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Emphasizes Agencywide Priorities, but Transparency of Budget 
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Report to the Subcommittee on Energy and Water Development, Committee 
on Appropriations, House of Representatives: 

United States Government Accountability Office: 
GAO: 

April 2010: 

Army Corps Of Engineers: 

Budget Formulation Process Emphasizes Agencywide Priorities, but 
Transparency of Budget Presentation Could Be Improved: 

GAO-10-453: 

GAO Highlights: 

Highlights of GAO-10-453, a report to the Subcommittee on Energy and 
Water Development, Committee on Appropriations, House of 
Representatives. 

Why GAO Did This Study: 

The U.S. Army Corps of Engineers (Corps) is the world’s largest public 
engineering, design, and construction management agency. In fiscal 
year 2006 it began incorporating performance information into its 
budget process, but Congress raised concerns that the criteria used by 
the Corps to prioritize projects are not transparent and the budget 
formulation process could achieve a higher return on investment. GAO 
was asked to (1) describe the information the Corps uses in its budget 
formulation process and the implications of the process, and (2) 
evaluate whether the President’s recent budget requests for the Corps 
are presented so that agency priorities are clear and proposed use of 
funds transparent. 

GAO reviewed the Corps’ internal budget guidance, documentation of its 
project rankings and budget formulation process, performance review 
materials, and budget presentation materials. GAO also interviewed 
Corps and Office of Management and Budget officials. 

What GAO Found: 

With the introduction of performance-based budgeting in fiscal year 
2006, the Corps began emphasizing projects with the highest 
anticipated returns on investment. Previously, Corps division 
officials sought to provide continued funding to all ongoing projects 
that fit within administration guidelines. Now, under the current 
process, Corps headquarters plays an increased role in selecting 
projects, and evaluates projects using certain performance metrics. 
The Corps gives priority to those projects with the highest 
anticipated returns for the economy and the environment, as well as 
those that reduce risk to human life. The Corps’ use of performance 
metrics makes projects in certain geographic areas more likely to be 
included in the budget request. For example, the benefit-cost ratio, a 
measure of economic benefit that is used to rank certain projects, 
tends to favor areas with high property values. Another effect of the 
Corps’ use of performance-based budgeting is that fewer construction 
and investigation projects—studies to determine whether the Corps 
should initiate construction projects—have been included in the budget 
request in recent years. In contrast, the number of projects in the 
Operation and Maintenance account has been relatively stable, which 
Corps officials attributed partially to its emphasis on routine 
activities. While the metrics used by the Corps in its budget 
formulation process focus on anticipated benefits, the Corps monitors 
the progress of ongoing projects through review boards at the 
headquarters, division, and district levels. However, the Corps does 
not have written guidance establishing a process for incorporating 
information on demonstrated performance, such as review board 
findings, into budget formulation decisions. In the absence of such a 
process, the Corps may miss opportunities to make the best use of this 
performance information. 

The budget presentation for the Corps lacks transparency on key 
elements of the budget request. It focuses on requested construction 
and investigations projects, but does not describe how the decisions 
made during the budget formulation process affected the budget 
request. For example, the budget presentation does not include an 
explanation of the relative priority given to project categories or 
how they are evaluated against each other. Also, while the number of 
construction and investigations projects receiving appropriations is 
typically much greater than the number requested, the budget 
presentation does not include detailed information on all projects 
with continuing resource needs. The budget presentation also lacks 
detail on the amount of the balance of unobligated appropriations 
(carryover) that remain available for each project. Users of the 
budget presentation told GAO that these two types of project 
information would be useful. 

What GAO Recommends: 

GAO recommendations include the Corps establishing a documented 
process for incorporating ongoing performance information into budget 
formulation decisions and improving the transparency of its budget 
presentation. The Corps concurred with all but the first 
recommendation, stating existing mechanisms are sufficient. GAO 
believes establishing a process would ensure more complete and 
consistent decision making. 

View [hyperlink, http://www.gao.gov/products/GAO-10-453] or key 
components. For more information, contact Denise M. Fantone at (202) 
512-6806 or fantoned@gao.gov or Anu K. Mittal at (202) 512-3841 or 
mittala@gao.gov. 

[End of section] 

Contents: 

Letter: 

Background: 

The Corps' Budget Formulation Process Favors Projects with the Highest 
Anticipated Outcomes and Emphasizes Agencywide Priorities: 

The Corps' Budget Presentation Lacks Transparency on Key Elements of 
Its Budget Request: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Objectives, Scope, and Methodology: 

Appendix II: Project Prioritization in the Construction, 
Investigations, and O&M Accounts: 

Appendix III: Methodology for Calculating Benefit-Cost Ratio and 
Changes in Requirements Over Time: 

Appendix IV: Trends in Budget Requests for the Corps: 

Appendix V: Comments from the Department of Defense: 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

Tables: 

Table 1: Summary of Fiscal Year 2010 Budget Request and 
Appropriations: Construction, Investigations, and O&M Accounts: 

Table 2: Construction Categories and Ranking Metrics (Fiscal Year 2010 
Budget Request): 

Table 3: Summary of Primary Inputs Used to Calculate Benefits for 
Different Project Types: 

Table 4: Hypothetical BCR Calculation for Two Alternative Construction 
Projects: 

Table 5: Summary of Economic Requirements for Construction Projects, 
by Fiscal Year: 

Figures: 

Figure 1: Locations of the Corps' Civil Works Divisions and Districts: 

Figure 2: Fiscal Year 2010 Civil Works Budget Request, by Account: 

Figure 3: Total U.S. Army Corps of Engineers Annual and Supplemental 
Appropriations, by Fiscal Year: 

Figure 4: Number of Construction Projects Requested, by Fiscal Year: 

Figure 5: Number of Investigations Projects Requested, by Fiscal Year: 

Figure 6: Number of O&M Projects Requested, by Fiscal Year: 

Abbreviations: 

BCR: benefit-cost ratio: 

Corps: U.S. Army Corps of Engineers: 

EC: Engineer Circular: 

OMB: Office of Management and Budget: 

O&M: Operation and Maintenance: 

RBRC: remaining benefits-remaining costs: 

[End of section] 

United States Government Accountability Office: 
Washington, DC 20548: 

April 2, 2010: 

The Honorable Peter J. Visclosky: 
Chairman: 
The Honorable Rodney P. Frelinghuysen: 
Ranking Member: 
Subcommittee on Energy and Water Development: 
Committee on Appropriations: 
House of Representatives: 

The U.S. Army Corps of Engineers (Corps) is the world's largest public 
engineering, design, and construction management agency. The Corps 
provides vital public engineering services in peace and war to 
strengthen the nation's security, energize the economy, and reduce 
risks from disasters.[Footnote 1] In fiscal year 2010 the Corps' civil 
works program received $5.4 billion to plan, construct, operate, and 
maintain a wide range of water resource projects. In fiscal year 2006, 
the Corps began incorporating performance information in its civil 
works budget formulation process. The Corps uses performance 
information both (1) to gauge overall progress in performing its civil 
works mission and (2) to prioritize and select civil works projects 
for inclusion in its funding request. Performance information is a 
broad term that often includes a variety of measures. These measures 
may be based on the demonstrated performance of a program or project 
and on estimates of future outcomes. The Corps' performance measures 
primarily focus on estimates of future outcomes such as providing 
economic benefits, addressing risk to human life, and restoring 
ecosystems. Congress has raised concerns that the criteria the Corps 
uses to prioritize projects are not transparent and the Corps' budget 
formulation process could achieve a higher return on investment for 
the nation's water resource projects. 

In this context, you asked that we (1) describe the information the 
Corps uses in its budget formulation process and the implications of 
the process, and (2) evaluate whether the President's recent budget 
requests for the Corps are presented so that agency priorities are 
clear and proposed use of funds transparent. 

To identify the information used in the Corps' budget formulation 
process since the Corps began incorporating performance information in 
fiscal year 2006, we reviewed documentation of its project rankings 
and budget formulation process, as well as budget presentation 
materials from fiscal years 2006 through 2010. While we did not 
evaluate in detail the fiscal year 2011 budget submitted in February 
of 2010, we did review it to gain a sense of key changes. We also 
reviewed the Corps' internal budget guidance for fiscal year 2011 and 
examples of its performance review materials. We interviewed officials 
at Corps headquarters and all eight U.S. division offices about the 
budget formulation process and the information developed and used for 
it, as well as the impacts of the process. To examine the implications 
of the Corps' budget formulation process, we also analyzed Corps 
budget and project data from fiscal years 2001 through 2010, the 5 
years before and the 5 years after the Corps introduced performance-
based budgeting. We reviewed the metrics and measures used to rank 
Corps projects and how they have changed since fiscal year 2006. We 
reviewed Corps guidance on calculating the benefit-cost ratio (BCR) of 
projects and interviewed Corps officials about their use of the BCR 
and other metrics in formulating the agency's budget and the related 
effects these metrics have on the budget. We did not evaluate the 
accuracy of the Corps' calculations for the BCR or other metrics. 

To evaluate how the President's budget request for the Corps is 
presented, we reviewed the President's budgets and appendixes, and 
budget presentation materials for the Corps, including the budget 
justifications and Press Books for fiscal years 2006 through 2010. We 
also reviewed the Corps' Five Year Development Plans for fiscal years 
2007 through 2011, 2008 through 2012, and 2009 through 2013. To obtain 
input from users of the budget presentation, we interviewed staff from 
relevant congressional committees. We also reviewed appropriations 
committee reports from fiscal years 2005 through 2010. We interviewed 
Corps officials and staff at the Office of Management and Budget (OMB) 
about the reasons for the structure of the budget presentation, the 
information provided in it, and the feasibility of making specific 
changes to it. Appendix I contains more detailed information on our 
scope and methodology. 

