made for several days (weeks). Therefore, detailed discussions with subordinate elements cannot be initiated until further notice.

Item 4: A summary briefing for the U.S. POD high-level staff (3 to 5 persons) is scheduled for Friday, 11 hours, 9 October 1970. At that time U.S. POD representative will also provide a summary briefing to the Corps.

Details on this briefing will be furnished as available.

Item 5: Confirming previous information the Corps is responding to individual requests by U.S. POD (e.g. DeRussy, Kearney, and Memphis) and is preparing to undertake accomplishment of the Corps organization and plans for management should consider the following factors.

That is October 7, 1970.

Mr. WRIGHT. Mr. Constandy, who was the author of this document? Mr. CONSTANDY. It was Mr. Barnes.

Mr. WRIGHT. This document originated with the corps on October 7, 1970, apparently. So that at that point following the passage by Congress of the Postal Reorganization Act, reference is made to the fact that "only the high-level staff of the U.S. Post Office Department 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."

Whose idea was this, General Rebh?

General REBH. In terms of restricting the dissemination of information?

Mr. WRIGHT. Yes.

General REBH. This was with the Post Office, and there were two reasons for this. One was since it was not known as to how long it would take to come to agreements, to announce it prematurely would have a morale effect, which is quite obvious.

Mr. WRIGHT. Morale effect upon whom?

General REBH. Post Office personnel who would be subject to losing their jobs.

The second thing is that if the announcement was made prematurely, I am certain there would have been an effect upon their work. They would not have been as effective and as highly interested in their job. Mr. WRIGHT. We are talking about an effect upon the postal employees?

General REBH. Postal employees, not within the Corps of Engineers. Mr. WRIGHT. What you are saying is the request to keep this more or less under hat originated with the Post Office Department and not with the Corps of Engineers?

General REBH. That is correct, and for the two reasons I gave you. These are the ones given to us as to why it was desirous not to communicate with the lower levels within their organization.

However, within the Corps of Engineers, on all matters regarding the agreements, we brought in everybody that was required in order to lend their expertise and knowledge to them.

Mr. WRIGHT. What is the meaning of the sentence "detailed discussions with subordinate elements cannot be initiated until further notice"?

General REBH. With the Post Office Department.

Mr. WRIGHT. That refers to any discussions with the Post Office Department, not within the Corps of Engineers personnel?

General REBH. No. That was between our people and the Post Office people at the lower levels.

Mr. WRIGHT. So, by this document, you are advising the Corps of Engineers personnel not to discuss these matters with subordinate elements in the Post Office Department?

General REBH. That is correct.

Mr. WRIGHT. That would seem consistent with paragraph 4, which announces that a summary briefing for the U.S. Post Office Department high level staff and then in parentheses it says three to five persons, is scheduled for Friday, 1100 hours, October 9, 1970.

You are reiterating here that any conversation with the Post Office Department personnel up to this point are going to be limited to only three to five people in the high level staff of the Post Office Department; is that correct?

General REBH. That is correct, sir. I think that was generally the number we dealt with throughout the course of the discussions.

Mr. WRIGHT. In paragraph 5, it confirms that the corps is preparing to undertake accomplishment of the overall postal public building

program.

General REBH. This was the purpose of the meeting on the date of October 9. I was briefing these top people in the Post Office so that they would be acquainted with our organization and our method of operation.

Mr. WRIGHT. Yes, sir. Well, the committee has been extremely concerned and deeply interested in how this all took place in what appears to have been an atmosphere of high secrecy. We have been deeply concerned to discover at whose order it was kept in this atmosphere of high secrecy.

What you are saying with reference to this communication is that these directives to hold it within house and not discuss it with subordinate elements in the Post Office Department and to limit the briefing to three or five people in the so-called high level staff and so forth originated at the request of the Post Office Department. They were not your ideas?

General REBH. That is correct.

Mr. WRIGHT. Thank you very much.

Mr. CONSTANDY. One other thing. There is another matter that that raises, and it is that this is a relatively large undertaking on behalf of the Postal Service.

