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Department for the acquisition, design and construction of real estate services in the postal building program.

The letter is dated March 27, 1969 and it is signed by General Clarke, Acting Chief of Engineers. It was addressed to Mr. Blount as Postmaster General.

Without reading the letter, Mr. Chairman, I think it simply sets forth the conclusions from the brochure which describes the Corps of Engineers structure and capabilities in broad, general terms. The significance of it is that by March 27, 1969 the Corps was already prepared to respond to a request by the Postmaster General on the general subject of the corps undertaking the building program and related activities.

I would like to make that exhibit 10. Mr. WRIGHT. Without objection, this letter will become exhibit 10. (The letter follows:)

EXHIBIT 10

MARCH 27, 1969. Hon. WINTON M. BLOUNT, Postmaster General, Washington, D.C.

DEAR MR. PosTMASTER GENERAL: In response to your query, we have summarized in the attached brochure the specific capabilities of the Corps of Engineers to provide design, construction and real estate services to the Post Office Department.

Subject to the approval of 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 this connection, other agencies have called on the Corps many times in the past for the execution of large construction programs. The most recent example is the work begun for the National Aeronautics and Space Administration in 1960, which is still being carried on under a formal agreement initiated at that time. The agreement between the Corps and NASA is inclosed in the brochure to illustrate the details of mutual support in that particular instance. The provisions of agreements with other agencies vary considerably, depending on the circumstances in each case.

Large programs, such as the construction of NASA and ICBM facilities in the early 1960's, and the current SENTINEL program, led to the establishment of special organizations in the field and small specialized staffs in the Office, Chief of Engineers. These arrangements were necessary because of the urgency, magnitude and specialized nature of those programs. In most instances, however, the existing organization of the Corps has been fully capable of discharging large increases in construction workload without significant changes in the organization or location of existing field offices.

Based on criteria established by your Department, the Corps could provide all design, construction and real estate services, including project cost estimates; site acquisition and leasing; preparation, award and complete administration of design, construction, and supply contracts and modifications thereto; supervision and inspection of contract construction; legal services, including requirements resulting from contractor claims and appeals, and labor disputes ; disbursing and accounting for funds; and reporting on the status of all construction and related activities.

The assignment to the Corps of responsibilities for the types of services enumerated above would require the support of your Department in the provision of manpower spaces, as current personnel ceilings are restricted to programs presently assigned. Funding for all services assigned could be arranged either by transfer of funds at departmental level, or by reimbursement on a periodic basis. Charges for real estate and engineering and design services would be based on actual costs. Reimbursement for costs incurred by the Corps in supervising and administering the program could be based on actual costs for individual projects, or charged at a single, predetermined rate for all projects. The predetermined rate would be subject to periodic adjustment.

Your expressed interest in the Corps of Engineers construction capabilities is deeply appreciated. I trust that the contents of the enclosed brochure will provide information of additional interest to you. We welcome this opportunity to be of service to you. Sincerely yours,

F. J. CLARKE,
Major General, USA,

Acting Chief of Engineers. Mr. CONSTANDY. Mr. Ahart, also there was reference made this morning to a letter from Mr. Kunzig to the Hon. Peter M. Flanigan, Assistant to the President, dated April 17, 1969. I received this from the GSA and I will read it into the record, and we perhaps could make that exhibit 11.

Mr. WRIGHT. Without objection, this will become exhibit 11. (Document previously printed on page 147.)

Mr. CONSTANDY. The subject is GSA delegation of post office construction authority. It reads:

This is a brief memorandum to report to you on the present status of the above subject. Red Blount and I met this morning with the following results:

1. I raised the point that it might be "easier" to deal through the GSA. It might be “cheaper" through GSA and there could be conceivably Congressional problems if the Corps of Engineers is used.

2. We solved all major legal problems. I may delegate-and the Post Office may legally use—the Corps of Engineers. Smaller technical legal problems in the phraseology of actual delegations will be worked out quietly in the future between our appropriate legal staffs.

3. Since the White House and Red Blount feel the Corps of Engineers, for many reasons, will best be able to handle specialized new post office construction, we have agreed that the delegation will continue and there is nothing to stop the Post Office Department from using the Corps of Engineers at once.

Red Blount seemed quite pleased with the agreement we reached. He recognizes there may be congressional problems and he and his staff will give careful attention to this situation as time progresses. If there is anything further you wish me to do in this matter, just let me know. This is signed, “Robert L. Kunzig, Administrator."