We conducted this performance audit from March 2009 to March 2010 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

Background: 

Headquartered in Washington, D.C., the Corps has 8 regional divisions 
and 38 districts that carry out its domestic civil works 
responsibilities (see figure 1). Corps headquarters primarily develops 
policies, based on administration guidance, and plans the direction of 
the organization; divisions coordinate the districts' projects; and 
the districts plan and implement the projects, which are approved by 
the divisions and headquarters. The Corps' civil works program is 
classified into nine major functional areas, or business lines: 
Navigation, Flood Risk Management, Environment, Recreation, 
Hydropower, Water Supply, Emergency Management, Regulatory Program, 
and Support for Others[Footnote 2][Footnote 3]. 

Figure 1: Locations of the Corps' Civil Works Divisions and Districts: 

[Refer to PDF for image: illustrated map of the U.S.] 

Depicted on the map are the following entities: 

Division headquarters location: 
District headquarters location: 
Division boundary: 
District boundary: 
State boundary: 

North Atlantic Division: 
Division headquarters: New York City; 
District headquarters: 
Baltimore, Maryland; 
Norfolk, Virginia; 
Philadelphia, Pennsylvania. 

South Atlantic Division: 
Division headquarters: Atlanta, Georgia; 
District headquarters: 
Charleston, South Carolina; 
Jacksonville, Florida; 
Mobile, Alabama; 
Savannah, Georgia; 
Wilmington, North Carolina. 

Great Lakes and Ohio River Division: 
Division headquarters: Cincinnati, Ohio; 
District headquarters: 
Buffalo, New York; 
Chicago, Illinois; 
Detroit, Michigan; 
Huntington, West Virginia; 
Louisville, Kentucky; 
Nashville, Tennessee; 
Pittsburgh, Pennsylvania. 

Mississippi Valley Division: 
Division headquarters: Vicksburg, Mississippi; 
District headquarters: 
Memphis, Tennessee; 
New Orleans, Louisiana; 
Rock Island, Iowa; 
St. Louis, Missouri; 
St. Paul, Minnesota; 
Vicksburg, Mississippi. 

Southwestern Division: 
Division headquarters: Dallas, Texas; 
District headquarters: 
Fort Worth, Texas; 
Galveston, Texas; 
Little Rock, Arkansas; 
Tulsa, Oklahoma. 

Northwestern Division: 
Division headquarters: Portland, Oregon; 
District headquarters: 
Kansas City, Missouri; 
Omaha, Nebraska; 
Portland, Oregon; 
Seattle, Washington; 
Walla Walla, Washington. 

South Pacific Division: 
Division headquarters: San Francisco, California; 
District headquarters: 
Albuquerque, New Mexico; 
Los Angeles, California; 
Sacramento, California; 
San Francisco, California. 

Pacific Ocean Division: 
Division headquarters: Honolulu, Hawaii; 
District headquarters: 
Alaska; 
Honolulu, Hawaii. 

Source: GAO representation of U.S. Army Corps of Engineers data. 

[End of figure] 

Corps headquarters, divisions, and districts are all involved in 
developing the President's budget request for the Corps. As part of 
the executive budget formulation process, Corps headquarters staff, 
with input and data from division and district offices, develop a 
budget request for the agency. Once the Corps completes its internal 
review, the Assistant Secretary of the Army for Civil Works approves 
and submits its budget to OMB for review. OMB recommends to the 
President whether to support or change the Army's proposals and the 
decisions made during OMB's budget review process culminate in the 
President's budget request transmitted to Congress at the beginning of 
February. Shortly thereafter the Corps provides budget justification 
materials that support the President's request in more detail to the 
House and Senate Appropriations committees' subcommittees. 

The documents that typically make up the budget presentation for the 
Corps are the congressional budget justification, the Press Book, and 
the Five Year Development Plan. The budget justification for the 
fiscal year 2010 budget request includes details on construction 
projects and investigations projects--studies to determine whether the 
Corps should initiate construction projects--included in the budget 
request, including a narrative description and such details as the 
total estimated federal cost and amount allocated in prior years. It 
also provides some information on other Corps accounts such as the 
Flood Control and Coastal Emergencies account. The information 
included in the Press Book has varied in recent years, but the Press 
Book accompanying the fiscal year 2010 budget request consisted 
primarily of a listing of all construction, investigations, and 
operation and maintenance (O&M) projects included in the budget 
request. The listing is organized by state and specifies the amount 
requested for each project. Finally, the Corps has in the past 
included a Five Year Development Plan as part of the budget 
presentation, though it did not for the fiscal year 2010 or 2011 
budget requests. The most recent Five Year Development Plan contained 
descriptions of nine civil works accounts[Footnote 4] and summaries of 
its business line programs, including past accomplishments and future 
challenges.[Footnote 5] It also included project-level details for the 
Construction and Investigations accounts with projected funding 
requirements for the current fiscal year and 4 subsequent fiscal 
years. It did not include project-level details for the O&M account. 
In addition to the information contained in the budget presentation, 
congressional staff members may request additional information as 
needed for decision making. 

The submission of the President's budget request to Congress marks the 
beginning of the congressional phase of the budget process. The budget 
request is often a starting point for congressional actions and 
Congress typically makes changes that reflect its priorities. For 
example, Congress has historically appropriated more funding to the 
Corps for a greater number of projects than have been included in the 
President's budget request. 

About 84 percent of the President's fiscal year 2010 budget request 
for the Corps' civil works program was for three appropriations 
accounts--Construction, Investigations, and O&M--all of which are 
focused on specific projects or studies.[Footnote 6], [Footnote 7] The 
Construction account includes construction and major rehabilitation 
projects related to navigation, flood control, water supply, 
hydroelectric power, and environmental restoration. The Investigations 
account funds studies to determine the necessity, feasibility, and 
returns to the nation for potential solutions to water resource 
problems, as well as design, engineering, and other work. The O&M 
account focuses on preserving, operating, and maintaining river and 
harbor projects that have already been constructed. Table 1 summarizes 
the fiscal year 2010 budget request and appropriations for these three 
accounts.[Footnote 8] 

Table 1: Summary of Fiscal Year 2010 Budget Request and 
Appropriations: Construction, Investigations, and O&M Accounts: 

Construction: 
Fiscal year 2010 budget request: Amount: $1,718 million; 
Fiscal year 2010 budget request: Number of projects: 93; 
Fiscal year 2010 appropriations: Amount: $2,031 million; 
Fiscal year 2010 appropriations: Number of projects: 278. 

Investigations: 
Fiscal year 2010 budget request: Amount: $100 million; 
Fiscal year 2010 budget request: Number of projects: 68; 
Fiscal year 2010 appropriations: Amount: $160 million; 
Fiscal year 2010 appropriations: Number of projects: 315. 

O&M: 
Fiscal year 2010 budget request: Amount: $2,504 million; 
Fiscal year 2010 budget request: Number of projects: 813; 
Fiscal year 2010 appropriations: Amount:$2,400 million; 
Fiscal year 2010 appropriations: Number of projects: 826. 

Total (3 accounts): 
Fiscal year 2010 budget request: Amount: $4,322 million; 
Fiscal year 2010 budget request: Number of projects: 974; 
Fiscal year 2010 appropriations: Amount: $4,591 million; 
Fiscal year 2010 appropriations: Number of projects: 1,419. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[End of table] 

A breakdown by account of the fiscal year 2010 budget request is shown 
in figure 2. 

Figure 2: Fiscal Year 2010 Civil Works Budget Request, by Account: 

[Refer to PDF for image: pie-chart] 

O&M: 49% ($2,504 million); 
Construction: 34% ($1,718 million); 
Investigations: 2% ($100 million); 
Other: 16% ($803 million). 

The total civil works budget request in fiscal year 2010 was $5.125 
billion. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

Note: the "Other" category consists of the following six accounts: 
Regulatory Program, Mississippi River and Tributaries, Expenses, Flood 
Control and Coastal Emergencies, Formerly Utilized Sites Remedial 
Action Program, and the Office of the Assistant Secretary of the Army 
(Civil Works). 

[End of figure] 

Since fiscal year 2006 the Corps has received appropriations of over 
$5 billion annually for its civil works program through the Energy and 
Water Development Appropriations Act. Committee and conference reports 
accompanying the appropriations bills include specific allocations of 
funding for individual projects. The Corps also typically receives 
funds, particularly for construction projects, from each project's 
local sponsor, which may be a state, tribal, county, or local agency 
or government.[Footnote 9] In addition to the funding received through 
annual appropriations acts, the Corps received supplemental 
appropriations in 6 of the past 8 fiscal years. Some supplemental 
appropriations have been designated for specific activities. For 
example, a Corps official told us that in fiscal year 2009 the agency 
received supplemental funding of about $5.8 billion for hurricane 
protection in Louisiana. In recent years, most supplemental funding 
provided to the Corps has been used for expenses related to the 
consequences of 2005 Gulf Coast hurricanes, including Hurricane 
Katrina. According to the Corps official, funding has also been 
directed to expenses related to the consequences of hurricanes Gustav 
and Ike (both 2008 hurricanes), as well as the 2008 Midwest floods. 
The Corps also received $4.6 billion in fiscal year 2009 through the 
American Recovery and Reinvestment Act. Figure 3 shows the amount of 
funding the administration has requested for the Corps' civil works 
program and the amount the Corps has received, both through annual and 
supplemental appropriations, from fiscal years 2003 through 2010. 

