Mr. FLYNT. Have any funds been previously authorized for these projects for which you intend to use proceeds of sales? Mr. RALSTON. No sir, no funds have been appropriated. Mr. FLYNT. Are any or all of them authorized? Mr. RALSTON. Yes sir. Mr. FLYNT. All of them? Mr. RALSTON. Yes sir. Mr. FLYNT. Would you please provide for the record the total estimated cost of these construction projects? Mr. RALSTON. Yes sir. [The list follows:] ESTIMATED CONSTRUCTION COSTS OF PROJECTS IN FISCAL YEAR 1977 BUDGET Note: The estimates reflected above may be changed due to currency revaluations or unanticipated change orders. LEASEHOLD PAYMENTS Mr. FLYNT. On page 16, on the leasehold payments you say the salaries and expenses appropriation finances leasing for less than 10 years. Do you know how much is in the S. & E. budget for these leases? Mr. ELLER. May I supply that for the record, please? Mr. FLYNT. You may. [The information follows:] FUNDS REQUIRED FOR SHORT-TERM LEASED PROPERTIES The sum of $15,248,200 is included in the salaries and expenses appropriation request for fiscal year 1977 for short-term leased properties. Mr. FLYNT. You show a total increase in operations of $4,775,000. Would you please comment on this increase? Mr. RALSTON. All the increased costs are for mandatory items such as wages, prices, and the transfer of operating costs for Poland, which is being taken off the excess foreign currency list. POSITIONS Mr. FLYNT. You show an increase of $206,000 for a change in employment lapse. Would you explain that item? Mr. YOUNG. Last year we transferred 10 positions from overseas to the domestic side, and this is the annualization cost in fiscal year 1977 for 100 percent employment of those positions. Mr. FLYNT. Where in the justifications do we find the number of employees funded from the appropriation? Mr. RALSTON. We have 103 positions; 13 are not filled. Mr. FLYNT. Does that include those paid with foreign currencies? Mr. RALSTON. Part of them, yes, sir. Mr. YOUNG. Five local employees, sir. Mr. FLYNT. Five are paid with foreign currencies and the remainder, those on board and authorized, would be paid out of dollar appropriated funds? Mr. RALSTON. Yes, sir. RENTAL INCOME Mr. FLYNT. Pages 23 and 24, under "Proceeds of sale and miscellaneous receipts for fiscal year 1975," show rental income. Certain entire properties are rented; is that correct? Mr. RALSTON. That is correct, sir. Mr. FLYNT. Why do we retain these properties if we do not need them for our own use? Mr. RALSTON. We do have a continuing need. The posts have not been totally closed in most cases, so we retain the properties until we are reasonably certain we will have no further need. Mr. FLYNT. Let me say I concur with the policy and concept of retaining ownership of properties, even though you have no immediate need for them. I say that I concur in that policy, because if you can foresee a future need, it would seem to me that the most economical way to handle it would be to hold onto it, to use the proceeds of rent during the time that you rent it, and have it available if and when you need it in the foreseeable future. Mr. RALSTON. Yes, sir. Mr. FLYNT. If you dispose of this and had to repurchase comparable facilities, it would probably cost considerably more than the amount you might save. Mr. RALSTON. That is correct, sir. Mr. FLYNT. On page 24 you show an adjustment figure of $1,294,750. Would you please explain this item? Mr. RALSTON. That is mainly a result of the fluctuation of the currency relating to the Tokyo sale. OWNERSHIP VS. RENTAL OF PROPERTIES Mr. FLYNT. As construction costs continue to spiral upwards in almost every country, do you still feel it is more economical to acquire and construct properties rather than to rent them? Mr. RALSTON. Yes, sir. Mr. FLYNT. Could you give us some examples supporting that position? Mr. RALSTON. In Lagos, for example, rents over there run as high as $30,000 a year, payable 5 years in advance, for a normal threebedroom house. Mr. FLYNT. The entire amount is paid ahead of time? Mr. RALSTON. Prepaid, yes, sir. Mr. FLYNT. Proceed. Mr. RALSTON. I have other examples. In Algeria, about the same situation exists. In Zaire rents are not quite as high; they are about $20,000 a year. Mr. FLYNT. Do you mean figures ranging from $20,000 to $30,000 dollars per year in rent for a three-bedroom residence for embassy personnel? Mr. RALSTON. Yes, sir. Mr. FLYNT. Are there any other questions, gentlemen? MOSCOW COMPLEX Mr. SLACK. Mr. Ralston, referring to this structure in Moscow, you state that funds are needed to allow a signature on a contract with the Russians for constructing the foundation and skeleton frame of the complex. Mr. RALSTON. That is correct, sir. Mr. SLACK. What is the skeleton frame? Mr. RALSTON. The foundation, outside walls and roof. Mr. SLACK. Then you take over, is that right? Mr. RALSTON. Yes, sir. Mr. SLACK. What happens, once the building is completed, if the leaks in the roof ruin the walls and so forth? Who is liable for that? Mr. RALSTON. The Soviets would be liable, sir. Mr. SLACK. You think they would be liable or do you know they would be liable? Mr. RALSTON. That would be in the agreement. In accordance with customary contractors' responsibilities, the Soviets would be held responsible for any deficiencies in the work they do. Mr. SLACK. Is that agreement