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PAYMENTS TOTALING $3.5 MILLION WERE MADE BY THE DEPARTMENT OF DEFENSE TO YOUR COMMITTEE UPON YOUR REQUESTS. AN AUDIT BY THIS OFFICE HAS DISCLOSED THAT ALL OF THE $3.5 MILLION PAID YOUR COMMITTEE TO MEET ARENA CONSTRUCTION COSTS WAS NOT UTILIZED FOR THE ARENA BUT THAT A PORTION THEREOF WAS. THE ARENA REFRIGERATION PLANT WAS DESIGNED TO ACCOMODATE THE TEMPORARY RINKS AND OVAL AND WAS OF CONSIDERABLY GREATER CAPACITY THAN WOULD HAVE BEEN REQUIRED FOR THE ARENA ALONE. THE SECRETARY OF DEFENSE IS AUTHORIZED TO ADVANCE TO THE ORGANIZING COMMITTEE. THE EXPENDITURE OF SUCH FUNDS BY THE COMMITTEE IS SUBJECT TO SUCH AUDIT AND CONTROL AS THE COMPTROLLER GENERAL OF THE UNITED STATES MAY PRESCRIBE.'.

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B-135232, APR. 2, 1962

TO THE ORGANIZING COMMITTEE, VIII OLYMPIC WINTER GAMES:

BY LETTER OF JUNE 11, 1958, B-135232, WE FORWARDED TO YOU A COPY OF OUR LETTER TO THE SECRETARY OF DEFENSE SETTING FORTH THE PROCEDURES FOR MAKING PAYMENT TO YOUR COMMITTEE OF FUNDS APPROPRIATED FOR THE CONSTRUCTION OF A SPORTS AREA AS AUTHORIZED BY THE ACT OF APRIL 3, 1958, PUBLIC LAW 85-365, 72 STAT. 78. UNDER THESE PROCEDURES, PAYMENTS TOTALING $3.5 MILLION WERE MADE BY THE DEPARTMENT OF DEFENSE TO YOUR COMMITTEE UPON YOUR REQUESTS--- CERTIFIED BY THE SUPERVISING ARCHITECT AS BEING REASONABLE--- FOR FUNDS NEEDED TO CONSTRUCT THE ARENA.

AN AUDIT BY THIS OFFICE HAS DISCLOSED THAT ALL OF THE $3.5 MILLION PAID YOUR COMMITTEE TO MEET ARENA CONSTRUCTION COSTS WAS NOT UTILIZED FOR THE ARENA BUT THAT A PORTION THEREOF WAS, IN FACT, USED TO FINANCE THE SEPARATE CONSTRUCTION OF TWO TEMPORARY ICE RINKS AND ONE SPEED SKATING OVAL. ALSO, THE ARENA REFRIGERATION PLANT WAS DESIGNED TO ACCOMODATE THE TEMPORARY RINKS AND OVAL AND WAS OF CONSIDERABLY GREATER CAPACITY THAN WOULD HAVE BEEN REQUIRED FOR THE ARENA ALONE.

SECTION 2 OF PUBLIC LAW 85-365 PROVIDES THAT:

"SEC. 2. OUT OF MONEYS APPROPRIATED BY CONGRESS FOR THE SPECIFIC PURPOSE, THE SECRETARY OF DEFENSE IS AUTHORIZED TO ADVANCE TO THE ORGANIZING COMMITTEE, VIII OLYMPIC WINTER GAMES, SQUAW VALLEY, CALIFORNIA, U.S.A. 1960, INCORPORATED, A NONPROFIT CORPORATION OF THE STATE OF CALIFORNIA, AT ITS REQUEST, FUNDS TO CONSTRUCT, ON LAND OF THE UNITED STATES IN SQUAW VALLEY, PLACER COUNTY, CALIFORNIA, A SPORTS ARENA SUITABLE FOR THE CONDUCT OF SPORTS AND APPROPRIATE CEREMONIES IN CONNECTION WITH THE V111 OLYMPIC WINTER GAMES. FUNDS SO ADVANCED BY THE SECRETARY OF DEFENSE SHALL NOT EXCEED ESTIMATED REQUIREMENTS FOR EXPENDITURES FOR THE ENSUING TWO-MONTH PERIOD FROM THE DATE OF THE REQUEST. AS COMPLETED, THE ARENA BECOMES THE PROPERTY OF THE UNITED STATES. THE EXPENDITURE OF SUCH FUNDS BY THE COMMITTEE IS SUBJECT TO SUCH AUDIT AND CONTROL AS THE COMPTROLLER GENERAL OF THE UNITED STATES MAY PRESCRIBE.'

AND SECTION 4 OF THE SAME ACT PROVIDES THAT:

"SEC. 4. THERE IS AUTHORIZED TO BE APPROPRIATED NOT TO EXCEED $500,000 TO CARRY OUT THE PURPOSES OF SECTION 1 AND NOT TO EXCEED $3,500,000 TO CARRY OUT THE PURPOSES OF SECTION 2 OF THIS ACT.'