Figure 3: Total U.S. Army Corps of Engineers Annual and Supplemental 
Appropriations, by Fiscal Year: 

[Refer to PDF for image: multiple vertical bar graph] 

Fiscal year: 2003; 
Administration's request: $4.3 billion; 
Annual appropriations: $4.6 billion; 
Supplemental appropriations: $0.1 billion. 
	
Fiscal year: 2004; 
Administration's request: $4.2 billion; 
Annual appropriations: $4.6 billion. 

Fiscal year: 2005; 
Administration's request: $4.2 billion; 
Administration's supplemental request: $0.4 billion; 
Administration's supplemental request: $4.7 billion; 
Annual appropriations: $0.8 billion. 

Fiscal year: 2006; 
Administration's request: $4.5 billion; 
Administration's supplemental request: $3.7 billion; 
Annual appropriations: $5.3 billion; 
Supplemental appropriations: $6.6 billion. 

Fiscal year: 2007; 
Administration's request: $4.7 billion; 
Annual appropriations: $5.3 billion; 
Supplemental appropriations: $1.6 billion. 

Fiscal year: 2008; 
Administration's request: $4.9 billion; 
Annual appropriations: $5.6 billion; 
Supplemental appropriations: $3.4 billion. 

Fiscal year: 2009; 
Administration's request: $4.7 billion; 
Annual appropriations: $5.4 billion; 
Supplemental appropriations: $11.2 billion. 

Fiscal year: 2010; 
Administration's request: $5.1 billion; 
Annual appropriations: $5.4 billion. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

Note: Dollar amounts are nominal. 

[End of figure] 

Rescissions are included in the annual request and appropriations 
amounts. 

The Corps' strategic plan for its civil works program lays out its 
goals and objectives and its strategies for achieving them. The Corps' 
current strategic plan covers fiscal years 2004 through 2009, and the 
Corps is planning to issue an updated version that will cover fiscal 
years 2010 through 2014.[Footnote 10] The goals listed in the most 
recent strategic plan are: (1) provide sustainable development and 
integrated management of the nation's water resources; (2) repair past 
environmental degradation and prevent future environmental losses; (3) 
ensure that projects perform to meet authorized purposes and evolving 
conditions; (4) reduce vulnerabilities and losses to the nation and 
the Army from natural and man-made disasters, including terrorism; and 
(5) be a world-class engineering organization.[Footnote 11] 

The Corps' Budget Formulation Process Favors Projects with the Highest 
Anticipated Outcomes and Emphasizes Agencywide Priorities: 

The Corps' Use of Performance-Based Budgeting Emphasizes Anticipated 
Returns and Takes a Centralized Approach to Decision Making: 

Prior to fiscal year 2006, the Corps' budget formulation process was 
relatively decentralized, with divisions playing a significant role. 
According to Corps officials, the Corps' previous budget formulation 
process for the Construction, Investigations, and O&M accounts started 
with district staff, who developed a request for their geographic 
area. Next, division staff integrated the district office projects 
into a single divisionwide portfolio of projects. Finally, 
headquarters staff consolidated each of the divisionwide portfolios 
into a single agencywide portfolio. Under the former process, each 
division was authorized an amount of funding, which division officials 
would allocate with two conditions: (1) all projects were required to 
meet administration priorities, and (2) construction and 
investigations projects that reached a certain stage were required to 
have benefits that at least equaled costs. Corps officials told us 
that they sought to provide continued funding to all ongoing projects 
that fit within administration guidelines. 

Beginning in fiscal year 2006 the Corps introduced what it refers to 
as performance-based budgeting as a way to focus funding requests on 
those projects with the highest anticipated return on investment, not 
on all ongoing projects as it sought to do in the past. Under the new 
process, Corps headquarters began playing a greater role in selecting 
projects, using performance criteria that emphasize agencywide 
priorities. Specifically, although districts and divisions continue to 
collect and develop project data, ranking of construction and 
investigations projects is now done only at the headquarters level. 
While division staff still rank O&M projects, a Corps official told us 
that headquarters staff review these rankings to make sure that they 
are consistent with Corps-wide guidance and result in decisions that 
emphasize agencywide priorities. Then, they consolidate the O&M 
requests across business lines and divisions to a highest priority 
grouping. According to a Corps official, the use of performance-based 
budgeting has allowed the Corps to present OMB with various funding 
options based on performance criteria. While the Corps also presented 
OMB with different options prior to fiscal year 2006, the official 
told us that under that process these options reflected regional 
priorities. 

Under its current budget formulation process, the Corps uses 
performance metrics to evaluate projects' estimated future outcomes, 
and gives priority to those with the highest expected returns for the 
national economy and the environment, as well as those that reduce 
risk to human life. The Corps' written budget guidance, the Budget 
Engineer Circular (Budget EC), details the data that should be 
developed for each project to support budgetary decisions. For 
example, the Corps calculates the economic benefits of most 
construction and investigations projects using a BCR.[Footnote 12] The 
Corps uses projects' BCRs to evaluate them against each other and 
determine whether they will be given priority in the budget request. 
According to Corps and OMB staff, each year OMB sets minimum BCR 
thresholds that some construction and investigations projects must 
meet to be included in the budget request. If projects do not meet the 
designated BCR thresholds, they may qualify in other ways, such as by 
restoring a nationally significant ecosystem or addressing risk to 
human life. The use of these metrics to evaluate projects provides the 
Corps with a mechanism to give priority to projects that, based on the 
current method of calculation, may not generate any economic benefits 
or have relatively low BCRs, but benefit nationally significant 
ecosystems or address risk to human life. For O&M projects, imminent 
risk to human life and the amount of commercial tonnage transported on 
a waterway are examples of the types of factors described in the 
Budget EC that influence the priority of a navigation project. 

Additionally, the Corps' use of performance metrics makes projects in 
certain geographic areas more likely to be included in the budget 
request, since they produce higher returns on investment. For example, 
since a primary input in BCR calculations for Flood Risk Management 
projects is the value of property for which damage would be prevented 
as a result of the project, projects in areas with high property 
values--such as in California--tend to have higher BCRs.[Footnote 13] 
Ecosystem restoration projects with national significance are also 
given priority under this process. More specifically, the Everglades 
in Florida has consistently been among the projects included in this 
category, and over the past 5 years has been the project with the most 
funding requested. In addition, the risk to human life metric is 
affected by population density, so more densely populated areas tend 
to be given priority.[Footnote 14] 

According to Corps and OMB staff, another effect of the performance 
criteria used as part of the current budget process is that fewer 
construction and investigation projects have been included in the 
budget request in recent years. Corps officials also attributed the 
decrease in number of projects to available funding and budget 
cutoffs, such as the BCR. From fiscal year 2001 to 2010, the number of 
construction projects included in the budget request decreased by 
about 52 percent, and the number of investigations projects decreased 
by about 79 percent. Though the number of construction and 
investigations projects decreased, the average amount requested per 
project has increased over time. For example, the average request per 
construction project went from $7.0 million in fiscal year 2001 to 
$17.3 million in fiscal year 2010.[Footnote 15] In contrast to trends 
in the Construction and Investigations accounts, the use of the 
ranking metrics does not appear to have had a significant effect on 
the O&M account; the number of projects within the O&M account has 
remained relatively stable. From fiscal year 2001 to 2010, the number 
of O&M projects requested increased by about 7 percent. Corps 
officials told us that the relative consistency of the O&M account is 
partially due to the emphasis on critical routine projects and 
activities. Because the performance metrics used to evaluate O&M 
projects--such as the amount of commercial tonnage transported on a 
waterway--tend to be consistent, and a large portion of projects are 
routine (occurring every year or on an otherwise cyclical basis), the 
projects given priority tend to be the same from year to year. 
Additionally, they told us that because there are more project 
activities of lower value in the O&M account, changes to specific 
projects generally do not affect the overall request amount as 
significantly as variations in the projects in the Construction 
account do. In fiscal year 2010, the average amount requested per O&M 
project was $2.8 million. Budget trends are discussed in more detail 
in appendix IV. OMB staff that review the budget request for the Corps 
concurred that the nature of the O&M account results in more stability 
in project selection than in the Construction and Investigations 
accounts. 

The Corps' Budget Formulation Process Focuses on Projects' Anticipated 
Outcomes, Rather than Demonstrated Performance: 

The Corps uses performance metrics in its budget formulation process 
that primarily focus on anticipated outcomes with limited evidence of 
how performance information measuring demonstrated performance factors 
into decisions on budget requests. In part, the Corps focuses on 
anticipated outcomes because most of the construction and 
investigations projects being considered in the budget request are new 
or have not yet been completed, and thus have not generally begun to 
achieve benefits. Because the O&M account includes projects that have 
already been constructed, the Corps incorporates ongoing performance 
information, such as assessments of whether infrastructure meets 
current engineering and industry standards, to a greater extent when 
budgeting for these projects. Even though the overall focus for budget 
formulation of the three accounts is on anticipated outcomes, Corps 
officials told us that they monitor the progress of projects underway 
through review boards established at the district, division, and 
headquarters levels within the agency. These review boards generally 
meet monthly and focus on project management issues. These issues 
include whether projects are meeting financial goals and other 
milestones, such as awarding contracts on schedule. Review boards also 
discuss progress on two of the nine business lines each month and, on 
average, each business line is reviewed at least twice annually. 
[Footnote 16] A Corps headquarters official told us that the 
performance metrics presented at review boards demonstrate good 
performance, areas that need improvement, and situations where focused 
leadership attention would be useful. For example, Corps documentation 
showed that in a meeting in which it focused on the Flood Risk 
Management business line, the headquarters-level program review board 
looked at measures such as the number of dam safety assessments 
completed and the percentage of dams rated as unsafe. Although review 
boards collect a variety of performance information, the Corps does 
not have written guidance establishing a process for incorporating 
their findings into budget formulation decisions.[Footnote 17] Our 
previous work on performance-based budgeting found that federal 
agencies that were successful in measuring their performance worked to 
ensure that decisions were based on complete information.[Footnote 18] 
The Corps collects numerous data and has detailed processes for 
evaluating projects during the budget formulation process; however, in 
the absence of a documented process for considering information on 
demonstrated performance--such as the performance information 
discussed during review board meetings on whether projects are on time 
and on budget--the Corps may miss opportunities to make the best use 
of this information. Additionally, without a documented process it is 
not clear how information from the review boards shapes program 
priorities and affects decision making. 

