The Corps has half a dozen other postal projects under actual construction and about 13 additional postal projects under design right now. The Corps is planning to issue an invitation for bids on a preferential mail facility at Tucson, Arizona, on April 7, and there are a number of other projects throughout the country that I am anxious to assign to the Corps as soon as practicable.

In his message to the Congress of April 16, 1970, the President stressed that the new Postal Service should be "insulated from direct control by the President, the Bureau of the Budget and the Congress." As to Congress, I think it is fair to say that most of the Members are not unaware ofthe enthusiasm with which we have embraced the proposition that the Postal Service must be free of direct congressional control. Congress is probably somewhat sensitive about this subject right now, indeed, and because of that fact I suspect there are some on Capitol Hill who would not be averse to trying to make political capital out of any action that might conceivably be construed as a failure on the part of your office to honor the President's commitment that the new Postal Service will be a truly independent establishment.

I fully appreciate the fact that you have no intention of compromising our independence, and I know that you have very important responsibilities insofar as the Corps and the Department of Defense are concerned. My experience has been that important details can sometimes get lost in the heat of congressional debate, however, and it could well be that a hold up in the Corps' agreement would be greeted with charges that the President's postal reform bill has simply transferred the Postal Service out of the frying pan of congressional politics and into the fire of Executive branch politics. Such charges could only be damaging to the cause that all of us are trying to serve.

I think that is the end of the portion that is of interest here.

Mr. WRIGHT. It seems both clear and significant from this letter as well as others read in context that the Postmaster General does indeed intend to be a fully independent agent, free of any review or oversight by the Congress and by the executive branch to a large extent.

Would it be agreeable, General, if the committee might recess long enough for the members of the committee to answer the quorum call and then return? Accordingly, the committee will be in recess for approximately 20 minutes subject to the call of the Chair.

(Short recess.)

Mr. WRIGHT. The subcommittee will be in order.

When we recessed to attend to business on the House floor, the counsel had just read from a letter by Postmaster General Blount, in which the Postmaster General had given further expression to his concept of the total independence of the newly created Postal Corporation from congressional, as well as administrative oversight.

I think it unnecessary for the committee to elaborate upon its rightful concern with respect to costs and other factors relating to this total program.

The subcommittee does have jurisdiction over the General Services Administration in its public buildings program and over civil works activities of the U.S. Army Corps of Engineers.

Therefore, anything which has a bearing or an affect upon those programs and that work must of necessity be a rightful concern of the Public Works Committee of the House of Representatives.

Mr. Constandy, did you have further questions of this point?
Mr. CONSTANDY. Yes, Mr. Chairman.

General Rebh, your statement under the heading "Regional Postal Facilities," you address yourself to the two subsequent agreements to March 11; namely, the one of May 20 and the agreement of June 28. If we could just discuss those for a minute, and perhaps we could get through some of this very rapidly.

There are two additional agreements that I think are quite significant. The May 20 agreement provides for the corps to undertake the construction of small and medium facilities and the lease construction program.

I think it is worth pointing out that the lease construction program for the Post Office in the preceding 2 years accounted for approximately 1,000 structures of the small and medium size. One year was 1970, for a total dollar value somewhere in the area of $88 million for last year.

I understand the Post Office's intention is to have less lease construction, and more construction for their own ownership, but their needs perhaps can be viewed in that range for those types of facilities, whatever number of small or medium projects would be built, plus those that heretofore, some thousand of them, have been lease construction.

At the time of the March 11 agreement, at the time it was signed, did the corps contemplate undertaking the activities embodied in the May 20 agreement?

General REBH. No, sir.

Mr. CONSTANDY. When did that come up?

General REBH. There were early indications in March that Mr. Blount, the Postmaster General, was considering the possibility of it, but they were very faint indications, and it was, I would say, along in April that there were more indications that this was under active study.

Mr. CONSTANDY. Why I make reference to that is that the OMB, when they testified on last Thursday in the person of Mr. Nathan, spoke of the review that they had of the agreements as a result of the March 27 letters of this year, and he spoke in a way that suggested that they anticipated in that review the extension of the work that would be undertaken by the corps as of that time.

