Evening star. [volume] (Washington, D.C.) 1854-1972, 1957-02-19
Public Building Plans
Still Pushed by GSA
Failure to Act
Laid to Rise in
Interest Rates
BY ALEX R. PRESTON

continue to acquire sites and
draw up plans for proposed
Federal buildings which have
been blocked due to suspension
of the lease-purchase program.
Franklin G. Floete, GSA adj
ministrator, told the Senate Pub
lie Works Subcommittee on
Public Buildings:
Failure (of the lease-pur-
chase program) has been pri-
marily due to the increased
demand for money and the re-
sulting higher interest rates"
Last month GSA and the Post
Office Department suspended
Ilease-purchase negotiations on
nearly $50 new Federal building
projects throughout the country.
Eight Projects in Area
/ These include eight projects
totaling nearly 5000 million in
the Washington area, of which
four are Federal Office buildings
in the Southwest Redevelopment
Area. Nationwide, GSA projects
total more than $740 million for
buildings and sites.
Chairman Mcnamara. Demo-
crat of Michigan, brought out
that there had been some con-
fusion in press reports indicat-
ing that projects in the District
of Columbia would be exempted
from the freeze on lease-purchase
negotiations.
Mr.. Floete said there was no
basis for that. The policy. he
added. was applied across the
board.
Some confusion had arisen be-
cause a bill by Representative
Jones. Democrat of Alabama.
was introduced last week to re-
peal all lease-purchase projects
except the eight in the Wash
: ington area.
Bids Called Inadequate
!, Mr.. Floete said GSA had made
every effort by negotiation to
; make the three-year-old law a
/ success. But, he added, lin the
/ few cases where bids were re-
ceived, they were wholly made
quate in numbers to provide a
: real competition. Such lack of
competition is most costly to
: the Government"
The reason for the lack of
D bids, he said. was due to the
\ fact that the Treasury Depart
ment has set the maximum &C.
;, ceptable interest rate for f1nanc-
ing at 4 per cent.
' The administrator precipitat-
! ed a prolonged exchange with
D Senator Kerr, Democrat of Ok
S lahoma, when he said:
"On February 10. GSA an
e nounced politically. that further
r offers of bids for construction
: of buildings under lease-pur-
chase contracts will be tempo
: rarily deferred and pending ne
= gotiation suspended"
Questioned on Time
Senator Chavez. Democrat of
New Mexico. asked. What do
you mean by temporarily de-
ferred'?"
) Mr.. Floete responded: "You
can put any time limit on 1t.
! think if we had said indefinitely
. deferred it would have meant
the program is at an end"
At this point Senator Kerr be-
gan a close cross-examination
, of the witness. He tried to tie
{ Mr.. Floete down to an estimate
, of how long the program will
, be on ice.
{ DO you anticipate any reduc-
ton in interest costs any time
) soon?" Senator Kerr inquired.
: Personally" Mr.. Floete re-
!, sponded. Il can't see it within
, the period of this year"
The Oklahoman wanted to
know if it wasn't a fact that a
recession" in the Nations econ
omy would be necessary to bring
down the interest rates.
Il don't like to adopt that
term" Mr.. Floete replied. There
: would have to be a lessening in
! demand for money"
! Senator Kerr contended this
&. Quizzed on Recession"
Senator Kerr contends this
amounts to the same thing. He
persisted that the witness should
tell the committee If he has
evidence of a slow -down-I call
! it a recession-in the Nations
economy"
Il have no such evidence the
GSA official replied.
|, He added that the massive
! building program was suspended
because it would have an infla-
tionary effect on the economy of
the country.
The committee was to resume
hearings this afternoon with Or
monde A. Kieb, assistant post
master general, scheduled as the
witness. Percy Rappaport of the
Bureau of the Budget also was
to testify today or tomorrow.
Case Asks Self-Financing
Yesterday. a new means Of
! rescuing the Nations tagging
! multi-million- dollar public works
program was proposed by Sem
. ator Case. Republican Of South
Dakota. who offered bill pro-
} viding for a self-financing plan
for Federal buildings. including
public schools.
Senator Case. a member of the
! Senate Public Works Committee,
! proposed the creation Of a Fed
eral Building Finance Admins
tration. which would be author
. lied to sell revenue bonds to
? finance construction of public
! buildings. now supposedly COW
cred by the Lease-Purchase Act.