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posed to him rather than his own knowledge as of that time of the circumstances.

Mr. WRIGHT. I think that is obvious as a result of the timing of the letter and as a result of the evidence we have otherwise adduced, that at a later date Mr. Kunzig did, in fact, very vigorously object to this whole proposal.

Additionally, the Chair would like to observe simply on a personal basis that he has always found Mr. Kunzig to be a direct person and not a devious person, and it would be unfair for any implication to exist in the record that the Chair regards the reference to working matters out quietly as a reflection of character with respect to Mr. Kunzig. The Chair meant, instead, that it should refer to the whole process of a sub rosa agreement having been reached prior to the action of Congress and the Congress not being advised of those agreements prior to its action in adopting the Postal Reform Act.

Mr. CONSTANDY. I think, Mr. Ahart, that the material in relating to the breakdown of what was referred to by Mr. Blount as the Corps of Engineers construction program averaging $2 billion a year was given to the record this morning.

I would like to point out that we will have additional testimony next Tuesday, the 20th, from GSA and in advance of their testimony I have been advised that the reference here to the comparison with GSA, which is that their program averaged about $115 million a year with a projected fiscal year 1972 workload of about $180 million is not exactly accurate. Their average from 1959 to 1971 is about $250 million and for fiscal year 1972 their projected figure is $375 million in direct constuction programs. Assuming the passage of the lease construction program they have pening, it would be an additional $400 million which would raise their construction program anticipated to something on the order of $775 million, which compares rather favorably for like construction that you testified to for the corps in dollar amount.

There is reference to the September 26 letter from Mr. Blount to the Secretary of Defense formally requesting the corps to undertake the postal building program, is that correct?

MR. AHART-Resumed

Mr. AHART. That is correct.
Mr. CONSTANDY. Could we make that exhibit 12?
Mr. WRIGHT. Without objection, that will be exhibit 12.
(The letter follows).

EXHIBIT 12

THE POSTMASTER GENERAL,

Washington, D.C., September 26, 1970. Hon. MELVIN R. LAIRD, Secretary of Defense, Washington, D.C.

DEAR MR. SECRETARY: More than a year ago, preliminary discussions were held between members of the Corps of Engineers, U. S. Army, and the Post Office Department to explore the desirability of using the Corps' services in undertaking accelerated construction of our postal facilities. By reason of the passage of the Postal Reorganization Act and our 1971 Appropriations Act, we are now in a position to go forward with an expedited construction program.

We believe that the capabilities of the Corps of Engineers, as outlined in their letter to me dated 27 March 1969, would be of great assistance in bringing into being the vitally needed modern postal plants. This letter will serve as formal confirmation of our desire to utilize the capabilities of the Corps of Engineers for real estate services, design, construction, and supervision during construction and acceptance of our Postal Public Building Program as mutually agreeable. We would expect to work out a definitive agreement with the Corps to specifically identify the types of services we will require and to provide for strict control of the costs to be incurred in carrying out our program. We understand that the Corps may need additional manpower because of our requirements and we are willing to explore the transfer of manpower and spaces needed in meeting our requirements.

At the present time I can anticipate utilizing the Corps of Engineers for a near term predictable construction load of approximately $750,000,000. I mention this figure only to give you an indication of the total scope of work which we see ahead of us during the next 242 to 3 years. Again, specific details will be worked out in the agreement which results from this request for services.

I hope this relationship is consistent with your policies so that you can authorize the appropriate people to proceed with negotiations with us. Sincerely,

WINTON M. BLOUNT. Mr. CONSTANDY. You made reference to an October 8, 1970, letter from Mr. Laird to the Postmaster General in the text this morning. In that letter, Mr. Laird mentions that he reviewed this matter with the Secretary of the Army, who advised him that the corps would be able to undertake the program without impairing its ability to carry out other programs currently assigned to it and, as a consequence, he is authorizing them to proceed in negotiations with the Post Office Department for that work.

Mr. AHART. That is correct.

Mr. CONSTANDY. I would like to bring out another memo. There is another document which predates that by a day. It is not made reference to in your material. We have a copy of it. It is dated October 7. It is an internal memorandum to the files of the Corps of Engineers on the postal public building program. There are two elements in the letter that I think bear mentioning in that they again address themselves to the manner in which the agreement was developed between the corps and the Post Office Department insofar as it relates to being restricted in the advertisement of it.

Paragraph 3: As of 6 October 1970 only the high level staff of the U.S. Post Office Department were aware of the proposal to use the Corps. Public announce ment of the plan may not be made for several days (or weeks). Therefore, detailed discussions with subordinate elements cannot be initiated until further notice.

