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TUESDAY, JULY 13, 1971


Washington, D.C.
The subcommittee met at 10:10 a.m., in room 2253, Rayburn Build-
ing, Hon. James C. Wright, Jr. (chairman), presiding.
Mr. WRIGHT. This subcommittee will be in order.

From the beginning of the Republic, the business of providing timely delivery of the mail to U.S. citizens was one of the original and vital functions of the Government. One of the earliest acts of the Continental Congress was to make provisions for post roads and post trails.

Always, from that moment until this year, Congress exercised legislative jurisdiction over this key function of government, and the Public Works Committees of the House and Senate exercised the legislative responsibility to provide buildings for use by the Post Office Department, often in conjunction with other agencies of the Government, particularly following passage of the Public Buildings Act of 1959.

Much of this has changed. The Postal Reform Act of 1970 has radically altered that historic relationship. That act created an independent establishment of the executive branch with the capacity to sell on the open market up to $10 billion worth of bonds and with unrestricted authority over postal facilities. The act also provided for the Postal Service to take over from the Federal Government all public buildings in which it occupies 55 percent or more of the space.

These provisions for unilateral decisions by the Postal Service for its own interests seem to portend serious planning and management problems for the General Services Administration, and its tenant agencies, and for the U.S. Army Corps of Engineers, which the Postal Service has retained as its facilities construction and real estate management agency.

It will be the purpose of these hearings to ascertain exactly what effects the building program of the Postal Corporation will have upon the Government and its agencies and, therefore, upon the taxpayers of this country; and what protections, if any, should be provided to the taxpayers under these new circumstances. Mr. Grover.

Mr. GROVER. Mr. Chairman, I would like to associate myself with your remarks concerning these very important hearings. These oversight hearings are doubly important to me since I am a member of and am very much interested in the work of this Subcommittee on


Investigations and Oversight, and also I have the honor of serving as ranking minority member of the Subcommittee on Public Buildings and Grounds, which is responsible for legislation dealing with the facilities we will be discussing here.

On this very point, Mr. Chairman, recent events have come to our attention, particularly concerning the withdrawal of the Post Office from certain facilities scheduled for their use. Like yourself, I have become extremely concerned over the impact such actions will have. What will be the effect upon the Federal agencies who were to have become tenants? One of our committee's basic responsibilities is for the smooth transition in dealing with the space needs of Federal agencies whether these needs involve merely an expansion or a new location. Plans have been drawn and sites have been acquired. Must we begin anew the processing of design, or site acquisition for those public buildings which it has been determined do not now meet postal needs? Or will these plans be abandoned with space needs left to gather cobwebs and dust? What effect will such delays have upon the waiting agencies?

And what of the Corps of Engineers, Mr. Chairman? What effect will the proposed Corps of Engineers construction and management relationship with the Postal Service have upon the agency which has for so long and so well served, through this committee, the rivers and harbors and flood control needs of this Nation?

I have many unanswered questions, Mr. Chairman, and it is my hope that, as the testimony unfolds before us in these 2 weeks, we will not only find some reasonable answers, but we may be assured that the projected efficiency of one part of this Government will not work to the inefficiency of other parts.

Mr. WRIGHT. Our first witness for today in these hearings is Mr. Rod Kreger, Acting Administrator of the General Services Administration. That Agency was created by law to be a real estate agent and to exercise a landlord relationship with all the other agencies of Government.

I understand that Mr. Kreger is accompanied by Mr. Herman Barth, Deputy General Counsel, General Services Administration.

Mr. Kreger, are there others with you who may testify today or respond to questions?

Mr. KREGER. Yes, I have with me Mr. Bill Sanders, Deputy Commissioner of Public Buildings Service; Mr. Bill Butts, Director of Office of Budget; Mr. Mike Martin, my special assistant; and Mr. Thomas Gherardi, director of our congressional affairs office.

Mr. WRIGHT. But you and Mr. Barth will be the ones who will be answering questions of the committee; is that right?

Mr. KREGER. Most of them; yes, sir.
Mr. WRIGHT. Would you two then stand to be sworn at this time?

Do you solemnly swear that the testimony you will give to this subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?

(Messrs. Rreger and Barth responded in the affirmative.)

Mr. Wright. Mr. Kreger, I observe that you have a prepared statement. You may proceed in such manner as you desire, either reading the statement, or presenting it in toto, or submitting it for the record and summarizing it, just as you please.



Mr. KREGER. Mr. Chairman, if it is agreeable with you. I think we would like to read the statement because it does give, I think, a background of some of the problems that will come up later.

