NOTE TO COLONEL JOHN MILLER FROM(Sanitized)

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP74B00415R000300210013-8
• Release Decision: RIPPUB
• Original Classification: K
• Document Page Count: 15
• Document Creation Date: December 19, 2016
• Document Release Date: July 27, 2001
• Sequence Number: 13
• Publication Date: July 21, 1972
• Content Type: NOTES

Appro
Office of Legislative Counsel
Washington, D. C. 20505
Telephone: [phone] (Code 143-6121)
21 July 1972
TO: Colonel John Miller
AF/LGPLA
4C 270 Pentagon
Per our conversation, attached are the
pertinent papers having to do with Scoop
Jackson's referral of the Lao Air Develop-
ment letter. Our suggested reply is based
on an unclassified cable from USAID
Vientiane.
Deputy Legislative Counse
Appro
FORM 1533 OBSOLETE
6-68 PREVIOUS
EDITIONS
 STUART SYMINOTO4PProvCMjIIA-IdTCRABESlJ &;QII~/09/25 : CIA-RDP74B00415R000300210013-8
HENRY M. JACKSON, WASH. STROM THURMOND, S.C.
SAM J.' BRV;N. JR., N.C. JOHN G. TOWER, TEX.
HOWARD W. CANNON. NEV. PETER H. DOMINICK. COLO.
THOMAS J. MC INTYRE, N.H. BARRY GOLDWATER. ARIZ.
HARRY P. BYRD. JR.. VA. RICHARD S. BCHWEIKER, PA.
HAROLD E. HUGHES, IOWA WILLIAM Y. SAXBE, OHIO
LLOYD BENTSEN, TEX.
Legislative Liaison
Department of Defense
Washington, D. C.
COMMITTEE ON ARMED SERVICES
WASHINGTON, D.C. 20510
June 26, 1972
Dear Sir:
The enclosed is respectfully submitted to you
for every proper consideration.
Please provide me with a report in duplicate,
and return the enclosure to me with your response.
HMJ:gtr
enc.
C G
8 7 5
'zCnx$eb .cif of ez zonate
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 it.aved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
VN LAM '0,4A 'UM V
P.O.
I;DX 233 WiTTAY ilunPQ1tT
V1Eis't1ANP, LAOS
,2. . 7 2--(i?66
12 June 1972
i} Lra oa,r?us .ty,
...r i
Craig r?,~^?J!
7110 flortor;iblo Som,ttor Henry
Old r,nr,tror v rice
t3itlt*,.
Wa ah ing L on, D. C,
Dear Senator Tackgonj
i'ni pI'$,:ent.iy in r?t +t3 w' 1'i': i l'l a for 4..;30 fur feValejr womt , L.9!) 9,8 j, tt'=.t 2CC5j`'L+_'F? f
fixed wing c:.ont;ract cor!ttzrr.rry whifeh 1-1,1:3`T,eau n in ex:int;cnco for ari,out, 1.6 months
and is In c.,i.roct coarj'.?r:~t;i.tion with Air Arnasricca and C,m-L:irvtnt,tji.,, A.T. th.i9
paint I can hone ntly st,rate that in many arcaa.Oareciall.y Air Srk1:.por?t, thtc
t1.5< tax payer is having his rone.Y thrown away. An oxarrtpics Air lo-,ar?ica
churgets upwards of 0:15.00 per fli8ht hour for 10 place light twin r.ircrafi..
Our cor.tpany has proposxad operatiagg, a similar Ly'pe of aircraft, at ;2Y0.0c-
pe'2' fl. Cht; lhour, the jprcl'b... m i9 th;r.t most Govorrirrtent Aj ncjes ou, i,cr{:..
oonL nus to c xolude our proposal. duos to t:he Govcrtrmant:al status of Air Am omc
lie have for the past ].2 months tern flyin:u 3eJ.1 Jet hanger ti l.icopt,*rs for
USAID With a record. o.f flight reliability unequaled in our burxtnean.
lieO.'s ; ~crt+riJr s3s3~Gy ,1art"rrc,4eraon they nowslsrrper columnist, who is
to good friend of. rosy uncle, a`-onc --31't'L:f.rag the }arT-crn(r)75" nt;icvrr,
various rt ;ertcie :i.n j,w-lon. (101- < b)j.9c vrs I will .fcrr?w:,.rrd arl,y
infornrrrtion to hi.m a,n .1. be.'Ue;ve that "Action i,n W sslairax;ton will scan e liov.