Paragraph 4 reads as follows: A summary briefing for U.S. Post Office De partment high level staff (3 to 5 persons) is scheduled for Friday, 1100 hours, 9 October 1970. At that time, Post Office Department representative will also provide a summary briefing to the Corps. Details on this briefing will be furnished as available.

This internal memo in the corps then makes reference to the fact that the briefing on the proposal as of October 7, 1970, would be confined to three to five persons from the Post Office.

A third paragraph stresses the fact that only the high level Post Office people I think, Mr. Chairman, this becomes significant because one of the questions we asked the Post Office Department was the extent to which they undertook studies within the Post Office Department to satisfy themselves as to the feasibility of the situation. Not only was their embargo on discussion limiting as it related to the Post Office Department's ability to conduct those studies but it seems additionally to be limited to the corps staff in considering in detail the feasibility of the undertaking of the work.

Mr. WRIGHT. I fully agree and I believe additionally it underlines what we already have discovered, that all these discussions and arrangements even at late as October of 1970 after the passage of the Postal Reorganization Act—were being conducted in an atmosphere of secrecy:

Without objection, these documents will become exhibits No. 13 and 14.

(The documents follow :)

EXHIBIT 13

THE SECRETARY OF DEFENSE,

Washington, D.C., October 8, 1970. Hon. WINTON M. BLOUNT, The Postmaster General, Washington, D.C.

DEAR RED: This is in reply to your letter of September 26, 1970, asking that I authorize the Department of the Army, acting through the Corps of Engineers, to provide real estate, design, construction and supervision services in connection with the Postal Public Building Program.

I have reviewed this matter with the Secretary of the Army, who advises me that the Corps will be able to undertake this program without impairing its ability to carry out the other programs currently assigned to it. Accordingly, I am pleased to be able to authorize the Secretary of the Army to proceed with the negotiation of a definitive agreement covering the services which you desire. Secretary Resor will designate representatives of the Corps of Engineers to initiate negotiations with you immediately. When a mutually satisfactory agreement has been developed, the Secretary of the Army will authorize the Chief of Engineers to provide services on a direct basis to the Post Office Department.

I welcome your plan to utilize the Corps of Engineers in advancing your expedited construction program. The Corps has a wealth of experience gained in a variety of construction programs, such as the Civil Works program, the Military Construction program, and the highly complex ICBM, NASA and SAFEGUARD programs, and it will bring to bear its record of outstanding performance and integrity in executing your program. Sincerely yours,

MEL.

EXHIBIT 14

DISPOSITION FORM

SUBJECT_POSTAL PUBLIC BUILDING PROGRAM, OCTOBER 7, 1970

1. The purpose of this DF is to furnish current information as to status of actions and to request your comments for the planning for the support to the USPOD.

2. By MRS, 2 Oct 70, copy of General Clarke's memorandum to Special Assistant to the Secretary of Army for Civil Functions forwarding proposed memorandum for Secretary of Defense and letter from Secretary of Defense to PMG. Secretary of the Army forwarded memorandum to Secretary of Defense at COB 5 Oct 70. It is anticipated that Secretary of Defense will sign letter to Mr. Blount MLT Wednesday, 7 Oct 70.

3. As of COB, 6 Oct 70, only the high level staff in the USPOD were aware of the proposal to use the Corps. Public announcement of the plan may not be made for several days (or weeks). Therefore, detailed discussions with subordinate elements cannot be initiated until further notice.

4. A summary briefing for the USPOD high level staff (3 to 5 persons) is scheduled for Friday, 1100 hours, 9 Oct 70. At that time, USPOD representative will also provide a summary briefing to the Corps. Details on this briefing will be furnished as available.

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5. Confirming previous information, the Corps is responding to individual request by USPOD (e.g., DeRussy, Kearny, Memphis) and is preparing to undertake accomplishment of the overall Postal Public Building Program. The development of the Corps organization and plans for management should consider the following factors:

a. Immediate response. b. Establishment of a Class II activities (Not to be named a Division). c. Maximum use of existing Corps organizational elements (OCE and Field).

d. Assign work to both military and civil districts.

e. On-going projects (less than 50% complete), projects under design, and projects to be designed, will be assigned to Corps.

f. Central Postal Service support element to include appropriate capability for:

(1) Management & Control.
(2) Liaison/Interface.
(3) Design Development.
(4) Construction Execution.