But from your testimony now, it would have been very difficult for them to have anticipated

General REBH. That is correct.

Mr. CONSTANDY. This is a major program in and of itself; is that right?

General REBH. Yes; it is a good-sized program.

Mr. CONSTANDY. At what stage of the negotiations are you relative. to the reimbursement of the corps for the construction work involved in the small and medium post offices under lease construction?

General REBI. I did not get the gist of the question.

Mr. CONSTANDY. At what point are you in the negotiations for payment by the Post Office-under the major agreement you are to be reimbursed on a program basis of 5.5 percent?

General REBH. We have not actively engaged in negotiations on the percentage for the new small construction.

Mr. CONSTANDY. Have you undertaken any projects at all that would be relative to the May 20 agreement?

General REBH. Yes. We have had requests which we passed on to the field.

Mr. CONSTANDY. How many of them, in dollar value?

General REBH. I cannot say what the dollar value is. It is six or eight so far.

Mr. CONSTANDY. Okay. As you accepted those, you were anticipating some reimbursement for the services that you performed?

General REBH. There is a project authorization that accompanies each request for services, and it contains money for the project as well as for corps services.

Mr. CONSTANDY. On what basis?

General REBH. I understand that the Post Office in sending these to us is calculating the corps' services based upon 5.5. We have accepted them. However, we have indicated to them that this is simply interim financing.

Mr. CONSTANDY. There is no provision in the agreement for repayment, is that correct?

General REBH. What do you mean repayment?

Mr. CONSTANDY. For the cost of your services. You will be paid, but the agreement itself does not make any provision for the basis of pay

ment?

General REBH. That is correct.

Mr. CONSTANDY. It neither spells out a fixed figure, nor does it say you will receive actual costs, does it?

General REBH. That is correct.

Mr. CONSTANDY. So to the extent you begin undertaking that work, you are a little vulnerable as to coming to terms with the Post Office as to how you will be paid for it? Your basic premise being you are going to be reimbursed for your cost?

General REBH. No. They are giving us sufficient money to carry the project forward. It is not that we are committing funds that we do not have, because this we do not do.

Mr. CONSTANDY. You are not talking about construction costs?

General REBH. No, support costs. There are funds, and no funds have been spent on them yet, because we have just received the request for services and it is a matter of passing them out to the field.

Mr. CONSTANDY. To the extent you have received them, they have been on the basis of a working arrangement of some 5.5 percent until you do negotiate a figure?

General REBH. That is correct. This has not been uncommon that they have given us interim funding which is enough to get the project moving, and then later provide for additional funds after that amount has been determined.

Mr. CONSTANDY. Has any rate been set in the negotiation thatGeneral REBH. Not yet. No, I think that when we start, we will start looking at the 5.5 as a basis of discussion, but I do not anticipate that it is going to be at the 5.5 level.

Mr. CONSTANDY. Will your services generally cost more for these projects, or will it be larger or less on a percentage basis?

General REBH. It is going to cost more on a percentage basis. In fact, this is one of the reasons why we think we can do the big construction programs for 5.5 because the projects are so large.

Mr. CONSTANDY. And then we have the agreement of June 28, which again is a major departure from either the March 11 agreement or the May 20 agreement, insofar as it relates to services not contemplated in either of those.

General REBH. It is contained, comprehended within the May 20 agreement when it talks in terms of real estate services. The June 28

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agreement simply spells out and covers the condition of leasing and the servicing of leases. It is comprehended within the May 20 agree

ment.

Mr. CONSTANDY. So we do not spend too much time with it, I believe the June 28 agreement lists a number of types of services that you will be performing.

General REBH. That is correct, within the concept of leasing.

Mr. CONSTANDY. And certain maintenance services that you provide? General REBH. We have to differentiate here in maintenance. It is not custodial maintenance. This is repair and improvement type construction.

Mr. CONSTANDY. We must recognize that we are talking in terms there of some 27,000 leases, are we not?

General REBH. Yes.

Mr. CONSTANDY. How many leases does the corps service itself on its own basis?