the touchy situ,a.tiozt with to open bidcia.rtxy, in this partai eul.:,r
l 4rn al 3o trs? if. i,r a lout- or to 8wim.Lox? t; tt;r,ct:,on irn rog: rds to thi;r si.t,uatiot.
ssince he hae a, groat deal. to do witty oral?I?uj+r i t;:i_ons,
IIonestly i.f tit;raa b i.adAn s,rsrr: i;0 t.ako Place ira th3..n area the Govnrnwr :mt wfju; ,:
save tuji.,t,i.oiis ad' t?x 1>.:ay':r cira.J.'iFa-~;;. 'hie price* Air Arrmerica }irts hr?;c:n chtri ,
its outragCout; Ind 1i. cli,r:;;':^,St.C t,t, oxxx' poli.ti_cal systtj(rs. One cart sr,y that we
tr3 a also cookin:; a profit thouCUi w er certati.nl..y a. o not nt& irrr; 2;iO prnr fl:i,.;.t
hour as is /t.Lr Rrio?rten rind Couta.msrata:L; ra,ar;~cr4:S.rrc;s the rtat pu t, hour i:r a+v::;~
hit I% r. Somoth]rrg shotl.t.rI bo done ror Lf)o (i%l1.,' aof.
.
D. Craig Jarrell
Dircetor of Flight TralnIna
LAO AIR DEVELOPMENT I
P.O. Box 283
WA1.TAY AIRPORT Approveuc erxelte'ase 2006/09/25 : CIA-RDP74B00415R000300210013-8
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10 July 1972
SUBJECT: Laos Flying Hour Rates - GFY-1972
The following flying hour rates are quoted for the major AAM/USAID
flying contracts in Laos and represent the rates that were in effect
during GFY-1972. All rates'are dry with the exception of those for
the C-46.
TYPE
CONTRACT 439-342
CONTRACT 439-713
AIRCRAFT
Maximum
Minimum
Maximum
Minimum
I Transport
Rate (1)
Rate (2)
Rate
Rate
C-123K
$150.00
$126.00
C7A, DHC-4
158.00
122.00
C-46
(wet)
295.00
295.00
II Utility Twin
DHC-6 (Twin Otter)
259.00
167.00
$259.00
$167.00
Volpar Turbo Beech
256.00
117.00
201.00
170.00
III Single Engine
PC-6C - Porter
162.00
124.00
138.00
116.00
H-395 - Helio
145:00
113.00
IV Helicopters
UH-34D
S-58T
261.00
203.00
261.00
203.00
Bell 204
273.00
225.00
273.00
225.00
Bell 205
Hughes 500
As can be seen, there are no rates on the above schedules that even come
close to the "$385.00 per flight hour for 10 place light twin aircraft"
cited in Mr. Jarrell's letter of 12 June 1972. In fact, the only aircraft
we offer in the light twin category are the Volpar Turbo Beech (9 pax
capacity) in the $117 to 259 per'flight hour range and the DHC-6 Twin
Otter (20 pax capacity)` in the $167.00 to $259.00 per flight hour range.
(1) Maximum rate is based on the minimum number of flying hours
guaranteed to AAM under this contract
(2) Minimum rate is a de-escalated rate based on the maximum numbeYT,INTL
of flying hours AM may be called on to provide under this
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 Approved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
Only proposal received USAID from LAD for 10 place light twin
engine aircraft was letter dated 13 June 1972 (one day after Jarrell
letter to Senator Jackson) offering Cessna 402 at $225 wet wing
per flight hour based on. 100 hour monthly usage. USAID need for
administrative aircraft fully met by Volpar which apparently the
.Air America 10 place light twin aircraft mentioned in Jarrell's
letter.
We fail understand figure of $385 per flight hour cited by Jarrell
as Air America charge for this aircraft. Under contract AID 439-342,
which expired 30 June, USAID paid Air America monthly price of
$18, 000 for 65 flying hours ($277 per flight hour) with contractor
furnishing pol, and $137 for every wet wing flight hour over 65 in
any given month. Had we needed Volpar for 100 hours per month,
Air America hourly price would have been $228. In fact, since
USAID barely reached 65 hour minimum guarantee, LAD's 100 hour
monthly requirement was beyond USAID needs. Were LAD to propose
65 hour monthly usage minimum, their price for such contract would
have to have been increased to equal, but possible exceed that of
Air America.
