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Mr. NATHAN. We do not.
Mr. CONSTANDY. Do you have copies of the March 11 agreement?
Mr. NATHAN. Yes. And the March 20.
Mr. BENTON. May 20.

Mr. WRIGHT. Do you have copies of both March 11 agreements with you?

Mr. NATHAN. Yes.
Mr. CONSTANDY. And the May 20 agreement.
Mr. NATHAN. Yes.
Mr. CONSTANDY. Have either of you ever read the June 28 agreement?
Mr. NATHAN. I would answer this way-

Mr. CONSTANDY. Could you answer yes or no once? Either you have it or you do not.

Mr. NATHAN. May I answer no, and then can I make a comment? My comment is

Mr. Wright. The question was, Has either of you? Mr. Benton, you have not?

Mr. BENTON. No.

Mr. WRIGHT. Neither of you have seen the agreement. That is the testimony.

Mr. NATHAN. This is the comment I would make, that does not mean that our responsibility is such that when we see the agreement-and surely we will—if it raises questions we need get into, we will do that.

Mr. CONSTANDY. Our point here is that all your testimony today has been with the personal ignorance of the contents of it, so we have to construe everything you said today in the light of that fact, that neither

have the agreement, ever read the agreement, or have access to its contents.

Mr. NATHAN. That is correct, and to the extent that that agreement would change our decision, which we cannot at this time know, that might make some difference for he purpose of these discussions. That might change the character of these discussions.

Mr. CONSTANDY. It might?
Mr. NATHAN. Our understanding of the
Mr. CONSTANDY. Did you say it might change-

Mr. NATHAN. I am saying we will, in the course of our work, review that agreement, and if it contains any provisions that we would feel would justify our taking any action again in this matter, we would do it.

Mr. CONSTANDY. We are concerned for the record here. That is irrevocable.

Mr. NATHAN. The record, we have not seen it, but that does not mean when we do see it

Mr. CONSTANDY. But the things you have commented about today were commented on with ignorance of the provisions of the June 28 agreement. Mr. NATHAN. I do not know how important it is.

Mr. CONSTANDY. Exactly. Exactly, Mr. Nathan; which is why we are here today.

There were four agreements. You have the two dated March 11 and the May 20 one, and they do differ, if you will bear with me a minute. The first agreement, four pages, of March 11, was quite

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specific in section 2 under heading G-1, "The Chief of Engineers is designated as the Department of the Army representative for all matters pertaining to the acquisition of postal facilities for the U.S. Post Office Department.”

That is quite broad.

Page 2 gets down to what they were considering when they drafted this agreement under section 3, contractual services. It speaks of entering into and administering contracts for real estate, design and construction of facilities.

Under section 4, operating procedures, it says that the U.S. Post Office Department requests for real estate, design, and construction services will be in writing. It is not yet broadened.

On the long agreement of that date, the 23-page one, in the first section of transfer of functions, in the middle of the paragraph it reads to refer back to this first umbrella agreement on page 2 under the assignment of program and project responsibilities, and in fixing the program responsibilities—this is the May 20 agreement-it includes for the first time that the corps will perform the lease construction and fixed mechanization, fabrication, and installation contracts, and, on page 3, for the first time, it makes reference under section B, new construction projects under 50,000 square feet, fixed mechanization, including modifications and the major improvements and modification projects to be commenced in fiscal 1972 and after.

Your not knowing what was provided had to have an influence on your decision.

Further, in the June 28 agreement, entitled "Assignment of Responsibility for the Execution of the U.S. Post Office Department Leasing Program to the Corps of Engineers," under section 2, assignment of responsibilities, it lists the two pages and a portion of two others. The specific actions of the corps were performed for the Postal Service, and each of these has broadened the workload that the corps will undertake for the Post Office.

Your review was limited entirely to the two agreements of March 11.

