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percent. They did not do too well negotiating, right? The Office of Management and Budget sent a letter to the Post Office Department, asking them to suspend the agreement and take no further action under the terms of the agreement.

The Post Office continued to do what it was doing anyhow. You met with people from the Post Office Department when you cleared your budget for the lease construction projects and had their approval of the 45 projects being advanced for lease construction, correct?

Mr. SAMPSON. Correct.
Mr. CONSTANDY. What happened right after it was sent to Congress?
Mr. SAMPSON. Shortly thereafter, they withdrew.
Mr. CONSTANDY. Eighteen of the projects, totaling $55 million?
Mr. SAMPSON. That is right.

Mr. CONSTANDY. It would have been discreet of them to have made mention of that before you took the trouble to send the bill to Congress, would it not? If they are dealing with you on an even basis, are you going to be able to solve problems that occur?

Mr. SAMPSON. I think, in that particular case, and this is their rationale and their explanation to us, that after we had tested the lease construction concept, they felt it was not going to be passed by the Congress, and they needed their buildings quickly. This is why they withdrew.

Mr. CONSTANDY. They knew that when they agreed to your budget proposal. The correspondence between the two of you for some projects specifically addressed itself to that.

I only point this up, not to get into any discussion about the activity involved in withdrawing the 18 projects, I want to use-well, people have not always been satisfied in their ability to deal with the Post Office.

Mr. SAMPson. Granted. It is not all peaches and roses, obviously.
Mr. WRIGHT. Off the record.
(Discussion off the record.)
Mr. CONSTANDY. That was the only point, Mr. Chairman.

Mr. SAMPSON. None of us can look into the future. The best we can do is to try to assess the significance of the past and then contemplate the future with those things in mind.

I suggest to you that some of the situations that we have discussedand we only discussed one here in order to conserve time—that the relationship is going to be faced with some significant problems. It is necessarily so, as each of you serves your own interests and do it without the benefit of law, without the benefit of a redress in court; it is going to tax the negotiating ability of both of you, perhaps more than you have the ability to handle.

Now, I do not say that with any disrespect to either you or the Post Office. I want you to be clear on that. I know both of you are very sincere in your concern for it.

Our interest is simply that there are problems posed here for which there is no easy solution as each of you attempts to resolve this thing to the best interest of the person to whom you must answer. They have spoken in the course of testimony before committees and otherwise about the necessity of running a post office as a business and taking all of those actions consistent with good business that will conserve their assets and their revenues.

I am only suggesting here that in the kinds of complications that will be arising, they are going to have to address themselves to that as they try and reach a solution with you. If the solution, as acceptable to you, is going to cost them money, I do not know how in good conscience they can agree to it.

Mr. Chairman, I have no further questions. But I would like to say this has been a unique experience in dealing with the people from GSA. I think it is the kind of arrangement which is best for government, for the people that support the Government. We have had a very fine relationship. They have been extremely candid. I have enjoyed it, and I want to thank them personally for the kind cooperation they have given us.

Mr. WRIGHT. The Chair would like to echo that sentiment. Additionally, the Chair would like to express to Mr. Sampson, Mr. Sanders, and Mr. Barth the committee's appreciation for the wholehearted cooperation that you have given, for the directness and candor with which you have answered the questions which have been posed, and for your patience in coming and being with us today.

When the committee adjourns today, it will adjourn to meet at 10:30 tomorrow.

I am advised now by counsel that we may have difficulty in the scheduling of witnesses to appear tomorrow, and for that reason we may adjourn until tomorrow afternoon, and so let us adjourn at this time, subject to further notification by the Chair.

Mr. SAMPSON. Thank, you, Mr. Chairman.
Mr. WRIGHT. The committee is adjourned.

(Whereupon, at 12:45 p.m., the subcommittee adjourned, to reconvene at the call of the Chair.)

IMPACT OF POSTAL BUILDING PROGRAM ON FEDERAL

AGENCIES

THURSDAY, JULY 22, 1971

HOUSE OF REPRESENTATIVES,
SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT
OF THE COMMITTEE ON PUBLIC WORKS,

Washington, D.C. The subcommittee met at 10:10 a.m., pursuant to recess, in room 2253, Rayburn House Office Building, Hon. James C. Wright, Jr. (chairman of the subcommittee) presiding.

