Army Corps of Engineers
Improved Monitoring and Clear Guidance Would Contribute to More Effective Use of Continuing Contracts Gao ID: GAO-06-966 September 8, 2006The U.S. Army Corps of Engineers (Corps) is authorized under the River and Harbor Act of 1922 to issue contracts with a continuing contracts clause to carry out certain projects. This allows the Corps to award multi-year contracts without having received appropriations to cover the full contract amount. The Corps has used these contracts for decades, but modified their use in 2005, in response to congressional committee concerns that their use may have been ineffective. GAO was asked to determine (1) the number and dollar amount of continuing contracts the Corps awarded during fiscal years 2003?2005; (2) the circumstances in which the Corps used continuing contracts in fiscal years 2003-2005; and (3) how the Corps' process for approving and using continuing contracts changed since 2005, and whether the changes reduced the use of these contracts. For these objectives, GAO reviewed the Corps' contracting data, a random sample of 107 continuing contracts, and districts' requests to use continuing contracts
The Corps does not know how many continuing contracts it awarded in fiscal years 2003-2005 or the dollar value of these contracts, because it does not track information on the contracts awarded with a continuing contracts clause. Although the Corps was directed to provide the appropriations committees with quarterly reports on their use of continuing contracts in fiscal year 2006, GAO found that the information was inaccurate. For example, at least 13 continuing contracts were missing from the reports and 10 continuing contracts had inaccurate values. Because the Corps could not provide information on the number of continuing contracts awarded for fiscal years 2003-2005, GAO analyzed the Corps' contracting data and determined that 1,592 contracts awarded in these 3 years most likely included and used a continuing contracts clause. These contracts were expected to cost more than $3.96 billion when awarded and would generally be funded to cover the full contract amount (fully funded) pursuant to requirements of the Antideficiency Act. However, continuing contracts are exempt from the act. Consequently, the Corps only obligated $655 million when it awarded these contracts, leaving an outstanding commitment of about $3.30 billion to be covered by future years' appropriations. During fiscal years 2003?2005, the Corps' standard operating practice was to include a continuing contracts clause in most contracts. As a result, many continuing contracts were used for short term and low dollar value contracts. The Corps might have been able to fully fund some of these contracts if, at the time of award, the Corps had adequate appropriations to cover the contract amount. For example, for the 107 continuing contracts GAO reviewed, about one-third were valued at less than $1 million. In only 8 of 107 continuing contracts that GAO reviewed, the contract value was more than $10 million and involved work that required more than 12 calendar months to complete. The Corps also used continuing contracts extensively to move funds among projects and help meet its policy of expending all available appropriations in the fiscal year appropriated. For fiscal years 2003-2005, GAO found that over half of the contracts reviewed were awarded during the last quarter of the fiscal year as continuing contracts with little or no associated obligations, thereby shifting the obligations to pay for these contracts into future years. The Corps responded to congressional committee direction in 2005 and again in 2006 to monitor the use of continuing contracts by, among other things, requiring districts to obtain headquarters' approval before using such contracts. The new processes reduced the use of continuing contracts, but have not prevented the approval of continuing contracts for short-term, low dollar value contracts. This occurred because the Corps established criteria on when contracts should be fully funded, but did not establish criteria for when continuing contracts should be used.
RecommendationsOur recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.
Director: Team: Phone:GAO-06-966, Army Corps of Engineers: Improved Monitoring and Clear Guidance Would Contribute to More Effective Use of Continuing Contracts
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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:
September 2006:
Army Corps Of Engineers:
Improved Monitoring and Clear Guidance Would Contribute to More
Effective Use of Continuing Contracts:
Corps' Continuing Contracts:
GAO-06-966:
GAO Highlights:
Highlights of GAO-06-966, 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 authorized under the River
and Harbor Act of 1922 to issue contracts with a continuing contracts
clause to carry out certain projects. This allows the Corps to award
multi-year contracts without having received appropriations to cover
the full contract amount. The Corps has used these contracts for
decades, but modified their use in 2005, in response to congressional
committee concerns that their use may have been ineffective.
GAO was asked to determine (1) the number and dollar amount of
continuing contracts the Corps awarded during fiscal years 2003–2005;
(2) the circumstances in which the Corps used continuing contracts in
fiscal years 2003–2005; and (3) how the Corps‘ process for approving
and using continuing contracts changed since 2005, and whether the
changes reduced the use of these contracts. For these objectives, GAO
reviewed the Corps‘ contracting data, a random sample of 107 continuing
contracts, and districts‘ requests to use continuing contracts.
What GAO Found:
The Corps does not know how many continuing contracts it awarded in
fiscal years 2003–2005 or the dollar value of these contracts, because
it does not track information on the contracts awarded with a
continuing contracts clause. Although the Corps was directed to provide
the appropriations committees with quarterly reports on their use of
continuing contracts in fiscal year 2006, GAO found that the
information was inaccurate. For example, at least 13 continuing
contracts were missing from the reports and 10 continuing contracts had
inaccurate values. Because the Corps could not provide information on
the number of continuing contracts awarded for fiscal years 2003–2005,
GAO analyzed the Corps‘ contracting data and determined that 1,592
contracts awarded in these 3 years most likely included and used a
continuing contracts clause. These contracts were expected to cost more
than $3.96 billion when awarded and would generally be funded to cover
the full contract amount (fully funded) pursuant to requirements of the
Antideficiency Act. However, continuing contracts are exempt from the
act. Consequently, the Corps only obligated $655 million when it
awarded these contracts, leaving an outstanding commitment of about
$3.30 billion to be covered by future years‘ appropriations.
During fiscal years 2003–2005, the Corps‘ standard operating practice
was to include a continuing contracts clause in most contracts. As a
result, many continuing contracts were used for short term and low
dollar value contracts. The Corps might have been able to fully fund
some of these contracts if, at the time of award, the Corps had
adequate appropriations to cover the contract amount. For example, for
the 107 continuing contracts GAO reviewed, about one-third were valued
at less than $1 million. In only 8 of 107 continuing contracts that GAO
reviewed, the contract value was more than $10 million and involved
work that required more than 12 calendar months to complete. The Corps
also used continuing contracts extensively to move funds among projects
and help meet its policy of expending all available appropriations in
the fiscal year appropriated. For fiscal years 2003–2005, GAO found
that over half of the contracts reviewed were awarded during the last
quarter of the fiscal year as continuing contracts with little or no
associated obligations, thereby shifting the obligations to pay for
these contracts into future years.
The Corps responded to congressional committee direction in 2005 and
again in 2006 to monitor the use of continuing contracts by, among
other things, requiring districts to obtain headquarters‘ approval
before using such contracts. The new processes reduced the use of
continuing contracts, but have not prevented the approval of continuing
contracts for short-term, low dollar value contracts. This occurred
because the Corps established criteria on when contracts should be
fully funded, but did not establish criteria for when continuing
contracts should be used.
What GAO Recommends:
GAO recommends that the Corps eliminate its routine use of continuing
contracts, establish meaningful criteria on the use of such contracts,
and monitor its use of these contracts. In its comments on the draft
report, the Department of Defense agreed with GAO‘s recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-966].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Anu Mittal at (202) 512-
3841 or mittala@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
The Corps Cannot Accurately Identify How Many Continuing Contracts It
Has Awarded because It Does Not Track These Contracts:
Prior to 2005, the Corps Routinely Included a Continuing Contracts
Clause in Most Contracts:
The Corps' Revised Processes for Approving Continuing Contracts Has
Reduced Their Use, but It Still Lacks Criteria for When Their Use Is
Appropriate:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Appendix I: Scope and Methodology:
Appendix II: Characteristics of the Continuing Contracts Identified by
GAO:
Appendix III: Comments from the Department of Defense:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: Fiscal Years 2003-2005 Appropriations:
Table 2: Total Number and Full Costs to the Federal Government of
Continuing Contracts, Fiscal Years 2003-2005:
Table 3: Total Number of the 107 Randomly Selected Continuing Contracts
Awarded in Fiscal Years 2003-2005 by the Full Contract Costs and Number
of Months to Complete the Contracted Work:
Table 4: Headquarters' Reasons for Denying Seven Requests to Use a
Continuing Contract and How Districts Proceeded with the Work:
Table 5: Total Number of Approved Requests to Use a Continuing Contract
in Fiscal Year 2005:
Table 6: Total Number of Approved Requests to Use a Continuing Contract
in Fiscal Year 2006:
Table 7: Total Number of Continuing Contracts Awarded by the Full Costs
to the Federal Government, Fiscal Years 2003-2005:
Table 8: Total Number of Continuing Contracts by Percentage of Federal
Funds Made Available in the First Year of the Contract, Fiscal Years
2003-2005:
Table 9: Commitments for Continuing Contracts Made by Appropriations
Account, Fiscal Years 2003-2005:
Table 10: Total Number of Continuing Contracts by Appropriations
Account, Fiscal Years 2003-2005:
Table 11: Total Number and Full Costs to the Federal Government of
Continuing Contracts Awarded by Division, Fiscal Years 2003-2005:
Table 12: Total Number and Full Costs to the Federal Government of
Continuing Contracts Awarded by District, Fiscal Years 2003-2005:
Figures:
Figure 1: Obligations by Fiscal Year for Continuing Contracts Awarded,
Fiscal Years 2003-2005:
Figure 2: Total Number of Continuing Contracts by Fiscal Quarter of
Award, Fiscal Years 2003-2005:
United States Government Accountability Office:
Washington, DC 20548:
September 8, 2006:
The Honorable David L. Hobson:
Chairman:
The Honorable Peter J. Visclosky:
Ranking Minority Member:
Subcommittee on Energy and Water Development:
Committee on Appropriations:
House of Representatives:
Each year, Congress provides funding to the U.S. Army Corps of
Engineers' (Corps) Civil Works program to plan, construct, operate, and
maintain a wide range of water resources projects. During fiscal years
2005 and 2006, the Corps received annual appropriations of more than $4
billion for such projects. Water resources projects often take more
than 1 fiscal year to complete, and the Corps usually relies on one or
more contractors to complete these projects. Generally, agencies are
required to obligate appropriations for all costs expected to be
incurred at the time of award (i.e., fully fund contracts).[Footnote 1]
However, the River and Harbor Act of 1922 provides the Corps a unique
authority to use what is referred to as a "continuing contract" to
carry out certain projects. The Corps' continuing contracts authority
allows it to enter into, and commit the federal government for, the
full amount of contracts that span more than 1 fiscal year--even though
the Corps may not have sufficient funds to cover the full contract
amount at the time the contract is awarded. For example, the Corps
could award a 3-year, $12 million continuing contract even if it only
had appropriations to cover the first year's work; the funds needed to
cover the remaining contract amount would be obligated to subsequent
years' appropriations. A continuing contract contains a continuing
contracts clause that allows contractors to continue work on a project
even when appropriations are not available. When funding becomes
available, the Corps is committed to pay all of the outstanding costs
incurred by the contractor for work performed under the contract, as
well as any interest that may have accrued on these outstanding
balances.
A provision of law enacted in the Water Resources Development Act of
1999 requires the Corps to use continuing contracts for certain water
resources projects for which sufficient funds are not available to
complete the project.[Footnote 2] However, in the conference report
accompanying the Corps' 2004 appropriations, the conference committee
noted its concerns about the Corps' policy of allowing contractors to
choose their own pace for working on continuing contracts, which
effectively allowed contractors, rather than the Corps, to determine
how future appropriations would be allocated. In fiscal year 2005, the
conference committee noted that continuing contracts are to allow the
Corps to award large construction elements of a project to take
advantage of the economies of scale and allow these large elements to
be efficiently managed over several years.[Footnote 3] The committee
reiterated its past concerns that the Corps' construction projects may
have used continuing contracts ineffectively.
In this context, you asked us to determine (1) the number and dollar
amount of continuing contracts the Corps awarded during fiscal years
2003-2005; (2) the circumstances in which the Corps used continuing
contracts in fiscal years 2003-2005; and (3) how the Corps' process for
approving and using continuing contracts changed since 2005, and
whether these changes have reduced the use of these contracts.
