going to get out of these areas themselves and that the people who worked for the Post Office, now the Postal Service, who do those performance kind of functions, were going to work for the corps.

Mr. CONSTANDY. If they were valid considerations, they would have been predicated on studies; would they not?

Mr. NATHAN. Studies by whom?

Mr. CONSTANDY. By the people concerned, by the Post Office Department, by the Corps of Engineers. True or not?

Mr. NATHAN. The inference of your question may be that there was not sufficient study by the parties to the agreement.

Mr. CONSTANDY. It is no inference. I say it flatly. You should not have an inference.

Yesterday we had read into the record by representatives of the GAO a document that was written by the general in charge of the postal building program to his field people, requesting an answer by June 9, if my memory serves me, where he is making for the first time a survey of his own organization's capability to undertake the leasing program on June 9.

If the corps did not known by June 9 whether it had the capacity to undertake the program, how could OMB have taken this into consideration back in March and April preceding it?

Mr. NATHAN. I assume that they asked for a great deal of information when they made this decision.

Mr. CONSTANDY. We are talking about a very specific thing. We are talking about the corps' capability through its field offices to undertake the types of things which ultimately become the body of the June 28 agreement.

Before the corps would commit itself, they felt certain studies had to be made by them. Did they have people in the right places, and were the people of the proper competency to undertake that program? They could not reach that decision until they got the response from

the field.

Mr. NATHAN. I understand you. When it comes to internal processes of their analysis, they would be the best source.

Mr. CONSTANDY. Having had access to one of the documents, I think we can make the conclusion now that they are the best, and undertook that kind of a study to be reported back at the beginning of June to let them know at the headquarters level whether they felt they had the competency to undertake this part of the program.

You would suggest that OMB was considering the broadening of the agreement to include these things back in March and April.

Mr. NATHAN. We based our decision on what we know, which is a lot of the basic program information about the corps, and about the Postal Service in terms of the number of people they have, the kind of people they have in their employment. They made a more intensive analysis, and that analysis supported the conclusion which we have reached.

Mr. CONSTANDY. You are not suggesting OMB, prior to the review, had the capability to assess whether the corps could undertake the leasing program?

Mr. NATHAN. We have experts. but we do not have the depth of expertise that the agency has, obviously. We were relying in large measure on what they told us.

Mr. CONSTANDY. They could not have told you anything until they got the answers back from the field in June. What we want to get to, Mr. Nathan, is that your review encompassed only those things that were contained within the March 11 agreements.

Even though you may have anticipated the broadening of the agreements as it got down to specifics, you could not have reviewed it.

Mr. NATHAN. We made our determination on the basis of the information that the agencies provided, and it was available to us

Mr. CONSTANDY. You had no information, I suggest, from the Corps of Engineers which suggested whether they had or did not have the competency to even undertake the lease construction program.

Do you know how many projects annually were committed by the Post Office to lease construction in the past couple of years, or the dollar value?

Mr. BENTON. About 8,000.

Mr. CONSTANDY. It is about 8,000, with about $88 million worth of work.

Mr. BENTON. It varies from $75 to $100 million a year.

Mr. NATHAN. We made the decision on the best basis we could. The process in terms of what we understood in trying to recreate these circumstances is, to the best of my ability and Mr. Benton's ability, described in our testimony.

Mr. CONSTANDY. You are talking about your prepared statement?
Mr. NATHAN. Our testimony in the question and answer.

Mr. CONSTANDY. And your prepared statement.

Mr. NATHAN. And the testimony in question and answer. That is where you have drawn us out on these.

Mr. CONSTANDY. On page 3, you say, "I wish to submit some of our considerations involved in reviewing this matter' and you go over to page 4-now we are talking about your considerations, not your conclusions, and yet the very first item is a conclusion.

It says, "In view of the options available there was nothing to be gained" that is a conclusion, "--by prohibiting the corps from providing construction services to the Post Office Department on a reimbursable basis."

