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that budget request, which by this testimony has been done once the request has been submitted by any of the administrations. So you are dependent upon that process. But the Postal Service will not be dependent upon that process, correct?

Mr. KREGER. That is right.

Mr. WRIGHT. Therefore you are placed in a position of great dependence upon the Postal Service in the prosecution of plans you earlier had made, are you not?

Mr. KREGER. Well, our people have been going over the building program, building by building, and studying the various options that we might have to provide adequate Government space.

Mr. WRIGHT. You may by reason and logic persuade the Postal Service to cooperate with you if you are successful, but you have no leverage of law to require the Postal Service to cooperate, do you?

Mr. KREGER. That is absolutely right. Under the Postal Reorganization Act, the Postal Service can acquire space in any manner they want without regard to

Mr. WRIGHT. So I come back to the earlier comment, that unlike you and the rest of the Federal Government, the Post Office, or the newly independent Postal Service, is capable of moving ahead as it desires. You then are placed in a position of dependence upon the Postal Service to decide at its option whether or not to go into a project with you or to help you out of a project that is no longer feasible because of its withdrawal, or to go ahead and build it and then rent the space to you?

Mr. KREGER. Well, it is undoubtedly true that the Post Office has great flexibility. I think that the options that GSA has open to it to acquire space for tenant agencies allows quite a bit of flexibility so that we are not dependent completely on the Post Office, the Postal Service.

If you would not mind, I would like to reread for the subcommittee a small portion of the testimony of the Administrator on June 22, which talks about reforms in building financing, which GSA hopes would come to pass.

Mr. WRIGHT. This subcommittee is very familiar with that testimony. It was given to this subcommittee, was it not?

Mr. KREGER. Right.

Mr. WRIGHT. And a very heartening thing, I might say. Go ahead and read what portion of it you would like, sir.

Mr. KREGER. This is quoting the Administrator's testimony:

Reform of building financing is one of the biggest challenges. Right now we are required to seek many separate appropriations and maintain many separate accounts for separate aspects of the construction of a single public building. For instance, we may have to start by seeking funds for a feasibility study of the project. Then maybe 2 years later we have to come back to the Congress with a request for appropriations to buy the site and to pay the architects' fees. Often we must request funds to begin work on the substructure. In some cases we have had to do that in two separate phases. Then we come back to the Congress again for superstructure money. All the while, we are encountering new delays and building costs keep rising.

This goes back to the Honolulu building.

Mr. WRIGHT. I think this subcommittee is wholly sympathetic to the plight of the General Services Administration in that regard.

I might say for myself, though I cannot necessarily speak for the subcommittee, that I was pleased with the suggestions brought to this subcommittee by Administrator Kunzig in looking toward a greater degree of flexibility for the General Services Administration, to give you the latitude to move out and build some buildings out of a fund. But let us talk right now about what exists in the present law.

You have to come to the Office of Management and Budget.

Mr. KREGER. Right. Our prospectus, after being developed we go to the Office of Management and Budget.

Mr. WRIGHT. You have to come to Congress for approval of the prospectus, and then you have to go to the Office of Management and Budget for the budget request, and then you have to go to Congress again through the appropriations process to get money.

Mr. KREGER. Right.

Mr. WRIGHT. The Postal Service does not have to do any of this, does it?

Mr. KREGER. That is right.

Mr. WRIGHT. So I do return to the conclusion that I tried to express, which is that to a very large extent you are dependent upon the Postal Service and what it may decide. It has the power to make a decision unilaterally, right?

Mr. KREGER. It has been given under the Postal Reorganization Act the authority which-some of which I think the Administrator is hoping to get and hoping for as evidenced by his testimony before your committee.

Mr. WRIGHT. That is exactly right. The Postal Service may move out on a program as big and expansive as it desires, without limitation, and the General Services may not. The General Services Administration was created by law to be a building agent and a landlord and a real estate agent for all the branches of Government.

Mr. KREGER. That is right.

Mr. WRIGHT. And yet we have allowed a situation to develop in which in effect the Post Office Department is taking over many of the functions that were created in the law for the General Services Administration. Would you not say this is correct?