To address these objectives, we analyzed the Corps' contracting data
for Civil Works fixed-price and indefinite-delivery contracts (both
construction contracts and operation and maintenance contracts) for
fiscal years 2003-2005. Of the contracts we reviewed, we identified all
of the contracts for which the Corps did not obligate the full contract
amount (i.e., partially funded). We excluded from our analysis
contracts that the Corps identified as incrementally funded
contracts.[Footnote 4] We assessed the reliability of the Corps' data
and found that they were sufficiently reliable for our use. In
addition, we reviewed 107 randomly selected continuing contract files
from three Corps districts. The districts we selected used a large
number of continuing contracts and were located in divisions that
awarded a large percentage of continuing contracts in fiscal years 2003-
2005. We also reviewed Corps guidance for approving and using
continuing contracts before and after 2005, when the Corps revised its
process. We surveyed all eight Corps divisions to determine the total
number of continuing contract requests that were approved and denied by
Corps headquarters after the Corps revised its process. We performed
our work between December 2005 and July 2006, in accordance with
generally accepted government auditing standards. Appendix I provides a
detailed description of our scope and methodology.
Results in Brief:
The Corps does not track information on the number of contracts with a
continuing contracts clause that it awards, and therefore does not know
how many continuing contracts it awarded during fiscal years 2003-2005.
It also does not know the dollar value of these contractual
obligations. The Corps was directed to provide the appropriations
committees with quarterly reports on its use of on-going continuing
contracts in fiscal year 2006, but we found that the information
submitted in these reports was inaccurate. For example, we found that
at least 13 continuing contracts were missing from the Corps' quarterly
reports and 10 continuing contracts had incorrect dollar values.
Because the Corps cannot determine how many continuing contracts it
awarded for fiscal years 2003-2005, we analyzed the Corps' contracting
data. We found that 1,592 of the 16,532 contracts awarded in this 3-
year period most likely included and exercised (used) a continuing
contracts clause. These 1,592 contracts accounted for more than 60
percent of the Corps' annual obligations for new contracts awarded
during these 3 years. The 1,592 contracts were expected to cost the
government more than $3.96 billion at the time of award, but the Corps
only obligated $655 million to current appropriations when these
contracts were awarded; as a result, the federal government was left
with about $3.30 billion in outstanding commitments. The value of
individual continuing contracts ranged from as little as $12,000 to as
much as $564 million.
During fiscal years 2003-2005, it was standard operating practice for
the Corps to include a continuing contracts clause in most of its
contracts. This occurred, according to Corps officials, because a
provision in the Water Resources Development Act of 1999 required the
agency to use continuing contracts when a project could not be fully
funded with available appropriations. Our review of 107 randomly
selected continuing contracts awarded during fiscal years 2003-2005
found numerous examples of the Corps' overuse of this requirement for
contracts where a continuing contract may not have been needed. For
example, in about one-third of the continuing contracts that we
reviewed, the contracted work required 6 months or less to complete or
had a contract value of less than $1 million. Therefore, we believe
that these contracts did not need to be awarded as continuing contracts
given their relatively short-term and small dollar values. The Corps
might have been able to fully fund some of these contracts if, at the
time of award, the Corps had adequate appropriations to cover the
contract amount. Only 8 of the 107 continuing contracts we reviewed
involved a relatively large dollar amount--for the purposes of our
review, more than $10 million--and required more than 12 calendar
months to complete, thereby, in our opinion, establishing a rationale
for a continuing contract. Another factor contributing to the routine
use of continuing contracts was the Corps' policy of expending all
available appropriations in the fiscal year for which it was
appropriated, rather than carrying balances into the next fiscal year.
According to Corps officials, the use of continuing contracts helped to
meet this policy by allowing the Corps to move funds from projects that
had excess funds either (1) to other ongoing projects that could use
them or (2) to start new projects at the end of the fiscal year by
using partially funded continuing contracts. For fiscal years 2003-
2005, we found that over half of the contracts we reviewed were awarded
during the last quarter of the fiscal year as continuing contracts with
little or no associated obligations, thus committing the federal
government to cover the costs of these contracts in future years'
appropriations.
In response to congressional committee direction in 2005 and again in
2006, the Corps created new processes that, among other things, require
districts to obtain Corps headquarters' approval before using
continuing contracts. These new processes reduced the number of
continuing contracts awarded by the Corps since 2005, but have not
prevented the use of continuing contracts for short-term, low dollar
value contracts. The Corps might have been able to fully fund some of
these contracts if, at the time of award, the Corps had adequate
appropriations to cover the contract amount. Under the new processes,
in addition to obtaining headquarters' approval, districts were
instructed to fully fund contracts when, among other things, they had
sufficient funds. Districts were also instructed to stop contractors
from working on a contract once fiscal year 2006 appropriations had
been spent. However, the Corps did not establish criteria for when it
was appropriate to use continuing contracts. Consequently, we
determined that, despite the implementation of the new processes, Corps
headquarters received requests for and approved the use of continuing
contracts for short-term, low dollar value contracts. For example, in
fiscal year 2005, even with the new processes and guidance in place,
headquarters approved 38 of 141 requests for continuing contracts that
were valued at below $10 million and that required less than 12
calendar months to complete, including 3 requests that were for
contracts valued at less than $500,000. Similarly, for the first 6
months of fiscal year 2006, of the 17 continuing contract requests
approved by headquarters, 2 approvals were for work valued at below $10
million and required less than 12 calendar months to complete.
We are making recommendations that the Secretary of Defense direct the
Commanding General and Chief of Engineers of the U.S. Army Corps of
Engineers to eliminate the routine use of continuing contracts,
establish meaningful criteria for the use of such contracts, and
monitor the Corps' use of these contracts. In commenting on a draft of
this report, the Department of Defense stated that it was a
constructive report and concurred with our recommendations.
Background:
The Corps' Civil Works program is responsible for planning, developing,
and maintaining the nation's water and related environmental resources.
The Corps' headquarters is in Washington D.C; eight regional divisions
and 38 districts carry out its domestic civil works responsibilities.
Each year the Corps' Civil Works program receives funding through the
Energy and Water Development Appropriations Act. The act normally
appropriates a sum for water resources projects to several different
appropriations accounts, including construction; operation and
maintenance; and flood control, Mississippi River and tributaries. The
construction account finances construction and major rehabilitation
projects that relate to navigation, flood control, water supply,
hydroelectric power, and environmental restoration. The operation and
maintenance account finances the preservation, operation, maintenance,
and care of existing river and harbor, flood-control, and related
activities at the projects that the Corps operates and maintains. The
flood control, Mississippi River and tributaries account provides flood
protection for the alluvial valley of the Mississippi River from Cape
Girardeau, Missouri, to the Head of Passes, Louisiana; and improvement
of the Mississippi River for navigation from Cairo, Illinois, to Baton
Rouge, Louisiana. Table 1 shows the appropriations received in fiscal
years 2003-2005 for these accounts.
Table 1: Fiscal Years 2003-2005 Appropriations:
Appropriations account: Construction;
Fiscal year 2003 budget authority: $1,756,012;
Fiscal year 2004 budget authority: $1,722,319;
Fiscal year 2005 budget authority: $1,796,089.
Appropriations account: Operation and maintenance;
Fiscal year 2003 budget authority: 1,940,167;
Fiscal year 2004 budget authority: 1,967,925;
Fiscal year 2005 budget authority: 1,959,101.
Appropriations account: Flood control, Mississippi River and
tributaries;
Fiscal year 2003 budget authority: 344,574;
Fiscal year 2004 budget authority: 324,222;
Fiscal year 2005 budget authority: 324,500.
Appropriations account: Total;
Fiscal year 2003 budget authority: $4,040,753;
Fiscal year 2004 budget authority: $4,014,466;
Fiscal year 2005 budget authority: $4,079,690.
Sources: Fiscal years 2003, 2004, and 2005 Energy and Water Development
Appropriations Acts.
[End of table]
The conference report accompanying the Energy and Water Development
Appropriations Act generally lists individual projects and designates
amounts for each project.[Footnote 5] Through this report, the
appropriations committees essentially establish their priorities for
the Corps' water resources projects. In recent years, Congress has
appropriated less funding than the sum of the amounts designated to
individual projects in the conference report. Districts are responsible
for executing projects.
The Corps receives "no year" appropriations that remain available until
spent. As part of the budget process, the Corps has historically
requested appropriations from Congress to cover only those contract
payments expected to be made in the upcoming fiscal year; it generally
has not requested appropriations to fully fund its Civil Works
contracts. According to the Corps, to comply with congressional
direction that the agency give careful consideration to the disposition
of appropriated funds to ensure that they are applied effectively, and
that the agency effectively move (reprogram) funds from projects that
are not moving forward, the Corps developed policies and business
practices to expend all available appropriations in the fiscal year
appropriated and thereby minimize carrying appropriated funds over to
following years. In fiscal year 2006, again in response to changing
congressional direction in the Energy and Water Development
Appropriations Act and the accompanying conference report, the Corps
modified its program execution process to focus on expending funds only
on the projects for which they were specified, even if the appropriated
funds could not be completely expended in the fiscal year, and
minimizing reprogramming unless it was absolutely essential.[Footnote
6] Consequently, a higher level of carry-over balances is anticipated
starting in fiscal year 2006. The Corps has also stated that it will
begin requesting sufficient appropriations to fully fund most contracts
beginning in fiscal year 2008.
The Corps primarily uses fixed-price and indefinite-delivery contracts
to complete its work. Fixed-price contracts are awarded for a specific
price, regardless of the final cost to the contractor. If the contract
is completed for less than the fixed price, the contractor benefits
from greater profits; if the costs exceed the fixed price, then the
contractor bears the loss. Indefinite-delivery contracts allow the
Corps to obtain services or supplies through multiple task or delivery
orders, as needed, to carry out project construction, and operation and
maintenance activities.
History of the Corps' Continuing Contracts Authority:
Starting with the River and Harbor Act of 1892 and continuing
intermittently through the River and Harbor Act of 1916, Congress gave
the Corps authorization to enter into contracts to complete a limited
number of projects even though the Corps did not have appropriations to
cover the full contract amounts. In 1922, the Corps sought and received
from Congress permanent authority to enter into these types of
"continuing contracts." The River and Harbor Act of 1922 gave the Corps
authority to use continuing contracts for specifically authorized
projects on canals, rivers, and harbors.
When the Corps sought its 1922 authority to use continuing contracts,
it stated that this authority would enable it to enter into contracts
that exceeded the amount of funding that had been appropriated. At that
time, the Corps noted that the continuing contract option would be
advantageous for some projects--such as a lock and dam project that
required several million dollars and 3 to 4 years to complete--because
it would help avoid tying up appropriations over a long period of time
and carrying large sums of unexpended appropriations for several years.
The Corps also noted that awarding contracts with a larger scope of
work that covered several years would help encourage active competition
among contractors.
Since 1922, the Corps has used its continuing contracts authority to
varying degrees for different types of projects and activities. In
recent years, Congress has provided both guidance and specific
direction to the Corps on how to use continuing contracts. These
include the following:
* The Water Resources Development Act of 1999. Congress broadened the
types of projects and work covered by the Corps' continuing contracts
authority. Specifically, it directed the Corps to award continuing
contracts if sufficient funding was not available to complete a project
funded from the construction; operation and maintenance; or flood
control, Mississippi River and tributaries appropriations accounts.
* The Energy and Water Development Appropriations Act of 2004. Congress
included a provision, not limited to fiscal year 2004, to also allow
the use of continuing contracts for those contracts that were funded
from the investigations appropriations account. The investigations
account is used to collect and study basic information for, among other
things, river and harbor and flood control activities; miscellaneous
investigations; and surveys and detailed studies for projects before
construction.
* The committee report accompanying the Corps' fiscal year 2005
appropriations. The conference committee expressed concern about the
Corps' use of continuing contracts and noted that continuing contracts
are to allow the Corps to award large construction elements of a
project and take advantage of the economies of scale and allow these
large elements to be efficiently managed over several years.
* The Energy and Water Development Appropriations Act of 2006. Congress
included a provision that modifies the types of projects and work for
which the Corps is required to use a continuing contract. The
provision, not limited to fiscal year 2006, states that the
requirements regarding the use of continuing contracts in the Water
Resources Development Act of 1999 shall apply only to projects funded
from the operation and maintenance account and the operation and
maintenance subaccount of the Mississippi River and tributaries
account. The 2006 act also prohibits the Corps from entering into a
continuing contract or modifying an existing contract that commits an
amount for a project "in excess of the amount appropriated for such
project pursuant to this act."
The Corps' continuing contracts contain either a "basic clause" or an
"alternate clause." Districts may only use the basic continuing
contracts clause for those contracts awarded for congressionally
authorized Civil Works water resources projects, which are typically
authorized in a Water Resources Development Act. The alternate clause
can be used for projects that are not specifically authorized, but are
covered by the Continuing Authorities Program.[Footnote 7] The Corps'
continuing contracts authority applies to specific types of projects,
which do not include water-related environmental infrastructure and
resource development projects, such as wastewater treatment, water
supply, storm water retention and remediation, environmental
restoration, and surface water resource protection and development.
