Mr. STAATS. This would be a matter of record. We would be happy to do that and supply it to the committee.

(The information referred to follows:)

NOTIFICATION OF APPROPRIATION COMMITTEES OF COST INCREASES

According to the Postal Service, general notification of cost increases on Postal Public Buildings projects was given to the Appropriation Committees "on the 3-year table in our FY 1972 Budget submitted to the Office of Management and Budget and the Congress." This schedule may be found on pages 516-518 of Part 2 of the FY 1972 House Hearings on the Treasury, Post Office, and General Government Appropriations. In addition, on page 514 of those hearings the Post Office Department inserted the following paragraph regarding the FY 1971 Program:

"FY 1971 PROGRAM

"The estimates appearing in the FY 1971 program differ from those submitted to the Committee at the time of our request for the 1971 Postal Public Buildings Appropriation. Formal revisions to the program have deleted three projects and five were added. The cost estimates have been updated to reflect the latest construction cost escalation and operational concept changes. The construction cost estimates in the current 1971 program update the construction cost estimates presented to the Committee during the hearings on the FY 1971 Postal Buildings Appropriation request."

The following table shows at April 30, 1971, the seven postal projects on which the estimated costs exceeded by more than 10 percent the amounts approved by the Public Works Committees and the specific means used by the Post Office Department to notify the Appropriations Committees of such increases.

1 The Postal Service did not request any construction funds for this project in any of its past original budget submissions However, on Aug. 27, 1970, the Postal Service notified the House Subcommittee on Treasury and Post Office Appropriations of its intent to include the Carbondale project in its revised fiscal year 1971 postal public buildings program.

2 The Postal Service furnished information relative to this project to the Appropriations Committees by letters dated Feb. 20 and Dec. 31, 1970.

3 On July 28, 1970, the Postal Service notified the Appropriations Committees of its plans to reactivate the Salt Lake City project and to include tits revised fiscal year 1971 postal public buildings program.

We found nothing to show that the Appropriations Committees were specifically advised that the projects had not been resubmitted to the Committees on Public Works as required by the Public Buildings Act of 1959.

Mr. WRIGHT. Thank you very much.

Mr. STAATS. The Postal Reorganization Act approved August 12, 1970-the provisions of which became fully effective on July 1, 1971established the Postal Service and authorized it to construct, operate, lease, and maintain buildings and facilities without regard to the Public Buildings Act of 1959.

In early 1969, the Postmaster General began to evaluate the problems facing the Department and concluded that a fairly substantial investment in new plant and equipment was needed. The Postmaster General was of the opinion that the Department did not have an organization capable of completing, within a reasonable span of time, the large scale modernization program needed. Accordingly, he began discussing his problem with the corps and GSA.

In March 1969, the corps furnished the Department a brochure outlining its capability to provide design, construction and real estate services. The brochure referred to the corps' past experience in providing services to other agencies in the execution of large construction programs, such as its work for NASA and its design and construction of hospitals for the Veterans' Administration. In transmitting the brochure, the Acting Chief of Engineers stated that, subject to the approval of the Secretary of the Army, the corps would be pleased to support the Department's requirements for construction and the related services to whatever extent its future programs might demand. In April 1969, the Administrator of GSA advised the Postmaster General that it might be easier and cheaper to use GSA but that since it was felt the corps would best be able to handle specialized new post office construction, there was nothing to stop the Department from using the corps at once.

The Department's decision not to use GSA was made on the basis that it did not have the size or experience to manage the postal facility construction program. The Postmaster General was of the opinion that a postal construction program of $250 to $500 million a year could be better handled by the corps, which had a construction program averaging about $2 billion a year, rather than by GSA which had a program averaging about $115 million a year with a projected fiscal year 1972 workload of about $180 million.

Mr. WRIGHT. Would you yield at that point. With regard to the construction program of the corps being estimated at $2 billion a year, I would like to specify in what areas that construction activity occurs. I don't think you are saying that they have a $2 billion a year construction program directed toward such things as NASA and VA hospitals, are you?

Mr. STAATS. No. I think those are in the nature of $400 million a year, as I recall. Mr. Ahart?

Mr. AHART. Mr. Chairman, I think actually in the 1970 program of the corps, they had about $21 billion, rather than the $2 billion which the Postmaster General cited, which was referred to here. Of the $22 billion, approximately $12 billion was on the civil works side.

