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Mr. Wright. You mean the Corps of Engineers is going to be responsible for putting up the stamp machines for the Post Office ?

Mr. Ahart. When requested. If they are requested to do it, they are responsible for providing it.

Mr. WRIGHT. Who owns those stamp machines ? Are those owned by the Postal Service, by the Post Ofice Department in the past, or are they owned by private vendors ?

Nr. AHART. It is Post Office equipment, and I suspect that most of them are on leased space. But I imagine the equipment itself is owned in all cases by the Post Office Department.

Mr. CONSTANDY. This is the type of thing that is on the F Street Mall?

Mr. AHART. I think that is an example of it.

Mr. Wright. These vending machines where you can buy, I do not know, something like three 6-cent stamps for 15 cents, or something like that?

Mr. AHART. I think there are some private operators who have small machines, Mr. Chairman, and the small machines which you see in drugstores and so on. But this is a more elaborate unit, a self-contained unit, and you get several different types of services from it.

Mr. WRIGHT. You can buy stamps and what else can you do?

Mr. AHART. Mail letters, and perhaps one of the other gentlemen we have with us can give you a better explanation than I could.

Mr. WRIGHT. I'm not really interested in knowing all the details of all the different kinds of vending machines they have. Mr. Terry and some of the other members of the panel here have reminded me that you cannot get three 6-cent stamps for 15 cents. It is not a bargain basement operation. What do you pay in those machines for stamps? I forget from time to time.

Mr. AHART. I think in the Post Office operated machines that you pay the same thing you would pay in the Post Office.

Mr. Wright. Now, I've seen machines where you pay more than that. Mr. AHART. These are commercial enterprise machines.

Mr. WRIGHT. Commercial enterprise machines, and the private individual is making profit off of the sale of postage, is that correct?

Mr. AHART. That is correct.

Mr. WRIGHT. I suppose that was authorized by Congress at some point in the past?

Mr. AHART. I could not answer that question, Mr. Chairman. I do not know whether it was specifically authorized.

Mr. WRIGHT. I wish Mr. Socolar were here because I would like to get his opinion as to the legality of the Government's entering into an agreement with a private individual to make a profit off of U.S. postage. It seems to me that it is a questionable practice at best. We are talking now, however, of machines that would be owned by the Postal Service, is that correct?

Mr. AHART. That is correct.

Mr. WRIGHT. Are we talking in no sense of machines that would be installed under the supervision of the Army to be owned by private individuals?

Mr. AHART. No. That would not be involved in this case.

Mr. CONSTANDY. And these are actually pavilions, are they not, that have stamp machines built in them? They have scales available, and I think there's a telephone where you can call up the Post Office, unless you happen to be a Congressman, and obtain postal information.

How many leases are there at present between the Post Office Department and private owners, do you know?

Mr. AHART. Approximately 27,000, of which I believe about 12,000 represent lease constructed facilities where the leases are for the total facility, and the remainder would be space in other facilities.

Mr. CONSTANDY. Do you have any indication of how many people would be involved in this activity of servicing the leases?

Mr. AHART. I'ın not sure, Mr. Constandy. The May 20 agreement indicated that there would be transfer, as I recall it, I believe it was the May 20 agreement, that there would be a transfer of approximately 600 people to the corps. Now whether these are a sufficient number of people to perform all the functions which the corps will be undertaking, I do not know, or whether it is too many or what the case may be. But it would take a sizeable number of people to service this many leases and perform the functions which they are called upon to do.

Mr. CONSTANDY. Do you have a corps letter to the field that amplifies this further, or am I in error?

Mr. AJART. I have a letter, Mr. Constandy, which precedes the June 28 agreement. I think it is dated May 28, which requested certain information from the field offices, if I can locate it.

Yes, it was dated May 28, 1971, and was signed by General Rebh. It went out May 28 and requested two responses from the corps division offices, one to be in by June 4 and the other to be in by June 9.

If you would like, I could read the salient parts of this letter for the record. It has a background section in it, paragraph number 3, and states as follows:

On May 12, the Post Office Department announced its reorganization plan which involves the structuring of the Department as well as the organization of the Washington Headquarters and Regional Headquarters. A copy of the U.S. POD agreement is attached. The consequences of the reorganization is that the Washington Headquarters and Regional Headquarters are being relieved of certain real estate, design, and construction responsibilities. The extent of this relief is still to be determined. However, it is expected that the scope of responsibilities to be retained by the new 5 Regional Headquarters and those to be assumed by the Corps will be resolved within the next week. At this time, it is to be assumed that the leasing function and all new construction, as well as major and minor repair and renovation, but not R & U type functions, will become the responsibility of the Corps. This assumption is for planning purposes only and is not to be expressed to any Postal Agency as a Corps agreed commitment.

There follows an identification of which Postal regional headquarters will be the responsibility of which Corps of Engineers division offices, for the purposes of contact and discussion. It explains the purpose of this contact:

A, the function is to determine the real estate, design and construction functions performed at the Regional Headquarters level.