Districts historically made the decision to use continuing contracts
without oversight from the division or Corps headquarters.
In our prior reports on governmentwide funding practices, we have
observed that full funding for capital asset acquisitions is the best
way to ensure that all financial decisions are fully accounted for and
recognized as part of the budget process, and that full funding also
helps ensure that governmentwide fiscal control is maintained.[Footnote
8] Unlike a project started with a partially funded continuing
contract, an agency receives budget authority for the project's full
estimated costs before a commitment is made for a fully funded capital
project. Otherwise, distortions in resource allocations can result when
the full costs of the commitments are not recognized at the time budget
decisions are made.
The Corps Cannot Accurately Identify How Many Continuing Contracts It
Has Awarded because It Does Not Track These Contracts:
The Corps does not track information on the number of contracts that it
awards with a continuing contracts clause; therefore, it could not
identify the number or the dollar value of such contracts awarded in
fiscal years 2003-2005. Because the Corps does not track its use of
continuing contracts, the quarterly reports it submitted to the
appropriations committees in fiscal year 2006, on the use of such
contracts, were inaccurate. We independently identified the number of
continuing contracts awarded by the Corps in fiscal years 2003-2005 by
reviewing the agency's contracting data, and we determined that 1,592
(about 10 percent) of all contracts awarded during this 3-year period
most likely included and used a continuing contracts clause. These
1,592 contracts accounted for more than 60 percent of the Corps' annual
obligations for new contracts awarded during these 3 years.
The Corps Does Not Track Its Use of Continuing Contracts:
The Corps does not systematically track the extent to which it uses a
continuing contracts clause, and could not provide reliable information
on the number of continuing contracts awarded in fiscal years 2003-2005
or the dollar value of these contracts. Moreover, according to Corps
officials, nearly all multi-year contracts awarded by the Corps prior
to fiscal year 2005 routinely included a continuing contracts clause,
and the agency had no requirement for districts to track when this
clause was actually used.
In fiscal years 2005 and 2006, the conference committees, in the
reports accompanying the Corps' appropriation acts, directed the Corps
to monitor its use of continuing contracts. The Corps was also directed
to provide the appropriations committees with a quarterly report on the
agency's use of such contracts, starting in fiscal year 2006. Because
the Corps does not have a tracking system for continuing contracts, it
gathered the information submitted in the two quarterly reports for
fiscal year 2006 by asking each division to provide information on
their existing continuing contracts and expected obligations for the
federal costs associated with these contracts. We reviewed these two
quarterly reports and determined that they included inaccurate
information. For example, we found at least 13 continuing contracts
that were missing from the reports sent to the committees, and we found
wrong contract values (the expected total costs for a contractor to
complete the work) listed for 10 contracts.
Continuing Contracts Most Likely Accounted for About 10 Percent of All
Contracts Awarded by the Corps in Fiscal Years 2003-2005:
Our analysis of the Corps' contracting data indicates that the Corps
awarded 16,532 fixed-price and indefinite-delivery contracts (both
construction contracts and operation and maintenance contracts) during
fiscal years 2003-2005.[Footnote 9] According to Corps officials, the
agency included a continuing contracts clause in most of its multi-year
contracts. However, most of the 16,532 contracts were fully funded and,
therefore, would not have needed to use a continuing contracts clause
even if it was included in the contract.[Footnote 10] We found 1,592 of
the 16,532 contracts (about 10 percent) were partially funded contracts
at award and, therefore, most likely would have included and used a
continuing contracts clause. The 1,592 contracts included 402 contracts
that were partially funded at award but were fully funded by the end of
the first fiscal year.[Footnote 11] The 1,592 contracts accounted for
more than 60 percent of the Corps' annual obligations for new contracts
awarded during these 3 years.[Footnote 12] The full costs to the
federal government of the 1,592 contracts were more than $3.96 billion
at award. However, the Corps only obligated $655 million to current
appropriations when these contracts were awarded; the outstanding
commitment at the time of award was about $3.30 billion, and the Corps
expects to obligate this amount to subsequent years' appropriations.
Table 2 summarizes the total number and full costs to the federal
government of continuing contracts awarded during fiscal years 2003-
2005.
Table 2: Total Number and Full Costs to the Federal Government of
Continuing Contracts, Fiscal Years 2003-2005:
Number of continuing contracts;
Fiscal year: 2003: 669;
Fiscal year: 2004: 583;
Fiscal year: 2005: 340;
Total: 1,592.
Full costs to federal government at award;
Fiscal year: 2003: $1,098,599,154;
Fiscal year: 2004: 1,703,122,079;
Fiscal year: 2005: 1,154,337,793;
Total: $3,956,059,026.
Obligations at award;
Fiscal year: 2003: $201,528,606;
Fiscal year: 2004: 213,814,098;
Fiscal year: 2005: 240,013,268;
Total: $655,355,972.
Outstanding commitment at award;
Fiscal year: 2003: $897,070,548;
Fiscal year: 2004: 1,489,307,981;
Fiscal year: 2005: 914,324,525;
Total: $3,300,703,054.
Source: GAO analysis of Corps contracting data.
[End of table]
Other characteristics that we identified for these 1,592 continuing
contracts included the following:
* All 38 districts used at least one continuing contract during fiscal
years 2003-2005. Five districts--Jacksonville, Vicksburg, Memphis,
Walla Walla, and Portland--awarded only about 2.8 percent of the total
number of contracts for this time period, but accounted for about 30
percent of the continuing contracts.
* About 65 percent of the continuing contracts were valued at $1
million or less; 26 percent were valued at between $1 million and $5
million; 5 percent were valued between $5 million and $10 million;
and 4 percent were valued at more than $10 million.
* Several appropriations accounts funded these continuing
contracts.[Footnote 13] About 54 percent of the obligations were from
the construction account; 25 percent from the operation and maintenance
account; 7 percent from the flood control, Mississippi River and
tributaries account; 9 percent from the Inland Waterway Trust Fund;
and 6 percent from other accounts.[Footnote 14]
* When contractors continue to work even after appropriations are not
available, the Corps is committed to pay all of the outstanding costs
incurred by the contractor and any interest that may have accrued on
these outstanding balances. The Corps could not provide data on the
interest it paid in fiscal year 2003 for these continuing contracts,
but for fiscal years 2004 and 2005, the Corps paid about $497,000 and
$288,000 in interest payments, respectively. Monthly interest payments
on these contracts ranged from about $1 to more than $76,000 for
individual districts.
* Continuing contracts were generally used more often for fixed-price
contracts than for indefinite-delivery contracts. About 50 percent of
fixed-price contracts were continuing contracts, compared to only about
5 percent of indefinite-delivery contracts. The full costs to the
federal government of fixed-price continuing contracts ranged from
about $21,000 to more than $564 million, while indefinite-delivery
continuing contracts ranged from as small as $12,000 to more than $22.5
million. The median dollar value of all 1,592 continuing contracts was
about $440,000; the median value of the fixed-price continuing
contracts was about $1.2 million; and the median value of the
indefinite-delivery continuing contracts was about $147,000.
Appendix II provides more information on the characteristics of the
continuing contracts that we identified for fiscal years 2003-2005.
Prior to 2005, the Corps Routinely Included a Continuing Contracts
Clause in Most Contracts:
The Corps' routine practice was to include a continuing contracts
clause in most of the contracts it awarded during fiscal years 2003-
2005. According to the Corps, this occurred, in part, because a
provision of the Water Resources Development Act of 1999 requires the
agency to use continuing contracts for certain projects if sufficient
funding is not available to complete the project. The Corps interpreted
this provision to mean that, if sufficient funds were not available to
complete the entire project, then all contracts associated with the
project must be continuing contracts. The Corps' interpretation of this
provision resulted, in our opinion, in the overuse of the continuing
contracts authority because the provision does not require all
contracts awarded for a given project to be continuing contracts. The
Corps might have been able to fully fund some short-term, low dollar
value contracts if, at the time of award, the Corps had adequate
appropriations to cover the contract amount.[Footnote 15] Moreover, the
Corps relied on its use of continuing contracts to help meet its policy
of not carrying over unexpended appropriations into future fiscal
years. By routinely including a continuing contracts clause into all of
its contracts, the Corps could more easily move funds among contracts
at the end of the year. Appropriations that could not be expended on a
contract would be obligated to a contract that could expend the funds.
In addition, districts cited a variety of other reasons for a large
number of continuing contracts being awarded at the end of the fiscal
year.
In the late 1990s, large carry-over amounts of unexpended Corps
appropriations at the end of each fiscal year became a concern to
Congress. Through a provision of the Water Resources Development Act of
1999, Congress instructed the Corps to use continuing contracts for
certain water resources projects if sufficient funding was not
available to complete the project--in effect, this made permanent the
direction that the appropriations committees had given to the Corps for
a number of years through fiscal year 1998. As a result, the Corps
implemented policies designed to maximize expenditures from all
available appropriations in the year appropriated. These policies, in
turn, encouraged the Corps' use of continuing contracts to ensure that
only the appropriations required for expenditure in a given year were
obligated on the contract.
However, we believe that the Corps' implementation of the 1999 law has
resulted in an overuse of the continuing contracts authority and the
frequent awarding of continuing contracts for short-term, low dollar
value contracts.[Footnote 16] The Corps might have been able to fully
fund some of these contracts if, at the time of award, the Corps had
adequate appropriations to cover the contract amount. For example, for
the 107 randomly selected continuing contracts awarded in fiscal years
2003-2005 that we reviewed, we found only 8 continuing contracts that
were valued at more than $10 million dollars and involved contracted
work that required more than 12 calendar months to complete. In
contrast, many of the 107 continuing contracts we reviewed were short-
term and/or low dollar value contracts. For example, we found that, 39
continuing contracts were for work that lasted 6 months or less;
34 continuing contracts had a contract value of less than $1 million;
and 10 continuing contracts had a contract value of less than $1
million and included work that took less than 6 months to
complete.[Footnote 17] Some specific examples of the kinds of short-
term, low dollar value continuing contracts we identified were:
* The Jacksonville district used a continuing contract to partially
fund a $695,285 contract that required 90 days to complete.
* The Galveston district used a continuing contract for an $868,812
contract that required 30 days to complete. The district awarded the
contract on September 29, 2004, and did not give the contractor
permission to begin the work until the next fiscal year on November 1,
2004. Therefore, the contracted work was actually completed in one
fiscal year and was not a multi-year contract.
* The Vicksburg district used a continuing contract for a $102,051
contract that required 195 days to complete. Because the contract
spanned more than one fiscal year, the Corps considered this a multi-
year contract that justified the use of a continuing contract, even
though the contract required less than 7 months to complete and had a
relatively low dollar amount.
Table 3 summarizes the full contract costs and length of time needed to
complete contracted work for the 107 randomly selected continuing
contracts we reviewed.
Table 3: Total Number of the 107 Randomly Selected Continuing Contracts
Awarded in Fiscal Years 2003-2005 by the Full Contract Costs and Number
of Months to Complete the Contracted Work:
Number of months to complete work: Six or less;
Contract value at award: Less than $1 million: 10;
Contract value at award: From $1 million to less than $5 million: 26;
Contract value at award: From $5 million to less than $10 million: 3;
Contract value at award: More than $10 million: 0;
Contract value at award: Total number of contracts: 39.
Number of months to complete work: Between 6 and 12;
Contract value at award: Less than $1 million: 16;
Contract value at award: From $1 million to less than $5 million: 12;
Contract value at award: From $5 million to less than $10 million: 2;
Contract value at award: More than $10 million: 0;
Contract value at award: Total number of contracts: 30.
Number of months to complete work: Between 12 and 24;
Contract value at award: Less than $1 million: 3;
Contract value at award: From $1 million to less than $5 million: 6;
Contract value at award: From $5 million to less than $10 million: 4;
Contract value at award: More than $10 million: 4;
Contract value at award: Total number of contracts: 17.
Number of months to complete work: Greater than 24;
Contract value at award: Less than $1 million: 1;
Contract value at award: From $1 million to less than $5 million: 0;
Contract value at award: From $5 million to less than $10 million: 0;
Contract value at award: More than $10 million: 4;
Contract value at award: Total number of contracts: 5.
Number of months to complete work: Unknown;
Contract value at award: Less than $1 million: 4;
Contract value at award: From $1 million to less than $5 million: 9;
Contract value at award: From $5 million to less than $10 million: 2;
Contract value at award: More than $10 million: 1;
Contract value at award: Total number of contracts: 16.