General REBH. Between 9,000 and 10,000.

Mr. CONSTANDY. Is it not true that much of that is for land, rather than for structures and buildings?

Mr. BERGE. If I may answer, a lot of that is for buildings.

Mr. CONSTANDY. Do you have any idea of the approximate number that are for buildings?

Mr. BERGE. I do not have that exact figure, although I would, if I may say off the top of my head, the great majority is for building space, outside of the General Services Administration areas.

Mr. CONSTANDY. Are we talking about 6,000 or 7,000, something in that area?

Mr. BERGE. As to distinguish between bare land and buildings? I would say on the order of some 6,000 or 7,000, or possibly 8,000 on building space. This is reserved space and this type of thing.

Mr. WRIGHT. The corps presently conducts a lease servicing program for approximately 6,000 to 8,000 buildings?

Mr. BERGE. For building space, yes, sir.

Mr. WRIGHT. This is essentially with regard to services provided to the Military Establishment?

Mr. BERGE. That is correct, sir, very little leasing on the civil works side.

Mr. CONSTANDY. On page 2 of that agreement there is reference made in the last two items:

In negotiating and executing supplemental lease agreements under which lessors accomplish Post Office approved leasehold alterations and improvements and repairs which are the obligation of the Post Office Department, of which the total cost including all lessor charges is $2,000 or more

And the one below that

awarding, executing, administering, supervising contracts with third parties for the design and construction of Post Office Department approved leasehold improvements, alterations, and repairs of which the estimated construction cost is $2,000 or more or for which architectural-engineering services are required. How would the corps approach the handling of a job of that kind, the job that is as small as $2,000?

Mr. BERGE. Normally, sir, we would approach it on the basis of a preliminary design, whatever is required by the Postal Service,

whether it is adding a platform or whatever it may be, to the lease facility. We would, on the assumption that it would not be the lessor's obligation. If the lessor would do it, we would ask him to do the repair and renegotiate the lease. If he does not have to do it or will not do it, then the Army Corps of Engineers would have to make our own contract.

Mr. CONSTANDY. Are you not here embarking with 27,000 projects on a program that is going to be relatively small potatoes for what you have been doing prior to this?

Mr. BERGE. You mean the leasing program being the small potatoes? Mr. CONSTANDY. These $2,000, $2,500, $3,000, those smaller repair jobs that will be required, get to be kind of small things; do they not, for the corps?

Mr. BERGE. Yes. I believe I would have to say yes.

Mr. CONSTANDY. Up until now we have been talking about $2 million projects and $100 million projects, and we come all the way to the other end for a $2,000 repair job.

Mr. BERGE. The answer, sir, would be yes, it would be much smaller types of contracts.

General REBH. Again on that you would attempt to put them together in packages so that they would be larger than the smallest one in order to get a better bid on your contract, and also involve less effort on our part.

Mr. CONSTANDY. You may do a number of post offices that require that service at one time, with one contractor?

General REBH. I was thinking more of work within the same building.

Mr. CONSTANDY. A number of different items that need to be done? General REBH. Yes. If you add air conditioning, plumbing, you would try to lump them together in one package.

Mr. CONSTANDY. I am very apprehensive about this agreement and these provisions. We have had some contact with people who own post offices and some contact with people who are postmasters, and some contact with people who have handled post offices for the Post Office Department.

The impression that we have from conversations with them is that this is perhaps one of the largest headaches the post offices have in taking care of the minor renovations and repairs to the structure. It uses a disproportionate amount of time for the personnel handling the administration of it. It seems to be a very tough thing, and it raises another question.

Who is going to do the work under $2,000, do you know?

General REBH. The Post Office. The postmaster of the post office. Mr. CONSTANDY. The Postmaster?

General REBI. That is correct.

Mr. CONSTANDY. That is very interesting. He has been hired because he has a particular skill, hopefully, in operating a post office and performing those functions that have to do with the collection and distribution of mail, sorting of it. He has now become the building manager in the 27,000 locations, true?

General REBI. I would just assume that it was his responsibility before, that he was responsible for the custodial services.