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beneficial occupancy of the building. The tests should be completed as soon as practicable after occupancy so that full utilization of the facility may be effected promptly.

V. BUDGET AND FINANCE

1. The obligation of USPOD funds for projects and specific services requested under this Agreement will be authorized individually by USPOD Project Āuthorizations. The Corps will not start work on any project or specific services until it receives the applicable USPOD request for services. Each request for services will identify the project or specific services to which it relates and will contain a general description of the scope of the services requested. In addition, each request for services will be accompanied by a Project Authorization which will set forth the approved funding and any specific limitations. 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, cost of supervision and inspection of construction, support costs, costs of settling contractor claims and disputes and, in addition, costs attributable to the acquisition of real estate.

2. Design, Construction, and Mechanization. The USPOD will fund all payments to contractors pursuant to the provisions of contracts entered into by the Corps in accordance with this Agreement, including costs of settling contractor claims and disputes. The USPOD will additionally fund the costs incurred by the Corps in connection with each individual project, to include the Corp' costs for supervision of design, engineering, construction and mechanization. The Corps will establish controls over its operations to ensure that its costs for such services will not exceed 5.5 percent of the total program payments to contractors for design, construction, and mechanization and for any Corps inhouse design. This rate is based on the assumption of a continuing program of not less than $250 million annually and a schedule of projects at least six months in advance of dates on which services are required. Should this assumption not materialize, the Corps and the USPOD will consult to develop a mutually acceptable course of action. Regardless of the terms of this Agreement, the Corps will continuously seek ways of performing its services in the most efficient and economical manner.

3. Real Estate. The USPOD will fund all payments for land acquired through purchase contracts or by condemnation requiring deposits of estimated compensation together with any deficiency which may be awarded. The USPOD will additionally fund all costs incurred by the Corps in providing real estate services pursuant to this Agreement. It is estimated that the Corps' costs for site selection for budgeting purposes will average $3.500 per location and that the Corps' costs for site acquisition will average $3,800 per parcel inclusive of administrative and support costs, provided, however, that the USPOD will fund the actual costs incurred by the Corps in connection with each individual project. The Corps will effect continuing aggressive management to minimize its costs to the extent practicable.

4. At the end of Fiscal Year 1972 and each succeeding fiscal year while this Agreement is in effect, the USPOD and the Corps will conduct a joint review and analysis of the costs specified in paragraphs 2 and 3 of this section to include the status of Corps costs in not exceeding the 5.5 percent program limitation, with particular emphasis on problem areas, if any, and to consider the need for any adjustments, as appropriate. 5. The specific funding procedures are as follows:

a. Existing USPOD Contracts for which the Corps Designates a Successor Contracting Officer.—The USPOD Project Authorization applicable to each contract will include the status of contract financing and will authorize contingency funds in a specific amount for the issuance of change orders and/or contract modifications as authorized by this Agreement. Change order and contract modification documentation will be forwarded to the USPOD to be recorded against the contingency funds authorized to be obligated by the Corps. Vouchers for payments due under the contract will be certified by the Corps and forwarded to the USPOD for payment. Services performed by the Corps under the terms of this Agreement and within the budget estimate for the project or specific services requested will be on a reimbursable basis. Standard Forms 1080 will be forwarded to the USPOD for reimbursement.

b. Projects for which the Corps is to Let Contracts During FY 1971.Total Program funding, including the Corps' related costs, both direct and indirect, will be transferred to the Corps on SF 1151. The authorization to proceed with individual projects will be given by specific USPOD Project Authorizations. Unexpended balances as of June 30, 1971, will be transferred back to the Postal Service on Standard Form 1151. Cash to cover payments for projects commenced prior to July 1, 1971, will be included in the Standard Form 1151 described in Paragraph c below.

c. Projects on which the Corps is to commence Providing Services on and after July 1, 1971.—On or before July 1, 1971, the Corps will be issued a SF 1151 and a Budget Authorization authorizing the Corps to obligate Postal Service funds required to accomplish planned projects, subject to receipt of specific requests for services and accompanying Postal Service Project Authorizations. Promptly after receiving the Budget Authorization, the Corps will prepare and submit to the Postal Service a projection of monthly expenditures by project for one year in advance. The projection will be revised in February of each year for the twelve months commencing the next previous January 1st, and in August of each year of the twelve months commencing the next previous July 1st, and at such other times as may be necessitated by changes in the Budget Authorization or otherwise. The cash required by the Corps for disbursements in accordance with the monthly projection will be transferred to the Corps monthly in advance, or as otherwise agreed by the parties. If at any time additional funds are required for any project, or it becomes evident that additional funds are likely to be required, the Postal Service will be so advised.

VI. AUDIT

The USPOD may examine all records and documents pertaining to direct and indirect costs charged to the USPOD pursuant to this Agreement.

