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* If you want to get into the question of delegation, let us say, to the Army, as opposed to the use of the Army to perform certain functions, from a legal standpoint, I think, possibly, we are in an area of semantics in that case. I know of no prohibition either under the Public Buildings Act, or the delegation itself, the 1966 delegation, to either using the Corps of Engineers as an agent for the Postal Service under the delegation, or to, in effect, delegating what authority the Post Office Department had to the Corps of Engineers.

I think legally both are permissible. Mr. CONSTANDY. I think that is an issue here. But, to just nail down what the sentence means; is the position of GSA at the moment that GSA has no knowledge of the agreement between the Post Office Department and the Army Corps of Engineers!

Mr. BARTH. I have no personal knowledge of it.

Mr. KREGER. We have no knowledge. We have just general information, no definite knowledge.

Mr. CONSTANDY. OK. We will get into that later as we get to the discussion of the delegation of authority and its subsequent use. I just wanted to be very clear that the GSA is presently taking the position that, as an agency, it has no knowledge of any transaction between the Postal Service and the U.S. Army Corps of Engineers.

Mr. KREGER. We are not a party to the agreement and we have no formal knowledge.

Mr. CONSTANDY. Have you any information which suggests that there is under consideration by the Post Office or Postal Service, we will call it, any plan to have the Corps of Engineers construct any of the projects included within the 26 here?

Mr. KREGER. No, sir, we do not.

Mr. CONSTANDY. You do not know whether any of those projects have been included within a construction program schedule submitted by the Postal Service to the Corps of Engineers? Mr. KREGER. We have not seen such a program schedule.

Mr. CONSTANDY. Mr. Chairman, we are prepared to go ahead with this schedule which has the 26 projects separated in group 1 and group 2. I would like to say that the separation comes about this way.

The group 1 projects were originally considered to be built by the Federal Government for Federal ownership, and we could treat them as one class; on page 2, which is the group 2 projects, are the other 18 projects which, while they were originally considered by GSA to be built for Government ownership, have been changed to a proposal where they would be built under a lease-construction program; is that correct?

Mr. KREGER. Right.

Mr. Wright. I think we should move into that subject soon, I wanted to elicit further comment, if I could, from Mr. Kreger with respect to the statement he makes in the concluding paragraph on page 6 of his letter, in which he says: “I am sure the chairman is concerned, just as we are, however, that the Federal Government does not find itself in the position of building two separate facilities where only one is economically justified."

What protection is it possible for the General Services Administration to offer in a situation where one building would be economically justified to accommodate all Federal agencies, and the Postal Service has withdrawn from the plan and continues to go ahead with its own construction, and GSA finds itself in a need for space for other Federal agencies. How can we avoid having two Federal buildings!

Mr. KREGER. Mr. Chairman, we have had continuous discussion and negotiations with the Post Office Department. We plan to continue close liaison and coordination with them in the future. I think there are two alternatives there.

One would be that the Post Office might reconsider coming back into some of these buildings, and they have indicated an intention to come back into two buildings which have just been funded by the Congress : Elkins, W. Va., and Oxford, Miss.

The other would be that working together with them, we would either build the building, they would come back into it, or we might in some instances go into a building constructed by the Post Office.

Mr. Wright. The Post Office would become the landlord, and you would become the tenant?

Mr. KREGER. This could happen, Mr. Chairman, in the case of a need for space—small need for space in an area where the space was not available in any quantity. All of the Post Office buildings that are now under thier control, I would say that probably 95 percent of them are in small towns, and a lot of these areas where there just is not any space available.

Mr. WRIGHT, What would happen if the General Services Administration and its tenant agencies went into a building that the Post Office might build under its bonding authority? Would you then have to pay rent to the Post Office?

Mr. KREGER. Yes, sir. We would have to pay rent to the Post Office, and we have an agreement worked out with the Post Office Department as to exactly how much rent we would pay if we were in their building, how much rent they would pay if they were in our building, and the rental rates are the same in each instance.

Mr. WRIGHT. Did you ever charge the Post Office any rent when it occupied buildings that GSA constructed in the past? Mr. KREGER, No, sir. They were the same as any other

agency. Mr. WRIGHT. But now if they were to build a building, and you were to occupy it, the Federal Government would have to pay rent to the Post Office ?

Mr. KREGER. If the case arose where the Post Office Department built a building and GSA decided to move into it, we would pay them rent at agreed-upon rates, which are close to the commercial rates for the same type of space, and the Post Office would pay us rent if they were in one of our buildings from here on out.

