CONTRACT TIME FOR COMPLETION OF CONSTRICTION Mr. ROBISON. What's the typical contract time for completion of istruction? Mr. SAMPSON. Eighteen to twenty-four months is what we're getting w for construction time. On the previous programs that would ve been 3 to 4 years. Mr. ROBISON. When we consider the process by which this work now being done, by virtue of the amendments of last year, the atract for occupancy and payments thereunder runs for 30 years? Mr. SAMPSON. Thirty years. Mr. ROBISON. And you're using the 30-year term for all of the buildings so far? Mr. SAMPSON. Yes, that's correct. We have found that, by the way, be the most economical after advice from the financial adviser r this program. CONSTRUCTION SAVINGS Mr. ROBISON. Then, to summarize, one of the other reasons given justify for us your moving under this new program for all those ildings, even though we thought you might go the other way or at least 13 of them, is that you have as you say in your prepared atement, saved, you think, nearly $100 million a year from inflaonary increases that will be prevented by constructing these buildgs now rather than later? Mr. SAMPSON. Mr. Robison, there's a further saving, which I aladed to in my statement and which I think is significant in this articular dialog. For some reason under the other system, where we have to say e had less than a professional approach, we did not have quality conractors submitting bids in a good competitive market. Concerning he projects which we are talking about, for which we did have direct Federal funding, let me give you an example of some of the savings t will mean in construction costs by proceeding under the purchase ontract program. The appropriated amount for the McNamara buildng in Detroit was $56.5 million. We had a low bid of $49.1 million nder the purchase contract program. Mr. ROBISON. And you accepted it? Mr. SAMPSON. We sure did. But you know, historically, if we had an appropriation of $56 nillion under the old system, we'd get a bid of $58 million. Mr. ROBISON. That's a point, and that's a point worth considering. The San Juan building, is in a very tough construction market. Mr. SAMPSON. Right. The construction contract for that building was $18.9 million. For Lincoln, Nebr., we received an appropriation of $21.3 million and under the purchase contract program, we awarded a construction contract for $14.9 million. Mr. ROBISON. How do you explain it ? Mr. SAMPSON. We have a more professional approach to the overall program, and when you combine this kind of financing and contract construction contracting for the building, you attract higher quality contractors who will submit bids. I will say that we knew when we undertook this program that the market was good. Part of this is a market factor. We had a highly competitive market. But it was our ability to go forward with this kind of program-and by the way, we went out ahead of time and sold this across the country to both construction people and finance people. If you reduce your construction costs by 5 percent, it's equivalent to saving a half a point in interest costs. Mr. ROBISON. Yes. Insofar as the market situation was favorable for advancing under the new program within the last 12 months or so, that's indicated, is it not, by the high average number of bids you've had for the 33 buildings you've started to put up? Mr. SAMPSON. Yes, sir. CONSTRUCTION BIDS Mr. ROBISON. You tell us 7 bids is an average for the 33 buildings, and these bids came from 133 different construction contractors. who had never before bid with the Government. Let's get one other thing tied down here. You say, here, "Practically every award was made below the estimate." But a couple or more were also made above the estimate. Mr. SAMPSON. That's right. For example, one of the buildings of the 10 was above. The Hattiesburg, Miss., building was above the appropriated amount. Mr. ROBISON. Well, Hattiesburg was only $2,636,000. I suppose there was some modification in the construction itself, or the planning board might have brought that about, or was this a local construction situation? Mr. SAMPSON. I think it was local construction, yes, and the appropriation may have been lower than what we needed. Mr. MILLER. Would the gentleman yield at that point? Mr. ROBISON. Yes. Mr. MILLER. I notice that you say: "Practically every award was made below the estimate," and, "Many bids came in 10 percent to 12 percent below the estimate." Do you find after you enter into contract that you have a number of change orders that require that contract to go higher? A lot of contractors could be in early with a low bid expecting to be helped by change orders. Mr. SAMPSON. This program has almost eliminated the change order problem because the contractor recognizes a couple of things: First, GSA wanted this method of contracting, and secondly, we had the funds. The time schedule that we made a part of these contracts was short. The shorter the time schedule, the fewer the change orders. So we don't have the situation here that we had under the other system. There have been very few change orders on these jobs. Mr. MILLER. Thank you. Mr. ROBISON. That brings up a question that probably you would prefer wouldn't be asked, but it's on my mind so I have to do it. If the bids came in at so much below the estimates, again as you say, 10 to 12 percent below the estimates, what was wrong with your estimators, or is this now a different ball game? Mr. SAMPSON. I think it's a different ball game. What we do, in essence, is make estimates in an effort to project the condition of the market. At the time we are ready to place the project on the market, we make a new estimate to bring it up to date. When we made these estimates, we were basing them on our past experience n the market. In other words, we didn't even think the program would be as sucessful as it has been. We were all very surprised that it would be this uccessful. It has proven to be a success, and our estimates are better Mr. STEED. Mr. Bevill, do you have any questions? Mr. BEVILL. I just have one. Do you have anything to do with any of the Postal Service buildings? Mr. SAMPSON. We are concerned with some of them, but only where joint occupancy is involved. All Postal Service buildings which are 100-percent occupied by the Postal Service are completely under their urisdiction. We have nothing to do with