VII. REPORTS

In addition to all other reports, consultations, advice, notifications, and transmittals provided for in this Agreement or indicated by emergent developments, the Corps will submit in writing to the USPOD the following periodic reports :

A. Monthly Project Progress Reports.—For each project on which the Corps is providing services under this Agreement, the Corps will submit to the USPOD each month on a mutually agreeable date a Project Progress Report detailing, in an agreed format, the status and progress of the project as of the last day of the preceding calendar month. Each such report will cover all major activities involved in the project for which the Corps has responsibility including, as appropriate, site selection, site acquisition, design, and construction. Each Report will include pertinent information concerning the scheduled and actual commencement and completion dates for the major activities involved in the project, and will show : the scheduled and actual percentages of completion of each major activity; the estimated and/or actual costs of site selection and acquisition; the basic terms of contracts as they are let and modified ; increased costs and time extensions made by change order, supplemental agreement, or otherwise; developments having, or likely to have, a significant effect upon the cost or time of completion of the project; and such other information as the USPOD may reasonably request.

B. Monthly Project Fiscal Status Reports.-For each project on which the Corps is providing services under this Agreement, the Corps will submit to the USPOD each month on a mutually agreeable date a Project Fiscal Status Report detailing, in an agreed format, the fiscal status of the project as of the last day of the preceding calendar month. Each such report will include the original and current amount of the Budget Authorization and the applicable Project Authorization, the amount of accrued expenditures, the undelivered orders, the unobligated balance, and such other information as the USPOD may reasonably request. The Corps will also submit monthly on the agreed date a summary report reflecting the totals of the individual project fiscal status reports.

C. Special Reports on Completed Projects.Concurrently with the submission of the final progress and fiscal status reports on each project, the Corps will submit to the USPOD a special report setting forth, in an agreed format, such fiscal and physical data on the completed project as the USPOD may reasonably request. 3. Background.

VIII. AMENDMENT, DURATION, AND TERMINATION 1. This Agreement may be modified or amended by written agreement between the USPOD and the Corps, and it is understood that appropriate amendments may be made as appear necessary or desirable when the Post Office Department is succeeded by the United States Postal Service. It is also understood and agreed that detailed forms and procedures will be adopted, and coordinating groups may be established to implement this Agreement.

2. 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. The USPOD and the Corps will consult in advance of termination of all or any part of this Agreement and will, insofar as possible, fix a termination date sufficiently in advance so that both parties will have a reasonable period of time to make personnel and other adjustments in their operations in light of such termination. For the purposes of this paragraph, a period of six months will be deemed to be a reasonable period of time. Upon termination of this Agreement, all pertinent documentation requested by the USPOD relating to projects handled by the Corps under this Agreement will be delivered to the USPOD.

IX. EFFECTIVE DATE

This Agreement will be effective commencing with the 11th day of March, 1971.

CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY,
By F. J. CLARKE,

Lieutenant General, USA, Chief of Engineers.
Post OFFICE DEPARTMENT,
By WINTON M. BLOUNT,

Postmaster General. Mr. CONSTANDY. I would like to add that for fiscal year 1972, in addition to the $222 million, that fiscal year provides for $159 million. I think I gave the figure erroneously for both years as $222 million.

Mr. AHART. To clarify this for the record, I beleve you are readng from the appendix material which was attached to a corps document as opposed to appendicies to a March 19 document from the Office of Chief of Engineers to the field offices.

Mr. CONSTANDY. You are correct. We will get to that next. Thank you for pointing that out.

Mr. WRIGHT. The Chair would like to observe in connection with these projects listed for fiscal year 1971 and fiscal year 1972 a rather curious omission. Unless the Chair may be remiss in his attempt to find it, there is no reference herein to any facility at Charlotte Amalie, Virgin Islands, and yet the reason given by the Post Office Department for withdrawing from the multipurpose project in Charlotte Amalie was that it needed a facility very quickly. Unless I have missed it in my perusal of these listings, I do not find any reference to such project.

Mr. CONSTANDY. That is correct and I think the explanation would be that the Post Office Department is proceeding with that project as 'a lease construction project at the present time; isn't that so?

Mr. AHART. That is correct.

Mr. CONSTANDY. While the Corps of Engineers took over certain projects that were under construction in that category of lease construction, the balance of these projects I referred to were for direct Postal Service construction.

Mr. Wright. Can either of you gentlemen shed some light beyond that upon the plans of the Post Office to build a lease-purchase project at Charlotte Amalie, Virgin Islands?

Mr. Ahart. There is one in the planning stage, Mr. Chairman. I assume that the responsibility for this project would have been encompassed within the May 30 agreement under which the corps would undertake responsibility for the lease construction program as well as for the construction program as such.

Mr. WRIGHT. Do you know whether it is anticipated that this would be a lease-purchase project or a lease project!

Mr. AHART. As of the last information I had, it was planned as a lease-construction project.

Mr. WRIGHT. As opposed to lease purchase?
Mr. AHART. Yes.

Mr. WRIGHT. One of those projects, in other words, in which the Government never would anticipate owning the building but would pay rent presumably sufficient to amortize the construction by a private

Mr. AHART. That's correct.
Mr. WRIGHT. Thank you.
Mr. CONSTANDY. Just to make sure the record is clear on that, the
March 11 agreement did not contain these particular appendixes.
They were appendixes to General Rebh's memo to the field dated 8
days later, March 19, 1971.

