Mr. KREGER. Mr. Chairman, I think Mr. Barth could speak to that question.

Mr. BARTH. I think that considering certain features of it whereby, for instance, we were authorized or required in effect to transfer to the Postal Service those buildings, 55 percent or more which were occupied by the Post Office Department, that that presupposed that we would have to have some relationship with the new Postal Service respecting the space which other Federal agencies occupied in those buildings. While I would think that again the primary purpose of the Postal Service is in the delivery of the mails, I think there is nothing in the act which would certainly preclude them from operating buildings to include the furnishing of space in those buildings to other Federal agencies.

Mr. WRIGHT. Is there anything in the act, to your recollection, that specifically anticipates that the Postal Service, upon taking over this Government property, would turn around and charge the Government rent?

Mr. BARTH. Not specifically; there is a provision in section 411 of the act on the providing of services and the use of property which provides that it can be with or without reimbursement. It is upon a determination by the head of the agency and the head of the Postal Service.

I would certainly think that-and this is speculation on my part, because in the final analysis it is up to the Postal Service to construe the provisions of their own act-but I would certainly think that if the Postal Service is set up on a basis where it is to be in effect selfsufficient, that the services that other Federal agencies provide the Postal Service would be provided on a reimbursable basis the same as the service provided other departments would be on a reimbursable basis.

Mr. WRIGHT. This is what you would think?

Mr. BARTH. Yes, sir.

Mr. WRIGHT. As you read this section of the Postal Act, do you find therein any clear anticipation that the Post Office would charge rent to the Government for buildings it takes over from the Government?

Mr. BARTH. I know of no specific provision in the act which makes it mandatory upon the Postal Service to charge rent.

Mr. WRIGHT. Do you know who made the decision that the Postal Service would charge rent to the Government?

Mr. BARTH. I think it was worked out basically between our representatives and the Postal Service on the basis that we would pay rent for the space Federal agencies occupied in buildings under the control of the Postal Service, and by the same token the Postal Service would pay the GSA rent for all the space it occupies in buildings under the control of GSA.

Mr. WRIGHT. We will return to that question a little later. But, first, I think we want to develop some information with respect to these particular facilities that are withdrawn.

Mr. CONSTANDY. I would like to clarify the point that you will be a tenant of the Postal Service.

You already are. Chapter 20, finance section 2002, subsection (c) (4) is the one that makes provision that all real property 55 percent or

more of which is occupied or under the control of the former Post Office Department immediately prior to the effective date to this section would be taken over by the Postal Service.

Mr. BARTH. Shortly on or after the date the Postal Service came into effect. Now, those properties were transferred effective on July 1. Mr. CONSTANDY. They amounted to some 2,780 buildings which were physically or of record turned over from GSA to the Postal Service. Mr. BARTH. To the Postal Service.

Mr. CONSTANDY. And within that number, the figure you have given me, 1,528 buildings occupied by the Post Office Department, leaving the remainder of 1,252, which will be GSA tenants occupying space in the Postal Service buildings.

So, as to those 1,252 projects, you are already their tenant, correct? Mr. BARTH. By the same token, they are tenants of GSA in the buildings which we retain.

Mr. CONSTANDY. We will get to more of that a bit later. On the discussion of these 26, to get back to that, Mr. Kreger, you have some additional information that could amplify the Post Office rationale to withdraw on the eight projects and the 18 lease-construction projects. Will you give us that?

Mr. KREGER. Well, I think there are two factors here, Mr. Constandy. The withdrawal I think was based on inherent delays which I have previously spoken about that are in GSA's building program, and also we have the file of correspondence from the Post Office Department relating to each of these projects which give our reason for withdrawing from each of the projects.

The subcommittee I believe has that information available.

Mr. CONSTANDY. I would like to ask permission, as we discuss each one of these, that the record reflect the worksheet prepared by GSA on each project, and in addition, the letter from the Post Office Department withdrawing from that project, so that the record would then be complete.

Mr. WRIGHT. Without objection, so ordered. That information will be inserted in the record at the point at which we discuss each project, is that your desire?

Mr. CONSTANDY. Yes.

Mr. WRIGHT. Without objection, so ordered, and these documents will be designated exhibit No. 1.

Mr. CONSTANDY. That is true except for Honolulu. I think in the case of Honolulu, you have no letter from the Post Office Department? Mr. KREGER. That is right, sir.

(The information referred to above follows:)

EXHIBIT 1

Mr. A. F. SAMPSON,

Commissioner, Public Buildings Service,
General Services Administration,

Washington, D.C.

POST OFFICE DEPARTMENT, ASSISTANT POSTMASTER GENERAL, Washington, D.C., May 5, 1971.