The Corps' Budget Presentation Lacks Transparency on Key Elements of 
Its Budget Request: 

Our prior work has emphasized the importance of transparency in 
federal agencies' budget presentations.[Footnote 19] While the budget 
presentation for the Corps includes summaries of project categories, 
business lines, and accounts, it lacks summary-level information on 
the relationships and trade-offs made across these groups. For 
example, the presentation for the fiscal year 2010 budget request 
describes the primary criteria used to evaluate both construction and 
O&M projects. However, it does not include an explanation of how the 
Corps makes trade-offs among the project types in these accounts--for 
example, the budget presentation does not include an explanation of 
the priority given to dam safety projects over other construction 
project categories, or the effects that this has on the other 
categories. It also lacks an explanation of the impact of emphasizing 
one account over another. Congressional users of the budget 
presentation told us that having summary information on how decisions 
that significantly affect the budget request are made would enhance 
their understanding of the budget process. 

The budget presentation for the Corps only includes detailed 
information on the projects the President proposes to fund in the 
budget year, even though appropriated funding is provided to a number 
of projects that are not included in the budget request.[Footnote 20] 
House appropriators have voiced interest in having the Corps include 
additional information in the budget presentation. For example, the 
House committee report accompanying the fiscal year 2010 Energy and 
Water Development Appropriations bill requested that the Corps include 
in the fiscal year 2011 budget presentation project-level details for 
all of the projects that received appropriations in fiscal year 2010. 
Part of the reason for this request may be the difference between the 
number of projects requested in the budget for the Corps and the 
number that actually receive appropriations. For example, a Corps 
official told us that in fiscal year 2010 appropriated funds were 
applied to 278 construction projects, whereas the fiscal year 2010 
budget request included 93 construction projects. Additionally, in 
fiscal year 2010 appropriated funds were applied to 315 investigations 
projects, while the fiscal year 2010 budget request included 68 
investigations projects.[Footnote 21], [Footnote 22] Moreover, work on 
most construction and investigations projects is conducted over 
multiple years and thus projects require appropriations in more than 1 
year. With over twice as many projects receiving funds than were 
included in the budget request, an information gap is created when an 
administration highlights its priority projects, but does not provide 
sufficient information on other ongoing projects that may continue to 
have resource needs. Congressional users of the Corps' budget 
presentation told us that they are interested in previously funded 
projects not included in the budget request, and that not having 
information on these projects limits the ability of Congress to make 
fully informed decisions when making appropriations decisions. A Corps 
official told us that the Corps would be able to include in the budget 
presentation information on projects funded in the previous year. 

Senate appropriators have also expressed interest in greater project 
level information for the O&M account. Specifically, the Senate 
conference report accompanying the fiscal year 2010 Energy and Water 
Development Appropriations bill requested that the Corps provide in 
the fiscal year 2011 budget presentation, at a minimum, detailed 
project information justifying the need for each O&M project. For 
example, although the fiscal year 2010 budget request for the Corps 
included $2.5 billion for the O&M account (approximately 49 percent of 
the total request), the budget presentation for the Corps did not 
include detailed project-level information for this account or 
sufficient summary information to understand the status of O&M project 
implementation against agency projections or other benchmarks. 
Similarly, the Press Book lists all O&M projects in the request and 
the amount requested for each, but it does not provide any detailed 
information on how requested funding will be used. Furthermore, 
although the fiscal year 2010 budget justification provided detailed 
project-level information, such as narrative descriptions and previous 
funding allocations, for construction and investigations projects, it 
did not include any information on requested O&M projects. 
Congressional users of the budget presentation told us that such 
information would increase the usefulness and transparency of the 
presentation. Following up on the Senate's request, the fiscal year 
2011 budget request for the Corps included summary-level information 
describing how funding for each requested O&M project would be used. 
The Senate did not specify whether its request applies to fiscal years 
beyond 2011. 

Finally, the budget presentation for the Corps does not include 
information on how much carryover of unobligated appropriations is 
available to potentially offset new requests for projects that were 
previously funded, which congressional users of the budget 
presentation stated would be useful.[Footnote 23] With this 
information, they can consider how much of the previous year's funding 
remains available for obligations. Moreover, Corps officials told us 
that carryover amounts have increased in recent years.[Footnote 24] 
The budget request for the Corps includes aggregate information on 
carryover balances by account, but neither it nor the budget 
presentation includes information on how much carryover is available 
for specific projects. Accordingly, Congress has not been able to 
consider the full level of resources available for projects when 
making its appropriations decisions. Corps review boards routinely 
review whether projects are meeting financial milestones, so carryover 
balance information is available. However, a Corps official told us 
that project-level carryover estimates would not be available until 
after budget materials are submitted to Congress. According to this 
official, while the Corps is not able to include this information in 
the budget presentation, the Corps would be able to provide Congress 
with project carryover amounts separately and before final 
appropriations decisions are made. 

Conclusions: 

The Corps' move toward including performance information in the budget 
formulation process has given priority to the projects with the 
highest anticipated returns on investment. Although the Corps collects 
data on the demonstrated performance of ongoing projects and on a case-
by-case basis may use this information in budget decisions, it does 
not have a documented process to incorporate this type of information 
in budget formulation decisions. Without an established process to 
ensure that decision makers are aware of this information, relevant 
information may not always be considered in budget decisions. 

The current budget formulation process emphasizes agencywide 
priorities and focuses on projects with the highest estimated returns; 
however, the budget presentation for the Corps continues to lack 
transparency and key information that could be of use to congressional 
decision makers. While the budget presentation for the Corps includes 
a description of the primary metrics used to evaluate projects, it 
does not include a description of how decisions and trade-offs were 
made across project categories, business lines, or accounts. 

Although annual appropriations and accompanying committee and 
conference reports sometimes designate funds to be used for specific 
construction, investigations, and O&M projects, the budget 
presentation for the Corps lacks two types of project-level 
information that could be useful to congressional decision makers. 
First, the budget presentation lacks information on many projects that 
were previously funded and may continue to have resource needs. 
Because appropriators are likely to consider these projects for 
funding again, information on these projects is relevant and useful in 
the decision-making process. Second, the budget presentation lacks 
information on the amount of unobligated appropriations that remain 
available for each project. Such project-level information would help 
congressional decision makers make better informed appropriations and 
oversight decisions. 

Without such information it is unlikely that Congress can have a clear 
understanding of (1) how key trade-off decisions affected the budget 
request, (2) how new funding requests relate to funding decisions for 
existing projects with continuing resource needs, and (3) whether a 
given budget request and the underlying projects support longer term 
goals and priorities across component operations. 

Recommendations for Executive Action: 

To ensure that all relevant information is considered during the 
budget formulation process, we recommend that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to take the following action: 

* Establish a documented process to incorporate assessments of ongoing 
project performance, such as information from review boards, into the 
budget formulation process. 

To improve the transparency and usefulness of the Corps' budget 
presentation to Congress, building on the information the 
appropriators have requested the Corps provide, we recommend that the 
Secretary of Defense direct the Chief of Engineers and Commanding 
General of the U.S. Army Corps of Engineers to work with OMB and 
Congress to take the following four actions: 

* Include in the annual budget presentation for the Corps summary-
level information on how the budget request reflects decisions made 
across project categories, business lines, and accounts. 

* Continue to include in the annual budget presentation for the Corps 
project-level details for the O&M account, including an explanation of 
how the requested funding for each project will be used. 

* Provide project-level information on all projects with continuing 
resource needs, either as part of the budget presentation or as 
supplementary information. 

* As a supplement to the budget presentation, provide Congress with 
information on the estimated carryover of unobligated appropriations 
that remain available for each project. 

Agency Comments and Our Evaluation: 

We provided a draft of this report to the Department of Defense for 
official review and comment. The department provided us with written 
comments, which are summarized below and reprinted in appendix V. The 
department concurred with four of our recommendations and did not 
concur with one. Specifically, the department concurred with our 
recommendations that the Corps include additional information in the 
budget presentation, including summary-level information on how the 
budget request reflects decisions, project-level details for the O&M 
account, and project-level information on all projects with continuing 
resource needs. The department also concurred with our recommendation 
that the Corps provide Congress with information on the estimated 
carryover of unobligated appropriations that remain for each project. 
The department did not agree, however, with our recommendation that 
the Corps establish a documented process to incorporate assessments of 
ongoing project performance, such as information from review boards, 
into the budget formulation process. The department stated that its 
existing mechanisms to incorporate assessments of project performance 
into the budget formulation process are adequate and that project 
review findings are used in making budgeting decisions. It also 
provided an example of how actual performance of O&M projects is used 
to determine budget priority. While we agree that the Corps' current 
processes may incorporate project review findings, we continue to 
believe that establishing a documented process for the use of such 
information in the Corps' budget formulation would ensure that the 
Corps routinely makes the best use of all available information. 
Additionally, having a documented process would improve understanding 
of how information from the review boards shapes program priorities 
and affects decision making. Moreover, our report discusses the Corps' 
use of information on project progress, such as whether schedule and 
budgetary milestones are being met, through review boards at the 
district and division levels. However, according to Corps officials, 
this review board information affects funding decisions on a case-by- 
case rather than routine basis. Finally, we have clarified in our 
report that we agree that the Corps' budget formulation process for 
the O&M account reflects actual performance. Nonetheless, we continue 
to believe that the overall emphasis of the Corps' budget process is 
on anticipated rather than demonstrated performance. 