At point of receipt LAD's Cessna proposition, USAID was obviously
cognizant impending air contract consolidation wherein USAID Volpar
use would become unit in fleet of four with probable reduction in
flying hour rate.
While final contract 0002 prices await October negotiations, we
note that contractor has agreed to dry wing hourly interim billing
rate for Volpar of $202 up to 90 hour monthly minimum per aircraft
and $111 for over-minimum hours.
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 A rove 9 5 ; 4158000300210013-8
U',
UNCLASS I J I ED 400
PAGE 01 VTENTI 05286 13:I,0157_
43
.?...TION AID-59
:14F'O OCT"01 EA-04 IQA-912- H-01 E-Q'3 L-03 INR-f T-03
-p~--~~4~ww-n.a~rY+nwupM 06 03
P 131126Z'JUL'72
FM AMEMBASSY VIENTIANE
To S(=CSTATE WASHDC PRIORITY 9P36
UNCLAS 'VIENTIANE: 5286
AIDAC
SUBJECTS CONGRESSIONAL CORRESPONDENCE - -AIR SUPPORT
REFS STATE 123810
I. Rt' PARA 2 REFTEL FOLLOWING FACTS MAY RE HELPFUL.
IN PREPARING OR FOLLOWING UP ON RESPONSE TO SENATOR
'JACKSON?
2? ONLY PROPOSAL RECEIVED USA ID FROM .LAD FOR 10
PLACE LIGHT TWIN rNG wr AIRCRAFT WAS LETTER DATED
13 JUN 1972 (ONE DAY AI"T(:.R .JARRELL' LETTER TO
SENATOR JACKSON 1 OF("ERING CESSNA 4P2 AT. $225 WET WIE
PER FLIGHT HOUR RAGED ON 10q HOUR MONTHLY USAGE O
USA ID NEED FOF A0N t1j I')"ft?AT I VET A I RC.RAr? T FULLY MET
BY VOLPAR WHICH AE'P'AREN'rLY THE AIR AMERICA 10 PI-ACE
LIGHT' TWIN AIRCR,4F'T MENTIONF:'E) IN JAR(2EL!_tS L,I TTER,
3a WE FAIL UNDER STAND FIGURE OF $3E15 PER FLIGHT HOUR
CITED by JAPRELL_ AS A11R A14ERICA CHARtE FOR THIS
AIRCRAFT,, UNDER (-f1N7it. (,,Ail) 4: 9-:34P, WHICH r,.1PIRED
30 JUNE, USAID f'4IU ,1;:f? AH ',-? (Ct; t1f,tV-'4L.Y PRICE C)F'
91 8, e00 FOE? 65 F'L'Y I N(; 1111URS 1'$277 PER F1. IGHT HOUR 1
WITH CONTRACTOR ;'EJtftt';;tr HG :.,[,L. AND 9137 FOR E"/E:RY
WET WING FLIGHT HOUR OVER 68 IN ANY GIVEN MOh1THo
04D vf NEEDED VOLPAR FOR 1003 HOURS PER MONTH, AIR
AMERICA HOURLY PRICE WOULD HAVE DEEM 91?28 , I N FACT,
MINIMUM GUARANTEE,
-91.NCE USAID r3AR*(,'f f1E.'AC-~L:[} 65 HOUR
LAG?S 103 ?14001? REOUTREMF'N'f WAS BEYUNO USAI0
JvcC-fir:. WC-ME t.' i) -6 5 I-lf1JR 'IONTHLY USAGE
UNCLAS:J IFIE
,+08ry
RDP
 RDP74B00415R000300210013-8
Approved ~Fo~rr Release 2006/09/25 :.CIA-State
A./ Gp a Y^ bR,*,,, e nL .i" L s
UNCLASSIFIED
PAGE 02 V I ENT I a5P 6 1 31 3 ?! 7.
MINIMUM, THI 1R PRICE' FOR `;Ur t! CONTRACT WOULD HAVE
{C) HAVE BEEN INCRE, E"O TO Er;UAL, l3UT POSSIBLE EXCEF:[)
THAT OF AIR \MERICA.
i. AT POINT 07 RF-C?If T LAD+S CESSNA PROPOSITIONS USAID
.WAS OF3VIOUGL.Y COGNIZANT IMPENDING AIR CONTRACT CON-
SOLIDATION WHEREIN USAID V,)E_nAR USE WOULD BECOME
' U N I T I N FLEET OF FOUR WITH N OBAE3LE RE(JUCT I ON
IN FLYING HOUR RATE.
