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Washington, D.C. The subcommittee met 10:15 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 first witnesses for today are Mr. Elmer B. Staats, the Comptroller General of the United States—Mr. Staats, I believe you are accompanied by Mr. Gregory J. Ahart, Deputy Director, Civil Division, General Accounting Office, and Mr. Milton J. Socolar,

Deputy General Counsel, General Accounting Office, and Mr. Michael Zimmerman, who is Supervisory Civil Engineer for the General Accounting Office.

Would you stand at this time and be sworn?

Do you solemnly swear the testimony you are about to give will be the truth, the whole truth, and nothing but the truth, so help you God?

(The witnesses heretofore named answered in the affirmative.)

Nr. WRIGHT. Mr. Staats, you have prepared quite a compendium of material at the request of the committee, for which we are grateful.

In addition to an exhaustive report which you have directed to the questions that we posed to you, I believe you have a summary statement. If you would

care to proceed at this time with the presentation of the summary statement, we would be very glad to hear it.



Mr. STAATS. I do have a statement, Mr. Chairman, and I will be very happy to read it, and be responsive to questions either during or after the reading of the statement.

We are pleased to be here, at your request, to discuss the policies and practices followed by the Postal Service in leasing and constructing facilities. The specific points raised in your letters to me of April 6 and June 2, 1971, Mr. Chairman, refer to, among other things, the development of the Post Office Department facility acquisition authority; events leading to the 1966 delegation of authority by the General Services Administration to the Postmaster General for the design and construction of postal facilities; certain aspects of the management of the leasing and construction of postal facilities; the recent agreements entered into by the Department and the Corps of Engineers concerning postal facilities; the effect of the agreements on GSA; and a comparison of land acquisition and lease construction procedures followed by the Department, Corps, and GSA.

We understand, however, that of primary interest to the subcommittee this morning is information on certain issues relating to relationships between the Department and the GSA, and between the Department and the Corps. With this understanding, my statement this morning will concentrate on certain aspects of the delegation of authority from GSA to the Department to construct buildings, and on certain aspects of the agreements between the Department and the Corps whereby certain responsibilities for the Department's facility acquisition program were transferred to the Corps.

On the other matters referred to in your letters, Mr. Chairman, we have prepared rather detailed comments. With vour permission, we will submit them at this time for the record. This is the statement to which vou just referred.

Mr. WRIGHT. Without objection, this entire statement will be incorporated into the record at the conclusion of the summary statement.

Mr. Staats. I will, however, comment briefly on some of the issues regarding the administration of the Department's facility acquisition prooram.

Since 1962 we have issued several reports which have dealt with the issue of leasing versus Government ownership of postal facilities. In these reports we pointed out the economies achievable through Government ownership of facilities and recommended that the Department determine, on an individual facility basis, whether to acquire postal space by leasing or through Government ownership, rather than follow a general policy of leasing.

The Department agreed with us some vears ago that it was advantageous to construct major postal facilities for Government ownership. For smaller facilities, however, the Department stated that if construction funds were available and it was not required to construct postal facilities to GSA's design and construction standards, decisions to construct or lease would be based on economic evaluations of individual facilities. Because the Postal Reorganization Act vests the Postal Service with broad real property acquisition and financing authority, it is now practicable for the service to make these evaluations. We believe that decisions made on that basis will result in a better managed facility acquisition program.

We have also reported on improvements that were needed in the Department's practices for acquiring control of sites for leased facilities, and in the course of our work at the Department in recent years,

we have observed other areas in which management of its facilities acquisition program could be improved.

Section 2 of the Public Buildings Act of 1959, as amended, provides that no Government-owned public building shall be constructed except by the Administrator of General Services. Under section 13 of the act, public buildings include Federal office buildings, post offices, and customhouses, but exclude specific projects, such as projects on military reservations and hospitals. Section 15 provides that the Administrator, with certain exceptions, is authorized to delegate the authority vested in him by the act to an executive agency when the Administrator determines that such delegation will promote efficiency and economy.

The act provides also that no appropriation shall be made to construct any Government-owned public building involving an expenditure in excess of $100,000 or to alter any such building involving an expenditure in excess of $200,000 unless a prospectus has been approved by the Public Works Committees of the Congress.

In December 1964, the Postmaster General presented to the President a proposal that would have given the Department direct construction authority primarily because the characteristics of the buildings needed by the Department differed significantly from those of the office buildings needed by other civilian agencies. A committee of business executives, appointed by the President to advise the Postmaster General in this area, recommended that the Department have permanent authority to acquire, construct, and own buildings for postal purposes in addition to its authority to lease such facilities.

GSA did not concur with the recommendation on the premise that it had the experience and competency to design and construct postal facilities and that such work was foreign to the basic mission of the Department, that is, receiving, handling, processing, and distributing mail.

In April 1966, a bill was introduced in the Senate which would have authorized the Postmaster General to construct postal buildings. The Administrator of General Services by letter dated April 18, 1966, to the Postmaster General stated that the proposed legislation was unnecessary and ill-advised. Hearings on the bill were held, but it was not enacted.

During the summer of 1966, GSA, at the suggestion of the Bureau of the Budget, proposed to delegate to the Postmaster General the authority to design and construct postal facilities. In November 1966, the Postmaster General agreed to the delegation of authority, subject to working out specific language of the delegation.