We are sending copies of this report to the appropriate congressional 
committees, the Secretary of Defense, and the Chief of Engineers and 
Commanding General of the U.S. Army Corps of Engineers. In addition, 
this report will be available at no charge on the GAO Web site at 
[hyperlink, http://www.gao.gov]. 

If you or your staff have any questions regarding this report, please 
contact Denise M. Fantone, (202) 512-6806 or fantoned@gao.gov or Anu 
K. Mittal at (202) 512-3841 or mittala@gao.gov. Contact points for our 
Offices of Congressional Relations and Public Affairs may be found on 
the last page of this report. Key contributors to this report are 
listed in appendix VI. 

Sincerely yours, 

Signed by: 

Denise M. Fantone: 
Director, Strategic Issues: 

Anu K. Mittal: 
Director, Natural Resources and Environment: 

Signed by: 

[End of section] 

Appendix I: Objectives, Scope, and Methodology: 

To analyze the U.S. Army Corps of Engineers' (Corps) budget 
formulation process, we examined (1) the information the Corps uses in 
its budget formulation process and the implications of the process and 
(2) whether the President's budget request for the Corps is presented 
so that agency priorities are clear and the proposed use of funds 
transparent. We focused our review on three of the Corps' accounts--
Construction, Investigations, and Operation and Maintenance (O&M). 
Most civil works funding is designated to be used for specific 
projects, and projects are classified mainly into these accounts. The 
Formerly Utilized Sites Remedial Action Program (FUSRAP) is also 
project-based, but we did not include it in our review because of its 
specialized focus on sites contaminated during the development of 
atomic weapons and relatively small size (the fiscal year 2010 budget 
request for the Corps included 24 FUSRAP projects). 

To understand the Corps' budget formulation process and identify the 
information used to evaluate projects, we reviewed documentation 
related to the process. We examined the Corps' Budget Engineer 
Circular used in formulation of the fiscal year 2011 budget request. 
This document guides the formulation of the budget within the Corps. 
We reviewed Corps construction project rankings from fiscal year 2006, 
the first year in which the Corps ranked construction projects using 
performance information, through fiscal year 2010, the most recent 
year from which ranking information was available at the time of our 
review. In addition, we reviewed records of the agency's internal 
project performance reviews and documentation of the data collected as 
part of the budget formulation process. We also interviewed Corps 
headquarters officials in the Program Integration Division, including 
those responsible for budget formulation and execution, and officials 
at all eight U.S. division offices. In our interviews with division 
officials we used a common set of questions that focused on officials' 
perspectives on the effects at the division level of performance-based 
budgeting, as compared to the previous budget formulation process. To 
examine the effects of the Corps' budget formulation process, we also 
analyzed Corps budget and project data from fiscal years 2001 through 
2010, the 5 years before and the 5 years after the implementation of 
performance-based budgeting. We did not review in detail the fiscal 
year 2011 budget for the Corps, as it was released after our audit 
work concluded, though we did examine it for key changes from the 
previous year. We reviewed the metrics and measures used to rank Corps 
projects and how they have changed since fiscal year 2006. We examined 
Corps guidance on calculating the benefit-cost ratio (BCR) of projects 
and interviewed Corps officials about the BCR and other metrics used 
in budgeting and the related effects on the budget request. In 
reviewing budgeting metrics and rankings, we did not evaluate the 
accuracy of the Corps' calculations for BCR or other metrics. Our 
recommendation related to the budget process is based on previous GAO 
work which identified leading practices for performance-based 
budgeting. 

To evaluate how the President's budget request for the Corps is 
presented, we reviewed budget presentation materials, including the 
President's budgets and appendices and the budget justifications and 
Press Books from fiscal years 2006 through 2010. We also reviewed the 
Corps' Five Year Development Plans for fiscal years 2007 through 2011, 
2008 through 2012, and 2009 through 2013. We reviewed past GAO work on 
best practices of performance-based budgeting and examples of budget 
presentations for other agencies. To obtain input from users of the 
budget presentation for the Corps, we interviewed staff from relevant 
congressional committees. We also reviewed appropriations committee 
reports from fiscal years 2005 through 2010. We interviewed Corps and 
Office of Management and Budget (OMB) officials about the reasons for 
the structure and information provided in the budget presentation, and 
about the feasibility of making specific changes to it. Our 
recommendations related to budget presentation are based on 
information from users of the budget presentation, as well as previous 
GAO work on performance-based budgeting. 

We conducted this performance audit from March 2009 to March 2010 in 
accordance with generally accepted government auditing standards. 
Those standards require that we plan and perform the audit to obtain 
sufficient, appropriate evidence to provide a reasonable basis for our 
findings and conclusions based on our audit objectives. We believe 
that the evidence obtained provides a reasonable basis for our 
findings and conclusions based on our audit objectives. 

[End of section] 

Appendix II: Project Prioritization in the Construction, 
Investigations, and O&M Accounts: 

The Construction Account: 

According to a U.S. Army Corps of Engineers (Corps) official, for the 
Construction account, projects are systematically classified into 
established categories and headquarters officials use specific 
metrics, outlined in the Budget Engineer Circular, to rank projects 
within these categories. Corps documentation shows that construction 
projects are ranked within seven categories: (1) dam safety assurance, 
seepage control, and static instability correction projects; (2) 
projects with mitigation or environmental requirements; (3) projects 
with substantial life-saving benefits; (4) high-performing ongoing 
projects; (5) high-performing new start projects; (6) qualifying 
ongoing projects with continuing contracts; and (7) projects scheduled 
to be completed in the fiscal year of the budget request. The primary 
metrics that are to be used to rank projects within each of these 
categories are listed in table 2, along with a breakdown of funding by 
project type in the fiscal year 2010 budget request for the Corps. 
However, according to Corps officials, the metrics alone do not always 
determine the priority given to a project in the budget request, as 
varying degrees of professional judgment are involved in ranking 
individual projects. For example, high-performing projects (excluding 
those related to ecosystem restoration) are ranked primarily using the 
benefit-cost ratio (BCR). Once a project's BCR has been calculated, 
Corps officials have minimal discretion because, according to Corps 
and Office of Management and Budget (OMB) staff, OMB establishes 
minimum BCR thresholds and projects that do not meet the threshold 
cannot be included in the budget request in the high-performing 
category. On the other hand, while some metrics are applied to 
rankings of ecosystem restoration projects, a Corps official described 
these as more subjective. For example, a greater amount of 
professional judgment is used in evaluating the significance of one 
habitat against others. 

Table 2: Construction Categories and Ranking Metrics (Fiscal Year 2010 
Budget Request): 

Category: Dam safety assurance, seepage control, and static 
instability correction projects; 
Ranking metrics (fiscal year 2010): Dam safety ranking, which is based 
on risk factors such as the dam's condition and danger to human life; 
Percent of fiscal year 2010 construction project budget request: 32%. 

Category: Projects with mitigation or environmental requirements; 
Ranking metrics (fiscal year 2010): Required by environmental treaties 
or mitigation requirements; 
Percent of fiscal year 2010 construction project budget request: 13%. 

Category: Projects with substantial life-saving benefits; 
Ranking metrics (fiscal year 2010): Risk to human life (e.g., from 
flooding); 
Percent of fiscal year 2010 construction project budget request: 14%. 

Category: High-performing ongoing projects; 
Ranking metrics (fiscal year 2010): For all project types except 
ecosystem restoration: benefit-cost ratio (BCR) (2.5 to 1 or greater); 
Ecosystem restoration: Cost-effectively contribute to the restoration 
of a nationally or regionally significant aquatic ecosystem that has 
become degraded as a result of a civil works project or a restoration 
effort for which the Corps is otherwise uniquely well-suited; 
Percent of fiscal year 2010 construction project budget request: 27%. 

Category: High-performing new start projects; 
Ranking metrics (fiscal year 2010): For all project types except 
ecosystem restoration: BCR (3.2 to 1 or greater); 
Ecosystem restoration: same as above; 
Percent of fiscal year 2010 construction project budget request: 3%. 

Category: Qualifying ongoing projects with continuing contracts; 
Ranking metrics (fiscal year 2010): Special category for projects with 
continuing contracts that were not convertible to annual contracts; 
Percent of fiscal year 2010 construction project budget request: 8$. 

Category: Fiscal year 2010 completions; 
Ranking metrics (fiscal year 2010): Projects scheduled to be completed 
in fiscal year 2010; 
Percent of fiscal year 2010 construction project budget request: 3%. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[End of table] 

A Corps headquarters official told us that headquarters officials 
largely evaluate construction projects across categories on a case-by- 
case basis. Although performance-based budgeting has made ranking 
projects within categories more systematic, the Corps official added 
that professional judgment is still needed to compare projects across 
categories. For example, while formal written guidance documenting 
priorities across categories does not exist, dam safety projects are 
generally the highest priority among the project categories because 
these dams are already built and need to be maintained to provide 
continued protection to people living in the area. This is supported 
by Corps ranking data from the past 5 fiscal years, as the highest 
priority dam projects have generally been budgeted for the maximum 
amount of funding that the Corps determines can be effectively used. 
According to our analysis of Corps data, in most years since 
performance-based budgeting was begun, the funding requested for dam 
safety projects has been among the highest of the construction 
categories. In addition, the agency requests enough funding for 
projects with environmental or mitigation requirements to meet annual 
targets laid out in environmental plans. Other than dam safety and 
projects with environmental requirements, the Corps official could not 
generalize about the relative priority or level of funding requested 
for the remaining project categories, noting that they are decided on 
a case-by-case basis. A Corps official told us that administration 
priorities influence budget formulation, and may be communicated to 
the Corps through OMB's written feedback on the budget submission or 
in a letter from the Assistant Secretary of the Army for Civil Works. 