B, to determine the number, value, and current status of each project. These projects will involve new construction and major and minor repair and renovations.

C, to determine information relating to fee acquisition, lease build projects, number of leases to be administered, number of leases to be renegotiated this year and next year, lease improvement projects, tax adjudication workload, etc.

Next is divisions in contacting Regional Headquarters or acting as Corps of Engineers representatives. Having determined the location and nature of projects, the next step will be to arrive at assignment of projects on a District basis In contrast to the design of the Post Offices in excess of 50,000 square feet which will be handled by the designated 6 design districts, the design of the smaller Post Offices will be handled within the Divisions by appropriate Districts. As a starting point for the assignment of projects. the Civil Works district boundaries can be used. However, adjustments will have to be made on the basis of economy and effectiveness.

Mr. CONSTANDY. May I interrupt you?
What are the civil works boundaries predicated upon?

Mr. AHART. Basically, I think, it gets into this. It is basically on a watershed, river basin basis, as I understand it.

However, adjustments will have to be made on the basis of economy and effectiveness. For exampe, in the St. Louis area, the Kansas City District boundary lies just to the north of St. Louis. It would thus seem that it would be better for the St. Louis District to be responsible for those Post Offices in the eastern region of the Kansas City District. The point being that the watershed concept for determining district boundaries may not be the best criterion in all cases for determining the district boundaries for Post Office construction.

Mr. CONSTANDY. Say that again, Mr. AHART. The point being that the watershed concept for determining district boundaries may not be the best criterion in all cases for determining the district boundaries for Post Office construction,

Mr. WRIGHT. So that it is possible that the Corps of Engineers for that broad new portion of its recently assumed activity that deals with the Postal Service, would have to create a separate system of geographical divisions than the one through which it has operated in the past, is that what you read into it?

Mr. AHART. At the district office level, that would certainly be true.

Mr. WRIGHT. District offices were set up for the principal business of the Corps of Army Engineers which has been civil works?

Mr. AHART. That is correct.

Mr. WRIGHT. Logically they followed river basins. In this new arrangement, they are acknowledging that they may have to have superimposed upon this another district or regional setup for the exclusive purpose of servicing the Postal System, is that your interpretation ?

Mr. AHART. They would have to draw different geographical boundaries and adjust them for the purposes of carrying out these functions. Yes, that is what this reports. This goes on pretty much in the same vein.

The May 28 letter states that the action required at the division level is to first contact the regional headquarters of the Post Office Deparment, to find the information, get the information that they need; and, to submit to the Chief of Engineers Office by June 4, for approval, their recommendations regarding the delineation of district boundaries for the handling of the design, construction, and real estate regional workload; and, to submit to the Chief of Engineers Office by June 9 for approval the estimated personnel requirements by district, to accomplish this small post office program, assuming plans of the preceding subparagraph were approved.

In effect, what they were trying to do was to take inventory of the workload that they were going to be acquiring, how they would organize it geographically, and what the personnel requirements would be.

Now, this was to come in here June 9. We have not seen what they came in with, but the functions were transferred, as I understand it, on June 27, or effective July 1.

Mr. CONSTANDY. It begins to suggest that these arrangements with the Postal Service are going to begin to disjoint the corps' normal structure and operations, does it not?

Mr. AHART. As the Comptroller General pointed out in his statement this morning, I think we can certainly expect that it will have an influence upon the organization and staffing of the corps, the marnitude of which is pretty difficult to determine until they have actually assumed the functions to see how they are organized to operate.

Mr. CONSTANDY. It seems, though, that it will have some major ramifications on the reassignment of personnel that has the capability to perform the functions of the breadth that you have outlined that are anticipated in the June 28 letter. The thing that troubles me with it, any one of the contingencies which you made reference to in that list of functions that they perform is at least possible to occur in any one of the 27,000 present leaseholds, which means that there has to be within some reasonable distance from any one of them the ca pability to handle any of those problems. It does not seem that the corps’activity in the past is meshed with that kind of a need.

Mr. AHART. They have not been involved in a leasing service program of anywhere near this magnitude. Certainly, they would have to have people capable.

Mr. CONSTANDY. I would suggest building maintenance.

Mr. Ahart. They would be responsible for repair, as pointed out in this agreement of leaseholds and fairly minor alteration projects.

Mr. CONSTANDY. Mr. Chairman, if we could make the May 20 agreement exhibit No. 18.

Mr. WRIGHT. Without objection, that will be exhibit 18.
(Exhibit No. 18 was marked for identification.)
Mr. CONSTANDY. And the June 28 agreement, exhibit 19.
Mr. WRIGHT. Without objection, that will be exhibit 19.
(Exhibit No. 19 was marked for identification.)

Mr. CONSTANDY. And may we have this document, General Rebh's instruction to the Corps with that information, dated May 28, 1971, made exhibit 20, then.