Mr. KREGER. Well, that is a correct statement.

However, I might point out that the Post Office Department has had extensive leasing and lease-construction authority in the past, as have many other agencies of the Government to a more limited extent than the Post Office Department.

Mr. WRIGHT. Undoubtedly so. But the Post Office was not charging the Government rent when it went out and built its building, was it? Mr. KREGER. No, but they were paying rent on the buildings that were lease-constructed for them.

Mr. GROVER. One matter we did not clear up, when we discussed rentals before. You pointed out that the Postal Service, Post Office formerly, was never charged rent by your Administration. Is that going to change now, that they will be charging other agenciesMr. KREGER. Yes, sir; it will. They will pay rent on any space that they occupy in a GSA-controlled building.

Mr. WRIGHT. We have had testimony heretofore that there is a total of some 1,252 buildings that have been turned over to the Post

Office Department. In these 1,252 buildings, occupied by your Agency and other Federal agencies who are your tenants, the Federal Government will be in a position of tenants of the Post Office or the Postal Service. Approximately how much rent annually will the Government be paying to the Postal Corporation for the space it will occupy in these 1,252 buildings?

Mr. KREGER. On those buildings we do not know at the present time. These buildings had been under the complete control of the Post Office Department, and GSA is, at the present time, working with the Post Office Department to try and see how much space other agencies besides the Post Office Department had in those buildings.

Mr. WRIGHT. Do you have a ballpark figure?

Mr. KREGER. We have figures on 64 buildings which we had control of, and which we turned over to the Post Office Department. On the 64 buildings we will pay $7.5 million per year for 1.4 million square feet of space.

On 300 buildings, which GSA owns, and which the Post Office occupies, I believe 6 million square feet of space, the Postal Service will pay GSA approximately $24 million in rent.

Mr. WRIGHT. You have given us a partial-I would say very partialreply to the question I asked. I asked you about 1,252 buildings, and you responded with respect to 64 buildings.

Mr. BARTH. Mr. Chairman, if I could, I think, on the figures that Mr. Kreger gave you, which was the difference of $24-and-some million coming to us, versus $7 million we will pay to the Post Office, added to that $7 million figure will have to be the figure we determine, once we determine, how much space Federal agencies are occupying in 1,500 buildings, which were under the control of the Postal Service at the time of the transfer.

Mr. KREGER. Since these buildings were under the control of the Post Office Department, Mr. Chairman, we have no records of how much space other government agencies had in the buildings.

Mr. WRIGHT. Are you saying that the only record of space you have exists with respect to 64 of these buildings?

Mr. KREGER. No. We have space records on all GSA controlled buildings. The Post Office Department has taken 64 of the GSA controlled buildings.

Mr. WRIGHT. Taken 1,252, have they not?

Mr. BARTH. There again, the 1,252 were buildings on the inventory of GSA, but which were under the custody and control, as far as space within the buildings were concerned, by the Post Office, and the space that is occupied in those buildings was under the control of the Post Office, and our records do not show how much of that space is Post Office space versus how much of that space is occupied by other Federal agencies.

Mr. WRIGHT. We are talking, however, about 1,252 buildings in which the GSA and your tenant agencies will now be tenants of the Post Office.

Mr. BARTH. Right.

Mr. KREGER. And since we did not have any record of the space occupied by now tenant agencies, we are not taking the Post Office Department's figures as to the amout of space. We are conducting a building

by building survey to find out exactly how much space is occupied by the now tenants.

Mr. WRIGHT. I see. You are not taking the Post Office Department's figures. They have given you some figures?

Mr. KREGER. They have provided us with some preliminary figures. Mr. WRIGHT. Well, what do they say ?

Mr. KREGER. I am informed they have not given us figures on the space totals.

Mr. WRIGHT. Is there a difference between the Post Office Department figures and the figures of GSA, Mr. Kreger? Do you, for example, consider loading docks and things of that type used by the Post Office as not being comparable with the space inside the building? And does the Post Office Department desire to consider that type of space in computing the percentage of total space that it uses?

Mr. KREGER. Well, GSA's classification system for space takes into account the difference between office space, warehouse space, and one other class of space. Special purpose space.

