Water Resources

This briefing report looks at whether the U.S. Army Corps of Engineers program to set aside or restrict part of its dredging contracts for small businesses significantly boosts federal costs because there is less competition for restricted-bid contracts. GAO evaluated existing studies on program costs and competition (measured by the number of bids per contract) done on behalf of large and small dredging firms. GAO also did a separate analysis of dredging contracts the Corps awarded during a recent 31-month period.

GAO found that: (1) between fiscal years 1985 and 1990, decreased competition for restricted-bid contracts resulted in increased costs of between $70 million and $115 million; (2) the lowest bids for restricted-bid contracts were lower than the Corps' estimates by a greater percentage than were the lowest bids for unrestricted-bid contracts; (3) for both unrestricted-bid and restricted-bid contracts, winning bids were less than the Corps' estimate of the contract cost, and restricted bids were lower by a greater percentage than were the unrestricted bids; and (4) unrestricted-bid contracts were more competitive than restricted-bid contracts, since they elicited a higher average number of bids per contract, although the number of bids per contract may not be a clear measure of competition.