Mr. WRIGHT. How many will be involved in the small program? By that you do not mean small in total dollar volume, but size in regard to small buildings

General REBH. Small post offices.

Mr. WRIGHT. This will require a greater dispersal of personnel in that the cities wherein those smaller projects will be constructed are scattered throughout the United States and farther removed from your district offices; is that not correct?

General REBH. No. They will be in district offices. For the small program, they will be managed out of the district offices.

Mr. WRIGHT. But the fact they will be in communities in some cases geographically removed from your district offices, this will involve taking on additional number of personnel, would it not?

General REBH. The total figure we estimate at the peak of the program will be 1,000 people.

Mr. WRIGHT. A thousand people?

General REBH. Yes, sir.

Mr. WRIGHT. This is 1,000 people whom the corps must employ for a relatively short period of time?

General REBH. This is one of the reasons why the corps can undertake a program without detriment to itself, as it has done in the past with the ICBM and NASA programs, we have people retiring, and there is the attrition rate, and it is very easy for us to absorb additional people. The 1,000 refers to spaces. This does not mean we will have to take on necessarily 1,000 new people, because some of our programs are dynamic in nature.

In the case of certain districts, where a program in that particular district has dropped off, they will be able to utilize people that are currently assigned there, but all they need is a space to justify the man's existence on the payroll.

Mr. WRIGHT. Otherwise, the man might not be needed on the payroll, were it not for this new program?

General REBH. That is right.

Mr. WRIGHT. What we are saying is the program itself requires the services of approximately 1,000 people more than the corps otherwise would require?

General REBH. That is correct, sir.

Mr. WRIGHT. And it will require this additional 1,000 for a relatively short period of time unless the agreements are expanded and the program takes longer than is anticipated?

General REBH. Relatively, the big program would be 3 to 5 years, I believe. That takes care of 600. The other program, the leasing program is something that is continuing on into the future, so that I would assume then the 400 would stay in that capacity. The short-term one is around 3 to 4 years.

Mr. WRIGHT. You were saying to the committee, General Rebh, that you would be able to absorb these people that you have taken on into the normal work of the corps so as to minimize the undesirable effect of reductions in force?

General REBH. That is correct.

Mr. WRIGHT. But you cannot assure the committee that nobody is going to be let out of a job because of a reduction in force?

General REBH. I would say the higher probability-and again I do it on the basis of past experience, because of the ICBM and the NASA program-is they will be transferred within the corps. As you say, there is a possibility, and I am sure there could be a few cases of reduction in force, but the cases would be those wherein a man would not want to be transferred to another location.

Mr. WRIGHT. There appears additionally or there appears to me an additional possibility that persons who have become highly proficient in administering construction or leasing management of a public building might not necessarily be so useful in the prosecution of a civil works program involving dams and levees and things of that kind. Does that seem illogical to you?

General REBH. I think most people who have a firm grounding in a discipline, electrical engineering, mechanical, structural, well, they do in fact transfer occasionally from one to another. There may be a little bit of on-the-job training required, but such a transfer can be made.

Mr. WRIGHT. If you would, let us proceed to the statement you make concerning the Office of Management and Budget letters.

On March 27, the Director of OMB sent letters to the Secretary of Defense, Postmaster General and Administrator of General Services Administration, declaring that a review was being undertaken of this agreement and requesting that the agreement be suspended until such time as the review had been completed. And no action was taken under the agreement. These are not your words, but I believe these are the words that come from the letter of the Director of OMB.

Now, in his letter it requested that no action be taken under the agreement. However, you have said that the suspension was interpreted to apply to the start of new contracts, in other words that the corps would not advertise nor award any new design or construction contracts during the time when the Office of Management and Budget was reviewing the agreement. Otherwise, it was interpreted not to apply to work under way. By whom was it so interpreted?

General REBH. By the Chief of Engineers, General Clarke.

Mr. WRIGHT. As far as you know, this was a unilateral decision made by General Clarke, that the suspension by the Office of Management and Budget did not apply to work already under way?

General REBH. When we received a copy of the letter to the Secretary of Defense, we had a meeting, General Clarke, General Raymond, myself, and General Dunn and others, to discuss this, and we felt this was in the best interest of the Government, the practical thing to do, allow the work under way to continue. General Clarke, after we reached the decision, informed Mr. Jordan, General Counsel, Department of the Army, that this is what we were going to do.

Mr. WRIGHT. So the assumption underlying it all is that after the review, the Office of Management and Budget would agree to the agreement, and you would be able to proceed?

General REBH. That is not correct, sir. It seemed to us that whichever way the Office of Management and Budget decided, that the course of action of continuing the work was in the best interest of the Government. In the same sense in which we had assumed the work from the Post Office, in terms of ongoing projects, we would be able to pass on

to any successor agent, who was to take over the construction. If we were to continue, work would not be interrupted. Any time you stop projects, as I indicated in the statement, it is very costly for paying the contractor, either design or construction, in terms of suspension of work, plus the fact that you delay bringing the installation on stream. Because the Post Office is a profit-and-loss type of organization now, it would have meant the loss of savings to be derived through the increased operational efficiencies.

Mr. WRIGHT. General Clarke made this decision?

General REBH. General Clarke made the decision; yes, sir.

Mr. WRIGHT. I do not know that the committee could quarrel with the decision from the standpoint of its economy or its efficiency. It does seem to the committee rather irregular that it was handled in the way that it was. A representative of the Office of Management and Budget testifying to this committee earlier said that the effect of the suspension was simply to hold up on the award of new contracts.

There seems to be some further light shed on this, and on May 4 the Postmaster General wrote to the Office of Management and Budget again and said in effect since we have not heard anything further, we are going to go ahead with this project. The Corps of Engineers does not operate that way with the Office of Management and Budget, does it?

General REBH. No, sir; not to the best of my knowledge.

Mr. WRIGHT. In other words, when the Office of Management and Budget asks the Corps of Engineers to suspend work on a project until it has decided, the Corps of Engineers suspends work on a project until it hears from the Office of Management and Budget?

General REBH. It depends on what you mean. On this project we really did not suspend, because we thought it was in the best interest of the Government, but we felt we should not continue to commit the Government to anything further.

Mr. WRIGHT. The Office of Management and Budget being an arm of the Presidency says to the Army or the Corps of Engineers, look, we want you to hold up on this until we have decided whether it is in keeping with the program at present, and the Corps of Engineers does not normally write back to the Office of Management and Budget and say since we have not heard from you we are going to go ahead. To your knowledge that has not happened, has it?

General REBH. What you say is correct, sir. I do not know of any case. I cannot conceive of a case.

Mr. WRIGHT. Thank you. Mr. Constandy.

Mr. CONSTANDY. I think Mr. Blount's letter of April 2 to Mr. Schultz perhaps would enlighten us a little bit on this.

I would like to point to the fact that GAO in their testimony on last Wednesday put into the record a list of projects, which during the same period were assigned by the Post Office Department to the Corps of Engineers. I would like for us to bear in mind as I read a section of the letter from Mr. Blount to Mr. Schultz:

I deeply appreciate your expression of willingness to try to complete your review as expeditiously as possible. On April 28 the Corps will receive bids on the highly important New York bulk and foreign mail facility. (Bids on this project were originally solicited by the Post Office Department, and we had to reject all bids because of the fact that the lowest bid-which exceeded $100 million-was far in excess of the amount available under our appropriation.)

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 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 REBH. 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.