of the services that were the type of thing that was taking place during the period of supposed suspension?

Mr. AHART. Yes. We have this information, Mr. Constandy. We will be happy to provide it. We did interview General Rebh about this matter. He did advise us that the corps did not stop the postal support activities during the suspension period. As Mr. Staats mentioned this morning, we talked to people in the Kansas City, Norfolk, and Savannah offices of the corps as well as the Baltimore district, who told us they had not been aware of the suspension, and we also noted that these projects which were mentioned that were transferred during this period were formally transferred.

The services were formally requested by the Post Office Department during this period and this would be at the headquarters.

Now, the projects themselves included two facilities in Honolulu, Hawaii, which were involved. One was a vehicle maintenance facility, and the date of that request was March 30, 1971, and the services requested were design services.

Also in Honolulu is the Main Post Office, and a request was made April 20 for the selection, negotiation, award and management of an architect-engineer contract for building design.

In Lexington, Ky., services were requested April 16 for the management of an existing architect-engineer contract for building design.

On April 19, in connection with the Stamford facility, they were requested to select, negotiate, award, and manage an architectengineer contract for building design. In connection with the Gary, Ind., facility, they were requested on April 20 to manage an existing architect-engineer contract for building design.

For the Fort Lauderdale, Fla., facility, they were requested on April 29, 1971, to advertise, award, and manage a contract of project construction; and in connection with the Jacksonville, Fla., facility, they were requested on April 29, to advertise, award, and manage a contract for project construction.

Mr. CONSTANDY. Fine. You make reference to the May 20 agreement and the June 28 agreement. I do not know whether you have to do that combining the two or whether you want to deal with them separately, but could you give us a better idea of what type of thing these new arrangements provided for, the new agreements?

Mr. AHART. In essence, the May 20 agreement transferred the total real estate construction, design functions, and basically the real estate management functions of the Post Office Department to the Corps of Engineers. This involved all the construction projects, the lease construction projects, servicing of leases for lease space, both in the lease construction projects and the rental of space in other buildings and

so on.

The June 28 agreement makes a little bit more specific the duties of the corps with respect to the lease in and of itself, the leases themselves, what the corps is expected to do. If you would like, I could detail to you the items included in that agreement which I think kind of graphically illustrate what the corps will be required to do for the Postal Service in this regard.

Mr. CONSTANDY. Fine. I think we should recap, though, that the March 11 agreement provided solely for the construction by the Corps

of Engineers of major facilities, that is, those whose size was in excess of 50,000 square feet, generally.

Mr. AHART. That is correct.

Mr. CONSTANDY. And the thinking that went into the terms of that agreement anticipated projects of that size. So the May 20 agreement, if I understand it correctly, transferred to the corps the construction and lease construction and leasing of the remainder of the work that would have been retained in the Post Office had the March 11 agreement been the only one executed.

Mr. AHART. That is correct. I believe the agreement, itself, on March 11, was not quite that specific, but it is clear from the record that this would be the understanding between the corps and the Post Office Department that the projects to be transferred would be the major projects such as you have described.

Mr. CONSTANDY. Perhaps you could give us, then, some additional information on the type of activity to be involved.

Mr. AHART. I am reading now from the June 28 agreement which relates to the leasing activities which are transferred and under the section dealing with the assignment of responsibilities.

It says:

The Corps will be responsible for and is hereby authorized to accomplish the execution of the U.S. POD leasing program in accordance with the Department's leasing authorities, policies, guidelines, and determinations to include: Maintain the Department's lease records; obtaining new leasehold space for the Department in accordance with the Department's requests, renewing Department leases and executing purchase options after obtaining determinations from the Department as to whether to renew or purchase; representing the Department at all negotiations and discussions with lessors concerning leaseholds and the terms and provisions of leases; when made aware of the need by the Post Office Department or becoming aware thereof in the course of performing other duties, taking actions with lessors to insure that the lessors fulfill their lease obligations, including the making of needed repairs which are the obligations of the lessors; negotiating and executing supplemental lease agreements under which lessors accomplish Department approved leasehold alterations and improvements and repairs which are the obligation of the Department of which the total cost, including all lessor charges, is $2,000 or more.

Mr. CONSTANDY. Would you state that again?

Mr. AHART. $2,000 or more. In other words, we are talking about fairly minor alteration projects at the leasehold facilities.

Mr. WRIGHT. There would be relatively few alterations that would be less than $2,000?