Mr. NATHAN. Mr. Constandy, No. 1, we consider the March 11 agreement to embody the basic concept of the relationship here envisioned. We consider the subsequent agreements and working memorandums to implement that concept, and we have based our decision, not only on reading those agreements, but, also, as I indicated earlier, on discussions by our program experts with program experts in the pertinent agencies.

Mr. CONSTANDY. During those discussions, did they ever make reference to the fact that the corps would then undertake the lease construction program?

Mr. NATHAN. Yes.

Mr. CONSTANDY. Did they have discussions which related that the corps would undertake the small and medium postal construction pro

gram?

Mr. NATHAN. We understood that.
Mr. CONSTANDY. This is back on March 27-

Mr. NATIIAN. We understood the Post Office was to—was going to turn over all of these responsibilities to the corps and get out of these areas themselves and—that is not a very good phrase--but they were going to get out of these areas themselves and that the people who worked for the Post Office, now the Postal Service, who do those performance kind of functions, were going to work for the corps.

Mr. CONSTANDY. If they were valid considerations, they would have been predicated on studies; would they not?

Mr. NATHAN. Studies by whom?

Mr. CONSTANDY. By the people concerned, by the Post Office Department, by the Corps of Engineers. True or not?

Mr. NATHAN. The inference of your question may be that there was not sufficient study by the parties to the agreement.

Mr. CONSTANDY. It is no inference. I say it flatly. You should not have an inference.

Yesterday we had read into the record by representatives of the GAO a document that was written by the general in charge of the postal building program to his field people, requesting an answer by June 9, if my memory serves me, where he is making for the first time a survey of his own organization's capability to undertake the leasing program on June 9.

If the corps did not known by June 9 whether it had the capacity to undertake the program, how could OMB have taken this into consideration back in March and April preceding it?

Mr. NATHAN. I assume that they asked for a great deal of information when they made this decision.

Mr. CONSTANDY. We are talking about a very specific thing. We are talking about the corps' capability through its field offices to undertake the types of things which ultimately become the body of the June 28 agreement.

Before the corps would commit itself, they felt certain studies had to be made by them. Did they have people in the right places, and were the people of the proper competency to undertake that program! They could not reach that decision until they got the response from the field.

Mr. NATHAN. I understand you. When it comes to internal processes of their analysis, they would be the best source.

Mr. CONSTANDY. Having had access to one of the documents, I think we can make the conclusion now that they are the best, and undertook that kind of a study to be reported back at the beginning of June to let them know at the headquarters level whether they felt they had the competency to undertake this part of the program.

You would suggest that OMB was considering the broadening of the agreement to include these things back in March and April.

Mr. NATHAN. We based our decision on what we know, which is a lot of the basic program information about the corps, and about the Postal Service in terms of the number of people they have, the kind of people they have in their employment. They made a more intensive analysis, and that analysis supported the conclusion which we have reached.

Mr. CONSTANDY. You are not suggesting OMB, prior to the review, had the capability to assess whether the corps could undertake the leasing program?

Mr. NATHAN. We have experts, but we do not have the depth of expertise that the agency has, obviously. We were relying in large measure on what they told us.

Mr. CONSTANDY. They could not have told you anything until they got the answers back from the field in June. What we want to get to, Mr. Nathan, is that your review encompassed only those things that were contained within the March 11 agreements.

Even though you may have anticipated the broadening of the agreements as it got down to specifics, you could not have reviewed it.

Mr. NATHAN. We made our determination on the basis of the information that the agencies provided, and it was available to us

Mr. CONSTANDY. You had no information, I suggest, from the Corps of Engineers which suggested whether they had or did not have the competency to even undertake the lease construction program.

Do you know how many projects annually were committed by the Post Office to lease construction in the past couple of years, or the dollar value?

Mr. BENTON. About 8,000.

Mr. CONSTANDY. It is about 8,000, with about $88 million worth of work.

Mr. BENTON. It varies from $75 to $100 million a year.