DEAR MR. SAMPSON: In my letter of April 7, 1971, on Postal Service policies and guidelines governing joint Postal Service-GSA new construction projects, I indicated that our review of your 1972 program would be completed within 30 days.

68-528-71- -2

This review has now been completed insofar as the lease construction portion of your 1972 program is concerned. In conducting the review, the other Assistant Postmasters General and I have given full consideration to the pressing and rapidly accelerating need for improved mail service. No other facet of our operation receives so much critical attention from the public and of course this is as it should be.

When our postal facilities do not have the capacity for handling mail on a timely basis-when peak-hour volume exceeds peak-hour capacity by ratios of 2, 3, and 4 to 1-then the mail backs up in large quantities and service to the public deteriorates. In all instances involved in this review, we found that the project had been pending in GSA for a substantial length of time usually several years. We understand that the reasons for this delay are in virtually all instances matters beyond your control. Nevertheless, while the projects are pending, the Postal Service in the areas affected continues to deteriorate and pressures for action on the Postal Service continues to mount. It was just this situation that the Postal Reorganization Act was designed to remedy. Within a few months that Act will be effective, affording the Postal Service a method for acting rapidly to obtain the space it needs. In contrast, GSA cannot act on these projects until Congress has considered and passed the lease construction authority you have requested. We commend you for your aggressiveness in seeking this authority as a method of obtaining these facilities more rapidly than otherwise would be possible, but the inherent uncertainty of relying on future Congressional action of this type must be taken into account.

There is one other factor that we felt compelled to take into consideration and that is the requirement, implicit in the Postal Reorganization Act, that the Postal Service obtain its new facilities in the most economical manner possible. In many instances, as you know, leasing is not the most economical method of obtaining a new facility. This is particularly true with respect to larger facilities where residual value, real estate taxes, and the lessor's profit are all factors tending to make ownership more economical than leasing. Since the Postal Service would, no doubt, be expected to pay its pro rota share of the leasing costs of the buildings constructed under your lease construction program, this economic factor must be taken into consideration.

The consideration of all these factors has led us to the reluctant conclusion that the Postal Service cannot participate in your lease construction program insofar as space for main post offices is concerned. Accordingly we are withdrawing from the projects set forth on the attached list. We have previously advised you of our intention to withdraw from some of these projects, such as Griffin and Rome, Georgia; Moscow, Idaho; and Florence, South Carolina. With respect to other projects, such as Pearsall, Texas, and Essex Junction, Vermont, we had indicated a desire to continue with the project if we could be assured of firm funding plans and a firm construction schedule. It appears that a firm commitment on these projects is not now possible.

We are very appreciative of the fine cooperation we have received from you personally and from your Agency in the past. We look forward to a continuation of this cooperation, particularly in furnishing space for postal stations and branches. In the case of these two types of facilities, we would not be the dominant occupant of the building, but would instead be in the same position as other Federal Agencies-needing some space at the contemplated location but not enough to warrant the construction of a Postal Service owned building.

Our plan is to develop current postal needs in the localities which would have been served by the lease construction projects referred to in this letter and to proceed to satisfy those needs by the most economical and expeditious method possible. In formulating our plans, we will be glad to consider (on a lease-back basis) any other Agency needs you might care to submit and which you believe can be met without prejudicing the interest of the Postal Service. We appreciate the considerations mentioned in your letter of March 12 on this subject, but we feel that under the circumstances now existing, you may wish to avail yourself of this offer. More specifically, we plan to proceed with a project for Waterville, Maine. That project, as planned by GSA, called for postal occupancy of 86 percent of the space with the remainder to be occupied by other Agencies. Perhaps the relatively small amount of space required by other Agencies at Waterville could be provided in a Postal Service owned building. We stand ready to cooperate if you desire to proceed on this basis.

The decision reflected in this letter has not been made hastily. Rather, our careful examination of all the factors bearing on the decision, particularly the matter of improved mail service on a timely basis, has led to our decision to meet our space needs for main post offices by utilizing the authority contained in the Postal Reorganization Act.

I solicit your understanding of our position.
Sincerely,

HENRY LEHNE, Assistant Postmaster General.

MAY 4, 1971.

List of Joint Postal Service-GSA lease construction projects from which the Postal Service is withdrawing:

Batesville, Ark.; Griffin, Ga.; Rome, Ga.; Waycross, Ga.; Moscow, Idaho; Iowa City, Iowa; Waterville, Maine; Fitchburg, Mass.; Oxford, Miss.; Woonsocket, R.I.; Florence, S.C.; Denton, Tex.; Houston, Tex.; Pearsall, Tex.; Essex Junction, Vt.; Wenatchee, Wash.; Elkins, W. Va.; and La Crosse, Wis.