Number of months to complete work: Total;
Contract value at award: Less than $1 million: 34;
Contract value at award: From $1 million to less than $5 million: 53;
Contract value at award: From $5 million to less than $10 million: 11;
Contract value at award: More than $10 million: 9;
Contract value at award: Total number of contracts: 107.
Source: GAO analysis of Corps contracting data from randomly selected
continuing contract files.
Note: These costs include both the federal government and nonfederal
sponsor's share of the contract costs.
[End of table]
The Corps also routinely included a continuing contracts clause in its
contracts to help meet its policy of expending all available
appropriations in the fiscal year appropriated, and to minimize
carrying over unexpended appropriations into the next fiscal year.
According to the Corps, it allocates appropriations to projects at the
beginning of the fiscal year. The only way to reallocate appropriations
to avoid carryover is through reprogramming. Reprogramming provides the
Corps with the flexibility to move excess funds from projects that are
behind schedule to projects that may be able to use the funds because
they are ahead of schedule. Generally, federal agencies are required to
fully fund contracts at the time of award. The Corps would not have
been able to easily move the funds from a contract unless it included a
continuing contracts clause. According to agency officials, the Corps
has had a standard practice to include a continuing contracts clause in
most contracts as a precaution in the event that it might need to move
funds from a project at a later date in the fiscal year to meet the
agency's policy of expending all available appropriations in the fiscal
year appropriated.
As we reported in 2005, the Corps had come to rely excessively on
reprogramming as its primary method to manage Civil Works project
funds, with little consideration to pending needs or long-term
financial planning and priority-setting.[Footnote 18] In our 2005
report, we identified numerous instances where the Corps' policy of
expending all available appropriations in the fiscal year appropriated
had resulted in reprogramming actions that were inconsistent with the
Corps' reprogramming guidance. Similarly, during this review of the
Corps' use of continuing contracts, we found a number of instances
where the Corps used its continuing contracts authority primarily to
reprogram funds in furtherance of the agency's policy of expending all
available appropriations in the fiscal year appropriated. For example,
in some cases, we found that the Corps included a continuing contracts
clause even in contracts that had been fully funded at the time of
award, in case it needed to reprogram funds sometime later during the
year from these contracts. In some other cases, according to Corps
district officials, we found that the Corps modified fully funded
contracts and converted them into continuing contracts so that
obligations could be reprogrammed from these contracts. In addition,
other continuing contracts were awarded in a manner that was
inconsistent with the Corps' own guidance for the use of continuing
contracts, but which allowed the agency to award end-of-year contracts
and not carry over any end-of-year balances. A continuing contracts
clause should identify the portion of the contract value that the Corps
will reserve for the contract for the first fiscal year. However, we
found four contracts that were awarded at the end of the fiscal year
where the district initially obligated $50,000 to each of the
contracts, but deobligated the entire $50,000 from each contract within
1 day. These actions helped the Corps meets its policy of expending all
available appropriations in the fiscal year appropriated by allowing
the money to be spent on other contracts.
A variety of other factors may also lead to the award of many
continuing contracts late in the fiscal year.[Footnote 19] According to
district officials, it is not uncommon for a continuing contract to be
awarded late in the fiscal year in situations where (1) the district
commander committed to awarding the contract in that fiscal year, (2)
the district had agreements with the nonfederal sponsor that certain
contracts would be awarded in that fiscal year, or (3) the district ran
out of money to fully fund a contract. Of the 107 contracts we
reviewed, over half of these (58) were awarded in the fourth quarter of
the fiscal year. Of these, 27 were awarded in September, the last month
of the fiscal year, and 15 of the 27 September contracts were awarded
in the last week of the fiscal year. Because the Corps only obligated a
small portion of the total contract amount to these contracts in the
year that they were awarded, the bulk of the funds needed to cover most
of the contracts had to come from future years' appropriations.
The Corps' Revised Processes for Approving Continuing Contracts Has
Reduced Their Use, but It Still Lacks Criteria for When Their Use Is
Appropriate:
In fiscal year 2005 and again in 2006, in response to congressional
committee direction, the Corps implemented new processes that require
districts to, among other things, obtain headquarters' approval before
using continuing contracts. The new processes have reduced the total
number of continuing contracts the Corps awarded in fiscal years 2005
and 2006. However, the Corps has not established clear criteria for
when it is appropriate to request and approve the use of continuing
contracts. As a result, headquarters continues to receive and approve
continuing contracts for short-term, low dollar value contracts. The
Corps might have been able to fully fund some of these contracts if, at
the time of award, the Corps had adequate appropriations to cover the
contract amount.
Fiscal Year 2005 Process Changes for Approving Continuing Contracts:
Congressional committee direction contained in the conference report to
the Consolidated Appropriations Act of 2005 required the Corps to
monitor its use of continuing contracts and stated that the award of
such contracts should be guided by responsible financial management
practices. Further, according to Corps officials, based on their
discussions with the House Subcommittee on Energy and Water
Development, the Corps created a new process that required districts to
obtain headquarters' approval before using continuing contracts. Corps
headquarters' primary criterion for approving a request to use a
continuing contract was whether or not the project was likely to
receive appropriations in the next fiscal year. The first continuing
contracts were approved using this criterion on March 30, 2005. In June
2005, the Corps documented this change in procedure by issuing an
interim policy guidance memorandum. The guidance stated that
headquarters' approval was required for all continuing contracts, and
that districts should seek to fully fund contracts whenever possible.
The guidance also established criteria for the kinds of situations in
which a contract should generally be fully funded. These situations
include the following:
* when the contract will span 2 fiscal years but will begin or end a
short amount of time before or after a fiscal year, and sufficient
appropriations can be made available to fully fund the contract without
adversely affecting progress on other projects or prior reprogramming
commitments;
* when the contract will span 2 fiscal years but requires only a small
amount of funding in the first or last fiscal year, and sufficient
appropriations can be made available to fully fund the contract without
adversely affecting progress on other projects or prior reprogramming
commitments;
* when future allocations of appropriated funds in amounts needed to
support a continuing contract are unlikely, and appropriations already
allocated for the project could be used to fully fund the contract;
and:
* for all, or portions of, Continuing Authorities Program
projects.[Footnote 20]
Unlike in the past when no oversight was provided to the districts' use
of continuing contracts, Corps officials told us the new fiscal year
2005 process for approving and using continuing contracts involved all
levels of the agency--the district, division, and headquarters. The
districts were required to submit written requests to their divisions
if they were seeking approval to use continuing contracts. The requests
were to include a discussion of alternative contracting options,
whether the project would be budgeted for in subsequent fiscal years,
the likelihood of the project receiving appropriations in subsequent
fiscal years, and whether the needs identified in subsequent fiscal
years' appropriations were reasonable given the Corps' budget
environment. After the division reviewed the districts' request, the
division either denied the request or forwarded it to headquarters. If
the division denied the request, it might have suggested that the
district provide additional information to support the request, fully
fund the work, use an alternate contracting option, or wait until the
next fiscal year to proceed with the work. Under the 2005 process,
requests forwarded to headquarters for review were approved, withdrawn
by the division, sent back to the division for more information, or
denied.
Fiscal Year 2006 Process Changes for Continuing Contracts:
For fiscal year 2006, Congress provided additional direction to the
Corps in the Energy and Water Development Appropriations Act of 2006.
The law states that, (1) with certain exceptions, none of the funds
made available in the act may be used to award any continuing contract
or make modifications to any existing continuing contract that commits
an amount for a project in excess of the amount appropriated for the
project; and (2) notwithstanding any other provision of the law, the
requirements regarding the use of continuing contracts under the Water
Resources Development Act of 1999 shall apply only to projects funded
under the operation and maintenance account and the operation and
maintenance subaccount of the flood control, Mississippi River and
tributaries account. To respond to these new congressional
requirements, in December 2005, the Corps issued additional guidance
that is effective through the end of fiscal year 2006, which, among
other things:[Footnote 21]
* reaffirmed its policy that districts should use fully funded
contracts as their primary contracting option;
* directed that continuing contracts should only be used as the
contracting option of last resort;
* summarized new information that the districts are required to provide
in their requests to use continuing contracts, including an explanation
on why using a continuing contract is in the best interest of the
government; and:
* directed districts to take measures to ensure that contractor costs
generally do not exceed the amount appropriated for projects in fiscal
year 2006.
The Corps also continued to make additional policy changes in fiscal
year 2006 to better manage the use of continuing contracts in response
to the Energy and Water Development Appropriations Act of 2006. For
example, in March 2006, to help districts comply with the requirement
that contractors stop working on a contract once appropriations for the
fiscal year were spent, Corps headquarters developed two new continuing
contracts clauses.[Footnote 22] Corps headquarters directed districts
to replace the existing continuing contracts clause with either one of
two new continuing contracts clauses for most continuing contracts.
These new clauses do not permit the contractor to work beyond the
amount obligated in the contract for that year. Under the previous
continuing contracts clause the contractor could continue working on
the contract, which required the Corps to either reprogram funds or to
make payments from the next fiscal year's funds when they were
appropriated. By requiring the contractor to stop work once all
reserved funds for a given project are spent, the Corps is effectively
reasserting control in determining how future appropriations will be
spent for specific contracts.
The conference report accompanying the Energy and Water Development
Appropriations Act of 2006 also specified that the Assistant Secretary
of the Army for Civil Works would be responsible for approving the
award of each continuing contract. According to the Corps, to simplify
the administration of this provision, the Assistant Secretary of the
Army for Civil Works, after coordination with the House and Senate
Subcommittees for energy and water development appropriations, issued a
memorandum in March 2006 pre-approving continuing contracts that met
certain conditions for operation and maintenance work. These conditions
include, among other things, being financed from the operation and
maintenance account or the maintenance subaccount of the Mississippi
River and tributaries account, and that districts have determined that
using a continuing contract is the most cost-effective acquisition
mechanism. In May 2006, the Corps delegated, to the divisions and
districts, the authority to determine whether operation and maintenance
contracts meet the conditions for pre-approval. As a consequence, Corps
headquarters is no longer directly involved in the approval of these
new operation and maintenance continuing contracts. Because these
changes are relatively recent, it is too early to determine the effect
that they will have on the districts' use of continuing contracts for
operation and maintenance work.
Process Changes Have Reduced the Number of Continuing Contracts, but
Approvals Continue for Short-Term, Low Dollar Value Contracts:
The Corps process changes in fiscal years 2005 and 2006 reduced the
number of requests districts made to use continuing contracts. In
fiscal year 2005, headquarters approved 141 requests during the 6
months that the new procedures were in place (March 30 through
September 30, 2005)[Footnote 23], but only 17 requests were approved
during the first 6 months of fiscal year 2006 (October 1, 2005, through
March 30, 2006). According to the Corps, the process changes that were
made in response to discussions with the House Subcommittee on Energy
and Water Development and the enactment of the Energy and Water
Development Appropriations Act of 2006 were key in reducing the use of
continuing contracts.
Between March 30, 2005 (when the new approval process was implemented),
and March 30, 2006, Corps headquarters approved most of the continuing
contract requests that it received. The divisions received 180 requests
from the districts, 175 of which were forwarded to headquarters for
approval and 5 of which were denied.[Footnote 24] Of the 175 requests
forwarded to headquarters for approval, 10 were withdrawn by the
divisions prior to receiving approval.[Footnote 25] Headquarters
approved 158 of the 165 requests it considered and denied 7 of them.
The seven requests were denied primarily because they did not identify
subsequent years' funding in their requests. The districts ultimately
fully funded five of the seven requests that were denied. Table 4
summarizes headquarters' reasons for denying the seven requests and how
the districts proceeded with the work after the denial.
Table 4: Headquarters' Reasons for Denying Seven Requests to Use a
Continuing Contract and How Districts Proceeded with the Work:
Contract: 1;
Reason for denial: Contract could be fully funded: X;
Reason for denial: Contract did not identify subsequent years' funding:
[Empty];
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded: X;
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Contract: 2;
Reason for denial: Contract could be fully funded: X;
Reason for denial: Contract did not identify subsequent years' funding:
[Empty];
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded: X;
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Contract: 3;
Reason for denial: Contract could be fully funded: [Empty];
Reason for denial: Contract did not identify subsequent years' funding:
X;
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded: X;
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Contract: 4;
Reason for denial: Contract could be fully funded: [Empty];
Reason for denial: Contract did not identify subsequent years' funding:
X;
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded: X;
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Contract: 5;
Reason for denial: Contract could be fully funded: [Empty];
Reason for denial: Contract did not identify subsequent years' funding:
X;
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded:
[Empty];
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: X.