THE $3.5 MILLION AUTHORIZED BY THE ACT OF APRIL 3 WAS APPROPRIATED BY BY THE URGENT DEFICIENCY APPROPRIATION ACT, 1958, PUBLIC LAW 85-400, APPROVED MAY 14, 1958, 72 STAT. 108, 109. WE BELIEVE THAT THE LANGUAGE OF THE AUTHORIZATION ACT AND ITS LEGISLATIVE HISTORY TOGETHER WITH THE LEGISLATIVE HISTORY OF THE APPROPRIATION ACT REQUIRE THE CONCLUSION THAT THE $3.5 MILLION APPROPRIATION INVOLVED WAS FOR THE PURPOSE OF CONSTRUCTING A PERMANENT INDOOR FACILITY AND THAT OUTSIDE ICE SKATING FACILITIES OF A TEMPORARY NATURE WERE NOT COMTEMPLATED. SEE SENATE REPORT NO. 1342, 85TH CONGRESS, 2D SESSION, REFERRING TO THE SPORTS ARENA AS A PERMANENT MEMORIAL OF THE OLYMPIAD. SEE ALSO HEARINGS BEFORE THE SUBCOMMITTEES OF THE COMMITTEE ON APPROPRIATIONS, HOUSE OF REPRESENTATIVES, ON URGENT DEFICIENCY APPROPRIATIONS FOR 1958, PAGES 32 THROUGH 60. NOTE PARTICULARLY THE STATEMENTS ON PAGES 34 AND 35 UNDER THE HEADINGS COST AND DESCRIPTION OF ARENA AND PROPOSED USE OF ARENA AFTER THE OLYMPIC GAMES. NOTE ALSO THE SCHEDULE ON PAGE 51 WHICH SHOWS THAT REFRIGERATION AND RINKS WERE TO BE PROVIDED BY THE STATE OF CALIFORNIA. FINALLY, NOTE THE STATEMENTS ON PAGES 58 AND 59 SETTING FORTH PLANS TO BUILD FIVE SKATING RINKS AND SPECIFICALLY RELATING ONLY THE ARENA TO THE FEDERAL AID BEING SOUGHT. COPIES OF THE DOCUMENTS REFERRED TO ARE ENCLOSED FOR YOUR CONVENIENCE.

INFORMATION OBTAINED DURING THE COURSE OF OUR AUDIT, SHOWS THAT $269,394 OF FEDERAL FUNDS ADVANCED FOR MEETING ARENA CONSTRUCTION COSTS WERE USED BY YOUR COMMITTEE FOR CONSTRUCTION OF THE TEMPORARY RINKS MENTIONED AND THAT $276,000 OF SUCH FUNDS WERE SUPPLIED TO A REFRIGERATION UNIT DESIGNED TO SERVE THESE RINKS AS WELL AS THE ARENA. ON THE BASIS THAT THE SURFACE AREA OF THE TEMPORARY FACILITIES IS 6.5 TIMES GREATER THAN THAT OF THE ARENA, WE ARE ESTIMATING THAT $239,200 OF THE REFRIGERATION UNIT COST IS ATTRIBUTABLE TO OTHER THAN ARENA REQUIREMENTS. THIS $239,200 PLUS THE $269,394 CONSTRUCTION COST OF THE TEMPORARY RINKS TOTALS $508,394 OF FEDERAL FUNDS UTILIZED FOR PURPOSES CONTRARY TO THOSE FOR WHICH THEY WERE APPROPRIATED.

IT APPEARS CLEAR FROM THE PORTIONS OF LEGISLATIVE HISTORY QUOTED THAT BOTH YOUR COMMITTEE AND THE STATE OF CALIFORNIA WERE AWARE THAT THE $3.5 MILLION OF FEDERAL FUNDS MADE AVAILABLE BY THE CONGRESS WERE FOR THE SALE PURPOSE OF FINANCING THE COST OF THE PERMANENT SPORTS ARENA AND IT WAS ON THIS BASIS THAT THE FEDERAL GOVERNMENT WAS REQUESTED TO MAKE ITS CONTRIBUTION. THEREFORE, AND SINCE UNDER THE PROCEDURES ESTABLISHED FOR DISBURSING THESE FUNDS BY THE DEPARTMENT OF DEFENSE IT WAS THE RESPONSIBILITY OF YOUR COMMITTEE FOR SEEING TO IT THAT THEY WERE UTILIZED ONLY FOR THE PURPOSE FOR WHICH THEY WERE APPROPRIATED, WE MUST CONCLUDE THAT THE COMMITTEE IS INDEBTED TO THE UNITED STATES IN THE AMOUNT OF $508,594, CONSTITUTING THE TOTAL OF FUNDS REQUESTED AS NECESSARY FOR THE ARENA BUT NOT USED IN ITS CONSTRUCTION.

A COPY OF THIS LETTER IS BEING TRANSMITTED TO THE GOVERNOR OF THE STATE OF CALIFORNIA.

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