Mr. WRIGHT. The subcommittee will be in order. Our primary witness for today is Brig. Gen. George A. Rebh, Chief of the Corps of Engineers, Postal Construction Support Office, Department of the Army.

I believe General Rebh is accompanied by several representatives of his office of the Corps of Engineers. Would you at this time introduce for the committee, General Rebh, those who are with you.

General REBH. I would like to say that Mr. Woodrow Berge, who is Director of Real Estate, will also appear as a witness with me.

And I have with me Mr. Carl Barnes, Mr. Paul Gill, and Mr. George Brazier, Mr. Wally Sundell, Mr. Harnage, and Mr. Head.

Mr. WRIGHT. For purposes of testimony, General, you and Mr. Berge would be expected to bring the testimony to the committee.

General REBH. Yes, sir.
Mr. WRIGHT. Would the two of you rise and be sworn.
Do

you solemnly swear that the testimony you will give to the subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?

(General Rebh and Mr. Berge answered in the affirmative.)

Mr. WRIGHT. The Chair observes that General Rebh has a detailed statement, which he has prepared in response to questions that were submitted to him by the subcommittee. In view of the fact that the House will convene at 11 o'clock this morning, the Chair is going to ask unanimous consent that the statement may appear in the record in its totality; and that subsequent to that, General Rebh may begin and read portions of it, and at any point thereafter the subcommittee migh wish to question him with respect to those portions.

If there is no objection, the statement prepared by General Rebh will appear in its entirety in the record. (The statement follows:)

STATEMENT OF BRIG. GEN. GEORGE A. REBH, CORPS OF ENGINEERS Mr. Chairman and Members of the Subcommittee, I am Brigadier General George A. Rebh, Chief of the Corps of Engineers Postal Construction Support Office which has been established in the Office, Chief of Engineers to oversee the services to be provided the Postal Service, I am very pleased to have this opportunity to appear before you to present information regarding the real estate, design, and construction services to be provided by the United States Army Corps of Engineers in support of the Postal Service. First, I would like to discuss chronologically the principal events which transpired between the Corps of Engineers and the United States Post Office Department preceding the signing of the two agreements on 11 March as well as the principal events which have taken place since that date. Thereafter, I shall discuss several subjects and questions which have been raised at various levels and at various times during the past several months concerning the services to be provided by the Corps. I hope such a discussion will provide useful information to the Committee.

CHRONOLOGY Early Contacts

Returning to the first of these two broad topics, the chronological development of events, the first contact between the U.S. Post Office Department and the Corps of Engineers was on 18 March 1969. Representatives of the Post Office Department contacted the Office, Chief of Engineers and, on an informal basis, discussed the Postal Public Building Program as well as the possibility of Corps participation. As a result of this meeting, the Corps prepared a brochure dated 27 March 1969, which was presented on that date to the Postmaster General. The brochure outlined the organization of the Corps; programs, completed and underway; capabilities; other agencies for whom the Corps performs or has performed work; and the general way in which the Corps accomplishes its work. In early January, 1970, a Post Office Department representative contacted the Office, Chief of Engineers to discuss two matters: (1) the preparation by the Corps of a draft agreement establishing the kind of relationships which would exist in the event the Corps were to provide real estate, design, and construction services for the Post Office Department, and (2) the development by the Corps of detailed site plans for a post office at Fort DeRussy, Hawaii. The development of detailed site plans for the post office at Fort DeRussy was acceptable to the Corps, and the Corps thereafter issued instructions to the Division Engineer of the Pacific Ocean Division, located in Honolulu, to proceed with such site plans. Also, a draft agreement patterned after the one which existed between the Corps of Engineers and NASA was developed and submitted to the Post Office Department on 13 January 1970. The next contact was in May, 1970 when the Post Office Department asked the Corps if it would undertake the design of the Fort DeRussy post office (sometimes referred to as the Waikiki Post Office). The Corps was agreeable to undertaking the design of this project, and a project agreement was developed between the two agencies. Exchange of Letters hetween the Postmaster General and the Secretary of