in writing now? Mr. RALSTON. Yes, sir. Mr. SLACK. Do you have a copy with you? Mr. RALSTON. It is in the conditions of construction, sir. ADMINISTRATIVE COSTS Mr. SLACK. Mr. Ralston, at the beginning of the second paragraph of your statement you say "Of the remaining $37.2 million requested in new appropriations, $34.7 million is for day-to-day operation and maintenance costs of properties overseas." What about the $2.5 million difference between the $37.2 million and the $34.7 million? Mr. RALSTON. The $2.5 million we are asking for is administrative costs for other agencies, who formerly reimbursed us and now will not ask for that amount. FAAS Mr. SLACK. I don't understand. What are you going to do with the $2.5 million? Mr. RALSTON. It will be used for operation of buildings, sir. Mr. ELLER. Mr. Slack, you may recall Thursday, when Mr. Eagleburger was testifying, that we introduced the new concept of a Foreign Affairs Administrative Support System in our fiscal year 1977 budget. One of the operating elements behind this concept is that we will transfer from other agency appropriations into our own appro priations, sufficient funds to provide for the essential fixed cost of maintaining the system. Besides adding to the salaries and expenses appropriations, FAAS will increase two other appropriations. One is the Foreign buildings appropriation; the other is the Missions to international organizations appropriation. Within the Foreign building appropriation, these are the costs of building operating expenses to provide those services to the people who will be transferred into the Salaries and expenses appropriation. ARCHITECTURAL CONTRACTS Mr. SLACK. I note on page 2 of your statement you are proposing the use of $500,000 from proceeds that would be generated from the sale of excess properties to award architectural contracts on four projects, is that correct? Mr. RALSTON. That is correct, sir. Mr. SLACK. Who are the architects? Mr. RALSTON. They have not been selected as yet, sir. Mr. SLACK. What are the four projects? Mr. RALSTON. Port au Prince, Haiti; Jakarta, Indonesia; Rome, Italy; and Colombo, Sri Lanka. Mr. SLACK. You say the architects have not been selected? Mr. RALSTON. That is correct, sir. Mr. SLACK. Does GSA play any role whatsoever in your properties overseas? Mr. RALSTON. No, sir, they do not. AUTHORITY FOR FOREIGN BUILDING OPERATIONS Mr. SLACK. Tell me, who makes the final decision to build, purchase, rent, or lease a structure? Where do you get your orders? Mr. RALSTON. FBO makes the final decision whether to construct, purchase, or long-term lease, but the geographic bureaus determine the priorities for their individual areas. We take the priorities for the five areas and within the money available, we develop a worldwide program on a priority basis. Mr. SLACK. You determine the priorities and then you submit them further up the ladder? Mr. RALSTON. No, sir. The priorities within a geographic area are set up by each geographic bureau. They submit them to us, and we review them with the money and resources available. Then we take what we consider to be the top priority items, among all the bureaus. SELECTION OF ARCHITECTS Mr. SLACK. Now, getting back to the architects for these four projects, you state they have not been selected. How will they be selected? Mr. RALSTON. We have three consultants that advise us. Mr. SLACK. Who are the consultants? Mr. RALSTON. Mr. Anselevicius of Harvard and Dr. Charles Moore of Yale are two of our recent consultants. Mr. Harry Weese of Chicago is another of our consultants. Mr. SLACK. Who is Mr. Weese? Mr. RALSTON. He is the overall design consultant for the Metro stations in Washington. Mr. SLACK. He did the Metro or just the stations? Mr. RALSTON. Just the stations. Then, we have Mr. Caudill and Mr. Esherick. The former is an architect from Texas, and the latter is from San Francisco. Mr. SLACK. That is a five-member board. Mr. RALSTON. Actually, it is a three-member board. Two members haven't taken over as yet. Mr. SLACK. Who hasn't taken over? Mr. RALSTON. Mr. Caudill and Mr. Esherick. Mr. SLACK. Will it be a five-member board? Mr. RALSTON. No, sir, it will be a three-member board. Mr. SLACK. I am not with you. Mr. RALSTON. Actually, we don't have a board. We hire consultants to advise us. Mr. SLACK. Then, they are architects themselves. Mr. RALSTON. Yes, sir. Mr. SLACK. So you have architects who advise you whom to hire? Mr. RALSTON. They have to give us three to five names. Mr. SLACK. They give you three to five names? Mr. RALSTON. Yes, sir. Mr. SLACK. Then you make your selection from the three to five? Mr. RALSTON. That is correct. Mr. SLACK. Do you make that selection? Mr. RALSTON. Along with the advice of other people. Mr. SLACK. What other people? Mr. RALSTON. Our own architects and personnel. Mr. SLACK. How many architects do you have? Mr. RALSTON. We have six. Mr. SLACK. How long have you been in this position? Mr. RALSTON. I have been in this position 3 years. Mr. SLACK. Would you furnish a list of the architects that have been employed in the last 5 years? Mr. RALSTON. Yes, sir. Mr. SLACK. And the projects they were employed for? Mr. RALSTON. Yes, sir. Mr. SLACK. And the estimated cost of the structures? Mr. RALSTON. Yes, sir. Mr. SLACK. And then the actual cost of the structures? Mr. RALSTON. Yes, sir. [The list follows:] |