Mr. AHART. I Would suspect that that is true.

Mr. WRIGHT. This presumably would include almost all alterations save for nailing up of a faulty board, or something like that. Mr. AHART. $2,000 does not go very far. That is certain.

The next item is awarding, executing, administering, and supervising contracts with third parties for the design and construction of Department approved leasehold improvements, alterations, and repairs of which the estimated construction cost is $2,000 or more, for which architect-engineer services are required.

Submitted promptly to the Department as and when requisite lease and rental payment authorizations to include authorizations for withholding of rental and payments when appropriate, submitted and submitting on a regular and current basis, lease data requested by the Department for inclusion in the Department's ADP system and fur

nishing additional specified lease data upon request of the Department; monitoring and challenging all excessive or unwarranted increases in State and local real property tax assessments against properties leased by the Department where the Department pays or reimburses the lessors for all or part of such taxes.

Mr. CONSTANDY. Does that suggest that the Army is going to represent the Post Office Department in court?

Mr. AHART. This is what is required. It is stated as a responsibility of the corps under this transfer function.

Mr. WRIGHT. The Army must assume the responsibility of representing the Postal Service in court?

Mr. AHART. Well, I do not know whether this would be the corpsthis would be taken up with the tax assessment office in whatever jurisdiction is involved. There is a provision later which, I will get to in a minute, which does require the corps to insure that the Department is represented in court.

Mr. WRIGHT. In effect, the Army is taking over not merely the construction of buildings, but a very wide range of services for the Postal Service; is it not?

Mr. AHART. That is correct.

Mr. WRIGHT. The Postal Service seems by the terms of this agreement to be freed from any details of management, say, of the handling of the mail, and presumably all of these functions, within the intended scope of the 52 percent overhead costs?

Mr. AHART. No. The functions of service of agreements which do not involve the design and construction of facilities for direct ownership would, as I understand it, would be reimbursed on an actual cost basis. Now, there is a question as to whether the 5.5-percent limitation would apply to the minor construction projects which were not contemplated, I think, by the parties in the March 11 agreement as such. Mr. WRIGHT. Thank you.

Mr. AHART. There are just a couple more here.

The next one is negotiation with State and local authorities for compensation and with lessors for rent reductions and arranging for the Department to be formally represented in court proceedings whenever property leased by the Department is taken by State or local government by eminent domain, and when requested subletting space in Department leased buildings which is excess to the needs of the Department and acting as the Department's agent for the collection of rentals and other dealings with the subleases.

Mr. WRIGHT. Who are the subleasees, private individuals or government agencies?

Mr. AHART. They could be private individuals. In most cases they would be, I suppose, and perhaps some government agency, either local or Federal. This would be a situation where a lease constructed building, which they are leasing the total facility and do not need all the space, the corps would be responsible for finding a tenant for the space and entering into a sublease agreement with the tenant and collecting the rent, and servicing that lease.

The last item is when requested, assisting Department of Procurement Contracting Offices with real estate services needed in the erection of free standing, self-service postal units. These are the minor facilities where you can buy stamps, by coin, and mail letters.

Mr. WRIGHT. You mean the Corps of Engineers is going to be responsible for putting up the stamp machines for the Post Office?

Mr. AHART. When requested. If they are requested to do it, they are responsible for providing it.

Mr. WRIGHT. Who owns those stamp machines? Are those owned by the Postal Service, by the Post Office Department in the past, or are they owned by private vendors?

Mr. AHART. It is Post Office equipment, and I suspect that most of them are on leased space. But I imagine the equipment itself is owned in all cases by the Post Office Department.

Mr. CONSTANDY. This is the type of thing that is on the F Street Mall?

Mr. AHART. I think that is an example of it.

Mr. WRIGHT. These vending machines where you can buy, I do not know, something like three 6-cent stamps for 15 cents, or something like that?

Mr. AHART. I think there are some private operators who have small machines, Mr. Chairman, and the small machines which you see in drugstores and so on. But this is a more elaborate unit, a self-contained unit, and you get several different types of services from it.

Mr. WRIGHT. You can buy stamps and what else can you do? Mr. AHART. Mail letters, and perhaps one of the other gentlemen we have with us can give you a better explanation than I could.

Mr. WRIGHT. I'm not really interested in knowing all the details of all the different kinds of vending machines they have. Mr. Terry and some of the other members of the panel here have reminded me that you cannot get three 6-cent stamps for 15 cents. It is not a bargain basement operation. What do you pay in those machines for stamps? I forget from time to time.

