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Committee's encouragement the Treasurer will conduct a study of the cash flow and short-term investments projected over the next five years in view of these new elements.

Mr. Johnson told the Committee that he felt a responsibility, in the context of on-going business between his company and the Smithsonian, to bring to its attention the long and distinguished relationship between S.C. Johnson & Son, Inc. (Johnson Wax) and the Smithsonian. This has included the company's donations of art and cash, a commission to produce the IMAX film "Living Planet," and, most recently, cosponsorship of the production of the IMAX film "On the Wing" and of the development of a flying replica of a prehistoric reptile and ancillary products. As it has now become apparent some revenues may accrue to the company, as well as to the Smithsonian, after the recovery of direct and indirect expenses for the latter film and products, he disclosed that he would recommend to the company's Board of Directors that any such profits be directed to charitable, scientific, literary or educational purposes. The Secretary and the Committee accepted Mr. Johnson's verbal disclosure, along with his August 27, 1985 letter to the Secretary, and felt that Mr. Johnson's statements met his disclosure responsibilities as a Regent. They further expressed their extreme gratitude for his extraordinary support of the Institution over the years.

[[underlined]] Report of the Audit and Review Committee [[/underlined]]

The Audit and Review Committee met on August 1, 1985. Mr. Peyton noted that, in the report on the Continuing Resolution for Fiscal Year 1985, "the managers [were] greatly concerned with the Institution's seeming inability to accurately estimate costs associated with major construction and equipment programs, especially in view of the aggressive building program the Smithsonian hopes to pursue....The Committees expect to be informed as to what actions the Regents will propose to alleviate [these] concerns...." Noting that management had already recognized some inadequacies and had begun to undertake improvements before this official criticism, Mr. Peyton described such measures as establishing a formal planning organization for which experienced personnel have been hired, placing personnel with cost-estimating experience in management positions, hiring a qualified cost estimator, engaging the services of several cost-estimating firms and architectural/engineering firms, conducting formal cost-estimating training for the staff of the Office of Design and Construction, and establishing standard written procedures for cost estimating and for quality control. Mr. Peyton added that while these and other steps have resulted in improved estimating, the Smithsonian will continue to face special problems in estimating because of the complexities of maintaining and renovating its many historic buildings as well as its requirements for exacting standards in the environmental controls for its museums. He explained that the difficulties in estimating the cost of storage equipment for the Museum Support Center were attributable to the industry's inability to respond to its pioneering design.

The Committee discussed developments with respect to the Smithsonian's maintenance and repair of it 57 high-voltage electrical transformers containing potentially toxic PCB's as a coolant.