The Investigations Account: 

For the Investigations account, information used to make budgetary 
decisions varies depending on the phase of the project--reconnaissance 
study, feasibility study, and preconstruction engineering and design. 
In the first two phases, a Corps headquarters official told us that 
the Corps relies primarily on professional judgment and other factors, 
but that by the last phase, data are available to guide decision 
making. More specifically, the first phase of an investigation is a 
reconnaissance study, which is conducted to understand the nature of a 
water resources problem and determine the federal government's 
interest. To determine if a potential project warrants a 
reconnaissance study, he also stated that the headquarters business 
line managers meet with the Chief of Budget Development to discuss the 
merits of conducting the study. They make funding decisions based on a 
narrative description of the proposed study. At this point in the 
process, since the study is still prospective and there is no 
performance information available, agency officials rely primarily on 
their professional judgment, as they did prior to the use of 
performance-based budgeting. If the Corps determines through the 
reconnaissance study that there is a federal interest in the study, 
and local sponsors are available, as required by law, a feasibility 
study is conducted. This type of study is done to formulate and 
recommend specific solutions to a water resources problem. 

At the end of the feasibility study phase, performance information, 
such as BCR and returns for the environment, is available to inform 
decisions about which projects will move on to the final phase of the 
investigation, preconstruction engineering and design.[Footnote 25] 
Corps officials consider the same metrics used to evaluate 
construction projects since the purpose of this phase is to determine 
whether a project should be authorized for construction. 

The Operation and Maintenance Account: 

For the Operation and Maintenance (O&M) account, the divisions have a 
greater role in selecting projects in certain funding increments. 
Although the budget formulation process for the O&M account is less 
centralized than it is for Construction and Investigations, Corps 
headquarters and division officials described how the process is more 
centralized than it was prior to the introduction of performance-based 
budgeting, when the divisions could largely distribute funding as they 
saw fit. Corps officials noted that for increments 1 and 2, the 
highest priority increments, Corps division officials identify 
critical projects, equaling up to 75 percent of the average of their 
previous 5 years' budget requests. According to the Budget Engineer 
Circular (EC), the first increment should represent critical routine 
projects, meaning projects that are done every year or on a cyclical 
basis, or projects that are required in order to meet legal and 
environmental requirements or for historic preservation. For example, 
the ongoing operation of a powerhouse and the biennial dredging of a 
channel could be included in this increment. The Budget EC notes that 
the second increment should also represent critical projects, though 
these do not take place on a regular basis. An example of this would 
be the replacement of a potable water well or a broken gate on a lock. 
[Footnote 26] In addition, a Corps official stated that business line 
managers at Corps headquarters provide oversight to ensure the 
divisions include projects in the first two increments that reflect 
Corps-wide priorities. They read the divisions' narrative descriptions 
of how they plan to use the requested funding and what the 
consequences would be if the projects did not receive the funding. In 
addition, as stated in the Budget EC, the projects in increment 3--
equaling up to 25 percent of the average of the previous 5 years' 
budget requests for each division--are also considered critical, but 
are of lower priority than the first increments. A Corps official 
noted that headquarters officials play a greater role by evaluating 
increment 3 projects across divisions to determine which projects will 
be included in the ceiling level of funding. Unlike increments 1 and 
2, in which the divisions can generally be assured of a certain level 
of funding, some increment 3 projects may only be funded if the Corps 
receives more than the ceiling level of funding. Finally, increments 4 
and 5 are lower priority projects above the ceiling level of funding. 

The Corps' Budget EC provides detailed guidance to divisions on the 
metrics that should be considered to determine which O&M projects and 
activities receive priority. Imminent risk to human life, court 
mandates, strategic importance to the Department of Defense, and the 
amount of commercial tonnage transported on a waterway are among the 
factors that would give a waterway higher priority status. For 
example, the Budget EC provides specific tonnage ranges to assess the 
relative levels of commerce on particular waterways. Thus, all else 
being equal, a project that is critical to the operation of a waterway 
with a high level of commercial tonnage will be given priority over a 
project that is equally critical to the operation of a waterway with a 
low level of commercial tonnage. The Budget EC also specifies that, 
even if waterways do not support a high level of commercial tonnage, 
they can be included in the budget request if they support significant 
commercial fishing and public transportation, or are subsistence 
harbors, which local communities depend on for survival, or harbors of 
refuge, which are protected from heavy seas. 

Decision Making Across Accounts: 

Although the Budget EC provides guidance on the metrics that should be 
considered in determining which projects and activities receive 
priority, the Corps does not have formal guidance for making trade-off 
decisions while formulating the budget across Construction, 
Investigations, O&M, and the other accounts. According to a Corps 
official, however, the agency does have an informal process for making 
these trade-off decisions. First, the Corps headquarters business line 
managers and the Chief of Budget Development meet to consider the 
construction and investigations projects in the prior year's budget 
request. The goal is to maintain continuity of ongoing projects, 
provided they still meet the performance criteria, so these projects' 
minimum needs are met. Next, the managers of the nonproject-based 
accounts and the Chief of Budget Development consider these accounts, 
including General Expenses and the Regulatory Program, and determine 
what it would take to maintain the existing level of service. Then, 
with the remaining funds, headquarters business line managers and the 
Chief of Budget Development consider O&M projects above increments 1 
and 2, since these initial increments are included in the ceiling 
level of funding. Finally, they consider high-performing new start 
construction projects after the ceiling level of funding has been 
reached. 

[End of section] 

Appendix III: Methodology for Calculating Benefit-Cost Ratio and 
Changes in Requirements Over Time: 

Benefit-cost ratio (BCR) is calculated differently for various types 
of projects, but generally represents the value of damages avoided as 
a result of constructing a project, divided by the life-cycle cost of 
the project for the U.S. Army Corps of Engineers (Corps).[Footnote 27] 
Table 3 summarizes the primary inputs used to calculate benefits. 

Table 3: Summary of Primary Inputs Used to Calculate Benefits for 
Different Project Types[A]: 

BCR: Primary benefits; 
Flood Risk Management and Coastal Storm Damage: Estimated cost of 
property damage and emergency response prevented as a result of the 
project; 
Navigation (deep draft and inland): Estimated shipping savings 
resulting from the project; 
Navigation (shallow draft): Estimated cost of vessel damages prevented 
as a result of the project; 
Hydropower: Estimated difference in cost between providing hydropower 
compared to other available power sources. 

Source: GAO summary of U.S. Army Corps of Engineers information. 

[A] According to Corps officials, the benefits listed here are the 
ones that typically have the most significant effect on benefit 
calculations. Other factors, such as recreation value, may also be 
included in the benefit estimates. 

[End of table] 

Table 4 shows a simplified example of how BCR would be calculated for 
two alternative construction projects aimed at reducing the 
transportation costs to users of a channel. The first example, channel 
deepening, would generate benefits due to several factors. First, a 
deeper channel would accommodate larger vessels, which are more 
efficient and have a lower per-unit cost. Additionally, vessels 
sometimes have to wait for tidal changes so that there is sufficient 
channel depth. Deepening the channel reduces or eliminates the need to 
do this and thus creates savings. Finally, if a channel is not deep 
enough to accommodate a vessel, the cargo must sometimes be 
transferred to a vessel with a more shallow draft.[Footnote 28] If 
deepening reduces or eliminates this need, cargo handling savings are 
created. 

The second example, channel widening, would generate benefits due to 
reductions in vessel delays. This would occur if the widening allowed 
more vessels to use the channel at one time. For example, the channel 
might currently only permit one-way vessel traffic, but the widening 
would allow two-way traffic. The reduction in delays generates 
savings. Similarly, sometimes weather-related factors such as fog 
require wider channels. If a wider channel permits increased vessel 
traffic during foggy conditions, savings are also generated. According 
to a Corps official, channel widening projects are typically less 
expensive than channel deepening projects, though their benefits also 
tend to be lower. 

Table 4: Hypothetical BCR Calculation for Two Alternative Construction 
Projects: 

Alternative for reducing transportation costs: Channel deepening: 
Benefits: 
Savings due to lower per-unit cost of transporting goods; a deeper 
channel can accommodate larger vessels: $6,200,000; 
Savings due to reduced delays; deep-draft vessels do not have to work 
around the tide schedule: $1,400,000; 
Savings due to reduced cargo handling costs; there is a reduced need 
to transfer goods to shallow-draft vessels: $500,000; 
Total increased benefits: $8,100,000; 
Costs: 
Construction and maintenance: $3,100,000; 
Benefit-cost ratio: 2.61; 
Eligible for authorization (FY2010)[A]: Yes; 
Eligible for budgeting as an ongoing project (FY2010)[B]: Yes; 
Eligible for budgeting as a new start project (FY2010)[C]: No. 