those. Where there is joint ccupancy, we agree with the Postal Service as to who will construct he building. The normal guideline we follow is that if we occupy over 55 percent of the building, we do the construction and we lease space in it to them. If they occupy over 55 percent, they construct the building and we lease space in it from them. Mr. BEVILL. Under this new setup now since the amendments, you will be collecting rent on those buildings. You will actually be collecting rent from the Postal Service, won't you? Mr. SAMPSON. Yes, sir. We pay them rent for buildings they own where we are tenants, and vice versa. Mr. BEVILL. You do that already? Mr. SAMPSON. Yes, Mr. Bevill. Since the effective date when the Postal Service was established. SECURITIES ISSUES Mr. BEVILL. On this matter of borrowing of money, could you give me some of the names of some of the companies, or the agencies, from whom this money is borrowed? Mr. RICE. I'm Robert Rice, Assistant General Counsel for the Public Buildings Service. The bidders on the financings have been the large investment banking houses in New York, including Merrill Lynch, Lehman Bros., Morgan Guaranty Trust, First National City Bank, Chase Manhattan, Saloman Bros., and First Boston Corp., among others; and they syndicate with large numbers of other investment banking houses. Mr. SAMPSON. Most of these are investment syndicates because of the size of the offering. Mr. BEVILL. In negotiating these loans, is this open to all? Do you advertise and then select those bidders that give you better interest rates? Mr. SAMPSON. We advertise first, and then receive a closed bid which is opened publicly. The award is made to the offeror who submits a bid at the lowest interest rate. It's not negotiable. In preparation for any of our bond issues, we sell this concept in advance of going on the market and we are able to get a lower interest rate. Mr. BEVILL. This interest is 7 to 72 percent, lower than was ex pected? go Mr. SAMPSON. Yes. It was expected in this program that it would from 812 to 9 percent. It's actually as you said, a little over 7 percent. We consult with the Treasury Department before making an award as to what the interest rate or bid should be, because Treasury has more expertise than we do as as to whether the interest rate is reasonable. Mr. BEVILL. In what way have the amendments helped in the matter of financing? Mr. SAMPSON. We are extremely pleased. We think that this legis lation will be a landmark for modifying programs of the Public Buildings Service for years to come. FEDERAL BUILDINGS Mr. BEVILL. Do you still build the buildings, or get individuals to build buildings, and rent them? In other words, is this just an additional financing method that you have? Mr. SAMPSON. We are still leasing throughout the country where there's no need for one consolidated Federal building. Mr. BEVILL. I believe that's all I have, Mr. Chairman. MR. SAMPSON NAMED HONORARY MEMBER OF INSTITUTE OF ARCHITECTS Mr. ROBISON. Mr. Chairman, we may as well note that Mr. Sampson has been selected for an unusual honor in that he is going to be named, or was named, an honorary member of the Institute of Architects on May 7, at the AIA convention in San Francisco. Did that happen? Mr. SAMPSON. Yes; it did. Mr. ROBISON. Why did you receive such an award? Mr. SAMPSON. We have had an impact on the architects and engi neers throughout the country, and some in the construction industry. We have a great deal of interest in our concepts of architecture in GSA, and have provided some leadership. I felt especially honored to receive the award since I'm an accountant. FIRST FEDERAL DESIGN ASSEMBLY Mr. ROBISON. How was this organization handled that you helped set up, or that GSA did, here in Washington that was called the First Federal Design Assembly? Mr. SAMPSON. This actually was set up through the Academy of the Arts. GSA participated to a very great extent. It's purpose is to work on several areas of design relating to the exterior and interior of the buildings, and I think it's the first concerted attempt involving any agency of the Federal Government to get some excellence into design of Federal buildings through the country. Mr. ROBISON. Is it a fact that you have a desk paperweight that has on it one single word, "Excellent"? Mr. SAMPSON. It does have the word "Excellence," and I might add that anyone who comes into my office realizes what it means. DESIGN AWARDS Mr. ROBISON. And, is it further a fact that you've set up an award program to recognize superior designs in the buildings you're working on? Mr. SAMPSON. We have set up design awards on a national basis, and we intend to make awards every few years to provide some incentive for architects to include excellence in design. Mr. STEED. Would the gentleman yield? I want to congratulate you, Mr. Sampson, on your honor. I might say my only regret is that it didn't come sooner. It could have avoided Some of these monstrosities that have been put up. Mr. ROBISON. According to the newspapers, there's a Mrs. Huxtable Mr. SAMPSON. Ada Louise Huxtable. Mr. ROBISON. Who says: Politics and design do not make good bedfellows and that in the event politics and design marry, there will be good talk in Washington and bad design for everyone. Mr. SAMPSON. Mrs. Huxtable and I have had many debates and usually the debate is in this particular area. She is a well-known architectural critic. She's been critical of our Federal architecture. I think that she will see results in the very near future of our efforts, however. DESIGNS TO CONSERVE ENERGY Mr. ROBISON. On the practical side of all this, with the energy crisis as a developing situation that many of us must deal with, or cope with, what are you trying to do, Mr. Sampson, you and your people, to build into the design of these structures that you have in mind, or are now on the drawing board, new methods and approaches in ways and ideas for conserving energy, as may be required by the Federal Government to run and operate these buildings, whether it be for heat, light, air-conditioning, or what have you? Mr. SAMPSON. We have instituted within GSA a very strong program of conservation of energy. We held a conference over a year ago, with the experts in this matter from around the country, who gave us several significant recommendations on ways to conserve energy in Federal buildings. |