How is USACE going about the task of obligating ARRA funding?
It is a requirement that we have all of our funds, $4.6 billion, obligated before the end of fiscal 2010. But we’ve set a goal of having obligations complete by the end of second quarter-2010 so that we have wiggle room if we run into any issues. The good news is that we have a good, though stretched, contracting workforce and many of these projects have been on the shelf for some years. So our engineering staff was able to dust off many of those O&M designs, get them into the hands of the contracting folks and prioritized properly by program managers, then have the prioritization approved by Office of Management and Budget (OMB).
We were also able to use many of the acquisition tools that we have adopted based on modern acquisition techniques. In addition to design-bid-build, which was for many years our prime acquisition strategy, we’re utilizing the integrated design-build process with early contractor involvement. We’re also using existing or developed MATOC (Multiple-Award Task Order Contract), SATOC (Single-Award Task Order Contract), and IDIQ (Indefinite Delivery/Indefinite Quantity) contracts in order to get work turned quickly by a pool of already-selected contractors. We have been able to leverage several different acquisition tools to get industry moving quickly to meet our requirements.
If $4.6 billion was all we had to worry about, we probably could have gotten that money awarded relatively quickly. But we do have carryover from previous years and we’re also working on our fiscal 2009 program. So what our program managers had to do was to determine best how to integrate the workload of these different programs in a way that did not exceed our contracting management capacity.
How does ARRA funding for civil works projects affect USACE’s pre-existing workload? Is there an upside?
Civil works projects have essentially tripled this year because we had about a $5 billion 2009 program. We also had a $5.7 billion supplemental funding primarily associated with Gulf Coast recovery projects and then the $4.6 billion from ARRA. We’ve got over $15 billion on our plate this year. We had to take a balanced but expeditious approach to getting all of this work contracted.
Because the stimulus package projects were all fully funded up front, I believe we have an opportunity, if we deliver on these projects, to demonstrate our capability to the nation, and that it may have implications for the way we are financed in the future. Our appropriations sometimes give many projects a little bit of money. That’s good to the degree that it keeps those projects alive but it’s bad because it’s not an efficient way to perform construction, stringing work out over many years. To the extent that our projects are fully funded, we can deliver in a more timely and cost-effective manner for the nation.
What kind of progress has been made in awarding contracts for ARRA work?
As of mid-August, we’ve obligated in excess of $700 million against some 820 different contract actions. That’s 16 to 17 percent of all the funds we were allocated. Based on our timeline and milestones, we are generally on track.
We project that we will be on track with our goal of obligating nearly 45 percent of the funds we were allocated by the end of this fiscal year, much of that in the O&M category. We continue to work designs internally or through design-build contracts for the construction portion of the funding, the majority of which we’ll put under contract in the last three months of 2009.
Based on what we know now, we believe we’ll have all of the ARRA funds obligated by the second quarter of 2010. For the handful of projects that are currently scheduled for award in the third and fourth quarter of 2010, we intend to take a look at those projects by the end of the second quarter. If it looks like they are going to experience difficulty in being obligated for whatever reason, we will make a decision in coordination with the Assistant Secretary of the Army for Civil Works and OMB staffs to take those funds and apply them against other projects that are in the queue that didn’t receive funding and can be awarded in those last two quarters.
Please give a couple examples of construction projects that USACE is executing with ARRA funding.
ARRA funds will help us complete a new turning-basin in Mobile Harbor, for instance. We didn’t have sufficient funds to fully address that turning-basin under our regular appropriation. In that case, we had a project that was under way but we couldn’t complete a new phase of it without the ARRA money. That’s how we’re using ARRA money to augment and accelerate our ability to address construction needs.
In addition, one of the largest ecosystem projects ever undertaken in our country will begin this calendar year with $200 million worth of ARRA funding applied against projects in the Florida Everglades. That’s brand-new work that’s been on the shelf for some time. As we complete our project cooperation agreement with the South Florida Water Management District, that will enable us to partner with Florida to begin the work late this year.
Finally, how is ARRA funding allowing the Corps of Engineers to “build its bench” in terms of human capital?
As one example, it’s positive that we can use ARRA money to hire folks to help us with the big increase in administrative and management work that has come with the stimulus package. There are well-defined and mandated management actions, including tracking of the dollars and contracts, and other reporting processes in the interest of transparency that have caused us to focus particular effort on ARRA management.
We’re hiring program and project engineers from the commercial market, hiring additional government employees and interns. We’ve had a banner year for interest in Corps of Engineers work on the intern side. We’ve applied a lot of different techniques to hire the right type and right number of people to help us manage our way through this.
Since last year, we’ve hired just under 2,000 employees. Once we finish this $15 billion-plus workload by 2012 or so, we’ll be on our way to building a workforce, a “bench” for the future. We, like every other government institution, have an aging workforce. When we reach 2012 and beyond, many of them will be retirement eligible. It’s really important to take advantage of this huge workload now to teach our new people how to do this kind of work so they can carry forward for the next 20 to 30 years.