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Mr. Duncan. Thank you, Mr, Chairman. Mr. Kennedy, I under- 

 stand that the Park Service has approximately 600 concessions 

 contracts. Is that correct? 



Mr. Kennedy. Yes, sir. 



Mr. Duncan. But I am also told that some number of those con- 

 tracts are in an expired status, and some of them have been for 

 quite some time and are simply renewed on a year-to-year basis. 

 Can you tell me how many of those 600 are in an expired status 

 at this time? 



Mr. Kennedy. Yes, sir. The short form is too many. Approxi- 

 mately 500 concession contracts and permits had expired or will ex- 

 pire by the end of 1995. The backlog was because of a freeze on 

 contracting during a couple of years while the concessions contract- 

 ing procedures were reviewed and revised. 



Secretary Lujan, I think, very properly undertook that process of 

 revision. The big ones were beginning to be reissued at the end of 

 1994. 180 of the 500 have been processed since that time. Permits 

 will be authorized or prospectuses issued by the end of this year, 

 and the rest of them will be done next year. They have been held 

 up too long, and we are pushing them out the door just as fast as 

 we can. 



Mr. Duncan. All right. Thank you very much. But let me ask 

 you from another angle about your concessions contracts, and that 

 is this: I was reading some of the testimony in the package that 

 we were provided, and a witness in the next panel will testify that 

 State concessions contracts return on the average about four times 

 as much as your concessions contracts. Can you tell me why there 

 is such a great discrepancy there? 



Mr. Kennedy. I think, Mr. Duncan, that those are for the rea- 

 sons to which Mrs. Chenoweth referred in general and to which the 

 Chairman and others have referred specifically. There are inhibi- 

 tions upon the play of market forces on these contracts. 



The automatic right of renewal and the possessory interests are 

 just inhibitions upon honest, direct competition. And there is no 

 reason for somebody to elevate the rate of return if there is nobody 

 who is going to come in and offer a better deal. That is all. 



Now, we have learned in the Yosemite case, and I understand 

 Yosemite is special, but in the Yosemite case when you go from 

 three-quarters of one percent up toward 16, 17 percent, it indicates 

 there is a great big gap, and that gap can be improved. 



I do not think that 16 or 17 percent is anywhere near what we 

 are going to get in many instances. I don't want to imply that at 

 all, but there is a great big difference there. It is just that there 

 hasn't been real competition for these contracts. There has not. 



Mr. Duncan. Let me ask, and I guess this might be considered 

 almost a proconcessioners question, but I don't mean it as such. 

 But out of the 600 contracts, have you done an analysis or how 

 many do you feel are making exorbitant-type profits or have really 

 sweetheart-type deals at this time? 



Mr. Kennedy. I, of course, haven't reviewed a whole lot of them 

 personally, but I don't think those terms are useful. I don't think 

 there is a sweetheart deal or excessive profits. I do think that what 

 there is here is a lot of stale air, a lot of closed circumstances, an 