Now, it says there, "We did not believe that this agreement would lead to any adverse impact on the management and financing of the executive branch. Since most of the work to be done by the corps would be a substitution of work previously performed by the Post Office Department, we see no significant proliferation of construction service activities."

Mr. NATHAN. It may be that that should have been worded differently as a consideration

Mr. CONSTANDY. Oh, we have another place which should have been worded differently.

Mr. NATHAN. It does not change the substance of our discussion of this in any way.

Mr. CONSTANDY. It does in a way, because from 1966 until 1971, 5 years, the post office advanced only 30 projects for a total dollar volume of $468 million. Only one of them is completed; 38 projects in 5 years. We are not talking about 38 projects now. We are talking about the work already turned over to the corps on the basis of the first agreement of March 11, amounting to $422 million.

Mr. BENTON. There is not any doubt that the Postmaster General hopes to increase the pace of post office construction here. That is central to his thesis in hiring the Corps of Engineers.

Mr. CONSTANDY. We should not attempt to suggest in the statement that there is a simple matter of substitution here on the same work, because that is what the statement says.

Mr. NATHAN. I would add too that the people who are doing this work, to the extent that this work was being done in the post office, were still in the post office at the time that these agreements were made, and they were going to go over the agreements to the corps, so in part they are

Mr. CONSTANDY. Some of them.

Mr. NATHAN. Quite a large number of them.

So in part their determination that they could carry out these functions was based upon the assumption that they would acquire these people to operate in these areas, much the same basis, though on an expanded scale, as they had previously.

Mr. CONSTANDY. Do you know how many people, and how they are organized, will be retained in the Post Office Department for their program management?

Mr. NATHAN. I guess Mr. Benton

Mr. BENTON. We have some figures in the office, but we do not have them here. I do not recollect them.

Mr. CONSTANDY. That would have to have been a major element in the consideration of divesting the Postal Service of its complete ability to handle facilities; would it not?

Mr. BENTON. As I understand the split, the Post Office kept those employees who were more related to the policy direction of their program, and to transfer those people who were related to the execution of the program; the engineers, the construction people, and that sort of thing.

Mr. CONSTANDY. Do you know how many they had before they made the agreement with the Army totally in the facility section?

Mr. BENTON. No, I do not have a number offhand.

Mr. CONSTANDY. Do you know how many they retained in the program management section?

Mr. BENTON. I said I do not have those numbers with me. We do have that.

Mr. CONSTANDY. They are retaining 32 in the program management section.

Mr. NATHAN. I would have to inject when you discuss a matter of this kind in the detail that you now want to review it with us that it is necessary to bear in mind that the Office of Management and Budget's program expertise, even though it is good, is general. The agencies have the experts in the matters of detail, and we and the President and the Executive Office have to rely on the judgments of some of the key officials that the President has appointed to operate in these areas.

In this case, the judgment of Secretary Laird, who was involved. The judgment of Mr. Blount, who was involved. These are people that the President has appointed for the

Mr. CONSTANDY. And the judgment of Mr. Kunzig, who was involved?

Mr. NATHAN. Yes.

As I indicated in my answer, at one stage which I recollect in this process, Mr. Kunzig indicated that he understood the law to be written in such a way that it would be appropriate for the post office to make an agreement of this kind with the corps, and he did not see that that necessarily should not be the outcome.

Now, he had an interest in discussions

Mr. CONSTANDY. To what do you refer there? To what point in time? Mr. NATHAN. Oh, this is probably in February or March, when his thinking was made known to me.

Mr. CONSTANDY. Of this year?

Mr. NATHAN. Yes.

Mr. CONSTANDY. In his letter to you, that is not what he says. You are referring to the April 17, 1969 letter.

Mr. NATHAN. Maybe my recollection needs to be sharpened up by the staff, and they suggest that this may have gone back further in time.

Mr. CONSTANDY. Two years.

Mr. NATHAN. I think that is right.