If they were to confine the discussions of the proposition to three or five people, it would almost seem that they are denying themselves the opportunity to test the feasibility of it in their own organization by the people below those three to five, who have the technical competence to permit the consideration of whether this is the best approach for the Post Office.

You cannot comment on that, but I think it is an observation worth being made under those circumstances.

I would like to elaborate a little further as far as information on the other side, which is contained in a letter dated April 2, 1971, from Postmaster General Blount to Mr. Schultz, the Director of OMB, relative to a letter written by Mr. Schultz on March 27 of this year, reviewing the agreement between the Post Office and the corps.

On page 3 of Mr. Blount's letter, he makes reference to the April 17, 1969, letter from Mr. Kunzig to Mr. Peter Flanigan at the White House. It reads, and I will read this portion and the next paragraph:

"Since the White House and Red Blount feel the Corps of Engineers for many reasons will be best able to handle specified new post office construction, we have agreed that the delegation will continue and there is nothing to stop POD from using the Corps of Engineers at once." A copy of Bob's memorandum is attached at Tab B.

If I can just pause there. This is April 17, 1969. The sentence would suggest that the decision to use the corps was something more than a hope or a speculation. There seems to have been some position taken by Mr. Blount that the corps would be best able to handle the program. I would like to read the next paragraph:

We all recognized that the use of the Corps might conceivably ruffle a few feathers on Capitol Hill. This caused me some concern, because the President had asked me to give top priority to the task of securing passage of the postal reform bill. As you will recall, the AFL-CIO and all of the postal unions were presenting a united front in opposition to the bill, and as a result, the reform proposal met with a somewhat chilly reception in Congress. Because the construction freeze imposed by the President during that period made it necessary to defer a major expansion of our postal construction program, and because I was confident that we could get the reform legislation through Congress within a reasonable period of time if we did not try to fight too many battles simultaneously, I put the Corps of Engineers project on the back burner pending passage of the bill. I did, however, make arrangements for the Corps to take over supervision of several construction projects that we had underway, and I must say that we found the Corps' performance on these projects quite satisfactory.

I think that gives some insight into part of the reasons that the matter was discussed in the way that it had been.

Mr. WRIGHT. Mr. Constandy, once again, will you identify the author of this?

Mr. CONSTANDY. Postmaster General Blount, writing to Mr. Schultz on April 2, 1971, of this year.

In the course of that passage he is reviewing the past events to put the decision to use the corps in proper perspective, and he is giving it in a sense a historical recitation of the actions that he took as reasons for having taken them.

Mr. WRIGHT. This does indeed put the matter in clear perspective, and I think the sentence appearing at the first of the second paragraph on page 3 of this document clearly explains the reason for the atmosphere of secrecy that prevailed at the request of the Post Office Department. I shall quote that sentence. Postmaster Blount in this communication declared "We all recognized that the use of the corps might conceivably ruffle a few feathers on Capitol Hill."

He then goes on to declare, and I quote, "This caused me some concern, because the President had asked me to give top priority to the task of securing passage of the postal reform bill."

Those two sentences in context certainly make it quite clear that the purpose in keeping secret from the Congress the plan which then was

clearly well underway to utilize the services of the corps was kept secret from the Congress in the fear that its knowledge by the Congress might jeopardize the passage of the postal reform bill.

The committee views, and I think the Congress would view, with grave concern this evidence of a deliberate plan to conceal from Congress knowledge as to exactly what was proposed and exactly how this program was to be carried out.

Mr. CONSTANDY. Mr. Chairman, that is an exhibit, the number of which can be put in the record at this point, but it escapes me at this point.

Mr. WRIGHT. In regard to that, I would like to ask a question with respect to your testimony, General Rebh, wherein you refer to the development of two agreements.

These two agreements were signed on March 11, 1971. The shorter agreement is described by yourself as between the Postmaster General and the Secretary of the Army, setting forth general principles and policies. There was a longer agreement which you described as being between the Postmaster General and the Chief of Engineers, setting forth relationships, responsibilities, general procedures, and terms and conditions.