Mr. NATHAN. We made the decision on the best basis we could. The process in terms of what we understood in trying to recreate these circumstances is, to the best of my ability and Mr. Benton's ability, described in our testimony.

Mr. CONSTANDY. You are talking about your prepared statement? Mr. NATHAN. Our testimony in the question and answer. Mr. CONSTANDY. And your prepared statement. Mr. NATHAN. And the testimony in question and answer. That is where you have drawn us out on these.

Mr. CONSTANDY. On page 3, you say, “I wish to submit some of our considerations involved in reviewing this matter and you go over to page 4—now we are talking about your considerations, not your conclusions, and yet the very first item is a conclusion.

It says, “In view of the options available there was nothing to be gained that is a conclusion, "_by_prohibiting the corps from providing construction services to the Post Office Department on a reimbursable basis."

Now, it says there, "We did not believe that this agreement would lead to any adverse impact on the management and financing of the executive branch. Since most of the work to be done by the corps would be a substitution of work previously performed by the Post Office Department, we see no significant proliferation of construction service activities."

Mr. NATHAN. It may be that that should have been worded differently as a consideration

Mr. CONSTANDY. Oh, we have another place which should have been worded differently.

Mr. NATHAN. It does not change the substance of our discussion of this in any way.

Mr. CONSTANDY. It does in a way, because from 1966 until 1971, 5 years, the post office advanced only 30 projects for a total dollar volume of $468 million. Only one of them is completed; 38 projects in 5 years. We are not talking about 38 projects now. We are talking about the work already turned over to the corps on the basis of the first agreement of March 11, amounting to $122 million.

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Mr. BENTON. There is not any doubt that the Postmaster General hopes to increase the pace of post office construction here. That is central to his thesis in hiring the Corps of Engineers.

Mr. CONSTANDY. We should not attempt to suggest in the statement that there is a simple matter of substitution here on the same work, because that is what the statement says.

Mr. NATHAN. I would add too that the people who are doing this work, to the extent that this work was being done in the post office, were still in the post office at the time that these agreements were made, and they were going to go over the agreements to the corps, so in part they are

Mr. CONSTANDY. Some of them.
Mr. NATHAN. Quite a large number of them.

So in part their determination that they could carry out these functions was based upon the assumption that they would acquire these people to operate in these areas, much the same basis, though on an expanded scale, as they had previously.

Mr. CONSTANDY. Do you know how many people, and how they are organized, will be retained in the Post Office Department for their program management ! Mr. NATHAN. I guess Mr. Benton

I Mr. BENTON. We have some figures in the office, but we do not have them here. I do not recollect them.

Mr. CONSTANDY. That would have to have been a major element in the consideration of divesting the Postal Service of its complete ability to handle facilities; would it not?

Mr. BENTON. As I understand the split, the Post Office kept those employees who were more related to the policy direction of their program, and to transfer those people who were related to the execution of the program; the engineers, the construction people, and that sort of thing.

Mr. CONSTANDY. Do you know how many they had before they made the agreement with the Army totally in the facility section?

Mr. BENTON. No, I do not have a number offhand.

Mr. CONSTANDY. Do you know how many they retained in the program management section?

Mr. BENTON. I said I do not have those numbers with me. We do have that.

Mr. CONSTANDY. They are retaining 32 in the program management section.

Mr. NATHAN. I would have to inject when you discuss a matter of this kind in the detail that you now want to review it with us that it is necessary to bear in mind that the Office of Management and Budget's program expertise, even though it is good, is general. The agencies have the experts in the matters of detail, and we and the President and the Executive Office have to rely on the judgments of some of the key officials that the President has appointed to operate in these areas.

In this case, the judgment of Secretary Laird, who was involved. The judgment of Mr. Blount, who was involved. These are people that the President has appointed for the

Mr. CONSTANDY. And the judgment of Mr. Kunzig, who was involved?

Mr. XATIAN. Yes.

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