Alternative for reducing transportation costs: Channel widening: 
Benefits: 
Savings due to reduced delays; a wider channel would allow two-way 
vessel traffic: $2,500,000;
Savings due to reduced delays; a wider channel would reduce weather-
related delays: $700,000; 
Total increased benefits: $3,200,000; 
Costs: 
Construction and maintenance: $1,700,000;
Benefit-cost ratio: 1.88; 
Eligible for authorization (FY2010)[A]: Yes; 
Eligible for budgeting as an ongoing project (FY2010)[B]: No; 
Eligible for budgeting as a new start project (FY2010)[C]: No. 

Source: GAO Analysis of U.S. Army Corps information. 

[A] In order to be eligible for authorization, most construction 
projects must have a BCR of at least 1. 

[B] Projects that do not qualify for budgeting by restoring ecosystems 
or addressing risk to human life must meet BCR thresholds set by the 
administration. In fiscal year 2010 the BCR threshold for ongoing 
projects was 2.5. These examples assume that the projects would not 
qualify for budgeting for environmental or risk to human life reasons. 

[C] In fiscal year 2010 the BCR threshold for new start projects was 
3.2. These examples assume that the projects would not qualify for 
budgeting for environmental or risk to human life reasons. 

[End of table] 

The minimum BCR has been higher for new start construction projects 
than ongoing projects, reflecting the administration's preference for 
fewer new start projects. Prior to fiscal year 2008, a different 
measure was used instead of BCR as the primary economic metric. Table 
5 shows the changes in the BCR requirements over the past 5 years. 
Office of Management and Budget (OMB) staff stated they recommended 
changing the measure to create more stability. Nevertheless, according 
to Corps division officials, there is still uncertainty about whether 
particular projects will be included in the budget request. Since, 
according to Corps and OMB staff, the BCR threshold set by OMB can 
change from year to year, a project may meet the BCR threshold 1 year 
but fail to meet it in future years, making it difficult for the Corps 
to make long-term commitments. For example, one division cited a 
hydropower plant that had been funded since 2005, but was not included 
in the President's 2010 budget request because it had a BCR of 1.7 and 
the BCR threshold for ongoing projects that year was 2.5. Officials at 
another division estimated that three to four projects in their 
jurisdiction had been put on hold since the introduction of 
performance-based budgeting because they could not meet the BCR 
threshold. Officials at some divisions told us that this uncertainty 
and the failure of a project to be budgeted has negatively affected 
the Corps' relationship with local sponsors. Some division officials 
also told us that this increased uncertainty has made workforce 
planning more challenging. 

Table 5: Summary of Economic Requirements for Construction Projects, 
by Fiscal Year: 

Thresholds for ongoing projects; 
Fiscal year: 2006: RBRC[A] must be at least 3 to 1; 
Fiscal year: 2007: RBRC must be at least 3 to 1; 
Fiscal year: 2008: BCR must be at least 1.5 to 1; 
Fiscal year: 2009: BCR must be at least 1.5 to 1; 
Fiscal year: 2010: BCR must be at least 2.5 to 1. 

Thresholds for new start projects; 
Fiscal year: 2006: Must rank in the top 20 percent of ongoing, 
budgeted projects of its type; 
Fiscal year: 2007: Must rank in the top 20 percent of ongoing, 
budgeted projects of its type; 
Fiscal year: 2008: Must rank in the top 20 percent of ongoing, 
budgeted projects of its type; 
Fiscal year: 2009: Must rank in the top 20 percent of ongoing, 
budgeted projects of its type; 
Fiscal year: 2010: BCR of at least 3.2 to 1. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[A] RBRC represents the remaining benefits of a project divided by its 
remaining cost to complete. 

[End of table] 

[End of section] 

Appendix IV: Trends in Budget Requests for the Corps: 

Numbers of Projects Requested: 

Over the past decade the number of projects included in the budget 
request for the U.S. Army Corps of Engineers (Corps) has varied. The 
number of construction projects has in general decreased, though it 
has been more stable in recent years, as shown in figure 4. 

Figure 4: Number of Construction Projects Requested, by Fiscal Year: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2001; 
Number of construction projects requested: 194. 

Fiscal year: 2002; 
Number of construction projects requested: 207. 

Fiscal year: 2003; 
Number of construction projects requested: 194. 

Fiscal year: 2004; 
Number of construction projects requested: 161. 

Fiscal year: 2005; 
Number of construction projects requested: 139. 

Fiscal year: 2006; 
Number of construction projects requested: 98. 

Fiscal year: 2007; 
Number of construction projects requested: 86. 

Fiscal year: 2008; 
Number of construction projects requested: 66. 

Fiscal year: 2009; 
Number of construction projects requested: 83. 

Fiscal year: 2010; 
Number of construction projects requested: 93. 

Fiscal year: 2011; 
Number of construction projects requested: 95. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[End of figure] 

The number of investigations projects included in the budget request 
has followed a similar trend to the Construction account, though the 
degree of the decrease over time has been greater, as shown in figure 
5. 

Figure 5: Number of Investigations Projects Requested, by Fiscal Year: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2001; 
Number of investigations projects requested: 327. 

Fiscal year: 2002; 
Number of investigations projects requested: 353. 

Fiscal year: 2003; 
Number of investigations projects requested: 384. 

Fiscal year: 2004; 
Number of investigations projects requested: 293. 

Fiscal year: 2005; 
Number of investigations projects requested: 262. 

Fiscal year: 2006; 
Number of investigations projects requested: 135. 

Fiscal year: 2007; 
Number of investigations projects requested: 56. 

Fiscal year: 2008; 
Number of investigations projects requested: 61. 

Fiscal year: 2009; 
Number of investigations projects requested: 65. 

Fiscal year: 2010; 
Number of investigations projects requested: 68. 

Fiscal year: 2011; 
Number of investigations projects requested: 65. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[End of figure] 

Compared to the Construction and Investigations accounts, the 
Operation and Maintenance (O&M) account has been relatively stable, as 
shown in figure 6. 

Figure 6: Number of O&M Projects Requested, by Fiscal Year: 

[Refer to PDF for image: vertical bar graph] 

Fiscal year: 2001; 
Number of O&M projects requested: 761. 

Fiscal year: 2002; 
Number of O&M projects requested: 688. 

Fiscal year: 2003; 
Number of O&M projects requested: 814. 

Fiscal year: 2004; 
Number of O&M projects requested: 821. 

Fiscal year: 2005; 
Number of O&M projects requested: 692. 

Fiscal year: 2006; 
Number of O&M projects requested: 747. 

Fiscal year: 2007; 
Number of O&M projects requested: 792. 

Fiscal year: 2008; 
Number of O&M projects requested: 814. 

Fiscal year: 2009; 
Number of O&M projects requested: 846. 

Fiscal year: 2010; 
Number of O&M projects requested: 813. 

Fiscal year: 2011; 
Number of O&M projects requested: 768. 

Source: GAO analysis of U.S. Army Corps of Engineers data. 

[End of figure] 

[End of section] 

Appendix V: Comments from the Department of Defense: 

Department Of The Army: 
Office Of The Assistant Secretary: 
Civil Works: 
108 Army Pentagon: 
Washington, DC 20310-0108: 

March 30, 2010: 

Ms. Anu K. Mittal: 
Director, Natural Resources and Environment: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Mittal: 

This is the Department of Defense (DoD) response to the GAO Draft Report
(GAO-10-453), "Army Corps Of Engineers: Budget Formulation Process 
Emphasizes Agency-Wide Priorities, but Transparency of Budget 
Presentation Could be Improved," dated February 23, 2010 (GAO Code 
450715). 

Thank you for the opportunity to review and comment on the draft report.
Responses to the GAO recommendations are enclosed and summarized below. 

DoD concurs with recommendations two, three, four and five, but non-
concurs with recommendation one, specifically, the GAO recommendation 
that the Secretary of Defense direct the Chief of Engineers and 
Commanding General of the U.S. Army Corps of Engineers to establish a 
documented process to incorporate assessments of on-going project 
performance, such as information from review boards, into the budget 
formulation process. 

Existing methods of incorporating assessments of project performance 
into the Army Civil Works budget formulation process are considered to 
be sufficient, as explained in the enclosed response to recommendation 
one. 

Very truly yours, 

Signed by: 

Jo-Ellen Darcy:: 
Assistant Secretary of the Army (Civil Works): 

Enclosure: 

GAO Draft Report Dated February 23, 2010: 
GAO-10-453 (GAO Code 450715): 

"Army Corps Of Engineers: Budget Formulation Process Emphasizes Agency-
Wide Priorities, But Transparency Of Budget Presentation Could Be 
Improved" 

Department Of Defense Comments To The GAO Recommendations: 

Recommendation 1: The GAO recommends that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to establish a documented process to incorporate 
assessments of ongoing project performance, such as information from 
review boards, into the budget formulation process. (See page 18/GAO 
Draft Report.) [Now on page 18] 

DoD Response: Non-concur. Existing processes are considered to be 
adequate and there would be no added benefit to establishing new ones. 
On page 12 the report states that "the Corps' budget formulation 
process focuses on projects' anticipated outcomes, rather than 
demonstrated performance." While it is correct that criteria such as 
safety and benefit-to-cost ratio are the primary budget prioritization 
criteria, it is not correct that the results of periodic assessments 
and review boards are not incorporated into the budget formulation 
process. [See comment 1] 

If an individual project review determines that the project is not 
consistent with policy, it will not be budgeted at all. Corps 
Headquarters performance review boards focus at the programmatic 
level, and the results of the reviews are considered in the 
formulation of overall priorities for the program. For policy 
consistent studies and projects under construction, the results of 
management reviews of schedule slippage and cost changes inform the 
development of both the budget amount and optimal funding capability 
for the budget year. 

