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Mr. Wright. Can either of you gentlemen shed some light beyond that upon the plans of the Post Office to build a lease-purchase project at Charlotte Amalie, Virgin Islands?

Mr. AHART. There is one in the planning stage, Mr. Chairman. I assume that the responsibility for this project would have been encompassed within the May 30 agreement under which the corps would undertake responsibility for the lease construction program as well as for the construction program as such.

Mr. WRIGHT. Do you know whether it is anticipated that this would be a lease-purchase project or a lease project?

Mr. AHART. As of the last information I had, it was planned as a lease-construction project.

Mr. WRIGHT. As opposed to lease purchase?
Mr. AHART. Yes.

Mr. Wright. One of those projects, in other words, in which the Government never would anticipate owning the building but would pay rent presumably sufficient to amortize the construction by a private

Mr. AHART. That's correct.
Mr. WRIGHT. Thank you.

Mr. CONSTANDY. Just to make sure the record is clear on that, the March 11 agreement did not contain these particular appendixes. They were appendixes to General Rebh's memo to the field dated 8 days later, March 19, 1971.

The point I wanted to make is the same. Within 8 days from the signing of the agreement, there was in excess of $400 million worth of work scheduled or already turned over to the Corps of Engineers to be received by them.

In that same long agreement on March 11, I would like to call attention to the point you brought up this morning, Mr. Chairman, on the policy section, which is part 2 of the agreement, and it deals with the general subject of the public announcements and congressional liaison. I will quote from page 3, paragraph 1, which reads as follows:

Congressional liaison relating to any matter covered by this Agreement will be the exclusive responsibility of the Post Office. Congressional inquiries received by the Corps regarding all work performed under this Agreement will be sent with the Corps' suggested response, on a priority basis, to the U.S. Post Office Department's Congressional Liaison Office for disposition.

To amplify that, I would like to then have that marked exhibit 17. Mr. WRIGHT. Without objection, this is exhibit 17. (The document follows:)

EXHIBIT 17

DEPARTMENT OF THE ARMY,
OFFICE OF THE CHIEF OF ENGINEERS,

Washington, D.C., March 19, 1971.

PostAL CONSTRUCTION SUPPORT PROGRAM-EXPIRES MARCH 31, 1972 1. Purpose.—This circular provides information regarding a new mission of substantial size and importance which has been added to those now performed by the Corps of Engineers, namely the furnishing of real estate, design, and construction services in support of the expanded Postal Public Building Program of the U.S. Post Office Department (USPOD).

2. Applicability. It is applicable to all Corps of Engineers installations and activities assigned responsibilities for the Postal Public Building Program.

3. Background.

a On 26 September 1970, after passage of the Postal Reorganization Act, the Postmaster General sent a letter to the Secretary of Defense requesting the Corps' services in "undertaking accelerated construction of our postal facilities." On 8 October 1970, Secretary Laird informed Mr. Blount that he was authorizing the Secretary of the Army to initiate negotiations to develop an agreement whereby the Corps would provide the requested services.

b. Two general agreements have been developed to cover existing and future work. The first, Appendix A, is a broad "umbrella” type agreement between the Postmaster General and the Secretary of the Army covering policies and principles. The second, Appendix B, is a Memorandum of Understanding between the USPOD and the Corps of Engineers describing the relationships and responsibilities for accomplishing the expanded Postal

Public Building Program. 4. Differentiating Features of this Program.—There are several features which differentiate this program from other major Corps programs :

a. Single interface at OCE-Washington level.-In this case, there s a single interface with the supported agency. This interface occurs at the Office, Chief of Engineers-Washington level. This is in contrast to the NASA, Air Force, and Army programs wherein the interfaces are many and they occur primarily at the field level.

b. U.S. Post Office Department is Profit and Lo88 Oriented.-When the USPOD becomes the U.S. Postal Service on 1 July 1971, it will be a Government corporation operating on self-produced revenues. Bonds sold on the open market will provide for long term financing needs including construction. The acceptance of these bonds in the open market will depend largely upon the USPOD's "profit and loss” status. Timely and high quality design and construction at reasonable prices will be essential to both the technical and financial success of the expanded modernization program. This profit and loss approach has at least two principal impacts on Corps operations :

(1) The USPOD will be intensely interested in our ability to provide high quality real estate, design, and construction services at minimum costs. As part of its cost monitoring effort, the USPOD will be paying particular attention to Corps in-house costs with regard to real estate site selection and site acquisition, supervision and review of A-E contracts, supervision and inspection of construction, and the support costs at district, division, and OCE levels.