5. WHILE FINAL CONTRACT O-04) PRICES Atm".I7 O TC,r,r.'R
NEGOTIATIONS, WE NDTi THAT :nNTRACTriP HAS AEREFU
TO DRY WING W0URt.y nIE.E.TN6 RATE FOR VOLPAP
OF $2N2 UP To 9P. HOUR 11ONTH1.Y MINIMUM PER AIR('RAFT
AND still FOR OVF'RY;iINI"MUM Hr)tURS.
60 NOPF THESC''rACTS WILL BE UGFrF'UL.
STEARNS
UNCLASSIFIED
Approved For Release 2006/095rCIA-RDP74B00415R000300210013-8
 Appro%
Appro
~VNDER IIGILL CHECK CLASSIFICATION TOP AND BOTTOM
OFFICIAL ROUTING SLIP
TO
NAME AND ADDRESS
DATE
INITIALS
1
1 C
2
3
4
5
6
ACTION
DIRECT REPLY
PREPARE REPLY
APPROVAL
DISPATCH
RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
Remarks :
FOLD HERE TO RETURN TO SENDER
FROM: NAME, ADDRESS AND PHONE NO.
DATE
FORM NO, 237 Use previous editions
1-67
 Approved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
Mr. D. Craig Jarrell
Director of Flight Training
LAO Air Development
P.O. Box 233
Wattay Airport
Vientiane, Laos
GLC 20 July 1972
Dear Mr. Jarrell:
When I received your letter of 12 June 1972 regarding your
.company's proposals for operating aircraft in Laos and your concern that
Air America is being given some type of preferential treatment, I looked
into the matter closely.
I am advised that the only proposal which USAID received from
your company for a 10 place light twin engine aircraft was contained in a
letter written the day after you wrote to me offering a Cessna 402 at $225
wet wing per flight hour based on 100 hour monthly usage. The 100 hour
monthly requirement was beyond USAID's needs. It is my understanding
that USAID's need for administrative aircraft were fully met by the use
of Air America's Volpar aircraft which apparently is the plane mentioned in
your letter.
Officials I have contacted are unable to understand the figure of
$385 per flight hour quoted in your letter as the Air America charge for
this aircraft. Under contract AID 439-342, which expired on 30 June 1972,
USAID paid Air America a monthly price of $18, 000 for 65 flying hours
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 Approved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
($277 per flight hour) with the contractor furnishing pol, and $137 for every
wet wing flight hour over 65 in any given month. If the Volpar aircraft had
been needed for 100 hours per month Air America's hourly price would have
been $229. In fact, USAID's requirements barely reached the 65 hour
minimum guarantee. It is assumed that a proposal from Lao Air Develop-
ment based on 65 hour monthly usage minimum would equal or exceed the
Air America price.
I understand that air contract consolidation is contemplated and final
contract prices are awaiting October negotiations. If there is anything
further that you would like me to look into in that connection, please let
me know.
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 Approved For RQ-2QFC{74B00415R000300210013-8
July 18, 1972
CIA
DDP/FE
Attached for your information are two versions
of press guidance we've done recently on Lao
Air Development's charge that Air America
charges an excessive rate for a "10-place light
twin aircraft." (See cable details in State
123810 and Vientiane 5286, both of which you
have.)
The lengthier version of the guidance is the
one I cleared with you on July 14; it was not
used, since there were no questions asked
about it at the noon press briefing. The
shorter version was done for the July 17 noon
briefing, at which there also were no questions
about it.
R.
.0 P
UAM
Office of Laos Affairs
A.I.D.
X /4l- 2-1 L3%-
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 Approved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
SUGGESTED GUIDA14CE FOR PRESS BRIEFING JULY 14, 1972
(To be used only on "IF ASKED" basis)
1. Question: I've heard that the AID Mission in Laos contracts with
Air America at $380.00 per flight hour for a 10-place, twin engine
airplane that another U.S. airline has offered to provide a similar
version of for $225.00 per flight hour. If this is true, why is the
USG paying more than half again as much as it needs to for this plane?