The point I wanted to make is the same. Within 8 days from the signing of the agreement, there was in excess of $400 million worth of work scheduled or already turned over to the Corps of Engineers to be received by them.

In that same long agreement on March 11, I would like to call attention to the point you brought up this morning, Mr. Chairman, on the policy section, which is part 2 of the agreement, and it deals with the general subject of the public announcements and congressional liaison. I will quote from page 3, paragraph 1, which reads as follows:

Congressional liaison relating to any matter covered by this Agreement will be the exclusive responsibility of the Post Office. Congressional inquiries received by the Corps regarding all work performed under this Agreement will be sent with the Corps' suggested response, on a priority basis, to the U.S. Post Office Department's Congressional Liaison Office for disposition.

To amplify that, I would like to then have that marked exhibit 17.
Mr. WRIGHT. Without objection, this is exhibit 17.
(The document follows:)

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EXHIBIT 17

DEPARTMENT OF THE ARMY,
OFFICE OF THE CHIEF OF ENGINEERS,

Washington, D.C., March 19, 1971.

POSTAL CONSTRUCTION SUPPORT PROGRAM-EXPIRES MARCH 31, 1972 1. Purpose.This circular provides information regarding a new mission of substantial size and importance which has been added to those now performed by the Corps of Engineers, namely the furnishing of real estate, design, and construction services in support of the expanded Postal Public Building Program of the U.S. Post Office Department (USPOD).

2. Applicability.It is applicable to all Corps of Engineers installations and activities assigned responsibilities for the Postal Public Building Program.

a. On 26 September 1970, after passage of the Postal Reorganization Act, the Postmaster General sent a letter to the Secretary of Defense requesting the Corps' services in "undertaking accelerated construction of our postal facilities.” On 8 October 1970, Secretary Laird informed Mr. Blount that he was authorizing the Secretary of the Army to initiate negotiations to develop an agreement whereby the Corps would provide the requested services.

b. Two general agreements have been developed to cover existing and future work. The first, Appendix A, is a broad "umbrella” type agreement between the Postmaster General and the Secretary of the Army covering policies and principles. The second, Appendix B, is a Memorandum of Understanding between the USPOD and the Corps of Engineers describing the relationships and responsibilities for accomplishing the expanded Postal

Public Building Program. 4. Differentiating Features of this Program.—There are several features which differentiate this program from other major Corps programs :

a. Single interface at OCE-Washington level.-In this case, there s a single interface with the supported agency. This interface occurs at the Office, Chief of Engineers-Washington level. This is in contrast to the NASA, Air Force, and Army programs wherein the interfaces are many and they occur primarily at the field level.

b. U.S. Post Office Department is Profit and L088 Oriented.-When the USPOD becomes the U.S. Postal Service on 1 July 1971, it will be a Government corporation operating on self-produced revenues. Bonds sold on the open market will provide for long term financing needs including construction. The acceptance of these bonds in the open market will depend largely upon the USPOD's “profit and loss” status. Timely and high quality design and construction at reasonable prices will be essential to both the technical and financial success of the expanded modernization program. This profit and loss approach has at least two principal impacts on Corps operations:

(1) The USPOD will be intensely interested in our ability to provide high quality real estate, design, and construction services at minimum costs. As part of its cost monitoring effort, the USPOD will be paying particular attention to Corps in-house costs with regard to real estate site selection and site acquisition, supervision and review of A-E contracts, supervision and inspection of construction, and the support costs at district, division, and OCE levels.

(2) Adherence to established schedules will also be a matter of continuing concern to the USPOD. Because of the significant savings generated by the substitution of modern, large facilities for less efficient ones, time is money. As a result, the USPOD wants to be consulted, to a degree in excess of what is normal for the Corps and its other programs, at important milestones and when project cost and schedule changes are in the offing. The USPOD will be operating on a “marginal costmarginal revenue” concept; therefore, on occasion, time extensions and design and construction schedule considerations will be overriden by the requirement of the USPOD to bring a facility “on stream” by a certain date. Operational dates, once established for facilities, will be tantamount to fixed dates because of the extensive coordination required on a nationwide basis throughout the entire Postal system to achieve redirection

of mail to the new facility. c. Public Information. This subject and the two subjects covered in the next two subparagraphs (Congressional Inquiries and Control of Corps Costs) are of particular concern to the Postmaster General. With regard to policy governing the handling of public information, see the Agreement between the USPOD and the Corps, paragraph 1 of B. Policy. There are two principal aspects to this matter:

(1) The USPOD will make all public information releases and announcements involving policy, the overall program, and initial releases and matters of substance regarding individual projects to include the announcement of new projects and the awarding of contracts. The USPOD does not want A-E firm selections publicly announced. Likewise, there will be no groundbreaking ceremonies.

(2) The Corps is authorized to make public releases relative to dayto-day operations concerning a project but only after coordination of the

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