Mr. Wright. How would it benefit Federal agencies particularly to pay rent to the Postal Corporation, rather than paying rent to private landlords?

Mr. KREGER. I do not think there would be any great benefit. It would just be a question of the Post Office Department having space, or building a building with space that the agency could utilize.

Mr. WRIGHT. As you read the Postal Reform Act of 1970, does it seem to you to include an authorization for the Postal Service to become a landlord as well as handler of the mails?

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Mr. KREGER. Mr. Chairman, I think Mr. Barth could speak to that question.

Mr. BARTH. I think that considering certain features of it whereby, for instance, we were authorized or required in effect to transfer to the Postal Service those buildings, 55 percent or more which were occupied by the Post Office Department, that that presupposed that we would have to have some relationship with the new Postal Service respecting the space which other Federal agencies occupied in those buildings.

While I would think that again the primary purpose of the Postal Service is in the delivery of the mails, I think there is nothing in the act which would certainly preclude them from operating buildings to include the furnishing of space in those buildings to other Federal agencies. Mr. Wright. Is there anything in the act, to your recollection, that

WRIGHT specifically anticipates that the Postal Service, upon taking over this Government property, would turn around and charge the Government rent?

Mr. BARTH. Not specifically; there is a provision in section 411 of the act on the providing of services and the use of property which provides that it can be with or without reimbursement. It is upon a determination by the head of the agency and the head of the Postal Service.

I would certainly think that—and this is speculation on my part, because in the final analysis it is up to the Postal Service to construe the provisions of their own act—but I would certainly think that if the Postal Service is set up on a basis where it is to be in effect selfsufficient, that the services that other Federal agencies provide the Postal Service would be provided on a reimbursable basis the same as the service provided other departments would be on a reimbursable basis.

Mr. WRIGHT. This is what you would think?
Mr. BARTH. Yes, sir.

Mr. WRIGHT. As you read this section of the Postal Act, do you find therein any clear anticipation that the Post Office would charge rent to the Government for buildings it takes over from the Government?

Mr. BARTH. I know of no specific provision in the act which makes it mandatory upon the Postal Service to charge rent.

Mr. WRIGHT. Do you know who made the decision that the Postal Service would charge rent to the Government?

Mr. BARTH. I think it was worked out basically between our representatives and the Postal Service on the basis that we would pay rent for the space Federal agencies occupied in buildings under the control of the Postal Service, and by the same token the Postal Service would pay the GSA rent for all the space it occupies in buildings under the control of GSA.

Mr. WRIGHT. We will return to that question a little later. But, first, I think we want to develop some information with respect to these particular facilities that are withdrawn.

Mr. CONSTANDY. I would like to clarify the point that you will be a tenant of the Postal Service.

You already are. Chapter 20, finance section 2002, subsection (c)(4) is the one that makes provision that all real property 55 percent or more of which is occupied or under the control of the former Post Office Department immediately prior to the effective date to this section would be taken over by the Postal Service.

Mr. BARTH. Shortly on or after the date the Postal Service came into effect. Now, those properties were transferred effective on July 1.

Mr. CONSTANDY. They amounted to some 2,780 buildings which were physically or of record turned over from GSÁ to the Postal Service.

Mr. BARTH. To the Postal Service.

Mr. CONSTANDY. And within that number, the figure you have given me, 1,528 buildings occupied by the Post Office Department, leaving the remainder of 1,252, which will be GSA tenants occupying space in the Postal Service buildings.

So, as to those 1,252 projects, you are already their tenant, correct?

Mr. BARTH. By the same token, they are tenants of GSA in the buildings which we retain.

Mr. CONSTANDY. We will get to more of that a bit later. On the discussion of these 26, to get back to that, Mr. Kreger, you have some additional information that could amplify the Post Office rationale to withdraw on the eight projects and the 18 lease-construction projects.

Will you give us that?

Mr. KREGER. Well, I think there are two factors here, Mr. Constandy. The withdrawal I think was based on inherent delays which I have previously spoken about that are in GSA's building program, and also we have the file of correspondence from the Post Office Department relating to each of these projects which give our reason for withdrawing from each of the projects.

The subcommittee I believe has that information available.

Mr. CONSTANDY. I would like to ask permission, as we discuss each one of these, that the record reflect the worksheet prepared by GSA on each project, and in addition, the letter from the Post Office Department withdrawing from that project, so that the record would then be complete.