For completed projects in the Operation and Maintenance program, 
actual performance over time is assessed against authorized project 
purposes and contributes to the determination of budget priority. For 
example, in the navigation program, actual commercial use of projects 
normally establishes the budget priority. The first step for the 
Operation and Maintenance program, subject to Headquarters review, is 
for each Division to allocate an amount equal to 75 percent of its 
recent total allocations. This enables the Districts and Divisions, 
which are most familiar with projects and conduct the most intensive 
reviews of project performance and conditions, to allocate funds to 
project activities to ensure at least basic operation and attention to 
the most critical maintenance within the region. [See comment 2] 

The final 25 percent is allocated according to nation-wide budget 
metrics, to raise the level of operation in some cases and to address 
the next most important maintenance items from a national perspective. 

Recommendation 2: The GAO recommends that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to work with OMB and Congress to include in the 
annual budget presentation for the Corps summary level information on 
how the budget request reflects decisions made across project 
categories, business lines, and accounts. (See page 18/GAO Draft 
Report.) [Now on pp. 18-19] 

DoD Response: Concur. The Army will include, in the annual budget 
presentation for the Corps' Civil Works program, summary level 
information on how the budget reflects decisions made across project 
categories, business lines, and accounts. 

Recommendation 3: The GAO recommends that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to work with OMB and Congress to continue to 
include in the annual budget presentation for the Corps project-level 
details for the O&M account, including an explanation of how the 
requested funding for each project will be used. (See page 18/GAO 
Draft Report.) [Now on pp. 18-19] 

DoD Response: Concur. The Army will continue to include, in the annual 
budget presentation for the Corps' Civil Works program, project-level 
details for the O&M account, including an explanation of how funding 
budgeted for each project will be used. 

Recommendation 4: The GAO recommends that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to work with OMB and Congress to provide project-
level information on all projects with continuing resource needs, 
either as part of the budget presentation or as supplementary 
information. (See page 18/GAO Draft Report.) [Now on pp. 18-19] 

DoD Response: Concur. The Army will provide project level information 
on all projects funded in the prior year with continuing resource 
needs, either as part of the Corps' Civil Works budget presentation or 
as supplemental information. 

Recommendation 5: The GAO recommends that the Secretary of Defense 
direct the Chief of Engineers and Commanding General of the U.S. Army 
Corps of Engineers to work with OMB and Congress, as a supplement to 
the budget presentation, to provide Congress with information on the 
estimated carryover of unobligated appropriations that remain 
available for each project. (See page 18/GAO Draft Report.) [Now on 
pp. 18-19] 

DoD Response: Concur. The Army will provide information on the 
estimated carryover of unobligated appropriations that remain 
available for each project. The estimated carryover is taken into 
consideration in establishing the amount of additional funding to be 
budgeted for a given project. 

GAO Comments: 

1. While we agree that the Corps' current processes may incorporate 
project review findings, we continue to believe that establishing a 
documented process for the use of such information in the Corps' 
budget formulation would ensure that the Corps routinely makes the 
best use of all available information. Additionally, having a 
documented process would improve understanding of how information from 
the review boards shapes program priorities and affects decision 
making. Moreover, our report discusses the Corps' use of information 
on project progress, such as whether schedule and budgetary milestones 
are being met, through review boards at the district and division 
levels. However, according to Corps officials, this review board 
information affects funding decisions on a case-by-case rather than 
routine basis. 

2. We have clarified in our report that we agree the Corps' budget 
formulation process for the O&M account reflects actual performance. 
Nonetheless, we continue to believe that the overall emphasis of the 
Corps' budget process is on anticipated rather than demonstrated 
performance. 

[End of section] 

Appendix VI: GAO Contacts and Staff Acknowledgments: 

GAO Contacts: 

Denise M. Fantone, (202) 512-6806 or fantoned@gao.gov: 

Anu K. Mittal, (202) 512-3841 or mittala@gao.gov: 

Acknowledgments: 

In addition to the individuals listed above, Carol M. Henn, Assistant 
Director; Vondalee R. Hunt, Assistant Director; Kathleen Padulchick; 
and Kelly A. Richburg made significant contributions to this report. 
Joshua Archambault, Virginia Chanley, Robert L. Gebhart, Chelsa 
Gurkin, Felicia Lopez, and Vasiliki Theodoropoulos also made key 
contributions. 

[End of section] 

Footnotes: 

[1] The Corps has both a military and a civil works program. The 
military program provides, among other things, engineering and 
construction services to other U.S. government agencies and foreign 
governments, while the civil works program is responsible for 
investigating, developing, and maintaining water resource projects. 
This report only discusses the civil works program. 

[2] The "Support for Others" business line covers the Corps' 
activities related to interagency and international support. 

[3] The Corps has business line managers at the headquarters, 
division, and some district levels. Business line managers work to 
integrate resources, budgets, and activities, with a focus on 
executing the mission of each specific business line. 

[4] The nine civil works accounts included in the budget request for 
the Corps are: Construction, Investigations, O&M, Regulatory Program, 
Mississippi River and Tributaries, Expenses, Flood Control and Coastal 
Emergencies, Formerly Utilized Sites Remedial Action Program, and the 
Assistant Secretary of the Army (Civil Works). During the time period 
reviewed for this report, the Flood Control and Coastal Emergencies 
account received funding through supplemental appropriations. 

[5] The most recent Five Year Development Plan issued by the Corps 
covered fiscal years 2009 through 2013 and accompanied the fiscal year 
2009 budget request. 

[6] The Formerly Utilized Sites Remedial Action Program, another Corps 
account, is also project-based. 

[7] The remaining 16 percent of the budget request is for the 
following six accounts: Regulatory Program, Mississippi River and 
Tributaries, Expenses, Flood Control and Coastal Emergencies, Formerly 
Utilized Sites Remedial Action Program, and the Office of the 
Assistant Secretary of the Army (Civil Works). 

[8] Information on the number of projects receiving appropriations in 
fiscal year 2010 was provided to us by a Corps official. 

[9] The Water Resources Development Act (WRDA) of 1986 stipulated that 
nonfederal sponsors share the cost of planning and implementing Corps 
projects. The division of federal and nonfederal cost-sharing required 
varies by project purpose. Funding from nonfederal sources is not 
included in figure 3. 

[10] A Corps official told us that he expects the updated strategic 
plan to be issued in 2010. 

[11] A Corps official told us that the Corps plans to revise the 
strategic goals from five to four. The fifth goal will be incorporated 
into the others. 

[12] The Corps calculates BCR differently for various types of 
projects, but it generally represents the value of damages avoided as 
a result of constructing a project, divided by the life-cycle cost of 
the project for the Corps. See appendix III for additional discussion 
of the BCR calculation. 

[13] Appendix III contains a more detailed description of how BCR is 
calculated for different project types. 

[14] The risk to human life metric is also affected by factors such as 
the velocity and depth of flood waters, as well as warning and escape 
times. 

[15] Requested amounts were not adjusted for inflation. 

[16] As previously described, the nine business lines are: Navigation, 
Flood Risk Management, Environment, Recreation, Hydropower, Water 
Supply, Emergency Management, Regulatory Program, and Support for 
Others. 

[17] A Corps official told us that certain projects may receive more 
or less funding on a case-by-base basis depending on issues identified 
at review boards. Because the Corps does not compile detailed 
information on how review board findings affect budgetary decisions, 
we could not determine how often this occurs. 

[18] GAO, Executive Guide: Effectively Implementing the Government 
Performance and Results Act, [hyperlink, 
http://www.gao.gov/products/GAO-96-118] (Washington, D.C.: June 1996). 

[19] GAO, Veterans' Disability Benefits: More Transparency Needed to 
Improve Oversight of VBA's Compensation and Pension Staffing Levels, 
[hyperlink, http://www.gao.gov/products/GAO-05-47] (Washington, D.C.: 
Nov. 15, 2004). 

[20] Some information on projects not in the budget request is 
included in the Fiscal Year 2009 Five Year Development Plan. This 
document includes a listing of construction and investigations 
projects that make up an "enhanced plan" budget scenario, which is 
based on the prior year's appropriations. The listing includes the 
project name, the state and division in which the project is located, 
and estimates of fiscal year 2009 and subsequent year funding 
requirements. At a summary level, the Five Year Development Plan 
describes how the enhanced plan would affect business line performance. 

[21] The projects that received appropriations and the projects for 
which funding was requested included both new and ongoing projects. 
Project numbers do not include construction or investigations projects 
in the Mississippi River and Tributaries (MR&T) account. 

[22] The fiscal year 2011 budget request included 95 construction 
projects and 65 investigations projects. These numbers do not include 
projects in the MR&T account. 

[23] During the period examined for this report, Corps accounts 
received "no-year" appropriations--that is, funds that are available 
for obligation until expended--so funding may be carried over to 
subsequent fiscal years. For example, if the Corps obligates $40 
million of a $50 million appropriation, the $10 million that was not 
spent is available for use in subsequent years, with certain 
conditions. 

[24] A Corps official attributed the increase in carryover partially 
to the large amount of supplemental funding the Corps has received in 
recent years. In the past the Corps had a goal that projects have no 
carryover from year to year, but Corps officials told us that the 
agency no longer has this goal. 

[25] Many projects must also have nonfederal sponsors to advance to 
the next phase. 

[26] A section of a waterway, such as a canal, closed off with gates, 
in which vessels in transit are raised or lowered by raising or 
lowering the water level of that section. 

[27] Life-cycle cost is the overall estimated cost for a particular 
project over the time period corresponding to the life of the project, 
including periodic or continuing costs of operation and maintenance. 

[28] Draft refers to the depth of a vessel's keel below the water 
line, especially when loaded. 

[End of section] 

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