Inland Waterways:

Actions Needed to Increase Budget Transparency and Contracting Efficiency

GAO-19-20: Published: Nov 7, 2018. Publicly Released: Nov 7, 2018.

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The U.S. Army Corps of Engineers maintains the nation's inland waterways, including locks and dams. Its inland waterways construction projects have often seen delays and cost overruns.

Corps reports and academic studies say the Corps faces higher costs and delays because it receives funding for only a part of a project each year, so it must contract for projects in pieces. Corps officials estimate that this inefficient approach will add $229 million to the cost of one project alone.

We recommended the Corps seek ways to use construction funds more efficiently.

A towboat brings two barges through a lock (left) and a new lock under construction (right) on the Monongahela River in Charleroi, Pennsylvania.

This is a photo showing a towboat bringing two barges through a lock and a new lock under construction.

This is a photo showing a towboat bringing two barges through a lock and a new lock under construction.

Additional Materials:

Contact:

Andrew Von Ah
(202) 512-2834
vonaha@gao.gov

 

Office of Public Affairs
(202) 512-4800
youngc1@gao.gov

What GAO Found

The U.S. Army Corps of Engineers (Corps) allocates its appropriated funding for operations and maintenance projects for the inland waterways based on risk and economic benefits. However, the Corps does not know how much deferred maintenance exists for inland waterways because there is no agreed upon definition for deferred maintenance. Corps and ASA-CW officials identified several challenges related to developing a useful definition with which to measure deferred maintenance. For example, a single measure may not be useful to gauge the condition of the waterways because the effect of deferred maintenance projects on the reliability of the waterways will vary. However, without a measure or measures of deferred maintenance for inland waterways that (1) the Corps finds useful, (2) reflects its priorities, and (3) accurately conveys a consistent and well-defined measure of deferred maintenance, the Corps is limited in its ability to manage its maintenance efforts and accurately communicate its estimated maintenance costs to OMB and the Congress.

With regard to inland-waterways construction projects, the Corps prioritizes them based on expected costs and benefits. The Corps assesses the net economic benefits of inland-waterways construction projects' alternatives by comparing estimated direct costs (e.g., construction costs to build a new lock chamber) to estimated reductions in the waterway transportation costs (e.g., reduced travel costs related to a reduction in the time it might take for a barge to pass through a larger lock chamber). According to Corps officials and stakeholders, the current incremental-funding approach for prioritized projects, among other things, has resulted in schedule delays (as shown below) and cost increases. Although full upfront funding for capital projects is an important tool for effective management, inland-waterways construction projects have been funded incrementally, meaning the Corps requests—and Congress appropriates—annual funding that covers a portion of a project's estimated costs. Corps reports and academic studies have found that this approach results in increased project costs because the Corps must contract for construction in separable pieces. This approach is less efficient than contracting for the entire project at once. For example, Corps officials currently expect that the Kentucky Lock Addition project will cost at least $229 million more than the originally estimated cost as a direct result of this contracting approach. Without some change in the way inland-waterways construction projects are funded to either provide full funding or reduce the effects of incremental funding by concentrating funding on fewer projects at one time, current cost increases and schedule delays resulting from inefficient contracting are likely to continue.

Timelines for Ongoing New Construction Projects on Inland Waterways, Fiscal Year 2018

Project

Construction start

Estimated completion after authorization

Estimated completiona

Olmsted Locks and Dam: Ohio River

1993

2005

2018

Lower Monongahela Locks and Dams: Monongahela River

1994

2003

2023

Kentucky Lock Addition: Tennessee River

1998

2007

2024

Chickamauga Lock: Tennessee River

2007

2014

2023

Source: GAO presentation of U.S. Army Corps of Engineers information. | GAO-19-20

aEstimated completion refers to the date at which the facility is expected to be operational.

Why GAO Did This Study

The Corps is primarily responsible for operating and maintaining the nation's inland waterways, including maintaining locks and dams as well as rehabilitating, modernizing, or constructing new infrastructure as needed. Persistent schedule delays and cost overruns for inland-waterways construction projects have prompted some in Congress to explore funding and management alternatives.

GAO was asked to review options to change the management of inland waterways. Among other things, this report assesses how the Corps allocates funds for operations and maintenance for the inland waterways, describes how the Corps funds construction projects, and assesses the effect of the current funding approach on projects' costs and schedules. GAO reviewed Corps documents and data; interviewed officials from Corps headquarters, six districts, and representatives of regional and national stakeholder groups—including commercial and recreational interests as well as contributors to relevant literature—selected to achieve a variety of viewpoints; and developed a simulation of the effect of various funding approaches on the total funding requirements and timelines for a set of hypothetical construction projects.

What GAO Recommends

GAO is making two recommendations: that the Corps define and measure deferred maintenance for inland waterways and that it pursue changes to increase its ability to more efficiently use available funding for construction. The Department of Defense concurred with GAO's recommendations.

For more information, contact Andrew Von Ah at (202) 512-2834 or VonAhA@gao.gov.

Recommendations for Executive Action

  1. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers should define and measure deferred maintenance for inland waterways in a way that enables the Corps to clearly communicate estimated costs for maintenance needs. (Recommendation 1)

    Agency Affected: Department of Defense: Department of the Army: Corps of Engineers

  2. Status: Open

    Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.

    Recommendation: The Chief of Engineers and Commanding General of the U.S. Army Corps of Engineers should pursue ways to increase the Corps' ability to use available funding for inland waterways construction more efficiently and, should changes to the Corps' authority be necessary, develop a legislative proposal to request such authority. (Recommendation 2)

    Agency Affected: Department of Defense: Department of the Army: Corps of Engineers

 

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