Mr. WRIGHT. Irrigation, flood control, things of that sort?

Mr. AHART. Yes. On the military side there was roughly $1 billion. This included $250 million for the construction of Army facilities, $40 million for modernization of Army munition plants, $47 million for family housing, $185 million for the construction of Air Force facilities, $21 million for NASA, $32 million for the ABM sites, and $200 million in miscellaneous construction. This adds up to $775 million. I think it would be difficult to sort out these figures without a complete analysis of how much of this would be comparable to the building and mechanized facilities construction which the corps will be called upon to perform for the postal service. It would be somewhat less than this amount.

Mr. WRIGHT. Quite a bit less, wouldn't it?
Mr. AHART. Yes.

Mr. WRIGHT. The biggest portion of the corps' budget is for civil works projects, river developments and things of that kind. I think we would have to conclude that the amount of expenditures reflected over the years in the operations of the corps in developing buildings of a character similar to those required by the Post Office would be a rele

tively small percentage of the corps' total overall construction budget, would it not?

Mr. AHART. I believe that is correct, Mr. Chairman.

Mr. WRIGHT. Let me ask this further question at this point—I don't want to get ahead of the story. You are developing it in such an orderly way. But you have recited here transactions and conversations and proposals that were discussed within the Administration as early 1969. You say in early 1969 the Postmaster General expressed the opinion that his Department didn't have the capability to do this. In March of 1969, the Department entered into conversations with the Corps of Army Engineers. In April 1969 the Administrator of General Services advised the Postmaster General that it could do the job more efficiently. All of this took place more than a year before the passage of the Postal Reorganization Act, did it not?

Mr. AHART. That is correct, Mr. Chairman. The early discussions on it apparently took place in early 1969.

Mr. WRIGHT. Apparently the decision of the Post Office Department to utilize the services of the Army rather than those of the GSA came about in the early part of 1969, is that correct?

Mr. AHART. That is correct.

Mr. WRIGHT. Yet to the best of my ability, I have been unable to discover that the Congress or any committee of the Congress, particularly the Post Office and Civil Service Committee, which then was engaged in attempting to draft this legislation known as the Postal Reorganization Act, had been advised in any sense that the Postal Service would use the services of the Army to conduct its building.

Do you know of any instances in which representatives of the administration or of the Post Office Department advised the responsible congressional committees that this decision had been made?

Mr. STAATS. We are not aware of any information on this until, I believe it was March 11, which will be referred to later on.

Mr. WRIGHT. March 11, 1971?

Mr. STAATS. That is right.

Mr. WRIGHT. This was approximately 2 years after the decision apparently had been made, is that correct?

Mr. STAATS. At least a tentative agreement had been made, right. Mr. WRIGHT. A tentative agreement had been made in the first or second quarter of 1969. The Congress enacted the Postal Reorganization Act in July or August-August, I believe, of 1970.

Mr. AHART. August 12, 1970, I believe was the date.

Mr. WRIGHT. Was that the date of the congressional action, or the date of the signing?

Mr. AHART. The date of the signing by the President.

Mr. WRIGHT. But it was in early August that Congress acted on it. So, we have here a situation in which a tentative decision had been made to farm out this work to the Army in the early part of 1969.

I know of no occasion in which responsible committees of the Congress were advised of that decision prior to the enactment of the Postal Reorganization Act. Do you know of any such occasion?

Mr. AHART. Mr. Chairman, we haven't made an exhaustive review of the legislative history of the Postal Reorganization Act to try to identify this. I think the best we can say to your point is that we did, as an office, follow the Postal Reorganization Act very closely as it

went through the Congress because of the relationship it would have with our office, and we as an office, as the Comptroller General has pointed out, weren't aware of this arrangement ourselves until it was announced on March 11.

Mr. WRIGHT. The General Accounting Office didn't know anything about this arrangement until it was publicly announced on March 11, 1971?

Mr. AHART. That is correct.

Mr. WRIGHT. This was some months after the enactment by Congress of the Postal Reorganization Act?

Mr. AHART. Yes.

Mr. WRIGHT. I believe it is 6 months after they actually started to utilize the services of the Army, is that not approximately correct? Mr. AHART. I believe that is correct, Mr. Chairman. We may have

been aware-I would have to check with the staff- of some of the individual projects on which the Post Office Department, did request the assistance of the corps. I think the earliest of these was in late August 1970, when they requested some assistance in connection with their facility in Hawaii, and during the interim there were other arrangements made on a project by project basis.