Mr. CONSTANDY. Of the 18, there are two other projects to which we have to address ourselves to, separate from the 18.

Of the 26, 18 were contained in the present 1972 budget as part of your lease-construction project?

Mr. KREGER. Proposed lease-construction program.

Mr. CONSTANDY. Elkins, W. Va., and Oxford, Miss., have since been funded by Congress in the GSA's fiscal year 1972 budget for direct Federal construction. There is one other that we should mention before we get into them, and that is San Angelo, Tex., if you could turn to your material on that.

Mr. KREGER. Right.

Mr. R. I. NIXON,

POST OFFICE DEPARTMENT,

BUREAU OF FACILITIES, Washington, D.C., April 7, 1971.

Assistant Commissioner for Operational Planning, Public Buildings Service, General Services Administration, Washington, D.C.

DEAR MR. NIXON: This is in response to your letter of March 30, 1971, asking whether we have firm plans for participating in your proposed project for San Angelo, Texas. As you know, by letter dated December 2, 1968, the Postal Service advised your Agency that it desired to participate in your San Angelo project. This participation, it was indicated, included space for the main post office at San Angelo, totaling about 63,000 square feet.

San Angelo is a sectional center and the facility we require must serve as a processing plant not only for San Angelo but for mail originating from and destined for 26 surrounding post offices associated with the San Angelo office in its sectional center activity. Our needs call for a single-story mail processing plant, located in an outlying area, readily accessible to trucks from sectional center post offices and from other mail sources. For our purposes, the building should be surrounded by extensive acreage for employee parking and for the parking and maneuvering of postal vehicles. These requirements do not lend themselves to a limited site (five acres) and the business district location contemplated and indeed required for the Courts and other Federal Agencies. We would expect to meet our business district space requirements by retaining a station in the downtown area, probably located in the existing Federal building which will become the property of the Postal Service upon formal implementation of the Postal Reorganization Act.

An additional factor of course is that of time. Since the prospectus for the San Angelos project is just now being considered by the Office of Management and Budget, it is reasonable to expect that it will be a considerable length of time before a construction contract is awarded. We believe that, under the provisions of the Postal Reorganization Act, the Postal Service will be in a position to act much more rapidly in obtaining a new facility than would be the case under the provisions of the Public Buildings Act of 1959 and other statutes governing the procedures of your Agency.

These considerations have led to a decision to withdraw from the San Angelo project and from other projects of similar status (where prospectuses have not been approved) insofar as main post office space is concerned. If your Agency decides to proceed with this project for the purpose of providing for the needs of the Courts and other Federal Agencies of San Angelo, we will be glad to provide you with such needs as we have for the location of a station in that facility. This, of course, would be an alternative to utilizing the existing Federal building for this purpose.

We regret the necessity for this and other similar decisions, and particularly the resulting disruption of your plans which is bound to occur. We feel that we are bound in good faith to utilize the new Postal Reorganization Act to the maximum extent possible for the benefit of the Postal Service and of course this means the adjusting of planning procedures based on conditions existing before the passage of this important Act.

Sincerely,

HENRY LEHNE, Assistant Postmaster General.

SAN ANGELO, TEX., POST OFFICE, COURTHOUSE, AND FEDERAL OFFICE BUILDING Prospectus (11(b) report) approved: Senate 4/29/71, House-8/11/69. Total estimated project cost: $5,513,000.

Site: Size 169,800 SF (estimated). Status of Acquisition-Site not selected. Building area: Gross-125,300 SF; Net-96,500 SF; 61% of space is for Postal

use.

Status of design: Design not started.

Date of postal withdrawal: 4/7/71.

Remarks: Above data taken from Section 11 (B) report. On September 30, 1970, a prospectus based on revised postal requirements was submitted to OMB proposing construction of PO-CT-FOB. This prospectus replaced the Section 11 B report.

On March 19, 1971, OMB returned prospectus for restudy in view of possibility POD might withdraw from project and to review court requirements.

Reduced project and revised prospectus contemplated. Scope and cost to be developed.

PBS-GSA, 7/10/71.

Mr. CONSTANDY. I think we might dispose of that one. I think you have it in your prepared material there.

Mr. KREGER. Right. San Angelo, Tex., was a project which originated from the 11(b) report which was approved by both the Senate and the House. It was approved by the House in 1969, and by the Senate in April of 1971. It is a $5,513,000 cost. There have been no steps taken yet as far as acquiring a site or designing the building.

Mr. WRIGHT. Now, the San Angelo, Tex., project was approved in 1969 by the House?