(2) Adherence to established schedules will also be a matter of continuing concern to the USPOD. Because of the significant savings generated by the substitution of modern, large facilities for less efficient ones, time is money. As a result, the USPOD wants to be consulted, to a degree in excess of what is normal for the Corps and its other programs, at important milestones and when project cost and schedule changes are in the offing. The USPOD will be operating on a “marginal costmarginal revenue” concept; therefore, on occasion, time extensions and design and construction schedule considerations will be overriden by the requirement of the USPOD to bring a facility "on stream” by a certain date. Operational dates, once established for facilities, will be tantamount to fixed dates because of the extensive coordination required on a nationwide basis throughout the entire Postal system to achieve redirection

of mail to the new facility. c. Public Information. This subject and the two subjects covered in the next two subparagraphs (Congressional Inquiries and Control of Corps Costs) are of particular concern to the Postmaster General. With regard to policy governing the handling of public information, see the Agreement be tween the USPOD and the Corps, paragraph 1 of B. Policy. There are two principal aspects to this matter:

(1) The USPOD will make all public information releases and announcements involving policy, the overall program, and initial releases and matters of substance regarding individual projects to include the announcement of new projects and the awarding of contracts. The USPOD does not want A-E firm selections publicly announced. Likewise, there will be no groundbreaking ceremonies.

(2) The Corps is authorized to make public releases relative to dayto-day operations concerning a project but only after coordination of the

release has been accomplished with the local postmaster. The main purpose of this coordination is to keep the local postmaster informed of the subject matter of the release inasmuch as he may be queried on the subject, plus he has an intense interest in the facility since he will be

come its operator upon completion. d. Congressional Inquiries.—The memorandum and paragraph referenced above are explicit in delineating responsibilities regarding the answering of Congressional inquiries. While it is recognized that this is not the manner in which the Corps normally handles Congressional inquiries, this is the manner desired by the Postmaster General. It is general knowledge that, in the past, the Postal system was subjected to political pressures. The Postmaster General has centralized the handling of Congressional inquiries and certain public information releases so as to remove Post Office operations, to include the Postal Public Building Program, from the political arena. He is firm in his determination to keep politics out of postal matters.

(1) Telephonic Inquiries.

(a) The information requested through direct telephone calls received by Corps members at district and division levels from members of Congress or their staffs will be tactfully received with a statement that the information requested will be provided directly to the member's Capitol Hill office by the U.S. Postal Service's Congressional Liaison Office. The Corps recipient of the call will prepare a summary of the call containing all pertinent facts and, within 48 hours (Saturdays, Sundays and holidays excluded), will dispatch the written summary along with a recommended draft reply by air mail directly to: Director of Community Programs, U.S. Postal Service, Room 3446, 12th and Pennsylvania Avenue, NW., Washington, D.C. 20260.

(b) A copy of the summary and draft reply will be simultane ously sent to : Chief, Corps of Engineers Postal Construction Support Office, Office of the Chief of Engineers, Room 1-F-035, Forrestal Building, Department of the Army, Washington, D.C. 20314.

(c) If guidance is required in preparing the draft reply, the ap propriate higher level office, division or OCE, will be contacted prior to dispatch. If the inquiry implies criticism of the Corps or is highly controversial in nature, the matter will first be brought to the attention of Mr. George Brazier, Chief, Program & Planning Division, Directorate of Military Construction, Office of the Chief of Engineers. Telephone: AC 202–693–6427.

(d) Upon receipt of the summary and recommended response, the Director of Community Programs will be responsible for ensur

ing that the member's Capitol Hill office is immediately contacted. (2) Written Inquiries.

(a) The original copy of all Congressional communications concerning postal facilities received by Corps District and Division offices will be forwarded within 48 hours of receipt (Saturdays, Sundays and holidays excluded) with a draft reply directly to the Director of Community Programs, USPOD, addressed as indicated in the preceding paragraph.

(b) The inquiry and draft reply will not be channeled through a regional headquarters of the Postal Service or through a Corps higher headquarters (division or OCE). However, where OCE guidance is desired and in all instances involving criticism of the Corps of Engineers or matters of a highly controversial nature, the inquiry will first be informally brought to the attention of Mr. George Brazier, Chief Program & Planning Division, Directorate of Military Construction, Office of the Chief of Enigneers, Telephone: AC 202-693–6427.

(c) A copy of the inquiry and draft reply will be sent to the Chief, Corps of Engineers Postal Construction Support Office (CEPCSO), addressed as indicated in the preceding paragraph.

(d) The Postal Service will be responsible for preparing and dispatching the final reply to the Member of Congress.

(3) Personal Visits.

(a) Personal visits to Corps field officies; (division, district, area, or resident), by members of Congress or their staffs concerning postal facilities are to be handled in a courteous and friendly manner. Requests for information concerning a postal facility are to be received with a statement to the effect that a complete written reply will be supplied directly to the member's Capitol Hill office by the U.S. Postal Service.

(b) A summary of the request or inquiry will be prepared with all pertinent facts along with a recommended draft reply and forwarded within 48 hours (Saturdays, Sundays and holidays excluded) to the Director of Commupity Programs, USPOD, addressed as indicated above.

(c) A copy of the summary of the request or inquiry and the draft reply will be sent to Chief, CEPCSO, with address as indicated above. Where OCE guidance is desired and in all instances involving criticism of the Corps or matters of a highly controversial nature, the inquiry will first be informally brought to the attention of Mr. George Brazier, Chief, Program & Planning Division, Directorate of Military Construction, OCE, Telephone : AC 202-693–6427.