Mr. CONSTANDY. He had just come into office. The proposition was put to him whether he could interpose an objection to it. We are talking about the Administrator of GSA speaking to the White House and a Cabinet officer, as to how they interpreted the delegation of authority. He could not see how he could interpose.

Mr. NATHAN. It does not change my point, which is that the President does have to rely on the expertise of his designated chief policy officials on matters of detail of this character, and they often disagree, and when they disagree the decisions that we make that come to the President typically involve matters of policy, not so much matters of technique.

There is no question that that is a hard line to draw. The details of administration in a matter like this and the techniques involved are an important part of the question that was put to us as a policy question. We did the best we could. We did what we consider through our program experts the kind of a job that is appropriate for us to do in analyzing which of several courses of action we should take in this

area.

We made our decision. But I do want to suggest by that that there are some matters of implementation of these agreements now entered into in terms of detail and day-to-day activities that are more fully the responsibility of the agency heads whom the President has appointed than surely they would be of the Office of Management and Budget.

Mr. CONSTANDY. In the final analysis, the OMB finds itself in the position of a judge; does it not?

Mr. NATHAN. We often have to make determinations as between parties.

Mr. CONSTANDY. And the judge has to consider the evidence available; does he not?

Mr. NATHAN. Yes.

Mr. CONSTANDY. Was there any other evidence available to OMB excluding its own expertise that came from any of the agencies other than what was contained in the letters?

Mr. NATHAN. As I indicated in my testimony, our experts areMr. CONSTANDY. Exclusive of them.

Mr. NATHAN. I was going to add something. Our experts

Mr. CONSTANDY. This is a very simple question. Did you get anything directly from the Post Office or the Department of Defense or from the General Services Administration other than the letters which were in answer to your March 27 letter?

Mr. NATHAN. My answer to that question is that our experts did obtain information from the agency staff experts, and that was considered, and that was in addition to what they themselves knew at the beginning of their consideration of this matter.

Mr. CONSTANDY. We have to recognize they were not yet to the point where they were able to have the discussion and the review prior to the signing of the agreement. It was not that expert. Your review took place 16 days after the agreement was signed.

Mr. NATHAN. I never denied that.

Mr. CONSTANDY. I think it is very significant. You are limited then to reviewing something that already happened.

Mr. NATHAN. We could have changed it if we thought it was an incorrect decision.

We decided that it was not, and we did not change it. It seems to me we had much the same interest that the committee does. We needed to look at this. We did. We made a decision. We are here now to explain to you what that decision is, to the best of our knowledge, how it was made, and what was taken into account.

Mr. CONSTANDY. I have no further questions, Mr. Chairman.

I would like to ask if the correspondence from the OMB to Mr. Blount, Mr. Laird and Mr. Kunzig be made exhibit 27, and their answers to him, Mr. Blount, and Mr. Packard's letter to Mr. Shultz and his answer to all of them could be made exhibit 28.

Mr. WRIGHT. Without objection, this compendium of correspondence will become exhibits No. 27 and 28 in the record.)

(The documents referred to were marked for identification as Exhibits 27 and 28. They are as follows.)

EXHIBIT 27

EXECUTIVE OFFICE OF THE PRESIDENT,
OFFICE OF MANAGEMENT AND BUDGET,
Washington, D.C., March 27, 1971.

Hon. WINTON M. BLOUNT,

Postmaster General,

Washington, D.C.

DEAR MR. POSTMASTER GENERAL: This has reference to the recent agreement between the Department of the Army and the Post Office Department which provides for the Corps of Engineers to serve as a construction agency for the Post Office Department.

In view of the size and nature of the Post Office Department construction program, this agreement would result in a major change in the role and mission of the Corps of Engineers. It also has implications affecting the role of the General Services Administration as the primary agent for the construction of buildings to house the civilian agencies of the Federal Government. Therefore, I request that the agreement be suspended and that no action be taken to operate pursuant to its terms until this Office completes a review of the desirability of using the Corps of Engineers for this purpose, and the implications of such action with respect to the organization and management of the executive branch.