The first group of savings are calculated on the basis of the cost of present operation versus the cost of operations after occupancy of the new facility. All such savings are present-valued so we can make a comparison with planned investment. Seven of these projects, over the 40 year useful life of the buildings, will save less than $10 million while four projects will each save over $75 million in reduced operating costs during their useful life.

The second group of savings on this chart compares the cost of Federal versus lease construction. Anticipated rent payments were presentvalued at 4.5 percent over 40 years and then compared to the amount. of investment we would make under postal public buildings. It indicates that the difference in cost, again over the life of these buildings, on three projects is over $20 million and on eight projects between $5 and $15 million, thereby favoring the Federal ownership of these large facilities.

Again capital investment, here in space, is profitable to the Depart

ment.

Turing now to another portion of our modernization program, this chart (see below) depicts the procurement schedule in support of our carrier motorization program.

IN TWO YEARS, WE WILL COMPLETE THE CARRIER MOTORIZATION PROGRAM LEAVING ONLY REQUIREMENTS FOR VEHICLE HIRE REPLACEMENT, NEW SERVICE AND OBSOLESCENCE..

As you know, we have been over the past several years converting foot routes to motorized routes and we hope to substantially complete this program in fiscal 1970. We are going to constantly have a requirement for vehicles in support of new service as population continues to grow and the suburbs expand to create new mail routes. In addition, as the size of our fleet grows, the need for replacement vehicles increases. For example, in fiscal 1968, we required 5,000 vehicles for replacement purposes. If you look at fiscal 1972 and the Congress does fund this kind of program, we will need 19,825 vehicles just for replacement.

In this area savings on vehicles are good investments for the Department. As an example, on the 10,418 new vehicles for carrier motorization in fiscal 1969, we expect, after payment for the vehicles, a net saving of $15 million.

The last of the specific capital investment areas I would like to touch on, is covered on this chart (see below). Here is a long-term view

AN EXPANDING DATA PROCESSING SYSTEM IS PLANNED TO MEET GROWING MANAGEMENT, ADMINISTRATION, BUDGET AND ACCOUNTING REQUIREMENTS...

The Department has or will have funded, as of:

of our plans in the data processing area. For example, our postal source data system could expand to 175 offices by fiscal 1972. We are expanding the system on an incremental basis and only after we have fully implemented the first 100 offices will we study the next group of offices in which the system might be extended. This approach is necessary to satisfy ourselves that this is a wise and prudent investment of funds for the Post Office Department.

As of now we have our six postal data centers and the data processing center in the headquarters. This year we do have funds for buying a new large-scale general purpose computer and some associated equipment. This is going to cost us $6.8 million. While this computer will have the capacity for many functions, we have identified three projects, transportation scheduling, writing of money orders, and personnel records for data processing. On those three functions alone, which do not begin to use up the capacity of this computer, we expect to pay for the computer and its equipment and realize a net saving over a 5-year period of close to $6 million. There will be additional savings as additional jobs are programed for this same computer and we have already offset the computer costs by charging them to these three projects.

That is a view of what our program is today and looks like in the years ahead in the capital investment area.

I would like now to turn to the second area that I wanted to cover briefly. That is, how this program is accomplished.

As we all know, the program just does not happen. It requires good planning, constant direction, and execution. It also takes the talent, skills, experience, and knowledge of many professional people; experts in operational requirements, in engineering, in real estate transactions, in procurement and in contract administration. We are fortunate to have talented people in these activities.

To execute this program requires money, money to get these people and money for the capital items involved. The Department is funded, as you know, through eight separate appropriations.

This next chart (see below) shows the four appropriations that

SUPPORT OF THE MODERNIZATION PROGRAM IS ACCOMPLISHED THROUGH FOUR INTERRELATED APPROPRIATIONS...

are the responsibility of the Bureau of Facilities. These four appropriations relate to our maintenance of existing facilities and our capital investment program.

Last year Congress divided "Building Occupancy" and "Postal supplies" into two separate appropriations. These are shown in the dashed lines on the chart-building occupancy and supplies and services. These are the expense appropriations. We need funds in "Building occupancy" to meet prior year contractual obligations. This is the account with which we pay the rent, and it is the account through which we pay for the utilities consumed in the operation of our buildings. So this is not capital investment, but current expenditures.