Contract: 6;
Reason for denial: Contract could be fully funded: [Empty];
Reason for denial: Contract did not identify subsequent years' funding:
[Empty];
Reason for denial: Contract not in president's fiscal year 2007 budget:
X;
Reason for denial: Contracted work cannot use a continuing contract:
[Empty];
Action taken to proceed with the work: Contract was fully funded:
[Empty];
Action taken to proceed with the work: District assessing alternate
contracting options: X;
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Contract: 7;
Reason for denial: Contract could be fully funded: [Empty];
Reason for denial: Contract did not identify subsequent years' funding:
[Empty];
Reason for denial: Contract not in president's fiscal year 2007 budget:
[Empty];
Reason for denial: Contracted work cannot use a continuing contract:
X[A];
Action taken to proceed with the work: Contract was fully funded: X;
Action taken to proceed with the work: District assessing alternate
contracting options: [Empty];
Action taken to proceed with the work: Contract will use a new
continuing contracts clause: [Empty].
Source: GAO analysis of Corps information.
[A] This contract was for an environmental infrastructure project,
which cannot use a continuing contract.
[End of table]
Although the Corps' revised approval processes reduced the number of
continuing contracts districts used, they have not adequately addressed
when the use of continuing contracts is appropriate. This is because
the Corps' revised guidance established the situations in which
districts should consider fully funding contracts, but did not
establish similar criteria for when to use continuing contracts.
Consequently, even with the new process changes, districts requested
and headquarters approved the use of continuing contracts for
contracted work that is of short term and has a low dollar value. The
Corps believes that these requests demonstrated a strong business case
for using a continuing contract;[Footnote 26] however, we believe that
the Corps might have been able to fully fund some of these contracts
if, at the time of award, the Corps had adequate appropriations to
cover the contract amount.
Moreover, under the new processes, in fiscal year 2005, Corps
headquarters' primary criterion for approving a request to use a
continuing contract was whether or not the project was likely to
receive appropriations in the next fiscal year. If headquarters
determined that there was little likelihood of the project receiving
future years' appropriations it would generally deny the request for a
continuing contract. By focusing its review on just this criterion, the
Corps did not address factors such as length of work and dollar value
of the contract, which we believe are also important factors to
consider when justifying the need to use a continuing contract. Of the
141 requests approved by headquarters between March 30 through
September 30, 2005, only 24 (about 17 percent) were for contracts
valued at more than $10 million and that required more than 12 calendar
months to complete. In contrast, headquarters approved 38 of 141
requests (almost 27 percent) for contracts valued at less than $10
million and that required less than 12 calendar months to complete, and
included 3 requests that were for contracts for less than $500,000.
Table 5 summarizes information on the requests approved in fiscal year
2005.
Table 5: Total Number of Approved Requests to Use a Continuing Contract
in Fiscal Year 2005:
Number of months to complete work: Six or less;
Contract value at award[A]: Less than $1 million: 2;
Contract value at award[A]: From $1 million to less than $5 million:
14;
Contract value at award[A]: From $5 million to less than $10 million:
1;
Contract value at award[A]: More than $10 million: 1;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 18.
Number of months to complete work: Between 6 and 12;
Contract value at award[A]: Less than $1 million: 5;
Contract value at award[A]: From $1 million to less than $5 million:
15;
Contract value at award[A]: From $5 million to less than $10 million:
1;
Contract value at award[A]: More than $10 million: 2;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 23.
Number of months to complete work: Between 12 and 24;
Contract value at award[A]: Less than $1 million: 1;
Contract value at award[A]: From $1 million to less than $5 million:
14;
Contract value at award[A]: From $5 million to less than $10 million:
5;
Contract value at award[A]: More than $10 million: 5;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 25.
Number of months to complete work: Greater than 24;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million:
10;
Contract value at award[A]: From $5 million to less than $10 million:
9;
Contract value at award[A]: More than $10 million: 19;
Contract value at award[A]: Unknown: 1;
Contract value at award[A]: Total number of approved requests: 39.
Number of months to complete work: Unknown;
Contract value at award[A]: Less than $1 million: 8;
Contract value at award[A]: From $1 million to less than $5 million:
23;
Contract value at award[A]: From $5 million to less than $10 million:
5;
Contract value at award[A]: More than $10 million: 0;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 36.
Number of months to complete work: Total;
Contract value at award[A]: Less than $1 million: 16;
Contract value at award[A]: From $1 million to less than $5 million:
76;
Contract value at award[A]: From $5 million to less than $10 million:
21;
Contract value at award[A]: More than $10 million: 27;
Contract value at award[A]: Unknown: 1;
Contract value at award[A]: Total number of approved requests: 141.
Source: GAO analysis of Corps information.
Note: Fiscal year 2005 requests include those approved during the
period March 30 through September 30, 2005.
[A] The contract value generally includes only the federal government's
costs, except for those requests that did not distinguish between the
federal government and a nonfederal sponsor's share of the costs.
[End of table]
In fiscal year 2006, the Corps further revised headquarters' criteria
for approving continuing contract requests (or for recommending
approval by the Assistant Secretary, pursuant to the conference report
guidance); however, these changes also did not address our concern
about approving short-term, low dollar value continuing contracts. As a
result, the Corps and the Assistant Secretary continued to approve such
contracts as continuing contracts in fiscal year 2006. Of the 17
requests approved by headquarters in fiscal year 2006 (as of March 30,
2006), only 4 of the requests (about 24 percent) were for contracted
work that required more than $10 million and more than 12 calendar
months to complete; 2 approved continuing contract requests were for
short-term, low dollar value requests. Table 6 summarizes information
on the requests approved for fiscal year 2006, as of March 30, 2006.
Table 6: Total Number of Approved Requests to Use a Continuing Contract
in Fiscal Year 2006:
Number of months to complete work: Six or less;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 2;
Contract value at award[A]: From $5 million to less than $10 million:
0;
Contract value at award[A]: More than $10 million: 0;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 2.
Number of months to complete work: Between 6 and 12;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 0;
Contract value at award[A]: From $5 million to less than $10 million:
0;
Contract value at award[A]: More than $10 million: 0;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 0.
Number of months to complete work: Between 12 and 24;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 2;
Contract value at award[A]: From $5 million to less than $10 million:
1;
Contract value at award[A]: More than $10 million: 1;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 4.
Number of months to complete work: Greater than 24;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 0;
Contract value at award[A]: From $5 million to less than $10 million:
3[B];
Contract value at award[A]: More than $10 million: 3;
Contract value at award[A]: Unknown: 2;
Contract value at award[A]: Total number of approved requests: 8.
Number of months to complete work: Unknown;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 2;
Contract value at award[A]: From $5 million to less than $10 million:
0;
Contract value at award[A]: More than $10 million: 1;
Contract value at award[A]: Unknown: 0;
Contract value at award[A]: Total number of approved requests: 3.
Number of months to complete work: Total;
Contract value at award[A]: Less than $1 million: 0;
Contract value at award[A]: From $1 million to less than $5 million: 6;
Contract value at award[A]: From $5 million to less than $10 million:
4;
Contract value at award[A]: More than $10 million: 5;
Contract value at award[A]: Unknown: 2;
Contract value at award[A]: Total number of approved requests: 17.
Source: GAO analysis of Corps information.
Note: Fiscal year 2006 requests include those approved from October 1,
2005, through March 30, 2006.
[A] The contract value generally includes only the federal government's
costs, except in those requests that did not distinguish between the
federal government and a nonfederal sponsor's share of the costs.
[B] The Corps approved the use of a continuing contract for two of the
requests because requiring that the two requests be fully funded would
have required that the local communities fully fund their share of the
project, thus creating an economic hardship.
[End of table]
Although the Corps' current criteria does not consider the duration and
dollar value of contracts when making decisions about whether or not to
award continuing contracts, agency officials are evaluating guidance
for the fiscal year 2008 budget (and beyond) under which they would
propose full funding of the federal government's commitment for
contracts that are below a certain threshold. According to the Corps,
this approach would reduce the use of continuing contracts up to 90
percent by fiscal year 2010.
Conclusions:
The continuing contracts authority is a unique authority that provides
the Corps with important flexibilities to manage multi-year, multi-
million-dollar water resources projects. However, this authority also
allows the Corps to commit the federal government to future financial
obligations without appropriated funds to meet them. Because of the
potential to create significant future liabilities for the federal
government, it is critical that the Corps have appropriate processes
and practices in place to ensure that the use of the continuing
contracts privilege is not misused or overused. We continue to advocate
that fully funding contracts at the time of award is the best way for
federal agencies to manage contractual obligations. If the Corps
continues to use continuing contracts, then it must be able to monitor
and track the extent to which they are used. This will enable the Corps
to accurately determine the extent to which it has committed future
years' appropriations, and also readily provide information on the full
amount of these financial commitments.
Moreover, the Corps' past practice of routinely awarding continuing
contracts (especially at the end of the fiscal year) to reprogram funds
and avoid large carryover of unexpended balances, exemplifies, in our
opinion, the need for clear criteria on when continuing contracts
should be used. Even though the Corps has recently implemented new
approval processes to restrict the use of continuing contracts, it has
not yet established clear criteria to guide their use. As a result,
while the Corps has reduced its reliance on continuing contracts, it
continues to approve short-term, low dollar value contracts that may
not justify the use of a continuing contract. Without meaningful
criteria that include factors such as the length of time needed to
complete the work and the dollar value of the contract, we believe that
the Corps will not be able to assure that it uses continuing contracts
appropriately.
Recommendations for Executive Action:
To ensure the judicious use of continuing contracts by the Corps
districts and to provide better management of projects that use such
contracts, we recommend that the Secretary of Defense direct the
Commanding General and the Chief of Engineers of the U.S. Army Corps of
Engineers to take the following three actions:
* eliminate the routine use of continuing contracts by adopting good
project planning and management practices rather than relying on
continuing contracts;
* establish meaningful criteria for the use of continuing contracts,
including an assessment of dollar value and length of time needed to
complete contracted work so that districts have clear guidance on when
a continuing contract may be used; and:
* develop a tracking system to monitor the use of continuing contracts.
Agency Comments and Our Evaluation:
We provided a draft copy of this report to the Department of Defense
for review and comment. The Department stated that the report was very
constructive and concurred with our recommendations. Specifically, the
Department concurred with the recommendation that the Corps eliminate
the routine use of continuing contracts by adopting good planning and
management practices rather than relying on continuing contracts. The
Department stated that it incorporated the appropriations committees'
direction that discouraged continuing contracts and reprogramming in
its execution guidance for fiscal year 2006. As a consequence, the
number and dollar volume of new continuing contracts fell substantially
in fiscal year 2006 compared to previous years. For its implementation
guidance for fiscal year 2007, the Department stated that it will
incorporate any new direction in law or committee reports, as well as
lessons learned from fiscal year 2006.
The Department concurred with our recommendation that the Corps
establish meaningful criteria for the use of continuing contracts,
including an assessment of dollar value and length of time needed to
complete contracted work so that districts have clear guidance on when
a continuing contract may be used. The Department stated that in its
fiscal year 2007 implementation guidance it will include, among other
things, clearer criteria on when it is appropriate to use continuing
contracts including explicit consideration of dollar value and length
of time.
The Department concurred with our recommendation that the Corps develop
a tracking system to monitor the use of continuing contracts. The
Department said it has reviewed its data on continuing contracts and
included corrections in its third quarterly report to the
appropriations committees. The Department also stated that an automated
tracking system will be established for its fiscal year 2007
appropriations and retained indefinitely.
The Department of Defense's comments on our draft report are included
in appendix III.
We will send copies of this report to interested congressional
committees, the Commanding General and Chief of Engineers of the U.S.
Army Corps of Engineers, the Secretary of Defense, and the Director of
the Office of Management and Budget. We will make copies available to
others on request. In addition, this report will be available at no
charge on the GAO Web site at http://www.gao.gov.
If you or your staff have questions about this report, please call me
at (202) 512-3841 or contact me at mittala@gao.gov. Contact points for
our Offices of Congressional Relations and Public Affairs may be found
on the last page of this report. GAO staff who made key contributions
to this report are listed in appendix IV.