Mr. WRIGHT. Special purpose space would include loading docks and things of that kind?

Mr. KREGER. Right.

Mr. WRIGHT. GSA's accounting system takes into account a difference, and places each in a different category. This is what you are saying?

Mr. KREGER. Right. And our agreement with the Post Office Department also takes into account that difference.

Mr. WRIGHT. Does the Post Office in its accounting procedures take that difference into account?

Mr. KREGER. They will, under calculations made in accordance with the agreement; yes, sir.

Mr. WRIGHT. Therefore, I might presume that there would not be any basic difference in the determination as between your agency and the Post Office Department as to how much space you and your agencies occupy?

Mr. KREGER. Right.

Mr. WRIGHT. Now, on the basis of their guess, which you have not yet validated to your satisfaction, approximately how much space does the Government occupy in Postal Service buildings, and approximately how much rent will you be expected to pay annually?

Mr. KREGER. We have no solid figures on the rent that we will be expected to pay for space that we now occupy in buildings occupied by the Posal Service. The survey building by building that I spoke of is underway, and it is probably going to take as much as 6 months.

Mr. WRIGHT. It is safe to say that there is going to be more than the $72 million figure that you quoted, is it not?

Mr. KREGER. It is going to be greater than the $72 million figure. However, in discussion with some of the people in the public building service, they tell me there is a good chance, and this again is an estimate, but they tell me that there is a good chance that the Post Office will owe GSÅ more money than GSA owes the Post Office Depart

ment.

We will have to await completion of the survey.

Mr. WRIGHT. When do you think that survey will be completed? Mr. KREGER. We are moving it along as fast as we can. Every time I say 6 months, it takes a year and a half. It is a matter that has priority.

Mr. WRIGHT. You think at this moment that within 6 months you will have a fairly close feel for how much money we are going to owe the Postal Service, and how much the Postal Service is going to owe us, is that right?

Mr. KREGER. Yes, sir.

Mr. WRIGHT. If you were to come back 6 months from now, you might feel that 6 months from that moment

Mr. KREGER. Six months from now, if I came back, I would have to point to my statement. If I said 6 months, I meant a year and a half. Mr. WRIGHT. I think it is important for the committee to get a feel for this. It is vital to the Government of the United States to know whether we are going to wind up paying a lot of rent in buildings that the Government already has built, whether we are going to come out even, or whether the taxpayer is going to wind up picking up the tab. I think this is one of the critical points of this entire inquiry, and I think it is very important to us to know.

Mr. GROVER. Mr. Chairman.

Mr. WRIGHT. Mr. Grover.

Mr. GROVER. Mr. Kreger admits being wrong by 200 percent on the 6 months; is it possible that you will be wrong on the plus side?

Mr. KREGER. I think I said, Mr. Grover, that there was a good chance, and from all my conversations with the people who have been working with this matter, that is the indication I have. I am sure that there is a possibility that it might go the other way.

However, any information that I have to date indicates that we may receive more money than we would have to pay to the Post Office Department.

Mr. GROVER. And in your working this out, you have written agreements now on the basis for working out these rentals, do you?

Mr. KREGER. We have an interim agreement, Mr. Grover, which sets the rents for varying classes of space in varying locations from, I believe, $2.50 a square foot, up to around $8 per square foot.

Mr. GROVER. Are these being determined by local values of the market price, or how do you determine this?

Mr. KREGER. Yes, sir. They are comparable to the commercial rates in the various areas, and include such things as maintenance, and normal things that go with the space, based on the quality, also, of the office spaces. Based on quality, and naturally, the location.

Mr. GROVER. Because it would appear to me that this should have some continuing oversight, because the U.S. Postal Service, with its very, very strong and unilateral powers, and I would say with its rather dominant chief officer, is in a pretty good bargaining position with you, vis-a-vis the GSA.

Mr. KREGER. Right. As the chairman indicated before, under the law he has a lot more authority than we have, and some of which we are hoping to get.

Mr. GROVER. I say because of that, the imbalance of the negotiating power, I think that this committee will be very interested to observe

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