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UNITED STATES GENERAL ACCOUNTING OFFICE

POLICIES AND PRACTICES FOLLOWED BY THE

POST OFFICE DEPARTMENT IN LEASING AND CONSTRUCTING FACILITIES

This document presents information in response to the requests made by the Chairman, Subcommittee on Investigations and Oversight, House Committee on Public Works, in his letters to the Comptroller General of April 6 and June 2, 1971. Among other things, it describes the development of the Post Office Department (now the Postal Service) facility acquisition authority; events leading to the 1966 delegation of authority by the General Services Administration (GSA) 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 (Corps) concerning postal facilities; the impact of the agreements on GSA; and a comparison of land acquisition and lease construction procedures followed by the Department, Corps, and GSA.

DEVELOPMENT OF POST OFFICE DEPARTMENT

FACILITY ACQUISITION AUTHORITY

CONSTRUCTION AUTHORITY

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, i.e., receiving, handling, processing, and distributing mail.

In April 1966 Senate bill S. 3256 was introduced. This bill 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 proposed legislation were held on May 24, and 25, 1966, by the Senate Subcommittee on Buildings and Grounds, Committee on Public Works, but the bill was not enacted.

During the summer of 1966, GSA, at the suggestion of the Bureau of the Budget (now the Office of Management and Budget (OMB)), 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, after negotiations between GSA and the Department, the Administrator of General Services, pursuant to Section 15 of the Public Buildings Act of 1959 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 OMB and the Congress, and that funds for the approved projects be obtained from the Department's appropriations.

The delegation required that the facility design, conIn the struction, and alteration conform with GSA standards. December 1, 1966, letter transmitting the delegation of authority to the Postmaster General, GSA recognized, in view of the trend toward mechanized mail processing plants, that modification of the GSA standards might be necessary when applied to postal facilities.

The Postal Reorganization Act approved August 12, 1970-the provisions of which became fully effective on July 1, 1971-established the Postal Service and authorized it to construct, operate, lease, and maintain buildings and facilities without regard to the Public Buildings Act of 1959.

LEASING AUTHORITY

The Department's leasing authority was derived from 39 U.S.C. 2102, which authorized the Postmaster General to negotiate leases for periods up to 20 years, and 39 U.S.C. 2103, which authorized the Postmaster General to enter into lease agreements for periods up to 30 years.

At June 30, 1970, according to the Postmaster General's annual report for fiscal year 1970, the Department was occupying about 146 million square feet of interior space in 30,773 buildings, including about 83 million square feet in 27,722 leased and rented buildings. Of these buildings, about 12,000 were lease-constructed and accounted for about 71 million square feet of interior space. During fiscal year 1970 the annual rental expense for the leased and rented buildings amounted to approximately $140 million, of which $125 million was for lease-constructed buildings.

ADMINISTRATION OF FACILITY ACQUISITION PROGRAM

POSTAL BUILDINGS CONSTRUCTION PROGRAM

As of April 30, 1971, 77 postal projects to be constructed under the delegation of authority from GSA 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 postal buildings (Governmentowned) that had either been completed or were being constructed. These 38 projects were valued at about $468 million for land acquisition, design, and construction.

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