Did you know, or were you aware that the longer agreement of March 11, 1971, was not divulged to Congress but that only the shorter agreement was divulged to the Post Office and Civil Service Committee of the Congress?

General REBH. I was not aware that either one was being divulged to Congress. We simply worked with the Post Office Department in developing these.

Mr. WRIGHT. So far as you know, there was no question of national security being at stake?

General REBH. No, sir.

Mr. WRIGHT. With regard to this second agreement?

General REBH. No, sir.

Mr. WRIGHT. Therefore, there would be no security reason to keep it secret from the Congress?

General REBH. No, sir.

Mr. WRIGHT. So far as you interpret the doctrine of executive privilege, nothing herein relates to a negotiation with a foreign country or anything of a kind that would place it in a category privileged to the executive branch?

General REBH. That is correct, sir.

Mr. WRIGHT. Then you are saying that the Corps of Engineers was not a party to concealing from Congress information concerning these interagency negotiations or these two agreements?

General REBH. That is correct, sir. I was not aware of what publicity the Post Office was making with these agreements.

Mr. WRIGHT. In this longer agreement, I believe that a 5.5 percent ceiling was established on overhead costs incurred by the Corps of Engineers in administering this program.

When you agreed to the 5.5 percent ceiling, did you anticipate that there would be so many small projects involved in this building program, General Rebh?

General REBH. In our interpretation, there were no small projects.

In fact, this is one of the things that makes this program unique, so far as the corps is concerned, is that no project will be under $2

million or 50,000 square feet. This is the only thing that the 5.5 percent pertains to.

Mr. WRIGHT. Is there not a second agreement which broadens that and includes smaller projects?

General REBH. That is not correct, sir. There is a second agreement covering smaller projects but we have not worked out with the Post Office Department yet the percentage that will apply to corps costs.

Mr. WRIGHT. In other words, what you are saying to the committee, then, is that the 5.5 percent overhead ceiling applies only to the larger projects?

General REBH. That is correct.

Mr. WRIGHT. You have not yet agreed to any such ceiling with respect to the smaller projects encompassed in the later agreement? General REBH. That is correct. In theory it could be 5.5, but we have not worked out that agreement yet.

Mr. WRIGHT. How do you interpret the 5.5 percent ceiling? If you should run over for whatever reason, who pays? Does the corps absorb that, or does the Post Office Department have to pay you, notwithstanding the existence of the 5.5 percent ceiling.

General REBH. The corps does not expect to run over the 5.5.

Mr. WRIGHT. Of course not. But it is conceivable at least that this might occur. In the event it should occur, how do you interpret the agreement? Would the corps have to absorb that extra charge?

General REBH. No. The corps has no funds with which to pay for any deficit because each of our programs have a separate appropriation. I would like to say, a great deal of thought went into the development of the 5.5 ceiling.

General Clark consulted with both military and civilian personnel who had been associated with the NASA program, the ICBM program, military construction along with comptroller personnel before agreeing to a 5.5 ceiling.

As a result of his analysis, and particularly in view of declining costs we have been experiencing in recent years and the nature of this program, he decided that we would be able to meet the 5.5 ceiling.

But, of course, in doing this, there has to be the assumption that the party to the agreement is going to have to do certain things to permit us to manage our work and allocate our resources on an orderly basis.

Mr. WRIGHT. General, I think what the committee really wants to discover is in the event the 5.5 percent ceilings should be exceeded, who pays?

General REBH. If I may say and I will answer your question, but I think it is a very highly unlikely event. Because the two conditions we have in the agreement are that the Post Office Department has to give us a minimum program, plus they have to give us a schedule of projects 6 months in advance. If they can do that, based on our professional judgment, we will have no difficulty meeting that ceiling.

There is one other thing, and that is, if that assumption does not materialize, the corps and the U.S. Post Office Department will consult to develop mutually acceptable course of action.