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of work for the Postal Service than even the Army itself may have initially anticipated and that much of this work is outside the previous experience of the Army.

5. Based upon the experience rate to date, the Army may indeed have great difficulty in staying within the 5.5-percent ceiling on overhead costs to which it has agreed.

6. The chairman assumes that if a cost overrun does occur the Treasury will have to bear the expenses and that ultimately means the taxpayers.

All of these matters obviously are of great concern to Congress. If we should fail to develop the necessary facts in full, this committee would be thoroughly derelict in its duty.

On behalf of the committee I would like to thank the General Accounting Office for its very comprehensive work in this investigation and to pledge our continuing diligence to developing these facts.

If there are no further questions or comments, and no further business to come before the subcommittee at this time, the subcommittee is adjourned until 10 o'clock tomorrow morning.

(Whereupon, the subcommittee adjourned at 4:02 p.m., to reconvene at 10 a.m., the following day.)





Washington, D.C. The subcommittee met at 10:15 a.m., pursuant to recess, in room 2253, Rayburn House Office Building, Hon. James C. Wright, Jr. (chairman of the subcommittee), presiding.

Mr. WRIGHT. The subcommittee will come to order.

The Chair wishes to apologize for a slightly late beginning this morning occasioned by the fact that we did not receive the statement of the witnesses for today until quite late, and the Chair and members of the committee wanted an opportunity to review the statement before the session began.

Our witnesses today are Mr. Richard P. Nathan, Assistant Director of the Office of Management and Budget, and Mr. Charles E. Benton, Assistant Chief of the General Government Programs Division of the Office of Management and Budget.

Would you gentlemen be sworn?

Do you solemnly swear that the testimony that you will give to the subcommittee will be the truth, the whole truth, and nothing but the truth, so help you God?

Mr. NATHAN. I do.
Mr. BENTON. I do.
Mr. WRIGHT. Thank you.

Inasmuch as the statement did arrive rather late, I think it would be appropriate, Mr. Nathan, if you were to proceed on the basis of reading the statement to the committee.

Mr. NATHAN. Fine, I appreciate that.



Mr. NATHAN. Mr. Chairman, I am Richard P. Nathan, Assistant Director of the Office of Management and Budget, and have with me Mr. Charles E. Benton, who has worked in this area for some time as Assistant Chief of the General Government Programs Division.


First of all, let me say I regret the statement we prepared did not reach

you in time for you to go over it well in advance of the hearing because of the time we needed to finish our work on it, I am afraid.

I thought it might be useful for me to say a few words here about how we are organized in the Office of Management and Budget. I am Assistant Director, responsible—we have three program assistant directors. Each of the program assistant directors supervises the work of two program divisions. I supervise the work of the Human Resources Program Division and the General Government Programs Division.

The General Government Programs Division has responsibility for both the Postal Service to the extent that we are involved in activity affecting the Postal Service, and the General Services Administration. We have in the General Government Programs Division in the Office of Management and Budget several people who are quite expert on General Services Administration and postal affairs, Postal Service matters.

I would estimate that we spend on the order of 3 man-years on an annual basis in our review and consideration of the General Services Administration matters.

I understand that representatives of the General Services Administration, the Corps of Engineers, and the Postal Service have discussed or are scheduled to discuss—with the committee in some detail their relationships concerning the postal reorganization.

As I indicated in my introductory remarks, because of the way we are organized, I am not knowledgeable in as much detail as the agency witnesses will be on the matters of interest to your committee, but I will do whatever I can to answer your question about the role that the Office of Management and Budget plays in this kind of subject.

There are several points which I think deserve special emphasis during your consideration of some of the past decisions and for an understanding of some of the additional decisions which lie ahead. I understand that one of the particular concerns of the subcommittee is the background concerning the decision that the Corps of Engineers serve as the construction agency for the Postal Service.

Certain matters relating to the history of the postal reorganization are paramount to any review of interagency relationships both within the executive branch and with the Congress. There are four such points that I would make.

First, the Postal Reorganization Act provides authority for the Postal Service to acquire in any lawful manner such facilities as it deems necessary without review of any kind by the President or Congress. The choice of method of acquisition is left to the discretion of the Postal Service.

Mr. Wright. On that point, Mr. Nathan, you say that the Postal Service is authorized to acquire any facilities it wants to without review of any kind by the President or the Congress.

Mr. NATHAN. I think the second point, Mr. Chairman, indicates the extent to which there are restrictions on that review procedure.

Mr. WRIGHT. Mr. Nathan, I have read your second statement. I want to ask some questions relating to your first statement, if you will, please.

Mr. NATHAN. The intent of the law setting up the Postal Service was to permit them to manage their affairs on a comprehensive basis in a way that meets the very important public need of improving the Nation's mail service and making it faster and more efficient. That law is written in a way that, among other authorities, permits the Postal Service to acquire facilities which it believes are necessary to the efficient handling of the mail.

Mr. WRIGHT. May I ask a question with regard to your statement?

Do you interpret the construction of the Posal Service in such a way that it may operate without review of any kind by the President!

Mr. NATHAN. Well, there is a limit, as indicated, on the total dollar bonded indebtedness and a requirement for coordination with the Treasury before bonds are sold publicly, but otherwise, I would say that the way in which we relate to the Postal Service depends very much on their and our good will in terms of making necessary arrangements for coordination, which I discuss later on in my testimony as regards facilities jointly used by the Postal Service and other Government agencies.

Mr. WRIGHT. But so far as their operations are concerned, they operate without review of any kind by the President?

Mr. BENTON. This first point is directed to post office construction, and the fact that the Postal Reorganization Act contains no provisions for Presidential review or congressional review similar to the Public Buildings Act that controls General Service Administration construction, for example, where you have this prospectus procedure in which we are involved, in which the Public Works Committee is involved.

Mr. WRIGHT. I understand that.
Mr. BENTON. That is what the intent of that sentence is.

Mr. WRIGHT. The committee is fully cognizant of the provisions of the Public Buildings Act of 1959, it having been the original author of that act, and it having been the agency through which the prospectuses were submitted.

Now, I think it really does need some careful stipulation when you say that they are authorized to engage in this building program in any way they see fit without review of any kind by the President or the Congress. Now at this point I think we ought to make that clear.

Mr. BENTON. I think this statement is not intended to be so broad as to say that the Congress cannot, on its own initiative, inquire into the Postal construction program and do what it wishes with it, or the President can inquire into it and make such recommendations to the Congress, or initiate such discussions as he may want to with the Postal Service.

Mr. Wright. Yes; this is an independent executive agency of the Government, is it not?

Mr. BENTON. It is an independent establishment of the executive branch of the Government, I think the law states.

Mr. WRIGHT. As an independent establishment of the executive branch of the Government, it would be subject to the review of the President of the United States; would it not?

Mr. BENTON. Oh, yes.
Mr. WRIGHT. In all of its operations.

Mr. BENTON. In a manner consistent with the provisions of the Postal Reorganization Act; yes. We cannot require the Postal Service

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