Answer: USAID/Laos contracts with Air America for a number of
aircraft, including one known as a "Volpar", which I believe is the one
you are referring to. I don't know where the $380 per flight hour
figure comes from, because in FY 1972 USAID's contract cost was only
$277 per flight hour for a minimum 65 flying hours per month. The
cost would have been $137 for every flight hour over 65 in any given
month. Thus, if USAID had needed the plane for, say, 100 flying hours
per month, the cost would have averaged $228 pc:r flying hour. In fact,
however, USAID barely reached the 65 hour minimum guarantee.
The other "U.S. airline" you refer to is Lao Air Development, 49%
U.S. and 51% Lao owned, which contracts helicopters to USAID. This
company on June 13, 1972 offered to USAIT) a plane similar to the Volpar
for $225 per flying hour based on a minimum 100 hours monthly usage,
which as I have said is beyond USAID needs. If LAD were to propose a
65 hour monthly usage minimum, their price for such a contract would
have to be increased to equal, and possibly exceed, that of Air America.
The USAID contract with Air America has recently been extended for
several month while the U.S. ,.fission in Laos is in the process of
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Page 2
'SUGGESTED GUIDANCE FOR PRESS BRIEFING ('7/14/72)
consolidating its air contracts, in which case the USAID Volpar will
become one unit in a fleetrof four with a?'possible reduction in the
flying hour rate. Final negotiations are expected around October.
Meanwhile, the contrac'Cor hay agreed to an dourly interim rate for
each of the fo` Volpars of $202 for 90 hour monthly minimum and $111
for over-minimum hours, which would average $193 per monthly flying hourFuxe_ !ov
Thus even if USAID continues to use only 65 flying hours per month, it
will realize savings of about $4,900 per month from what it was paying
Air America, and will still pay $1,500 per month less than LAD's proposed
cost.
2. ?Ouesti_on: Will other airlines be permitted to bid on the contracts you
are preparing to consolidate and negotiate?
Answer: Yes. However, in making its selection the U.S. Mission must take
into account, besides the prices offered, such factors as types and suita-
bility of aircraft offered; the experience of personnel offered; and the
ability of the bidder"to perform the services offered. These factors,
of course, are important in any air services contracting, and they are
especially critical under the conditions in which air services must be
provided in Lads.
Clearances:
CIAI(phone)
DOD/ISA:CCook(phone)
SA/L : }IALevin
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 Approved For Release 2006/09/25 : CIA-RDP74B00415R000300210013-8
SUGGESTED GUIDANCE FOR PRESS BRIEFING JULY 7.7 1972
(To be used only on"IF ASKED" basis)
uestion: I've heard that the AID Mission in Laos contracts with Air
America @ $380 per flight hour for a 10-place, twin engine "Volpar"
airplane that another U.S. airline has offered to provide a comparable
version of for $225 per hour. I've also heard that the Mission has
excluded from consideration the lower offer. Will you please comment
on this?
Answer: With regard to the first part of your question, Laos Air
Development, a 49% US- and 51% Lao-owned company providing helicopter
services to USAID/Laos, has recently offered a Cessna 402 @ $225 per
hour for a minimum 100 flying hours per month. Air. America's "Volpar",
calculated at the same monthly rate, is $228.
With regard to the second part, the LAD offer was just received
on July 13 and I don't know that it has been excluded from consideration.
I can say, however, that in considering proposals and bids for flying
services, the Mission must take into account not only the price offered,
but also such factors as types and suitability of aircraft offered, the
experience of personnel offered (including management, pilots, and ground
crews), and the ability of the bidder to perform the services offered.
These factors, important in any air services contracting, are especially
critical under the conditions in which air services must be provided in
Laos,
Clear: CIA
DOD/SA:CCook
I?.A/LC:MPratt
SAIL: IIALevin
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 ,SENDER WILL CHECK CLASSIFICATION TOP AND BOTTOM
Approv
e
Approve
OFFICIAL ROUTING SLIP
TO
NAME AND ADDRESS
DATE
INITIALS.
1
j
2
3
4
'AInt
5
V
6
ACTION/
DIRECT REPLY
PREPARE REPLY
APPROVAL
DISPATCH
RECOMMENDATION
COMMENT
FILE
RETURN
CONCURRENCE
INFORMATION
SIGNATURE
Remarks :
The attached letter was sent to us for
our information by DOD. I have forwarded
action.
1r`
Peputy Legislative Counsel
FOLD HERE TO RETURN TO SENDER
FROM: NAME. ADDRESS AND PHONE NO.
DATE
OLC 7D43 4151
5 July 72
FORM NO. 237 Use previous editions (40)
1-67 I