newspapers. The first bid was set for May 21, 1970 and at this time it was the feeling of the Law Enforcement Committee that the bids from Motorola and General Electric were both too high as the county's share would greatly exceed the $8,000 originally allocated for this project. The second bid included some of our radio equipment as trade-in and the bids were opened on June 25, 1970, with Motorola being the low bidder. (General Electric, $25,670; Motorola, $24,953.80.) Motorola's bid was accepted, and at this time our committee began negotiations with the Motorola representatives in an attempt to keep the county's share at $8,000. This resulted in the county selling the radio equipment included as trade-in to Milltown Electronics for $2,633.88. This resulted in lowering the amount paid by the county; but it increased the overall price of the system from $24.953.80 to $26,584.71. This procedure may not meet with the approval of those who are administrating the program; but it certainly had no bearing as to General Electric not receiving the bid.

As you perhaps know, Sheriff Grant of St. Croix County and I have both been questioned regarding procedure followed in this program. The questioning began in a manner which gave me the impression that this was a routine matter; but as it continued the questions became rather personal, such as whether or not I had been "wined and dined" by any of the Motorola representatives. They also asked if any of the board members had received any Motorola equipment for their personal use. I felt that some of their questions were improper; but they were answered to the best of my ability as I had nothing to hide.

I have separated the material you are receiving, trusting that it make your unpleasant job a trifle easier and I will be expecting your telephone call at which time we can go over these problems in more detail.

Thanking you for your cooperation in this matter, I remain,
Yours very truly,

Enclosure.

ROY H. SIMENSON,
Sheriff, Pierce County.

Mr. INTRIAGO. With regard to the trade-in allowance, what is the policy of your council with respect to reduction of the Federal share, proportionately, by the amount of the trade-in.

Mr. KELLY. I don't understand the question.

Mr. INTRIAGO. If a trade-in allowance is provided by the supplier is the Federal share reduced accordingly off the top, so to speak? Mr. KELLY. I do not know.

Mr. INTRIAGO. Do you have a policy?

Mr. KELLY. To the best of my knowledge there is no policy.

Mr. Intriago, maybe I can perhaps shorten the process a bit. There are a number of grants which you asked me to discuss today, and I can tell you what I perceive to be some of the dangers in those grants, and if you want to go into more detail with respect to them, that is certainly acceptable to me.

Mr. MONAGAN. I think you might go ahead and do that. I think your introduction really covered the main points that we had in mind. These are some details that are corroborative perhaps. Why don't you go ahead?

Mr. KELLY. That is my inclination, too, to indicate to you that is in fact the case. I reviewed the records which we keep at the State agency with respect to those grants and I can tell you that on each of those

grants Motorola had a major role to play in the preparation of the original proposals which came into the agency. I consider that to be a dangerous process. It seems to me if there is some way we can render intercept in the original grant application and then upon the disposition of the council with respect to the grant, it seems to me that is the juncture where the competitors ought to come into the process. They should come in on a straight bid type of arrangement in my tentative judgment. That is the one element that ties together all of the grants that you have asked me to produce today.

Mr. INTRIAGO. Mr. Kelly, vou indicated in your statement that approximately 50 percent of the grants are subject to competitive bidding and the other 50 percent are procured on the basis of “good management."

Mr. KELLY. I also indicated that it is a very rough estimate.

Mr. INTRIAGO. As you probably know, in Polk County, which is a county we have not yet discussed, there were bids taken and the low bid was approximately $12,000 less than the bid which was accepted. I am wondering if in your 50 percent we ought to put in perspective what competitive bidding actually is in your State and what policy your council has in insisting that cost effectiveness justification be supplied by the subgrantee if its award is not to the low bidder.

(Project documents pertaining to purchase of communications equipment by Polk County, Wis., follow :)

5.

6.

Terms and Conditions: It is understood and agreed by the undersigned that (1) funds granted as a result of this request are to be expended for the purposes set forth in this application and in accordance with all applicable laws, regulations, policies and procedures of Wisconsin and the U. S. Department of Justice; (2) no expenditures will be eligible for inclusion if occurring prior to the effective date of the grant; and (3) funds awarded by the Wisconsin Council on Criminal Justice may be terminated at any time for violations of any terms and requirements of this agreement.

Name and Title of Individual Legally Empowered to Commit Applicant to this Agreement:

COUNTY OF POLK

PROPOSAL

To upgrade the entire radio communications system for police service in Polk County. This renovation will include the Polk County Sheriff Department, two small cities, eight villages, and one unincorporated village.

The objective is to improve the system by replacing the low band underpowered system with a modern high band system.

PROGRAM

The installation of new radio communications equipment for all law enforce ment jurisdictions in Polk County. This new system will have the capability of non-interference communicatinos not only with entities within the county, but also direct base to mobile and mobile to mobile communications with surrounding local police jurisdictions, state patrol units, conservation warden units and Federal officers. The need for new updated equipment is of vital importance to law enforcement in this county.

The present low band system does not provide total coverage, and it is the intent of this county government to completely renovate the radio system for law enforcement. The present system will be removed and replaced with a new high band system. This system as depicted in the budget supplementary attached to Act 2 submitted by the representative for Motorola Incorporated is compatible with the specifications and guidelines as set forth by the Communications Ad Hoc Committee of the Wisconsin Council on Criminal Justice.

This proposal by Motorola Inc. is submitted only as a guideline for the purpose of listing equipment and estimated costs for this project. There has been no commitment to this firm for the purchases of items listed.

With the county tax structure based on residential and farm property taxation, and rising costs involved in this county government, it will be necessary to request assistance in funding this much needed project. With the high tax structure that prevails, we can find no way of obtaining additional taxation to fund the much needed improvement.

We hereby request assistance under the Omnibus Crime Bill and Safe Streets Act for funding of this worthwhile project to upgrade the communications system in Polk County.

MOTOROLA COMMUNICATIONS AND ELECTRONICS INC.,
Eau Claire, Wis., January 13, 1971.

Polk County Sheriff's Department, Balsam Lake, Wis.

GENTLEMEN: Motorola Communications and Electronics thank you for the opportunity of proposing and designing a new communications system for Polk County. The following system is designed to follow all of the guide-lines and features necessary to comply with the recommendations suggested by the Ad Hoc Committee of the Wisconsin Council on Criminal Justice.

SYSTEM FEATURES

This system design is a "Private-Line" (tone-coded squelch) mobile relay system with 4 frequency mobile units operating on (1) mobile relay county frequency, (2) direct by-pass of the mobile relay for car to car communications, (3) 155.370, the point-to-point channel for neighboring communications, (4) 155.475, state of Wisconsin State coordinating channel. The mobile relay station will be located approximately 2 miles South of Balsam Lake on a new 200 foot guyed tower. The point-to-point base station will be located at the Polk County Sheriff's Office and the antenna mounted on a 50 foot tower section atop the Sheriff's office building. The control station antenna will be located atop the Polk County courthouse and the base station also located in the Sheriff's office. Both the point-to-point station and the control station will be remotely controlled for convenience purposes as well as combining the system equipment for ease of operation. One other control base will be located in the city of Amery. Of the five portable units, one will be at Amery, one at St. Croix Falls and three will be located at the Sheriff's Office.