Mr. Chairman, in this letter we want to point out the fact that paragraph 2 is referenced to solving all major legal problems. At the moment, we do not know what they are. Apparently they relate to the use of the delegation for such a purpose.

There are two references to the necessity of being delicate in the handling of this in regards to Congress.

Mr. WRIGHT. I think it is significant that two references in the communication acknowledge the possibility of difficulty with Congress and one reference acknowledges an agreement that these problems will be worked out quietly.

It might be unfair to assume unwarranted conclusions as this time in the absence of questioning Mr. Kunzig as to exactly what was meant but it does seem to the Chair significant that there are two references to the possibility of problems with Congress and one reference to working out these matters quietly. I think perhaps we would want to question Mr. Kunzig or representatives of the GSA with respect to those matters in the future.

Mr. CONSTANDY. I would like to point out, too, in fairness to Mr. Kunzig, he not being present, that his staff advised me that letter was entered into shortly after his arrival within GSA as the Administrator and that his reaction was more predicated on problems that were posed to him rather than his own knowledge as of that time of the circumstances.

Mr. WRIGHT. I think that is obvious as a result of the timing of the letter and as a result of the evidence we have otherwise adduced, that at a later date Mr. Kunzig did, in fact, very vigorously object to this whole proposal.

Additionally, the Chair would like to observe simply on a personal basis that he has always found Mr. Kunzig to be a direct person and not a devious person, and it would be unfair for any implication to exist in the record that the Chair regards the reference to working matters out quietly as a reflection of character with respect to Mr. Kunzig. The Chair meant, instead, that it should refer to the whole process of a sub rosa agreement having been reached prior to the action of Congress and the Congress not being advised of those agreements prior to its action in adopting the Postal Reform Act.

Mr. CONSTANDY. I think, Mr. Ahart, that the material in relating to the breakdown of what was referred to by Mr. Blount as the Corps of Engineers construction program averaging $2 billion a year was given to the record this morning.

I would like to point out that we will have additional testimony next Tuesday, the 20th, from GSA and in advance of their testimony I have been advised that the reference here to the comparison with GŠA, which is that their program averaged about $115 million a year with a projected fiscal year 1972 workload of about $180 million is not exactly accurate. Their average from 1959 to 1971 is about $250 million and for fiscal year 1972 their projected figure is $375 million in direct constuction programs. Assuming the passage of the lease construction program they have pening, it would be an additional $400 million which would raise their construction program anticipated to something on the order of $775 million, which compares rather favorably for like construction that you testified to for the corps in dollar amount.

There is reference to the September 26 letter from Mr. Blount to the Secretary of Defense formally requesting the corps to undertake the postal building program, is that correct?

MR. AHART_Resumed

Mr. AHART. That is correct.
Mr. CONSTANDY. Could we make that exhibit 12?
Mr. WRIGHT. Without objection, that will be exhibit 12.
(The letter follows).

EXHIBIT 12

THE POSTMASTER GENERAL,

Washington, D.C., September 26, 1970. Hon. MELVIN R. LAIRD, Secretary of Defense, Washington, D.C.

DEAR MR. SECRETARY: More than a year ago, preliminary discussions were held between members of the Corps of Engineers, U. S. Army, and the Post Office Department to explore the desirability of using the Corps' services in undertaking accelerated construction of our postal facilities. By reason of the passage of the Postal Reorganization Act and our 1971 Appropriations Act, we are now in a position to go forward with an expedited construction program.

We believe that the capabilities of the Corps of Engineers, as outlined in their letter to me dated 27 March 1969, would be of great assistance in bringing into being the vitally needed modern postal plants. This letter will serve as formal confirmation of our desire to utilize the capabilities of the Corps of Engineers for real estate services, design, construction, and supervision during construction and acceptance of our Postal Public Building Program as mutually agreeable. We would expect to work out a definitive agreement with the Corps to specifically identify the types of services we will require and to provide for strict control of the costs to be incurred in carrying out our program. We understand that the Corps may need additional manpower because of our requirements and we are willing to explore the transfer of manpower and spaces needed in meeting our requirements.

At the present time I can anticipate utilizing the Corps of Engineers for a near term predictable construction load of approximately $750,000,000. I mention this figure only to give you an indication of the total scope of work which we see ahead of us during the next 242 to 3 years. Again, specific details will be worked out in the agreement which results from this request for services.