Mr. WRIGHT. That will be fine.
(Exhibit No. 20 was marked for identification.)
(The 3 exhibits follow :)

EXHIBIT 18

MEMORANDUM OF WORKING AGREEMENT BETWEEN THE Post OFFICE DEPARTMENT

AND THE CORPS OF ENGINEERS, DEPARTMENT OF THE ARMY PROVIDING FOR THE ASSIGNMENT OF USPOD FACILITIES PROGRAM FUNCTIONS TO THE CORPS OF ENGINEERS

I. TRANSFER OF FUNCTIONS

1. In furtherance of the Memorandum of Agreement signed on March 11, 1971, by the Postmaster General and the Secretary of the Army, and the Memorandum of Agreement signed on March 11, 1971, by the Postmaster General and the Chief of Engineers, it is understood and agreed that there shall be transferred from the Post Office Department (USPOD) to the Corps of Engineers, Department of the Army (Corps), responsibility for the acquisition, engineering and construction functions, except policy determination and program management, involved in the execution of the USPOD Facilities Program.

2. The USPOD has identified the USPOD employee positions being abolished as a result of this transfer of function responsibility to the Corps; these are listed in Attachment A (USPOD Headquarters) and Attachment B (USPOD Regional Office). It is agreed that those USPOD employees occupying positions listed in Attachment A and B will be granted transfer rights to the Corps of Engineers Postal Construction Support Office, or the Corps field elements, in accordance with Civil Service Regulations.

3. A schedule for effecting all aspects of the transfer shall be devised jointly at the earliest practicable date following the signing of this Memorandum of Understanding. Actions to determine and consummate transfer of function rights shall be accomplished in accordance with this schedule. It is intended by both parties that all such actions shall be accomplished by July 1, 1971.

4. The Corps will make formal offers to the USPOD employees having transfer of function rights, and will notify USPOD of those who decline an offer of transfer. The Corps will process personnel actions for the transfer of those eligibles and available. The USPOD will issue appropriate travel orders and cite USPOD funds for all costs associated with personnel relocation. The USPOD will process necessary personnel actions on those individuals unwilling or ineligible to transfer, and will carry them on USPOD rolls through date of separation.

II. ASSIGNMENT OF PROGRAM AND PROJECT RESPONSIBILITIES

1. Program Responsibilities.—The Corps will be responsible for providing all USPOD facilities acquisition, design, engineering, construction, and real estate services, to include: project cost estimates and the selection of all contractors and architect-engineer firms; site acquisition; lease-construction; preparation, award, and complete administration of design, construction, and fixed mechanization fabrication and installation contracts and modifications thereto; supervision and inspection of contract construction; legal services including requirements resulting from contractor claims and appeals, and labor disputes; equal employment opportunity requirements; disbursing and accounting for funds; and reporting on the status of all construction and related activities. 2. Project Responsibilities.

A. E risting Projects.-The Corps will accept responsibility for, designate the successor contracting officer for, and administer to completion, all USPOD contracts presently in force and awarded during the remainder of Fiscal Year 1971 which are for the design or construction of public buildings fixed mechanization including modifications thereto, lease-construction projects, and leased-facility improvement, modernization, extension, or renovation projects. The list of all such existing contracts, with locations and amounts, and status will be set forth in an Attachment C which is to be provided at the earliest practicable date. Funding for such projects will be provided by project authorizations in accordance with the Memorandum of Agreement signed March 11, 1971 by the Postmaster General and the Chief of Engineers. Responsibility for all such projects shall be assigned to and accepted by the Corps as rapidly as possible. It is intended by both parties that these responsibilities be fully transferred by July 1, 1971. A schedule and the procedures for effecting the transfer of responsibility for those projects shall be devised jointly at the earliest practicable date following the signing of this Memorandum of Understanding.

B, New Construction Projects Under 50,000 Square Feet, Fixed Mechanization Including Modifications, and Major Improvement and Modernization Projects, To be Commenced in Fiscal Year 1972 and After.—The Corps already has assumed responsibility for execution of the USPOD “major facilities” (50,000 square feet and larger) construction program with a few exceptions which will be assigned to the Corps at the earliest practicable date in accordance with A above. Responsibility for new construction projects under 50,000 square feet, fixed mechanization including modifications, and Major (over $500,000) improvement and modernization projects to be commenced in Fiscal Year 1972 and after, will be assigned to, and accepted by, the Corps as rapidly as possible commensurate with new Postal Service Technical and operational concepts. The list of all approved Fiscal Year 1972 new construction projects with locations and sizes in square feet, will be set forth in an Attachment D to be provided.

C. Transitional Personnel Costs.—To assure funding of transitional personnel costs associated with the Corps employment of former USPOD regional personnel, the USPOD will establish a Personnel Cost Transition Fund in the initial amount of $500,000, to be adjusted to meet actual costs. The Corps will be authorized through December 31, 1971, to draw down all or such portions of the said fund as the Corps determines necessary to cover transitional personnel costs experienced through September 30, 1971, in connection with the Corps' employment of former USPOD regional personnel. Individual project costs shall not include any transitional personnel costs. For the purposes of this paragraph II, C, transitional personnel costs are

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