Mr. SAMPSON. Yes, sir.

Mr. WRIGHT. So, the relationship that has historically existed as the General Services Administration vis-a-vis the Post Office Department is now somewhat radically altered; is it not?

Mr. SAMPSON. Yes.

Mr. WRIGHT. Mr. Constandy.

Mr. CONSTANDY. I think this is even deeper than we have suggested. You people are rational in the development of your program for the next year, yes? And you give projects that you anticipate having a need for some considerable thought before you put them at some point on your priority.

Is it not true that forever after here in any of those buildings, the 1.252 which will be a tenant, you are going to be faced with the prospect of having to react to decisions made unilaterally within the Post Office Department with those things which are in its own interests and will not that have the effect if they choose to vacate the building in which you are a large tenant in having to reorder your priorities and have to change the plans that you have in the future?

Mr. SAMPSON. There is no question about that. But, again, I think I should point out this happens with other agencies also.

Mr. CONSTANDY. In a reverse way. I understand what you mean when you say that.

But, in your normal relationship with other Federal agencies, you are their landlord, and you are trying to satisfy their needs. I know you have mentioned this before. But if this program or their programs changed, they may have a reduction in space requirement.

Mr. SAMPSON. Or they may change locations.

Mr. CONSTANDY. Or may have an increase. We are talking about these situations which are developing in that strange area that has not got the usual agency-to-agency relationship, but those that relate now to the Postal Service in its unique capacity and in yours.

Are you not always going to have to be reacting to their plans?
Mr. SAMPSON. Yes, and they will have to react to some of ours.
Mr. CONSTANDY. Yes, I imagine that may be true.

By definition, those 1,252 projects that they got are properties in which they have at least 55 percent of the space, sometimes appreciably more. They are sometimes very big buildings.

Even though you hold a smaller percentage, the complexities of the space that you use insofar as it relates to allocated space to different tenants are quite large; are they not? If you receive notification from them on a building which you designed and built to handle your particular problem, you cannot say that is exactly the same as having dealt with acquiring space from a private owner on the chance condition that existed when you agreed to take it.

In other words, if you received that kind of notice, you face the prospect of securing other space on the chance conditions that exist at that time in the marketplace for space.

Faced with the problem of what that space is, as it relates to where you want the Federal agencies to be, you are going to have to face the problem of securing space of the kind and of the size that you need it for. These are all problems, I realize, that you contend with in the normal business that you are in. I suggest further because they are routine to you, you have taken a view in your relationship with

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the Post Office that does not really recognize the difference between the two of you.

Mr. SAMPSON. We recognize that, you know, our authority over the Postal Service has been radically changed. We do not have the same power.

Mr. CONSTANDY. Is it more or less desirable, this present relationship?

Mr. SAMPSON. That is a very difficult question to answer.

Mr. CONSTANDY. We both know what the answer is, do we not? It is less desirable, obviously, is it not?

Mr. SAMPSON. Well

Mr. CONSTANDY. The landlord is a private owner, and you have a lease and, to that extent, it is less desirable?

Mr. SAMPSON. Dealing now with Government-owned space, forget leasing as far as that is concerned; as far as Government-owned space is concerned

Mr. CONSTANDY. Let me put it another way.

Are you glad or sorry that this thing happened the way it did? Glad or sorry?

Would you rather it did not happen?

Mr. SAMPSON. I do not know how to answer. A personal opinion? Mr. CONSTANDY. In your capacity as Commissioner.

Mr. SAMPSON. There is no question about the fact that in my position as Commissioner, my job would be a little more complex

Mr. CONSTANDY. Since it has happened?

Mr. SAMPSON. Sure.

Mr. WRIGHT. I think the record reflects that the Administrator of the General Services Administration attempted to alter and change the situation from the consummation it now has reached. We might draw from that the clear assumption that the General Services Administration officially would have preferred another arrangement.

Mr. CONSTANDY. I dare say.

When and how did the GSA officials learn of the March 11, 1971, agreement between the Post Office and the corps?

Mr. SAMPSON. The first time we knew about it was when it was in the newspapers.

Mr. CONSTANDY. That is the truth?

Mr. SAMPSON. That is the first time I knew about it. I do not know if anybody else had any personal knowledge.

Mr. CONSTANDY. Keeping that in mind, you still feel you are going to be able to deal with the Post Office on these problems as they come up on an open, forthright basis, where both of you are looking to the best interests of each other?

Mr. SAMPSON. Well, I have to answer that again on the basis of negotiations we had, and except in the area of new construction, they have been very good. We have arrived at what I feel are good agree

ments.

Mr. CONSTANDY. We have to review the whole transcript.

The Corps of Engineers developed its foundation for a range of 5.5 to 6.98-percent overhead cost. They went into the negotiations, assuming that that was going to be a goal, that they would work very hard to get that. A day later, they came out and they are fixed at 5.5

percent. They did not do too well negotiating, right? The Office of Management and Budget sent a letter to the Post Office Department, asking them to suspend the agreement and take no further action under the terms of the agreement.

The Post Office continued to do what it was doing anyhow. You met with people from the Post Office Department when you cleared your budget for the lease construction projects and had their approval of the 45 projects being advanced for lease construction, correct? Mr. SAMPSON. Correct.