Mr. AHART. I think in the Post Office operated machines that you pay the same thing you would pay in the Post Office.

Mr. WRIGHT. Now, I've seen machines where you pay more than that. Mr. AHART. These are commercial enterprise machines.

Mr. WRIGHT. Commercial enterprise machines, and the private individual is making profit off of the sale of postage, is that correct? Mr. AHART. That is correct.

Mr. WRIGHT. I suppose that was authorized by Congress at some point in the past?

Mr. AHART. I could not answer that question, Mr. Chairman. I do not know whether it was specifically authorized.

Mr. WRIGHT. I wish Mr. Socolar were here because I would like to get his opinion as to the legality of the Government's entering into an agreement with a private individual to make a profit off of U.S. postage. It seems to me that it is a questionable practice at best. We are talking now, however, of machines that would be owned by the Postal Service, is that correct?

Mr. AHART. That is correct.

Mr. WRIGHT. Are we talking in no sense of machines that would be installed under the supervision of the Army to be owned by private individuals?

Mr. AHART. No. That would not be involved in this case.

Mr. CONSTANDY. And these are actually pavilions, are they not, that have stamp machines built in them? They have scales available, and I

think there's a telephone where you can call up the Post Office, unless you happen to be a Congressman, and obtain postal information.

How many leases are there at present between the Post Office Department and private owners, do you know?

Mr. AHART. Approximately 27,000, of which I believe about 12,000 represent lease constructed facilities where the leases are for the total facility, and the remainder would be space in other facilities.

Mr. CONSTANDY. Do you have any indication of how many people would be involved in this activity of servicing the leases?

Mr. AHART. I'm not sure, Mr. Constandy. The May 20 agreement indicated that there would be transfer, as I recall it, I believe it was the May 20 agreement, that there would be a transfer of approximately 600 people to the corps. Now whether these are a sufficient number of people to perform all the functions which the corps will be undertaking, I do not know, or whether it is too many or what the case may be. But it would take a sizeable number of people to service this many leases and perform the functions which they are called upon to do. Mr. CONSTANDY. Do you have a corps letter to the field that amplifies this further, or am I in error?

Mr. AHART. I have a letter, Mr. Constandy, which precedes the June 28 agreement. I think it is dated May 28, which requested certain information from the field offices, if I can locate it.

Yes, it was dated May 28, 1971, and was signed by General Rebh. It went out May 28 and requested two responses from the corps division offices, one to be in by June 4 and the other to be in by June 9.

If you would like, I could read the salient parts of this letter for the record. It has a background section in it, paragraph number 3, and states as follows:

On May 12, the Post Office Department announced its reorganization plan which involves the structuring of the Department as well as the organization of the Washington Headquarters and Regional Headquarters. A copy of the U.S. POD agreement is attached. The consequences of the reorganization is that the Washington Headquarters and Regional Headquarters are being relieved of certain real estate. design, and construction responsibilities. The extent of this relief is still to be determined. However, it is expected that the scope of responsibilities to be retained by the new 5 Regional Headquarters and those to be assumed by the Corps will be resolved within the next week. At this time, it is to be assumed that the leasing function and all new construction, as well as major and minor repair and renovation, but not R & U type functions, will become the responsibility of the Corps. This assumption is for planning purposes only and is not to be expressed to any Postal Agency as a Corps agreed commitment.

There follows an identification of which Postal regional headquarters will be the responsibility of which Corps of Engineers division offices, for the purposes of contact and discussion. It explains the purpose of this contact:

A, the function is to determine the real estate, design and construction functions performed at the Regional Headquarters level.

B, to determine the number, value, and current status of each project. These projects will involve new construction and major and minor repair and renovations.

(C, to determine information relating to fee acquisition, lease build projects, number of leases to be administered, number of leases to be renegotiated this year and next year, lease improvement projects, tax adjudication workload, etc. Next is divisions in contacting Regional Headquarters or acting as Corps of Engineers representatives. Having determined the location and nature of projects, the next step will be to arrive at assignment of projects on a District basis. In contrast to the design of the Post Offices in excess of 50,000 square feet which will be handled by the designated 6 design districts, the design of the smaller Post Offices will be handled within the Divisions by appropriate Districts. As a starting point for the assignment of projects, the Civil Works district bound