Mr. WRIGHT. Very well.

Mr. KREGER. Mr. Chairman and members of the subcommittee, the subcommittee has asked us to limit our testimony today to the impact of the Postal Service's withdrawal from several pending GSA building projects and to the transfer of certain public buildings to the Postal Service pursuant to the Postal Reorganization Act.

GSA will again appear before this subcommittee on July 20 to review GSA's overall relationships with the Postal Service.

I would like to thank the chairman and the subcommittee for its courtesy in narrowing the scope of today's hearings. As the chairman knows, Administrator Kunzig and Public Buildings Service Commissioner Sampson are out of town fulfilling longstanding commitments.

In October 1970, recognizing the problems GSA would have to work out with the newly created Postal Service, Administrator Kunzig created a special task force to work with Post Office officials.

This task force was directed to determine just what services formerly performed by GSA would, under the broad new authority of the Postal Reorganization Act, be performed by the Postal Service. Since Administrator Kunzig expected that the major impact upon GSA would be in the public buildings area, he appointed Commissioner Arthur F. Sampson, who also serves as Deputy Administrator for Special projects, to head GSA's task force. I know Mr. Sampson will be pleased to discuss further questions the subcommittee may have on July 20.

I think it would be appropriate, Mr. Chairman, for me to review some of the background of GSA's construction authority as it relates to the construction of postal facilities.

Under the Public Buildings Act of 1959, GSA is generally authorized to construct office or other facilities for executive agencies. In the interest of economy and efficiency, the Administrator may delegate this authority to any executive agency. Since this law was enacted, GSA has constructed 389 buildings at a cost of nearly $1.1 billion.

By law, GSA must take several specific steps before a public building becomes a reality. For example, GSA must submit a prospectus to the House and Senate Committees on Public Works for their approval. This prospectus outlines the need for a particular project and its size, scope, and cost.

Following prospectus approval, GSA must request and receive a series of appropriations to acquire the site, perform the design, and, ultimately, construct the facility.

As Administrator Kunzig testified on June 22 before this subcommittee, GSA's average project delivery time for a $13 million project has been 67 months-a little over 512 years.

This is not to say, Mr. Chairman, that it takes this long for every $13 million building. Some may be a shorter period of time, and some may be even longer.

We have made many significant management changes within GSA's Public Buildings Service during the last 2 years, all directed at reducing the amount of time it takes GSA to construct a building.

Nonetheless, as Administrator Kunzig stated, there are certain statutory requirements imposed upon GSA which militate against a reduction in project completion time. The Administrator discussed at length some of the necessary legislative reforms.

Those delays were undoubtedly a factor when, in 1966, the Post Office Department requested, and the Administrator granted, a delegation of authority to the Post Office Department to construct facilities which were primarily postal related. The delegation permitted redelegation.

To my knowledge, however, this delegation of authority has never been redelegated by the Post Office Department to any Federal or non-Federal agency.

In general, the delegation provided that GSA would submit a prospectus to the House and Senate Public Works Committees and, following committee approval, all design and construction of the project would be funded and performed by the Post Office Department.

Standards set by the Administrator, pursuant to the Public Buildings Act, were made applicable to postal construction under the delegation, but the Post Office Department was free to execute its building program within its own time frame so long as GSA's standards were met.

With respect to facilities to house the Post Office Department and other Federal agencies, GSA retained the authority to develop and submit a prospectus, request appropriations, and build the project. In these facilities, the Post Office Department was like any other Federal tenant.

Although Federal agencies usually remain as permanent tenants in GSA facilities, GSA does not enter into lease agreements with them. Thus, if the need for that particular agency to operate in that location ends, the agency moves out. GSA is then faced with the task of reassigning that space to another Federal agency.

On several occasions prior to July 1, 1971, the Post Office Department has withdrawn from certain GSA projects on the grounds that a single postal facility, rather than a joint Federal building, would be more appropriate for its needs.

In addition, the Post Office Department believed that certain postal facilities were so urgently needed that these projects should be built under its delegation of authority from GSA or its statutory authority to lease-construct its own buildings, or that there should be authority granted under the Postal Reorganization Act.

For example, prior to the enactment of the Postal Reorganization Act, the Post Office Department withdrew from three projects-Honolulu, Hawaii; Manchester, N.H.; and Charlotte Amalie, V.I. Despite this withdrawal, GSA plans to proceed with these projects at a reduced scope.

As the subcommittee knows, on August 12, 1970, the new Postal Reorganization Act was signed into law. This act of Congress gives to the

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