Signed by:
Anu K. Mittal:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Scope and Methodology:
To determine the number and dollar amount of continuing contracts the
U.S. Army Corps of Engineers (Corps) awarded during fiscal years 2003-
2005, we reviewed the Corps' quarterly reports to the appropriations
committees on their use of these contracts. We also obtained the Corps'
contracting data from the Army's Standard Procurement System. We
analyzed information on the Corps' domestic Civil Works fixed-price and
indefinite-delivery contracts (both construction contracts and
operation and maintenance contracts) for fiscal years 2003-2005. We
excluded the base contract of indefinite-delivery contracts from our
analysis because these base contracts have no value and no work
associated with them. Like the Corps, we treated individual task orders
awarded against the base contract to carry out the work as separate
contracts. Because the Corps does not track information on contracts
that included a continuing contracts clause, we developed a methodology
for identifying these contracts. Of the contracts we reviewed, we
identified all of the contracts for which the Corps did not obligate
the full contract amount. According to the Corps, in order to partially
fund a contract, the contract has to be either an incrementally funded
contract[Footnote 27] or a continuing contract. Using the data, we
eliminated contracts identified by the Corps as incrementally funded
that used either the limitation of funds clause or the Defense Federal
Acquisition Regulations Supplement's incremental funding
clause.[Footnote 28] We based our analyses on the most current data
available and only included the federal portion of the continuing
contracts' costs. We obtained from Corps officials monthly interest
payment information contained in the Corps of Engineers' Financial
Management System. We determined, based on interviews with Corps
officials, comparison of data to contract files, and electronic data
testing, that the data were sufficiently reliable for our purposes.
To determine the circumstances in which the Corps used continuing
contracts in fiscal years 2003-2005, we judgmentally selected three
Corps districts that used a large number of continuing contracts and
were located in divisions that awarded a large percentage of continuing
contracts in fiscal years 2003-2005. We selected Galveston (Southwest
division), Jacksonville (South Atlantic division), and Vicksburg
(Mississippi Valley division). We identified and reviewed a random
sample of 107 continuing contracts from these three districts. Within
the three districts, we ordered the districts' continuing contracts in
a random list using the continuing contracts identified in the Corps of
Engineers' Financial Management System and a list of contracts the
Corps identified as continuing contracts. We reviewed the continuing
contract files based on this random list. We reviewed fixed-price and
indefinite-delivery contracts and eliminated from our sample contracts
that were fully funded. For each contract, we reviewed the contract
files and entered information into a data collection instrument to
ensure uniformity. We also interviewed the contracting and program
management officials to obtain additional information on the contract,
including information on the circumstances when continuing contracts
were used. We entered information from the data collection instruments
into a database for analysis and independently verified the contents of
the database with information from the data collection instruments. We
also reviewed the Corps' guidance documents and interviewed Corps
officials at districts, divisions, and headquarters to determine the
Corps' polices and procedures for using a continuing contract. We
compared the information collected from each contract to the Corps'
general policies and procedures for using continuing contracts.
To determine how the Corps' process for approving and using continuing
contracts changed since 2005 and whether the changes reduced their use
of these contracts, we obtained Corps guidance documents for approving
and using continuing contracts and interviewed Corps officials at
districts, divisions, and headquarters. We also obtained information
from Corps headquarters on districts' requests to use continuing
contracts. For the purpose of our review, we treated a request as being
equivalent to a contract. For example, if in one request, a district
submitted information to justify the use of a continuing contract for
two different contracts, then we counted this as two individual
requests. We also surveyed the Corps' eight divisions to obtain
information on the total number of requests to use continuing contracts
submitted by each of their districts, requests forward by the division
to headquarters, requests that were denied by the division, and
requests that were denied by headquarters. We obtained responses from
all eight divisions to our survey. We compared the information from the
divisions' surveys to information that we obtained from Corps
headquarters, and reconciled any differences. We entered information
from the requests to use a continuing contract into a spreadsheet for
analysis and independently verified the contents of the spreadsheet
with information from the requests. We compared the requests to the
Corps' internal guidance on the use of continuing contracts.
We performed our work between December 2005 and July 2006, in
accordance with generally accepted government auditing standards.
[End of section]
Appendix II: Characteristics of the Continuing Contracts Identified by
GAO:
This appendix provides additional characteristics of the continuing
contracts awarded by the Corps during fiscal years 2003-2005 that we
identified using the Corps' contracting data in the Army's Standard
Procurement System. We summarize the 1,592 continuing contracts and
include information on the total number of continuing contracts awarded
by contract value and award date during this 3-year time frame. We also
summarize the total number of continuing contracts awarded in each
division and district during fiscal years 2003-2005.
According to the Corps' contracting data for fiscal years 2003-2005,
the contract values of 1,043 of 1,592 (over 65 percent) continuing
contracts awarded were less than $1 million; only 64 of 1,592 (about 4
percent) of the contracts were for more than $10 million. Table 7
summarizes the full costs to the federal government for the 1,592
continuing contracts.
Table 7: Total Number of Continuing Contracts Awarded by the Full Costs
to the Federal Government, Fiscal Years 2003-2005:
Contract value: $1 million;
Fiscal year: 2003: 464;
Fiscal year: 2004: 386;
Fiscal year: 2005: 193;
Total number of continuing contracts: 1,043.
Contract value: > $1million and $5 million;
Fiscal year: 2003: 161;
Fiscal year: 2004: 149;
Fiscal year: 2005: 98;
Total number of continuing contracts: 408.
Contract value: > $5 million and $10 million;
Fiscal year: 2003: 28;
Fiscal year: 2004: 26;
Fiscal year: 2005: 23;
Total number of continuing contracts: 77.
Contract value: > $10 million;
Fiscal year: 2003: 16;
Fiscal year: 2004: 22;
Fiscal year: 2005: 26;
Total number of continuing contracts: 64.
Contract value: Total;
Fiscal year: 2003: 669;
Fiscal year: 2004: 583;
Fiscal year: 2005: 340;
Total number of continuing contracts: 1,592.
Source: GAO analysis of Corps contracting data.
[End of table]
Our analysis of the Corps' contracting data indicates that 402 of 1,592
(about 25 percent) of the continuing contracts awarded in fiscal years
2003-2005 were fully funded within the fiscal year that they were
awarded. About half of these contracts were awarded in the first fiscal
quarter while the Corps was under a continuing budget resolution
authority and its final appropriation was not yet known. We found
another 66 contracts where a continuing contract was used to start a
contract with no money. Table 8 summarizes the total number of
continuing contracts by the percentage of federal funds made available
in the first year for continuing contracts awarded in fiscal years 2003-
2005.
Table 8: Total Number of Continuing Contracts by Percentage of Federal
Funds Made Available in the First Year of the Contract, Fiscal Years
2003-2005:
Percentage of federal funds made available in first year of continuing
contract: 0%;
Fiscal year: 2003: 29;
Fiscal year: 2004: 24;
Fiscal year: 2005: 13;
Total number of continuing contracts: 66.
Percentage of federal funds made available in first year of continuing
contract: > 0 and 10;
Fiscal year: 2003: 127;
Fiscal year: 2004: 115;
Fiscal year: 2005: 49;
Total number of continuing contracts: 291.
Percentage of federal funds made available in first year of continuing
contract: > 10 and 25;
Fiscal year: 2003: 78;
Fiscal year: 2004: 70;
Fiscal year: 2005: 42;
Total number of continuing contracts: 190.
Percentage of federal funds made available in first year of continuing
contract: > 25 and 50;
Fiscal year: 2003: 91;
Fiscal year: 2004: 95;
Fiscal year: 2005: 43;
Total number of continuing contracts: 229.
Percentage of federal funds made available in first year of continuing
contract: > 50 and 75;
Fiscal year: 2003: 96;
Fiscal year: 2004: 66;
Fiscal year: 2005: 47;
Total number of continuing contracts: 209.
Percentage of federal funds made available in first year of continuing
contract: > 75 and < 100;
Fiscal year: 2003: 81;
Fiscal year: 2004: 82;
Fiscal year: 2005: 42;
Total number of continuing contracts: 205.
Percentage of federal funds made available in first year of continuing
contract: 100%;
Fiscal year: 2003: 167;
Fiscal year: 2004: 131;
Fiscal year: 2005: 104;
Total number of continuing contracts: 402.
Percentage of federal funds made available in first year of continuing
contract: Total;
Fiscal year: 2003: 669;
Fiscal year: 2004: 583;
Fiscal year: 2005: 340;
Total number of continuing contracts: 1,592.
Source: GAO analysis of Corps contracting data.
Note: Contracts with 100 percent of funds available in the first year
were partially funded at award but fully funded within the fiscal year
they were awarded.
[End of table]
According to the Corps' contracting data for fiscal years 2003-2005, a
large portion of each year's appropriations was obligated to continuing
contracts awarded in previous fiscal years. For example, in fiscal year
2005, the Corps obligated more than $781 million to continuing
contracts awarded in fiscal years 2003 and 2004. Figure 1 summarizes
the Corps' obligations by fiscal year for the 1,592 continuing
contracts awarded during fiscal years 2003-2005.
Figure 1: Obligations by Fiscal Year for Continuing Contracts Awarded,
Fiscal Years 2003-2005:
[See PDF for image]
Source: GAO analysis of Corps contracting data.
[End of figure]
According to the Corps' contracting data for fiscal years 2003-2005,
almost 44 percent of the 1,592 continuing contracts were awarded during
the fourth quarter of the fiscal year. Figure 2 summarizes the total
number of continuing contracts awarded, by quarter, in fiscal years
2003-2005.
Figure 2: Total Number of Continuing Contracts by Fiscal Quarter of
Award, Fiscal Years 2003-2005:
[See PDF for image]
Source: GAO analysis of Corps contracting data.
[End of figure]
According to the Corps' contracting data for fiscal years 2003-2005,
most of the commitments for continuing contracts came from the
construction appropriations account. Table 9 summarizes the commitments
for continuing contracts by appropriations accounts.
Table 9: Commitments for Continuing Contracts Made by Appropriations
Account, Fiscal Years 2003-2005:
Dollars in millions.
Appropriations account: Construction;
Fiscal year: 2003: $585;
Fiscal year: 2004: $923;
Fiscal year: 2005: $617;
Total: $2,125.
Appropriations account: Operation and maintenance;
Fiscal year: 2003: 301;
Fiscal year: 2004: 387;
Fiscal year: 2005: 282;
Total: 970.
Appropriations account: Flood control, Mississippi River and
tributaries;
Fiscal year: 2003: 103;
Fiscal year: 2004: 62;
Fiscal year: 2005: 105;
Total: 269.
Appropriations account: Other[A];
Fiscal year: 2003: 110;
Fiscal year: 2004: 331;
Fiscal year: 2005: 150;
Total: 591.
Appropriations account: Total;
Fiscal year: 2003: $1,099;
Fiscal year: 2004: $1,703;
Fiscal year: 2005: $1,154;
Total: $3,956.
Source: GAO analysis of Corps contracting data.
Note: During the 3-year period, the Corps received an additional $170
million from nonfederal project sponsors.
[A] The other account includes the following: investigations, flood
control and coastal emergencies, regulatory programs, revolving funds,
and the Inland Waterway Trust Fund.
[End of table]
The construction appropriations account was the source for the largest
number of continuing contracts awarded. Some continuing contracts
received appropriations from more than one account. Table 10 summarizes
the total number of continuing contracts funded by each appropriations
account.
Table 10: Total Number of Continuing Contracts by Appropriations
Account, Fiscal Years 2003-2005:
Appropriations accounts: Construction;
Fiscal year: 2003: 276;
Fiscal year: 2004: 250;
Fiscal year: 2005: 129;
Total[B]: 655.
Appropriations accounts: Operation and maintenance;
Fiscal year: 2003: 233;
Fiscal year: 2004: 224;
Fiscal year: 2005: 116;
Total[B]: 573.
Appropriations accounts: Flood control, Mississippi River and
tributaries;
Fiscal year: 2003: 76;
Fiscal year: 2004: 41;
Fiscal year: 2005: 37;
Total[B]: 154.
Appropriations accounts: Other[A];
Fiscal year: 2003: 101;
Fiscal year: 2004: 90;
Fiscal year: 2005: 78;
Total[B]: 269.
Appropriations accounts: Total[B];
Fiscal year: 2003: 686;
Fiscal year: 2004: 605;
Fiscal year: 2005: 360;
Total[B]: 1,651.
Source: GAO analysis of Corps contracting data.
[A] The other account includes the following: investigations, flood
control and coastal emergencies, regulatory programs, revolving funds,
and the Inland Waterway Trust Fund.
[B] Some continuing contracts received appropriations from more than
one account and are included in more than one account.
[End of table]
Of the Corps' eight divisions, four divisions--Mississippi Valley,
South Atlantic, Great Lakes, and Northwest--account for about 72
percent (and over 66 percent of the value) of the 1,592 continuing
contracts awarded during fiscal years 2003-2005. Table 11 summarizes
the total number and full costs to the federal government of continuing
contracts awarded by division.
