Mr. STEED. But would that help, for example, in the area of the size of purchases you can make without having a written authorization? You have an enormous paperwork problem which could be eliminated if minimum purchase levels were made more realistic.

Mr. SAMPSON. Yes, sir. We need that very badly.

Mr. STEED. Is this the type of thing you have in mind?

Mr. SAMPSON. This particular activity would define the limits at which you would be able to do this locally, make purchases locally, and those where you have to have them checked by the procurement

managers.

Mr. STEED. At this time we'll recess until 2 o'clock.

AFTERNOON SESSION

Mr. STEED. The committee will be in order.

This committee is in session this afternoon for the purpose of consideration of the budget request for fiscal year 1974 for the General Services Administration.

CONSTRUCTION, PUBLIC BUILDINGS PROJECTS

We will now take up the items, "Construction, Public Buildings Projects."

The appropriation for fiscal year 1973 was $203,312,000. There is no request for this year.

We put the $203 million in last year, as you know, Mr. Sampson, after considerable discussion concerning the bill that was pending at that time which made the purchase contract program possible. Some of the projects that were included in the 1973 appropriation, I believe, had been before the Congress at the same time as the purchase contract bill.

PURCHASE CONTRACT PROGRAM

We entered into a gentleman's agreement, and we thought that at least some of the projects would be built by direct Federal construction, as approved by the Congress, but we find that that agreement wasn't implemented because none of the money appropriated was so

used.

It has been the feeling of the subcommittee that there was tremendous insincerity somewhere along the line, because we wouldn't have withdrawn our objection to the purchase contract bill if we had found that GSA was not going to use the money we appropriated.

I know that for those who wanted the bill there may be the contention that this purchase contract program is the best way for the Government to do its business, but I remind you that we had a bill like that once before, and after it had been in effect for a while it became obvious that it was not the best way to finance Federal construction projects and the Congress repealed it. We still have some of those projects under the 1954 act to pay for; we included payments for them in this bill, and probably will for some time to come.

I know that at the beginning this concept looked pretty good, but what concerned me is that we have half a billion dollars worth of projects under this program with an interest rate of somewhat above 7

percent and these are 30-year contracts. If my mathematics are correct, this means you're going to pay something like 210 percent interest on these contracts.

So you have half a billion dollars plus the 7- to 72-percent interest, and it means that you have entered into an agreement that will cost the taxpayers a billion to a billion and a half dollars more than by direct Federal financing.

The argument is made that when we appropriate money directly it costs money because we have to pay interest on the money we borrow. If we borrow money to build buildings, you surely are going to have to borrow money to pay back these loans. So if you pay interest on the project itself and then you keep paying interest on that part that goes into the national debt for the interest on that debt that is interest on top of interest. Therefore, I think that dollarwise you'll find out that we have some good arguments on our side.

With respect to the argument that projects are built faster under the new program than under the old one, if private industry is able to do it, then the Government ought to be able to learn enough about it to be able to improve its own system.

I have a lot of problems with this, because I made a lot of commitments to a number of Members of Congress. I have no personal quarrel with you. I think you are trying to do a good job and the way it ought to be, and that you are entitled to be commended for the way you have conducted it. I am not criticizing the new program per se. I think that we would have been further along if we had used both methods, which I thought we agreed to when we withdrew our objection to the purchase contract bill.

We have a situation now where it will be very hard for this committee or the Congress to have control over this program. Contracts can be signed imposing these 30-year obligations and there is no way Congress can exercise any judgment whatsoever. The Public Works Committee still has to approve prospectuses for new projects, but usually that has been a routine operation.

I think that the time is going to come when Congress is going to wake up to the fact that it has abdicated its responsibility and its prerogative, and that it will try to bring some control over this process. In this regard, it would seem to me that any complaint about the executive branch usurping the power of the Congress is ridiculous, because in this case Congress has given up its own power away, so how can you usurp it?

I am not going to ask you to get into a discussion about the merits. of this. I've listened to your remarks, and I hope you will listen to mine, in stating the position I think we are in. However, I do need some information. I would like to have the details of each project that has been entered into since this program started. I want it broken down so that we not only know the facts about it, the square feet, the cost, the annual interest rate and payment, and the impact of each program on the total account, but also the company involved in the bidding and building. We will need this because there are a number of Members who are expressing interest and concern, and we would like to be in a position to be informative.

Mr. SAMPSON. We'll provide it very promptly, Mr. Chairman.

PROJECT DETAILS

Mr. STEED. We would like those details for every project. We're going to permit you to set it aside in two groups, to also show the projects for other agencies like social security. That, of course, is a matter that has no part in this program. So you can provide it in two parts, so that the record will be complete in that regard. Mr. SAMPSON. That will be good.

Mr. STEED. I think it is important for the record to show that you do initiate projects in your own right and that you do carry out mandates from other agencies that are already initiated.

[The requested information follows:]

PURCHASE CONTRACTS AWARDED UNDER PUBLIC BUILDINGS AMENDMENTS OF 1972 (PUBLIC LAW 92-313) PACKAGE SYSTEM-GSA PROJECTS

Arkansas: Batesville, PO CT FOB..
California:

Santa Ana, FOB..

Van Nuys, FOB.

Delaware: Dover, FOB.

Georgia:

Idaho:

Athens, FOB.

Rome, PO CT.

Moscow, PO CT.

Sandpoint, FOB.

Illinois:

Purchase
price

Date of

acceptance of offer

$5,519,593 Oct. 10, 1972 2,219, 059 Dec. 12, 1972

7.5 Hunt Building Corp., Phoenix, Ariz. 7.5 Dawson Construction Co., East Gadsden, Ala.

7.5

Square feet
Gross

Net

Estimated
annual
payment 1

130, 489

98, 215

465, 111

49, 194

41,763

191,282

7.5 Montgomery Ross Fisher, Inc., Los Angeles, Calif...
Huber, Hunt & Nicholos, Santa Clara, Calif.

7.0 Consolidated Engineering Corp., Inc., Baltimore, Md.

35, 739

31,036

146, 642

PURCHASE CONTRACTS AWARDED UNDER PUBLIC BUILDINGS AMENDMENTS OF 1972 (PUBLIC LAW 92-313) DUAL SYSTEM-GSA PROJECTS

Ernest Alessio Constr. Co., Akron, Ohio.
Haas & Haynie Corp., South San Fran-
cisco, Calif

415,000

302,000

1,400,000