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Section 219 of the Flood Control Act of 1965 (79 Stat. 1089) authorizes the Corps to "accept orders from other Federal departments and agencies for work or services and to perform all or any part of such work or services by contract."

In March 1969, the Corps furnished the Department a brochure outlining its capability to provide design, construction and real estate services. The brochure referred to the Corps' past experience in providing services to other agencies in the execution of large construction programs, such as its work for the National Aeronautics and Space Administration and its design and construction of hospitals for the Veterans Administration, In transmitting the brochure, the Acting Chief of Engineers stated that subject to approval by the Secretary of the Army "we would be pleased to support your requirements for construction and related services to whatever extent your future programs may demand."

In April 1969, the Administrator of GSA advised the Postmaster General that it might be easier and cheaper to use GSA but that since it was felt the Corps would best be able to handle specialized new post office construction, there was nothing to stop the Department from using the Corps

at once.

The Department's decision not to use GSA was made on the basis that it did not have the size or experience to manage the postal facility construction program, The Postmaster General was of the opinion that a postal construction program of $250 to $500 million a year could be better handled by the Corps, which had a construction program averaging about

$2 billion a year, rather than by GSA which had a program averaging about $115 million a year with a projected fiscal year 1972 workload of about $180 million. In addition, the Postmaster General noted that the highly mechanized special purpose facilities needed for postal use bore little resemblance to the facilities GSA builds--a factor that led to the 1966 delegation of authority from GSA to the Postmaster General.

Conversely, the Postmaster General believed that the Corps had the size and geographical distribution of work force, and expertise in constructing complex buildings needed to manage the construction of postal facilities.

The Postmaster General decided to defer entering into a formal agreement with the Corps until after passage of the Postal Reorganization Act. In August 1970 he made an arrangement with the Corps to provide technical assistance on the Fort DeRussy, Hawaii, post office project.

On September 26, 1970, after passage of the Postal Reorganization Act, the Postmaster General formally requested the Corps to provide real estate, design and construction supervision services in connection with an accelerated postal building program. At that time, he anticipated utilizing the Corps for a $750 million program over a 2-1/2 to 3-year period. On October 8, 1970, the Secretary of Defense informed the Postmaster General that he was authorizing the Secretary of the Army to proceed with the negotiation of a definite agreement covering the services which Department desired.

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March 11, 1971, agreements

On March 11, 1971, the Department executed two agreements with the Department of the Army to continue in effect for a 3-year period. One agreement was a "broad umbrella type" between the Postmaster General and the Secretary of the Army covering basic principles and policies. The other agreement, signed by the Postmaster General and Chief of Engineers, was more specific and established the responsibilities, terms, and conditions under which the Corps will furnish the services required. The latter agreement also provided that the Corps will establish controls over its operations to ensure that its costs will not exceed 5.5 percent of the total design, construction, and mechanization costs. This rate was based on the assumption of a continuing program of not less than $250 million annually and the scheduling of postal projects at least 6 months in advance of dates on which services are required. On March 19, 1971, the Corps advised its field offices of the new mission to provide support to the Department and pointed out that they would be assigned those major postal projects over $2 million or 50,000 square feet and that projects falling below this criteria would generally be managed by the Department's regional offices. Information furnished House Post Office and Civil Service Committee

On March 11, 1971, the Postmaster General briefed the House Post Office and Civil Service Committee on his facility construction plans. In presenting his rationale for using the Corps, the Postmaster General stated that he anticipates a construction program of two to three times that previously experienced and that this level of effort would last for only a few years.

It was estimated that approximately 100 percent

temporary staff expansion would be required for the Department if the needed facilities were to be placed in operation within any reasonable period of time. Rather than undertaking this temporary staff build-up within the Department he decided to use the services of the Corps. The Postmaster General further informed the Committee that the agreement would necessitate transfer of personnel from the Department to the Corps but the details had yet to be worked out.

Effect of agreements on GSA

On March 27, 1971, the Director, OMB, wrote to the Secretary of Defense and the Postmaster General requesting that they suspend all activities pursuant to the agreement until his office completed a review of the desirability of using the Corps for this purpose. The Director stated that in view of the size and nature of the Department's construction program, the agreement would result in a major change in the role and mission of the Corps; and that it had implications effecting the role of GSA as the primary agent for the construction of buildings to house the civilian agencies of the Federal Government. To facilitate his review, the Director requested the three agencies to comment on the agreement.

In response to the Director's request, the Postmaster General by letter dated April 2, 1971, outlined the options that were available to him at the time he signed the agreement. He stated that it would be wasteful, inefficient, and time consuming to try to develop the necessary construction capability in-house and that the Corps already has precisely the kind of work force needed, located where it was needed, in-being and ready to go to work immediately.

On April 12, 1971, the Secretary of Defense responded to the Director's request describing the several benefits from a national security standpoint to be derived from this course of action. For example, he pointed out that the Department is devoting considerable effort toward advancing the state of the art in automated and computerized materials handling equipment.

The Corps' participation in this program will equip it to take advantage of these advances in modernizing existing plants and arsenals.

On April 15, 1971, the Acting Administrator of GSA commented on the agreement and stated that "We strongly feel that the role of the General Services Administration in the construction of buildings to house civilian agencies of the Federal Government would be seriously weakened if this agreement is implemented." Some of the reasons he gave were:

(1) Implementation of the agreement would further proliferate authority to construct public buildings within the Executive Branch contrary to the intent and purpose of the Public Buildings Act of 1959.

(2) Involvement by the Corps would contribute to further confusion on GSA's role in planning, building and managing public buildings, including the acquisition and management of leased space.

(3) GSA's work force would have to be curtailed substantially if the Corps undertook construction activities which GSA heretofore performed.

On May 4, 1971, the Postmaster General and the Deputy Secretary of Defense sent a joint letter to the Director, OMB, stating that "Since we have received no further questions from you concerning our replies to your letter of

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