Table 11: Total Number and Full Costs to the Federal Government of
Continuing Contracts Awarded by Division, Fiscal Years 2003-2005:
Division: Mississippi Valley;
Total number of continuing contracts: Fiscal year: 2003: 148;
Total number of continuing contracts: Fiscal year: 2004: 120;
Total number of continuing contracts: Fiscal year: 2005: 70;
Total number of continuing contracts: Total: 338;
Full costs to the federal government: Fiscal year: 2003: $211,354,085;
Full costs to the federal government: Fiscal year: 2004: $200,471,639;
Full costs to the federal government: Fiscal year: 2005: $223,623,848;
Full costs to the federal government: Fiscal year: Total: $635,449,572.
Division: South Atlantic;
Total number of continuing contracts: Fiscal year: 2003: 133;
Total number of continuing contracts: Fiscal year: 2004: 101;
Total number of continuing contracts: Fiscal year: 2005: 57;
Total number of continuing contracts: Total: 291;
Full costs to the federal government: Fiscal year: 2003: 256,418,689;
Full costs to the federal government: Fiscal year: 2004: 277,679,098;
Full costs to the federal government: Fiscal year: 2005: 171,286,604;
Full costs to the federal government: Fiscal year: Total: 705,384,392.
Division: Great Lakes;
Total number of continuing contracts: Fiscal year: 2003: 105;
Total number of continuing contracts: Fiscal year: 2004: 98;
Total number of continuing contracts: Fiscal year: 2005: 62;
Total number of continuing contracts: Total: 265;
Full costs to the federal government: Fiscal year: 2003: 66,341,407;
Full costs to the federal government: Fiscal year: 2004: 776,307,678;
Full costs to the federal government: Fiscal year: 2005: 250,408,627;
Full costs to the federal government: Fiscal year: Total:
1,093,057,712.
Division: Northwest;
Total number of continuing contracts: Fiscal year: 2003: 111;
Total number of continuing contracts: Fiscal year: 2004: 98;
Total number of continuing contracts: Fiscal year: 2005: 48;
Total number of continuing contracts: Total: 257;
Full costs to the federal government: Fiscal year: 2003: 75,881,917;
Full costs to the federal government: Fiscal year: 2004: 112,441,841;
Full costs to the federal government: Fiscal year: 2005: 95,168,247;
Full costs to the federal government: Fiscal year: Total: 283,492,005.
Division: North Atlantic;
Total number of continuing contracts: Fiscal year: 2003: 59;
Total number of continuing contracts: Fiscal year: 2004: 63;
Total number of continuing contracts: Fiscal year: 2005: 32;
Total number of continuing contracts: Total: 154;
Full costs to the federal government: Fiscal year: 2003: 93,427,779;
Full costs to the federal government: Fiscal year: 2004: 108,228,554;
Full costs to the federal government: Fiscal year: 2005: 126,398,547;
Full costs to the federal government: Fiscal year: Total: 328,054,880.
Division: Southwest;
Total number of continuing contracts: Fiscal year: 2003: 61;
Total number of continuing contracts: Fiscal year: 2004: 51;
Total number of continuing contracts: Fiscal year: 2005: 37;
Total number of continuing contracts: Total: 149;
Full costs to the federal government: Fiscal year: 2003: 109,168,860;
Full costs to the federal government: Fiscal year: 2004: 76,430,950;
Full costs to the federal government: Fiscal year: 2005: 181,682,768;
Full costs to the federal government: Fiscal year: Total: 367,282,578.
Division: South Pacific;
Total number of continuing contracts: Fiscal year: 2003: 48;
Total number of continuing contracts: Fiscal year: 2004: 49;
Total number of continuing contracts: Fiscal year: 2005: 32;
Total number of continuing contracts: Total: 129;
Full costs to the federal government: Fiscal year: 2003: 245,833,752;
Full costs to the federal government: Fiscal year: 2004: 142,725,841;
Full costs to the federal government: Fiscal year: 2005: 78,820,802;
Full costs to the federal government: Fiscal year: Total: 467,380,395.
Division: Pacific Ocean;
Total number of continuing contracts: Fiscal year: 2003: 4;
Total number of continuing contracts: Fiscal year: 2004: 3;
Total number of continuing contracts: Fiscal year: 2005: 2;
Total number of continuing contracts: Total: 9;
Full costs to the federal government: Fiscal year: 2003: 40,172,666;
Full costs to the federal government: Fiscal year: 2004: 8,836,477;
Full costs to the federal government: Fiscal year: 2005: 26,948,350;
Full costs to the federal government: Fiscal year: Total: 75,957,493.
Division: Total;
Total number of continuing contracts: Fiscal year: 2003: 669;
Total number of continuing contracts: Fiscal year: 2004: 583;
Total number of continuing contracts: Fiscal year: 2005: 340;
Total number of continuing contracts: Total: 1,592;
Full costs to the federal government: Fiscal year: 2003:
$1,098,599,154;
Full costs to the federal government: Fiscal year: 2004:
$1,703,122,079;
Full costs to the federal government: Fiscal year: 2005:
$1,154,337,793;
Full costs to the federal government: Fiscal year: Total:
$3,956,059,026.
Source: GAO analysis of Corps contracting data.
[End of table]
All 38 of the Corps' domestic districts awarded at least one continuing
contract during fiscal years 2003-2005. Districts' use of continuing
contracts ranged from Honolulu's 1 continuing contract to
Jacksonville's 142 continuing contracts during the 3-year time frame.
Table 12 summarizes the total number and full costs to the federal
government of continuing contracts awarded by each district during
fiscal years 2003-2005.
Table 12: Total Number and Full Costs to the Federal Government of
Continuing Contracts Awarded by District, Fiscal Years 2003-2005:
District: Jacksonville;
Total number of continuing contracts: Fiscal year: 2003: 65;
Total number of continuing contracts: Fiscal year: 2004: 51;
Total number of continuing contracts: Fiscal year: 2005: 26;
Total number of continuing contracts: Total: 142;
Full costs to the federal government: Fiscal year: 2003: $144,396,151;
Full costs to the federal government: Fiscal year: 2004: $142,584,020;
Full costs to the federal government: Fiscal year: 2005: $119,645,647;
Full costs to the federal government: Total: $406,625,819.
District: Vicksburg;
Total number of continuing contracts: Fiscal year: 2003: 50;
Total number of continuing contracts: Fiscal year: 2004: 22;
Total number of continuing contracts: Fiscal year: 2005: 22;
Total number of continuing contracts: Total: 94;
Full costs to the federal government: Fiscal year: 2003: 88,066,978;
Full costs to the federal government: Fiscal year: 2004: 30,913,686;
Full costs to the federal government: Fiscal year: 2005: 61,997,017;
Full costs to the federal government: Total: 180,977,681.
District: Memphis;
Total number of continuing contracts: Fiscal year: 2003: 31;
Total number of continuing contracts: Fiscal year: 2004: 31;
Total number of continuing contracts: Fiscal year: 2005: 20;
Total number of continuing contracts: Total: 82;
Full costs to the federal government: Fiscal year: 2003: 48,249,456;
Full costs to the federal government: Fiscal year: 2004: 70,903,673;
Full costs to the federal government: Fiscal year: 2005: 63,557,543;
Full costs to the federal government: Total: 182,710,673.
District: Walla Walla;
Total number of continuing contracts: Fiscal year: 2003: 32;
Total number of continuing contracts: Fiscal year: 2004: 36;
Total number of continuing contracts: Fiscal year: 2005: 12;
Total number of continuing contracts: Total: 80;
Full costs to the federal government: Fiscal year: 2003: 13,152,231;
Full costs to the federal government: Fiscal year: 2004: 27,424,601;
Full costs to the federal government: Fiscal year: 2005: 5,103,979;
Full costs to the federal government: Total: 45,680,811.
District: Portland;
Total number of continuing contracts: Fiscal year: 2003: 38;
Total number of continuing contracts: Fiscal year: 2004: 16;
Total number of continuing contracts: Fiscal year: 2005: 19;
Total number of continuing contracts: Total: 73;
Full costs to the federal government: Fiscal year: 2003: 23,312,900;
Full costs to the federal government: Fiscal year: 2004: 18,123,246;
Full costs to the federal government: Fiscal year: 2005: 56,232,398;
Full costs to the federal government: Total: 97,668,544.
District: Mobile;
Total number of continuing contracts: Fiscal year: 2003: 28;
Total number of continuing contracts: Fiscal year: 2004: 27;
Total number of continuing contracts: Fiscal year: 2005: 15;
Total number of continuing contracts: Total: 70;
Full costs to the federal government: Fiscal year: 2003: 73,363,467;
Full costs to the federal government: Fiscal year: 2004: 40,665,764;
Full costs to the federal government: Fiscal year: 2005: 20,256,737;
Full costs to the federal government: Total: 134,285,968.
District: Louisville;
Total number of continuing contracts: Fiscal year: 2003: 29;
Total number of continuing contracts: Fiscal year: 2004: 35;
Total number of continuing contracts: Fiscal year: 2005: 4;
Total number of continuing contracts: Total: 68;
Full costs to the federal government: Fiscal year: 2003: 28,295,240;
Full costs to the federal government: Fiscal year: 2004: 577,885,226;
Full costs to the federal government: Fiscal year: 2005: 23,612,598;
Full costs to the federal government: Total: 629,793,064.
District: Galveston;
Total number of continuing contracts: Fiscal year: 2003: 34;
Total number of continuing contracts: Fiscal year: 2004: 18;
Total number of continuing contracts: Fiscal year: 2005: 16;
Total number of continuing contracts: Total: 68;
Full costs to the federal government: Fiscal year: 2003: 83,037,690;
Full costs to the federal government: Fiscal year: 2004: 52,916,826;
Full costs to the federal government: Fiscal year: 2005: 28,904,950;
Full costs to the federal government: Total: 164,859,467.
District: New Orleans;
Total number of continuing contracts: Fiscal year: 2003: 34;
Total number of continuing contracts: Fiscal year: 2004: 24;
Total number of continuing contracts: Fiscal year: 2005: 9;
Total number of continuing contracts: Total: 67;
Full costs to the federal government: Fiscal year: 2003: 33,500,736;
Full costs to the federal government: Fiscal year: 2004: 11,153,745;
Full costs to the federal government: Fiscal year: 2005: 23,279,233;
Full costs to the federal government: Total: 67,933,714.
District: Sacramento;
Total number of continuing contracts: Fiscal year: 2003: 10;
Total number of continuing contracts: Fiscal year: 2004: 24;
Total number of continuing contracts: Fiscal year: 2005: 14;
Total number of continuing contracts: Total: 48;
Full costs to the federal government: Fiscal year: 2003: 25,722,603;
Full costs to the federal government: Fiscal year: 2004: 38,407,869;
Full costs to the federal government: Fiscal year: 2005: 23,559,019;
Full costs to the federal government: Total: 87,689,491.
District: Los Angeles;
Total number of continuing contracts: Fiscal year: 2003: 22;
Total number of continuing contracts: Fiscal year: 2004: 12;
Total number of continuing contracts: Fiscal year: 2005: 12;
Total number of continuing contracts: Total: 46;
Full costs to the federal government: Fiscal year: 2003: 124,079,132;
Full costs to the federal government: Fiscal year: 2004: 25,874,734;
Full costs to the federal government: Fiscal year: 2005: 51,808,004;
Full costs to the federal government: Total: 201,761,870.
District: Baltimore;
Total number of continuing contracts: Fiscal year: 2003: 15;
Total number of continuing contracts: Fiscal year: 2004: 18;
Total number of continuing contracts: Fiscal year: 2005: 11;
Total number of continuing contracts: Total: 44;
Full costs to the federal government: Fiscal year: 2003: 16,114,744;
Full costs to the federal government: Fiscal year: 2004: 31,392,195;
Full costs to the federal government: Fiscal year: 2005: 35,984,641;
Full costs to the federal government: Total: 83,491,580.
District: Little Rock;
Total number of continuing contracts: Fiscal year: 2003: 11;
Total number of continuing contracts: Fiscal year: 2004: 19;
Total number of continuing contracts: Fiscal year: 2005: 12;
Total number of continuing contracts: Total: 42;
Full costs to the federal government: Fiscal year: 2003: 6,524,151;
Full costs to the federal government: Fiscal year: 2004: 13,641,946;
Full costs to the federal government: Fiscal year: 2005: 124,103,897;
Full costs to the federal government: Total: 144,269,993.