Defense On 26 September, 1970, the Postmaster General wrote the Secretary of Defense requesting use of the Corps in providing real estate, design, and construction services in support of the Postal Public Building Program. The Postmaster General indicated that he thought a definitive agreement could be worked out covering the services to be provided and the procedures to be followed for controlling costs. The Postmaster General also indicated that there would be a short-term construction program of approximately $750 million which would take place during the next 21,2 to 3 years. The Postmaster General closed his letter by asking the Secretary of Defense to authorize appropriate personnel to begin negotiations with members of his, the Postmaster General's staff. The Secretary of Defense replied on 8 October informing that he had discussed this matter with the Secretary of the Army and that the Corps of Engineers would be able to undertake the work as outlined in the Postmaster General's letter without adverse impact on other Corps programs. The Secretary of Defense thereafter authorized the Secretary of the Army to proceed with negotiations to develop a definitive agreement.

Negotiation of Agreements and Assignment of Projects

As a result of the exchange of letters, two major actions resulted. First, two agreements were developed. One agreement was between the Postmaster General and the Secretary of the Army setting forth general principles and policies. The other was between the Postmaster General and the Chief of Engineers setting forth relationships, responsibilities, general procedures, and terms and conditic The two agreements were signed on 11 March 1971. Secondly, pending the finalization and signing of these two agreements and consistent with the general principles of these agreements, several individual agreements were developed for projects under construction and for which the Post Office desired the Corps to assume responsibility. Between 13 October, 1970 and 1 March 1971, the Corps assumed responsibility for five construction projects. These are at Kearny, New Jersey ; Memphis, Tennessee; St. Louis, Missouri ; Northern Virginia; and Baltimore, Maryland. The Corps' responsibility was to provide supervision and administrative services for the construction underway. On 1 March, the Corps was assigned responsibility for the New York Bulk Facility located in Hudson County, New Jersey. Additionally, between 1 March and 8 March, the Post Office Department assigned to the Corps the responsibility for five projects under design. These are located at Roanoke and Charlottesville, Virginia ; Carbondale, Illinois; Akron, Ohio; and South Bend, Indiana. Finally, on 3 and 4 March, respectively the Corps was assigned responsibility for advertising and awarding projects at Tucson, Arizona and Tallahassee, Fiordia. These projects had been previously designed by the Post Office Department. Office of Management and Budget Letters

On 27 March, the Director, Office of Management and Budget sent letters to the Secretary of Defense, the Postmaster General, and the Administrator, General Services Administration informing that a review was being undertaken of the agreement which had been signed recently between the Department of the Army and the Post Office Department. He also requested that the agreement be suspended until such time as the review had been completed. The purpose of the review was to determine the desirability of having the Corps engaged in the Postal Public Building Program. The suspension was interpreted to apply to the start of new contracts, i.e., the Corps would not advertise nor award any new design or construction contracts during the time the Office of Management and Budget was reviewing the agreement, but not to apply to work underway. The design and construction in progress was permitted to proceed on the basis that to do so was in the best interests of the Government. To have stopped work would have been costly in at least two respects: Suspension of work would have meant increased costs to be paid the construction contractors and the architect-engineer firms under contract as well as delays in completion schedules resulting in the loss of operational savings. In any event, if it had been determined that it was not desirable for the Corps to continue this work, it would have been simply a matter of turning over the work to the agency designated as successor; hence, no real purpose was to be served by suspending the design and construction work in progress. Since the Divisions and Districts of the Corps were involved only with on-going projects, no directives or instructions were sent to them on this matter. While we did not issue any invitations-to-bid or requests for proposals, we did open the requests for proposals on the New York Bulk Mail Facility. Prior to receipt of the Director, OMB's letter, the Corps had requested proposals for a major construction contract for the New York Bulk Mail Facility. We opened these proposals on the 28th of April. The opening of these proposals was permitted to take place since the act of opening the proposals did not commit the Government in any way nor did it have any impact on the Corps in the event the Corps' role in the postal construction program was not subsequently approved. The award of the contract, however, was not made until after the suspension was lifted.

The Secretary of Defense responded to the Director. OMB's letter on 12 April and on 5 May, the Director wrote the Secretary of Defense stating that a review of the agreement had been completed, there was no objection to the agreement, and the suspension was therefore lifted. Regional Postal Facilities

Up to this point. I have discussed only the Corps' relationship to the Postal Service major facilities program. Subsequent to the 11 March agreements, it was indicated to us that the Postmaster General also desired the Corps to

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