Mr. WRIGHT. But you weren't aware of any broad had been reached between the Post Office and the Army? Mr. AHART. That is correct.

agreement that

Mr. WRIGHT. I think it is clearly accurate to say that the Congress was not aware of it either. I thank you for that elucidation. I believe we will be able to document these dates further in the hearings later on today or tomorrow.

Mr. GROVER. I might mention in checking the House report on the postal reorganization bill, we find that the initial introduction of this legislation, when it was then H.R. 4 in the 91st Congress, was January 3, 1969, so that the negotiations later in March of 1969 for this delegation of authority might have been possible in anticipation of successful passage of the bill. That doesn't take away from

Mr. WRIGHT. I think clearly they were undertaken in anticipation of successful passage of the bill. Otherwise, there would have been no occasion for a broad, sweeping arrangement between the Post Office and the corps.

Mr. STAATS. Yes, there would have been very little point in it, except on the assumption that a bill of that general type would be enacted. Mr. WRIGHT. My point is this, Mr. Grover, that it seems to me that the Department owed to the congressional committee the courtesy and consideration of explaining what arrangements it anticipated, assuming the passage of the bill. I cannot find any instance in which that information was given to the Congress.

Mr. AHART. One comment here might be helpful. The Postmaster General's formal request to the Secretary of Defense to furnish services on this broad basis was made on September 26, 1970, the month following the approval by the President of the Postal Reorganization Act. This was when he formalized the request to the Defense Department for this kind of help.

Mr. WRIGHT. Yes, but a tentative agreement already had been reached approximately 12 years earlier.

Mr. AHART. That is correct.

Mr. WRIGHT. Proceed, if you desire.

Mr. STAATS. The point in the statement is the last sentence in the first paragraph on page 8.

In addition, the Postmaster General noted that the highly mechanized special purpose facilities needed for postal use bore little resemblance to the facilities GSA builds a factor that led to the 1966 delegation of authority from GSA to the Postmaster General.

The Postmaster General believed that the corps had the size and geographical distribution of work force, and expertise in constructing complex buildings needed to manage the construction of postal facilities.

Mr. GROVER. In this letter, General Clark pointed out that they, the corps, would require of Mr. Blount's Department the provision of manpower spaces as current personnel ceilings are restricted to programs presently assigned. How do we link that with this belief that they had the size work force to do the job?

Mr. AHART. I can't speak for the Chief of Engineers, but I think probably what he referred to was the fact that they do have a large organization which is geographically dispersed which had a great deal of engineering capability, but at the same time admitting that if they undertook a sizable program for the Post Office Department they would require some augmentation of their total staffing.

Mr. STAATS. In fact, as pointed out, a large number of employees have been transferred over to the Corps of Engineers, approximately

600.

Mr. AHART. I heard various figures, 600 is one.

Mr. WRIGHT. Those employees, formerly employees of the Post Office Department, now are employees of the Army Corps of Engineers, is that correct?

Mr. STAATS. That is correct

Mr. WRIGHT. Their pay is coming out of appropriated funds, taxpayer's money, is that correct?

Mr. STAATS. Well, presumably they will be financed by the transfer of funds from the postal service to the Corps of Engineers under this agreement.

Mr. WRIGHT. This is a point on which I was not clear-under the agreement, the Post Office Department promises to pay to the Corps of Army Engineers an amount sufficient to compensate for the wages of these approximately 600 people, is that correct?

Mr. STAATS. No. There is a 512-percent allowance to cover overhead, the administrative costs of the architects and engineers, and the cost of supervision and inspection of the construction.

So, what I was referring to is not a reimbursement for these employees as such, but a reimbursement to the corps of 512 percent of the total cost of construction involved.

Mr. WRIGHT. Now, two questions. The employees are on the public payroll of the Corps of Army Engineers?

Mr. STAATS. Yes.

Mr. WRIGHT. So, initially their pay is out of appropriated funds and supplied by the taxpayers of the United States?

Mr. STAATS. Yes; that is correct.

Mr. WRIGHT. Now, presumably under the agreement all overhead costs, including design, employees, administration, and all of this, will