(d) The Postal Service will be responsible for providing the information to the Member's Capitol Hill Office.

e. Control of Corps Costs

(1) Ceiling on Corps In-House Design and Construction Costs.Throughout the negotiations of the USPOD-Corps agreement, the Postmaster General was firm in his desire to ensure that Corps inhouse costs are controlled. The Agreement provides for a Corps inhouse cost ceiling of 5.5% of the aggregate of contract awards for design, construction, and mechanization on a program basis. While this percentage may be exceeded for a single project, it may not be exceeded on a program basis since there are no other funds available to cover costs which exceed this rate and the USPOD will not fund costs above this rate. Accordingly, costs will have to be managed closely. In some respects this is a new approach to Corps costs. Heretofore, we have always provided every service to the degree we felt necessary and accepted the resulting costs, concentrating our management on improving the efficiency and cost-effectiveness in the provision of those services. The agreement with the USPOD adds a new dimension to the cost problem ; now, we must also insure that the quantity and degree of services do not exceed the allowable cost, while, at the same time, insuring there is no decrease in quality of engineering and construction or responsiveness to USPOD requests. This will pose a new challenge to all of us. General Clarke considered that this commitment could be made based on Corps historical experience, the downward trend in Corps inhouse costs, the fact that we can control the services to be provided, and the USPOD commitment of a minimum annual program of $250 million and the furnishing of project schedules six months in advance of the requirement for Corps services.

(2) Real Estate Targets.-Since costs of real estate services are not amenable to a fixed ceiling approach at this time, the USPODCorps agreement provides for Corps cost targets of $3,500 per location for site selection and $3,800 per parcel (tract) for site acquisition services including administrative and support costs. These are estimates of the general order of magnitude of costs expected for predominantly suburban areas. As soon as sufficient experience has been gained, the USPOD desires to establish a ceiling on these costs.

(3) Bettering these Targets and Ceiling Costs.—General Clarke, in his discussion with the Postmaster General, gave assurances that the Corps would institute and undertake aggressive management practices to ensure high quality performance at minimum costs; the aim and challenge is to provide these services below these ceiling and target costs.

5. Corps Organizational Arrangements to Execute Postal Public Building Program.

a. Concept.

(1) Real Estate and Construction.-In view of the existing capabilities at the district level and the nationwide coverage provided by the district and project offices, particularly considering that many of our offices are located in populated areas where modern postal facilities are required, the division-distriat organization is ideally suited for this program. Even though this program falls under the aegis of the Military Construction Directorate, construction responsibility for each project will be assigned to the division whose district, whether military or civil, is considered to be best able to accomplish the task in terms of location, capabilities, etc.

(2) Design.—Whereas any of the existing districts may be assigned construction responsibilities for a post office project, only a few selected districts will be involved in the design program. In view of the repetitive nature of the postal facilities and the sophisticated nature of the specialized mechanization being incorporated into many of these facilities, it is considered that a higher quality of design can be gained by having a few districts manage the architect-engineer (A-E) design of many facilities as opposed to having many districts manage the A-E design of a few facilities. Under this concept, advantage can be taken of the learning curve. Six districts have been designated to manage the A-E design contracts; they are Sacramento, Kansas City, Fort Worth, Savannah, Norfolk, and New York. This number will be increased or decreased if experience indicates that the design program can be accomplished more economically, and within the established time frames, with a lesser or greater number of design districts. The selected districts will manage the design of postal facilities for the areas indicated at Appendix C.

(3) Management of the Program.—To accomplish the Corps interface with the USPOD and to provide central management of this program, an agency has been established within the Military Construction Directorate; its name is : Corps of Engineers Postal Construction Support Office (CEPCSO). An officer of general officer rank will be the Chief of CEPCSO and will also represent the Chief of Engineers in

the management of the program. b. Corps of Engineers Postal Construction Support Office.

(1) Relationship with Agencies Comprising the Office, Chief of Engineers.—(See Appendix D for organizational arrangement)

(a) Military Construction Directorate.-CEPCSO is a part of the Military Construction Directorate because most post office design and construction activities have characteristics similar to the design and construction activities associated with complex NASA, Air Force and Army projects. By being a part of the Military Construction Directorate, the Chief of CEPCSO can utilize, on an as-needed basis, the existing expertise of the divisions of the directorate. The Chief of CEPCSO has direct access to the divisions of the directorate and may task these divisions in the name of the Director.

(b) Other OCE Agencies.—As indicated above, the Chief, CEPCSO occupies a second position, which is, Assistant to the Chief of Engineers for Postal Construction Support; as such, he has direct access to task the advisory and administrative staff as well as the

other directorates in the name of the Chief of Engineers. (2) Function and Responsibilities.-CEPOSO is responsible for the following functions:

(a) Develops general operating policies and procedures for overall management of the Postal Public Building Program to insure expeditious, economical, and effective accomplishment of work within the funds authorized by the Post Office Department.

(b) Provides central management within the Corps of all matters pertaining to the execution of the Postal Public Building Program.

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