I hope this relationship is consistent with your policies so that you can authorize the appropriate people to proceed with negotiations with us. Sincerely,

WINTON M. BLOUNT. Mr. CONSTANDY. You made reference to an October 8, 1970, letter from Mr. Laird to the Postmaster General in the text this morning. In that letter, Mr. Laird mentions that he reviewed this matter with the Secretary of the Army, who advised him that the corps would be able to undertake the program without impairing its ability to carry out other programs currently assigned to it and, as a consequence, he is authorizing them to proceed in negotiations with the Post Office Department for that work.

Mr. AHART. That is correct.

Mr. CONSTANDY. I would like to bring out another memo. There is another document which predates that by a day. It is not made reference to in your material. We have a copy of it. It is dated October 7. It is an internal memorandum to the files of the Corps of Engineers on the postal public building program. There are two elements in the letter that I think bear mentioning in that they again address themselves to the manner in which the agreement was developed between

and the Post Office Department insofar as it relates to being restricted in the advertisement of it.

Paragraph 3: As of 6 October 1970 only the high level staff of the U.S. Post Office Department were aware of the proposal to use the Corps. Public announce ment of the plan may not be made for several days (or weeks). Therefore, de tailed discussions with subordinate elements cannot be initiated until further notice.

Paragraph 4 reads as follows: A summary briefing for U.S. Post Office De partment high level staff (3 to 5 persons) is scheduled for Friday, 1100 hours, 9 October 1970. At that time, Post Office Department representative will also provide a summary briefing to the Corps. Details on this briefing will be furnished as available.

This internal memo in the corps then makes reference to the fact that the briefing on the proposal as of October 7, 1970, would be confined to three to five persons from the Post Office.

A third paragraph stresses the fact that only the high level Post Office people I think, Mr. Chairman, this becomes significant because one of the questions we asked the Post Office Department was the extent to which they undertook studies within the Post Office Department to satisfy themselves as to the feasibility of the situation. Not

the corps

.

only was their embargo on discussion limiting as it related to the Post Office Department's ability to conduct those studies but it seems additionally to be limited to the corps staff in considering in detail the feasibility of the undertaking of the work.

Mr. WRIGHT. I fully agree and I believe additionally it underlines what we already have discovered, that all these discussions and arrangements—even at late as October of 1970 after the passage of the Postal Reorganization Act—were being conducted in an atmosphere

Without objection, these documents will become exhibits No. 13 and 14.

(The documents follow :)

of secrecy.

EXHIBIT 13

THE SECRETARY OF DEFENSE,

Washington, D.C., October 8, 1970. Hon. WINTON M. BLOUNT, The Postmaster General, Washington, D.C.

DEAR RED: This is in reply to your letter of September 26, 1970, asking that I authorize the Department of the Army, acting through the Corps of Engineers, to provide real estate, design, construction and supervision services in connection with the Postal Public Building Program.

I have reviewed this matter with the Secretary of the Army, who advises me that the Corps will be able to undertake this program without impairing its ability to carry out the other programs currently assigned to it. Accordingly, I am pleased to be able to authorize the Secretary of the Army to proceed with the negotiation of a definitive agreement covering the services which you desire. Secretary Resor will designate representatives of the Corps of Engineers to initiate negotiations with you immediately. When a mutually satisfactory agreement has been developed, the Secretary of the Army will authorize the Chief of Engineers to provide services on a direct basis to the Post Office Department.

I welcome your plan to utilize the Corps of Engineers in advancing your expedited construction program. The Corps has a wealth of experience gained in a variety of construction programs, such as the Civil Works program, the Military Construction program, and the highly complex ICBM, NASA and SAFEGUARD programs, and it will bring to bear its record of outstanding performance and integrity in executing your program. Sincerely yours,

MEL.

EXHIBIT 14

DISPOSITION FORM

SUBJECT-POSTAL PUBLIC BUILDING PROGRAM, OCTOBER 7, 1970 1. The purpose of this DF is to furnish current information as to status of actions and to request your comments for the planning for the support to the USPOD.

2. By MRS, 2 Oct 70, copy of General Clarke's memorandum to Special Assistant to the Secretary of Army for Civil Functions forwarding proposed memorandum for Secretary of Defense and letter from Secretary of Defense to PMG. Secretary of the Army forwarded memorandum to Secretary of Defense at COB 5 Oct 70. It is anticipated that Secretary of Defense will sign letter to Mr. Blount MLT Wednesday, 7 Oct 70.

3. As of COB, 6 Oct 70, only the high level staff in the USPOD 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.

4. A summary briefing for the USPOD high level staff (3 to 5 persons) is scheduled for Friday, 1100 hours, 9 Oct 70. At that time, USPOD representative will also provide a summary briefing to the Corps. Details on this briefing will be furnished as available.

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