On December 1, 1966, the Administrator of General Services delegated to the Postmaster General, with authority to redelegate, the authority to acquire sites, design, construct, and alter public buildings to be devoted primarily to postal purposes. The delegation of authority required that prospectuses be submitted by the Department to GSA for submission to the Office of Management and Budget and the Congress, and that funds for the approved projects be obtained from the Department's appropriations.

Although the delegation required that the facility design, construction, and alteration conform with GSA standards, GSA recognized

that in view of the trend toward mechanized mail processing plants, modification of the GSA standards might be necessary when applied to postal facilities.

As of April 30, 1971, 77 postal projects to be constructed under the delegation of authority at an estimated cost of about $1.2 billion had been approved by the Committees on Public Works. Based on data supplied by the Department, we identified 38 of these projects, valued at about $468 million-Government-owned—that had either been completed or were in various phases of completion.

The Department's latest estimates for 13 of the 38 projects exceeded the estimates shown on the approved prospectuses by about $38 million. The estimates for seven of the 13 exceeded the amounts in the related prospectuses by more than 10 percent, the point at which a revised prospectus would have to be submitted to the committees.

Department officials informed us that they advised the Appropriation Committees of the revised cost estimates; and therefore, in their opinion, submission of revised prospectuses to the Public Works Committees was not required.

Mr. WRIGHT. At that point, Mr. Staats, what is our legal opinion under the Public Buildings Act of 1959 ?

Mr. STAATS. I would like Mr. Socolar to comment from the legal standpoint. I can comment from my own background and history of the legislation.

I can say from my recollection that it was pretty clear that it was intended that when one exceeded this 10-percent mark, it should go back through the committees and go through the same process. That is a recollection. Mr. Socolar might want to comment.

Mr. SOCOLAR. Yes; I think the requirement for going back with a new prospectus is quite clear in the law. However, I think also that the law is really, in effect, an internal requirement of the Congress itself so that if an agency, without coming back with a new prospectus, were to obtain appropriations to fund the building for which a prospectus was required but not submitted, I think we would take the position that that later appropriation, as a statute duly enacted by the Congress in itself, would cover the matter.

Mr. WRIGHT. That is an interesting-
Mr. Staats. May I add to that?
Mr. WRIGHT. I want to probe this further. Go ahead.

Mr. STAATS. You may recall that this issue has been for discussion on a number of occasions, not just with respect to the Post Office Department, but other public works matters as well. The discussion has usually been in terms of whether the Congress goes ahead with the appropriations without referring the matter to the Public Works Committee, or refuses to appropriate until it did go through the process of concurrence. It therefore becomes an internal congressional problem, rather than a problem between the Congress as a whole and the agency.

Mr. WRIGHT. I think that is a very neat distinction. However, let me ask a question. Does not the law clearly require submission of these prospectuses?

Mr. SOCOLAR. The law states no appropriation shall be made unless the prospectus is provided. However, beyond that in terms of our look


ing at the full scope of the law, if in fact an appropriation had been made

Mr. WRIGHT. I understand. You mentioned that a moment ago, Mr. Socolar, as a rationale for evading or avoiding this particular provision of the law. The rationale would seem to boil down to this: That since Congress passed the law, if Congress lets us get by with avoiding the law, then we have no obligation to comply with it. Do you think that is a sound legal doctrine?

Mr. SOCOLAR. Well, I think that the obligation on the part of the agency is still there. My response to your question was really directed to what the status of the situation would be if, in fact, an appropriation had been enacted.

Mr. WRIGHT. I understand that.

Mr. STAATS. May I interject here, Mr. Chairman, on this? I think it might help. A point of order, I think, would lie for appropritions which went beyond the 10 percent-it would require resubmission to the Congress. I think what Mr. Socolar is referring to would be the situation where our office would be called upon to make a legal ruling with respect to whether the funds were illegal.

Now, our position has been in this area as well as other areas where once the appropriation is enacted and the bill signed by the President, that that is as much a matter of law as any legislation.

Mr. WRIGHT. I think quite so.
Mr. STAATS. This is what he is referring to.

Mr. Wright. I was not questioning the validity of the funds provided by Congress in the appropriation process. What I was questioning was the legality of evading the requirement of law and coming to the appropriations process of Congress without having first complied with what seems to me to be a clear provision of the law.

Mr. SOCOLAR. I would say in answer to that question that the agency didn't comply with the law is going to the Appropriations Committee rather than to the Public Works Committee.

Mr. WRIGHT. Now let me ask this further question in that connection. Do you know whether or not the agency in these instances advised the Appropriations Committee in its application for funds for these specific projects that they hadn't been authorized in compliance with the law ?

Mr. SOCOLAR. I am not aware of that personally. I understand the agency advised us that they did communicate with the Appropriations Committee, but I don't know what the extent of that communication was.

Mr. STAATS. This could be determined, Mr. Chairman, I think with not too great difficulty, by simply examining the justification and the hearings before the Approciations Commitees on these items.

Mr. WRIGHT. I think so.
Mr. STAATS. We would be happy to do that

Mr. Wright. I would appreciate it if the General Accounting Office might make an inquiry into the question of whether or not in these instances the agency seeking funds for projects not authorized under the provisions of the law had advised the Appropriations Committees in their budget submissions that these were outside the scope of the Public Buildings Act of 1959.

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