Mr. CONSTANDY. What happened right after it was sent to Congress?
Mr. SAMPSON. Shortly thereafter, they withdrew.

Mr. CONSTANDY. Eighteen of the projects, totaling $55 million?
Mr. SAMPSON. That is right.

Mr. CONSTANDY. It would have been discreet of them to have made mention of that before you took the trouble to send the bill to Congress, would it not? If they are dealing with you on an even basis, are you going to be able to solve problems that occur?

Mr. SAMPSON. I think, in that particular case, and this is their rationale and their explanation to us, that after we had tested the lease construction concept, they felt it was not going to be passed by the Congress, and they needed their buildings quickly. This is why they withdrew.

Mr. CONSTANDY. They knew that when they agreed to your budget proposal. The correspondence between the two of you for some projects specifically addressed itself to that.

I only point this up, not to get into any discussion about the activity involved in withdrawing the 18 projects, I want to use-well, people have not always been satisfied in their ability to deal with the Post Office.

Mr. SAMPSON. Granted. It is not all peaches and roses. obviously. Mr. WRIGHT. Off the record.

(Discussion off the record.)

Mr. CONSTANDY. That was the only point, Mr. Chairman.

Mr. SAMPSON. None of us can look into the future. The best we can do is to try to assess the significance of the past and then contemplate the future with those things in mind.

I suggest to you that some of the situations that we have discussedand we only discussed one here in order to conserve time-that the relationship is going to be faced with some significant problems. It is necessarily so, as each of you serves your own interests and do it without the benefit of law, without the benefit of a redress in court; it is going to tax the negotiating ability of both of you, perhaps more than you have the ability to handle.

Now, I do not say that with any disrespect to either you or the Post Office. I want you to be clear on that. I know both of you are very sincere in your concern for it.

Our interest is simply that there are problems posed here for which there is no easy solution as each of you attempts to resolve this thing to the best interest of the person to whom you must answer. They have spoken in the course of testimony before committees and otherwise about the necessity of running a post office as a business and taking all of those actions consistent with good business that will conserve their assets and their revenues.

I am only suggesting here that in the kinds of complications that will be arising, they are going to have to address themselves to that as they try and reach a solution with you. If the solution, as acceptable to you, is going to cost them money, I do not know how in good conscience they can agree to it.

Mr. Chairman, I have no further questions. But I would like to say this has been a unique experience in dealing with the people from GSA. I think it is the kind of arrangement which is best for government, for the people that support the Government. We have had a very fine relationship. They have been extremely candid. I have enjoyed it, and I want to thank them personally for the kind cooperation they have given us.

Mr. WRIGHT. The Chair would like to echo that sentiment. Additionally, the Chair would like to express to Mr. Sampson, Mr. Sanders, and Mr. Barth the committee's appreciation for the wholehearted cooperation that you have given, for the directness and candor with which you have answered the questions which have been posed, and for your patience in coming and being with us today.

When the committee adjourns today, it will adjourn to meet at 10:30

tomorrow.

I am advised now by counsel that we may have difficulty in the scheduling of witnesses to appear tomorrow, and for that reason we may adjourn until tomorrow afternoon, and so let us adjourn at this time, subject to further notification by the Chair.

Mr. SAMPSON. Thank, you, Mr. Chairman.
Mr. WRIGHT. The committee is adjourned.

(Whereupon, at 12:45 p.m., the subcommittee adjourned, to reconvene at the call of the Chair.)

IMPACT OF POSTAL BUILDING PROGRAM ON FEDERAL

AGENCIES

THURSDAY, JULY 22, 1971

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON INVESTIGATIONS AND OVERSIGHT

OF THE COMMITTEE ON PUBLIC WORKS,

Washington, D.C.

The subcommittee met at 10:10 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 be in order.

Our primary witness for today is Brig. Gen. George A. Rebh, Chief of the Corps of Engineers, Postal Construction Support Office, Department of the Army.

I believe General Rebh is accompanied by several representatives of his office of the Corps of Engineers. Would you at this time introduce for the committee, General Rebh, those who are with you.

General REBI. I would like to say that Mr. Woodrow Berge, who is Director of Real Estate, will also appear as a witness with me.

And I have with me Mr. Carl Barnes, Mr. Paul Gill, and Mr. George Brazier, Mr. Wally Sundell, Mr. Harnage, and Mr. Head.

Mr. WRIGHT. For purposes of testimony, General, you and Mr. Berge would be expected to bring the testimony to the committee. General REBH. Yes, sir.

Mr. WRIGHT. Would the two of you rise and be sworn.

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

(General Rebh and Mr. Berge answered in the affirmative.)

Mr. WRIGHT. The Chair observes that General Rebh has a detailed statement, which he has prepared in response to questions that were submitted to him by the subcommittee. In view of the fact that the House will convene at 11 o'clock this morning, the Chair is going to ask unanimous consent that the statement may appear in the record in its totality; and that subsequent to that, General Rebh may begin and read portions of it, and at any point thereafter the subcommittee might wish to question him with respect to those portions.

If there is no objection, the statement prepared by General Rebh will appear in its entirety in the record.

(The statement follows:)