(5) Planning and Program.
Mr. CONSTANDY. In your statement Mr. Ahart, we come to the
March 11 agreement, consisting of a four-page agreement that
was signed by Secretary of the Army Resor and the Postmaster Gen-
eral on March 11, 1971. As can be seen, this is an umbrella-type docu-
ment which covers the basic subjects detailed in the longer memo-
randum of agreement signed the same day. Why there were two, we
do not know.

I have asked one of the staff members to review the briefing on that same day, March 11, 1971, by the Postmaster General before the Post Office and Civil Service Committee in the House of Representatives to see whether there was any discussion or revelation as to the existence of a long agreement and I feel safe to say there was not.

I call attention to the page 2 section on policy.

The Chief of Engineers will perform real estate, design, and construction services in the acquisition of postal facilities as requested by the Post Office Department. Public announcements and congressional liaison will be the exclusive responsibility of the Post Office Department.

May we make that exhibit 15 ?
Mr. WRIGHT. Without objection, this will become exhibit 15.
(The document follows:)

EXHIBIT 15 MEMORANDUM OF AGREEMENT BETWEEN THE POST OFFICE DEPARTMENT AND THE

DEPARTMENT OF THE ARMY PROVIDING FOR POSTAL FACILITIES ACQUISITION SERVICES

1. INTRODUCTION 1. This Memorandum of Agreement outlines responsibilities and areas of interest under which the Chief of Engineers, under the supervision of the Secretary of the Army, will furnish as requested by, and to, the United States Post Office Department (USPOD) and its successor, the United States Postal Service, the following services in connection with the acquisition of postal facilities: (a) real estate, (b) design and construction, and (c) administration of contracts required to carry out (a) and (b) above.

2. The Chief of Engineers is designated as the Department of the Army rep resentative for all matters pertaining to the acquisition of postal facilities for USPOD.

3. The Chief of Engineers and the USPOD will develop a working agreement implementing the responsibilities and areas of interest covered by this Memo randum of Agreement; the working agreement will be consistent with the rela

tionships and principles set forth herein. Further, representatives of the Chief of Engineers and the USPOD will develop such implementing procedures as are necessary.

II. POLICY

The Chief of Engineers will perform real estate, design, and construction services in the acquisition of postal facilities as requested by the USPOD. Public announcements and Congressional liaison will be the exclusive responsibility of the USPOD.

III. CONTRACTURAL SERVICES 1. In entering into and administering contracts for real estate and the design and construction of facilities, the Corps will follow its civil works procedures to include the handling of claims and disputes.

2. The Chief of Engineers will designate the Contracting Officer and the Corps activity to perform the services in connection with each project.

IV. OPERATING PROCEDURES

USPOD requests for real estate, design, and construction services will be in writing. The request will include the scope of the services desired, project funding and scheduling limitations, and the project design sttandards and criteria. A. Real estate.

The Corps will furnish all real estate services as requested in writing by the USPOD. In connection with site acquisition, USPOD will designate the real estate and the real estate interest to be acquired. B. Design.

The Corps, either with its own forces or through an Architect-Engineer (A-E), will prepare all drawings, technical specifications, and other construction contract documents necessary for the completion of the projects. C. Construction.

Subject to the provisions of the working agreement to be developed by the Chief of Engineers and the USPOD, the Corps' Contracting Officers will enter into and administer the construction contracts, issue change orders, execute supplemental agreements, decide disputes, and take all other necessary and appropriate actions to assure the successful completion of the projects.

V. BUDGET AND FINANCE

The costs of design, construction, site selection, or real estate acquisition or other real estate services undertaken by the Corps at the request of the USPOD will be funded by USPOD on the basis of total project costs, including costs of settling contractor claims and disputes arising under the provisions of the contracts. For this purpose, project costs are the customary charges which include applicable engineering and design services and construction expenses, whether by contract or hired labor, costs of supervision and inspection of construction, support costs, costs of settling contractor claims and disputes, and, in addition, include the costs attributable to the acquisition of real estate. Labor costs include surcharge rates established to cover employees' leave and government contributions for insurance, health benefits, and retirement.

VI. AMENDMENT AND TERMINATION

1. This Agreement will continue in effect for a period of three years following its effective date, and thereafter as may be agreed by the parties. This Agreement may be modified or amended by written agreement between USPOD and the Department of the Army.

2. In the event circumstances are such that either USPOD or the Department of the Army deems it necessary or desirable to terminate this Agreement before completion of any services initiated hereunder, USPOD and the Department of the Army will consult in advance of such termination date sufficiently in advance so that the parties may make personnel and other adjustments in their operations in light of such termination.

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