Mr. WRIGHT. Without objection, so ordered. That information will be inserted in the record at the point at which we discuss each project, is that your desire ?

Mr. CONSTANDY. Yes.

Mr. WRIGHT. Without objection, so ordered, and these documents will be designated exhibit No. 1.

Mr. CONSTANDY. That is true except for Honolulu. I think in the case of Honolulu, you have no letter from the Post Office Department?

Mr. KREGER. That is right, sir.
(The information referred to above follows:)

EXHIBIT 1

Post OFFICE DEPARTMENT,
ASSISTANT POSTMASTER GENERAL,

Washington, D.C., May 5, 1971.
Vr. A. F. SAMPSON,
Commissioner, Public Buildings Service,
General Services Administration,
Washington, D.C.

DEAR MR. SAMPSON: In my letter of Alpril 7, 1971, on Postal Service policies and guidelines governing joint Postal Service-GSA new construction projects, I indicated that our review of your 1972 program would be completed within 30 days.

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This review has now been completed insofar as the lease construction portion of your 1972 program is concerned. In conducting the review, the other Assistant Postmasters General and I have given full consideration to the pressing and rapidly accelerating need for improved mail service. No other facet of our operation receives so much critical attention from the public and of course this is as it should be.

When our postal facilities do not have the capacity for handling mail on a timely basis—when peak-hour volume exceeds peak-hour capacity by ratios of 2, 3, and 4 to 1—then the mail backs up in large quantities and service to the public deteriorates. In all instances involved in this review, we found that the project had been pending in GSA for a substantial length of time usually several years. We understand that the reasons for this delay are in virtually all instances matters beyond your control. Nevertheless, while the projects are pending, the Postal Service in the areas affected continues to deteriorate and pressures for action on the Postal Service continues to mount. It was just this situation that the Postal Reorganization Act was designed to remedy. Within a few months that Act will be effective, affording the Postal Service a method for acting rapidly to obtain the space it needs. In contrast, GSA cannot act on these projects until Congress has considered and passed the lease construction authority you have requested. We commend you for your aggressiveness in seeking this authority as a method of obtaining these facilities more rapidly than otherwise would be possible, but the inherent uncertainty of relying on future Congressional action of this type must be taken into account.

There is one other factor that we felt compelled to take into consideration and that is the requirement, implicit in the Postal Reorganization Act, that the Postal Service obtain its new facilities in the most economical manner possible. In many instances, as you know, leasing is not the most economical method of obtaining a new facility. This is particularly true with respect to larger facilities where residual value, real estate taxes, and the lessor's profit are all factors tending to make ownership more economical than leasing. Since the Postal Service would, no doubt, be expected to pay its pro rota share of the leasing costs of the buildings constructed under your lease construction program, this economic factor must be taken into consideration.

The consideration of all these factors has led us to the reluctant conclusion that the Postal Service cannot participate in your lease construction program insofar as space for main post offices is concerned. Accordingly we are withdrawing from the projects set forth on the attached list. We have previously advised you of our intention to withdraw from some of these projects, such as Griffin and Rome, Georgia ; Moscow, Idaho; and Florence, South Carolina. With respect to other projects, such as Pearsall, Texas, and Essex Junction, Vermont, we had indicated a desire to continue with the project if we could be assured of firm funding plans and a firm construction schedule. It appears that a firm commitment on these projects is not now possible.

We are very appreciative of the fine cooperation we have received from you personally and from your Agency in the past. We look forward to a continuation of this cooperation, particularly in furnishing space for postal stations and branches. In the case of these two types of facilities, we would not be the dominant occupant of the building, but would instead be in the same position as other Federal Agencies—needing some space at the contemplated location but not enough to warrant the construction of a Postal Service owned building.

Our plan is to develop current postal needs in the localities which would have been served by the lease construction projects referred to in this letter and to proceed to satisfy those needs by the most economical and expeditious method possible. In formulating our plans, we will be glad to consider (on a lease-back basis) any other Agency needs you might care to submit and which you believe can be met without prejudicing the interest of the Postal Service. We appreciate the considerations mentioned in your letter of March 12 on this subject, but we feel that under the circumstances now existing, you may wish to avail yourself of this offer. More specifically, we plan to proceed with a project for Waterville, Maine. That project, as planned by GSA, called for postal occupancy of 86 percent of the space with the remainder to be occupied by other Agencies. Perhaps the relatively small amount of space required by other Agencies at Waterville could be provided in a Postal Service owned building. We stand ready to cooperate if you desire to proceed on this basis.

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