In the "Supplies and services" appropriation, likewise an expense appropriation, we purchase the supplies and services that are consumed in our day-to-day activities in processing the mail.

The inner blocks show the two appropriations which are our investment appropriations. They are shown in solid lines-Plant and Equipment and "Postal public building" appropriations. The funds in these two accounts make up the Department's capital investment program.

We have shown some lines here to indicate to you that all of these appropriations are interrelated. For example, we will buy items in the plant and equipment account, items of machinery and postal equipment that do require an expenditure from the supplies account in order to keep them going. We also buy items in the plant and equipment account that will go into new postal public buildings, federally owned buildings, or in leased building that we now occupy. These accounts, then, do not stand on their own, but rather there are programs which weave through two or more of them.

We assemble our requirements in these accounts by gathering information from the other bureaus in the Department. To give you some idea of the relative magnitude of these individual appropriations, for the current fiscal year we have $110 million in "Supplies and services", $200 million in "Plant and equipment", $50 million in "Postal public buildings", and $210 million in the "Building occupancy" account, for a total of $570 million for the Bureau's four appropriations.

Each year in making up our budget request, we do try to make a judgment on what the appropriation level should be, and how much of the needs I have outlined to you are reasonable to try to meet in the upcoming year. Likewise, we look at our own ability to execute th program for which we are asking funds; for example, the funding schedule that is required by the nature of our construction business is taken into account. We will only ask for funds for buildings that we are going to expend in that specific fiscal year. We will usually get site and design funds in one year and ask for construction funds in the following fiscal year.

I would like to show you on the next chart (see below) our track record, if you will, in executing the modernization program. Our committees have expressed in past years some discontent, and naturally so, when the Department failed to obligate the funds that were ap

IN FISCAL YEARS 1966 and 1967, WE ACCOMPLISHED THE PROGRAMS YOU AUTHORIZED...

propriated in that session. We are glad to be able to show you through these charts that we have obligated the appropriated funds since fiscal 1966.

Mr. Scort. Mr. Chairman?

Mr. WILSON. Mr. Scott.

Mr. Scorr. I commend the chairman for arranging for this meeting and Mr. O'Marra being here with his staff. But you talk about the programs that you have constructed and I am concerned about the relationship between this subcommittee and the Department because Mr. Coffman was up here and we were asked to extend, as we did, the lease-purchase law. We were told that the subcommitte would be consulted, that our views would be considered, and yet when it was contmplated that the facility at the National Airport would be expanded I offered objection to this, the then chairman of the subcommittee, Mr. Pool, objected to it, but the Department went right ahead as if we had not interposed any objection at all.

How can we bring a better relationship with the Department? We made the suggestion that consideration be given to Dulles Airport. That is in my district. Are you familiar with that?

Mr. O'MARRA. I am, and we did look carefully at that, Mr. Scott. Our problem today in that one particular instance you cite is that we require the facility at the location where the mail is being received. I can assure you that when and as Dulles Airport handles significant mail, the Department will be interested in a facility at Dulles. Our putting the facility there at the moment would not help the Department in handling the mail.

Mr. Scort. As I understand, you are modernizing the facility at National Airport and there are many in the Congress that do not want to see this airport expanded. This is a controversial matter and you got in on the side of expanding the National Airport when it is already overcongested. I did not feel, and I say this in all sincerity, that the Department gave due consideration to my views on this or the views of the chairman of this subcommittee. And if this continues to happen, certainly I will offer an amendment to the bill when it comes up again so that the Department will not have this freedom. I think it should have it, but at the same time I think it should pay some attention to this committee and to the members of the subcommittee.

Mr. O'MARRA. I wholeheartedly agree with you on that, sir.

As I recall, our commitment at National is a 5-year commitment, a commitment of the Post Office Department which certainly gives us the utmost flexibility with respect to a shift from National. When a facility is required at Dulles, constructed and in being, the Department should be able to reduce operations at National.

Mr. SCOTT. When we were considering this Mr. Coffman, who was then the Acting Assistant Postmaster General, assured the committee and the members that the Department would be very hesitant to take any action that the subcommittee did not agree with. Yet there was not 1 day's delay in this.

Mr. COFFMAN. I would like to comment on that, Mr. Congressman. As you know, the statute which was passed and under consideration at that time, required that 30 days before we enter into a contract for a leased facility of 20,000 square feet or more, we were required to

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