District: St. Paul;
Total number of continuing contracts: Fiscal year: 2003: 15;
Total number of continuing contracts: Fiscal year: 2004: 19;
Total number of continuing contracts: Fiscal year: 2005: 8;
Total number of continuing contracts: Total: 42;
Full costs to the federal government: Fiscal year: 2003: 21,314,700;
Full costs to the federal government: Fiscal year: 2004: 54,179,480;
Full costs to the federal government: Fiscal year: 2005: 28,469,738;
Full costs to the federal government: Total: 103,963,918.
District: Huntington;
Total number of continuing contracts: Fiscal year: 2003: 20;
Total number of continuing contracts: Fiscal year: 2004: 12;
Total number of continuing contracts: Fiscal year: 2005: 9;
Total number of continuing contracts: Total: 41;
Full costs to the federal government: Fiscal year: 2003: 7,015,273;
Full costs to the federal government: Fiscal year: 2004: 30,287,886;
Full costs to the federal government: Fiscal year: 2005: 39,103,622;
Full costs to the federal government: Total: 76,406,781.
District: Kansas City;
Total number of continuing contracts: Fiscal year: 2003: 12;
Total number of continuing contracts: Fiscal year: 2004: 22;
Total number of continuing contracts: Fiscal year: 2005: 5;
Total number of continuing contracts: Total: 39;
Full costs to the federal government: Fiscal year: 2003: 4,488,255;
Full costs to the federal government: Fiscal year: 2004: 19,174,960;
Full costs to the federal government: Fiscal year: 2005: 1,108,519;
Full costs to the federal government: Total: 24,771,734.
District: St. Louis;
Total number of continuing contracts: Fiscal year: 2003: 14;
Total number of continuing contracts: Fiscal year: 2004: 20;
Total number of continuing contracts: Fiscal year: 2005: 5;
Total number of continuing contracts: Total: 39;
Full costs to the federal government: Fiscal year: 2003: 19,525,371;
Full costs to the federal government: Fiscal year: 2004: 28,502,106;
Full costs to the federal government: Fiscal year: 2005: 5,191,377;
Full costs to the federal government: Total: 53,218,854.
District: Wilmington;
Total number of continuing contracts: Fiscal year: 2003: 17;
Total number of continuing contracts: Fiscal year: 2004: 13;
Total number of continuing contracts: Fiscal year: 2005: 7;
Total number of continuing contracts: Total: 37;
Full costs to the federal government: Fiscal year: 2003: 12,325,462;
Full costs to the federal government: Fiscal year: 2004: 13,149,898;
Full costs to the federal government: Fiscal year: 2005: 12,271,767;
Full costs to the federal government: Total: 37,747,126.
District: Seattle;
Total number of continuing contracts: Fiscal year: 2003: 18;
Total number of continuing contracts: Fiscal year: 2004: 11;
Total number of continuing contracts: Fiscal year: 2005: 6;
Total number of continuing contracts: Total: 35;
Full costs to the federal government: Fiscal year: 2003: 14,423,451;
Full costs to the federal government: Fiscal year: 2004: 19,607,356;
Full costs to the federal government: Fiscal year: 2005: 21,635,892;
Full costs to the federal government: Total: 55,666,699.
District: Detroit;
Total number of continuing contracts: Fiscal year: 2003: 10;
Total number of continuing contracts: Fiscal year: 2004: 14;
Total number of continuing contracts: Fiscal year: 2005: 10;
Total number of continuing contracts: Total: 34;
Full costs to the federal government: Fiscal year: 2003: 6,490,988;
Full costs to the federal government: Fiscal year: 2004: 22,220,346;
Full costs to the federal government: Fiscal year: 2005: 11,721,323;
Full costs to the federal government: Total: 40,432,656.
District: Philadelphia;
Total number of continuing contracts: Fiscal year: 2003: 12;
Total number of continuing contracts: Fiscal year: 2004: 19;
Total number of continuing contracts: Fiscal year: 2005: 2;
Total number of continuing contracts: Total: 33;
Full costs to the federal government: Fiscal year: 2003: 22,769,997;
Full costs to the federal government: Fiscal year: 2004: 55,937,326;
Full costs to the federal government: Fiscal year: 2005: 6,400,394;
Full costs to the federal government: Total: 85,107,716.
District: Omaha;
Total number of continuing contracts: Fiscal year: 2003: 11;
Total number of continuing contracts: Fiscal year: 2004: 13;
Total number of continuing contracts: Fiscal year: 2005: 6;
Total number of continuing contracts: Total: 30;
Full costs to the federal government: Fiscal year: 2003: 20,505,079;
Full costs to the federal government: Fiscal year: 2004: 28,111,678;
Full costs to the federal government: Fiscal year: 2005: 11,087,459;
Full costs to the federal government: Total: 59,704,216.
District: Pittsburgh;
Total number of continuing contracts: Fiscal year: 2003: 18;
Total number of continuing contracts: Fiscal year: 2004: 8;
Total number of continuing contracts: Fiscal year: 2005: 5;
Total number of continuing contracts: Total: 31;
Full costs to the federal government: Fiscal year: 2003: 9,738,860;
Full costs to the federal government: Fiscal year: 2004: 103,453,306;
Full costs to the federal government: Fiscal year: 2005: 21,205,797;
Full costs to the federal government: Total: 134,397,963.
District: Nashville;
Total number of continuing contracts: Fiscal year: 2003: 10;
Total number of continuing contracts: Fiscal year: 2004: 8;
Total number of continuing contracts: Fiscal year: 2005: 13;
Total number of continuing contracts: Total: 31;
Full costs to the federal government: Fiscal year: 2003: 2,735,434;
Full costs to the federal government: Fiscal year: 2004: 10,692,771;
Full costs to the federal government: Fiscal year: 2005: 103,378,174;
Full costs to the federal government: Total: 116,806,379.
District: Chicago;
Total number of continuing contracts: Fiscal year: 2003: 9;
Total number of continuing contracts: Fiscal year: 2004: 10;
Total number of continuing contracts: Fiscal year: 2005: 11;
Total number of continuing contracts: Total: 30;
Full costs to the federal government: Fiscal year: 2003: 9,040,432;
Full costs to the federal government: Fiscal year: 2004: 27,298,298;
Full costs to the federal government: Fiscal year: 2005: 41,616,047;
Full costs to the federal government: Total: 77,954,777.
District: New England;
Total number of continuing contracts: Fiscal year: 2003: 9;
Total number of continuing contracts: Fiscal year: 2004: 11;
Total number of continuing contracts: Fiscal year: 2005: 10;
Total number of continuing contracts: Total: 30;
Full costs to the federal government: Fiscal year: 2003: 10,387,794;
Full costs to the federal government: Fiscal year: 2004: 4,141,081;
Full costs to the federal government: Fiscal year: 2005: 5,202,937;
Full costs to the federal government: Total: 19,731,812.
District: Buffalo;
Total number of continuing contracts: Fiscal year: 2003: 9;
Total number of continuing contracts: Fiscal year: 2004: 11;
Total number of continuing contracts: Fiscal year: 2005: 10;
Total number of continuing contracts: Total: 30;
Full costs to the federal government: Fiscal year: 2003: 3,025,180;
Full costs to the federal government: Fiscal year: 2004: 4,469,845;
Full costs to the federal government: Fiscal year: 2005: 9,771,066;
Full costs to the federal government: Total: 17,266,091.
District: New York;
Total number of continuing contracts: Fiscal year: 2003: 11;
Total number of continuing contracts: Fiscal year: 2004: 13;
Total number of continuing contracts: Fiscal year: 2005: 4;
Total number of continuing contracts: Total: 28;
Full costs to the federal government: Fiscal year: 2003: 28,012,322;
Full costs to the federal government: Fiscal year: 2004: 15,557,452;
Full costs to the federal government: Fiscal year: 2005: 77,211,076;
Full costs to the federal government: Total: 120,780,850.
District: Albuquerque;
Total number of continuing contracts: Fiscal year: 2003: 10;
Total number of continuing contracts: Fiscal year: 2004: 9;
Total number of continuing contracts: Fiscal year: 2005: 5;
Total number of continuing contracts: Total: 24;
Full costs to the federal government: Fiscal year: 2003: 79,633,600;
Full costs to the federal government: Fiscal year: 2004: 20,273,752;
Full costs to the federal government: Fiscal year: 2005: 1,872,680;
Full costs to the federal government: Total: 101,780,031.
District: Savannah;
Total number of continuing contracts: Fiscal year: 2003: 12;
Total number of continuing contracts: Fiscal year: 2004: 5;
Total number of continuing contracts: Fiscal year: 2005: 6;
Total number of continuing contracts: Total: 23;
Full costs to the federal government: Fiscal year: 2003: 13,375,225;
Full costs to the federal government: Fiscal year: 2004: 50,182,815;
Full costs to the federal government: Fiscal year: 2005: 14,204,840;
Full costs to the federal government: Total: 77,762,879.
District: Fort Worth;
Total number of continuing contracts: Fiscal year: 2003: 10;
Total number of continuing contracts: Fiscal year: 2004: 6;
Total number of continuing contracts: Fiscal year: 2005: 6;
Total number of continuing contracts: Total: 22;
Full costs to the federal government: Fiscal year: 2003: 2,007,514;
Full costs to the federal government: Fiscal year: 2004: 298,253;
Full costs to the federal government: Fiscal year: 2005: 26,633,736;
Full costs to the federal government: Total: 28,939,503.
District: Charleston;
Total number of continuing contracts: Fiscal year: 2003: 11;
Total number of continuing contracts: Fiscal year: 2004: 5;
Total number of continuing contracts: Fiscal year: 2005: 3;
Total number of continuing contracts: Total: 19;
Full costs to the federal government: Fiscal year: 2003: 12,958,385;
Full costs to the federal government: Fiscal year: 2004: 31,096,602;
Full costs to the federal government: Fiscal year: 2005: 4,907,613;
Full costs to the federal government: Total: 48,962,599.
District: Norfolk;
Total number of continuing contracts: Fiscal year: 2003: 12;
Total number of continuing contracts: Fiscal year: 2004: 2;
Total number of continuing contracts: Fiscal year: 2005: 5;
Total number of continuing contracts: Total: 19;
Full costs to the federal government: Fiscal year: 2003: 16,142,922;
Full costs to the federal government: Fiscal year: 2004: 1,200,500;
Full costs to the federal government: Fiscal year: 2005: 1,599,499;
Full costs to the federal government: Total: 18,942,921.
District: Tulsa;
Total number of continuing contracts: Fiscal year: 2003: 6;
Total number of continuing contracts: Fiscal year: 2004: 8;
Total number of continuing contracts: Fiscal year: 2005: 3;
Total number of continuing contracts: Total: 17;
Full costs to the federal government: Fiscal year: 2003: 17,599,505;
Full costs to the federal government: Fiscal year: 2004: 9,573,926;
Full costs to the federal government: Fiscal year: 2005: 2,040,184;
Full costs to the federal government: Total: 29,213,616.
District: Rock Island;
Total number of continuing contracts: Fiscal year: 2003: 4;
Total number of continuing contracts: Fiscal year: 2004: 4;
Total number of continuing contracts: Fiscal year: 2005: 6;
Total number of continuing contracts: Total: 14;
Full costs to the federal government: Fiscal year: 2003: 696,843;
Full costs to the federal government: Fiscal year: 2004: 4,818,950;
Full costs to the federal government: Fiscal year: 2005: 41,128,939;
Full costs to the federal government: Total: 46,644,733.
District: San Francisco;
Total number of continuing contracts: Fiscal year: 2003: 6;
Total number of continuing contracts: Fiscal year: 2004: 4;
Total number of continuing contracts: Fiscal year: 2005: 1;
Total number of continuing contracts: Total: 11;
Full costs to the federal government: Fiscal year: 2003: 16,398,417;
Full costs to the federal government: Fiscal year: 2004: 58,169,486;
Full costs to the federal government: Fiscal year: 2005: 1,581,100;
Full costs to the federal government: Total: 76,149,003.
District: Alaska;
Total number of continuing contracts: Fiscal year: 2003: 3;
Total number of continuing contracts: Fiscal year: 2004: 3;
Total number of continuing contracts: Fiscal year: 2005: 2;
Total number of continuing contracts: Total: 8;
Full costs to the federal government: Fiscal year: 2003: 40,047,170;
Full costs to the federal government: Fiscal year: 2004: 8,836,477;
Full costs to the federal government: Fiscal year: 2005: 26,948,350;
Full costs to the federal government: Total: 75,831,997.
District: Honolulu;
Total number of continuing contracts: Fiscal year: 2003: 1;
Total number of continuing contracts: Fiscal year: 2004: 0;
Total number of continuing contracts: Fiscal year: 2005: 0;
Total number of continuing contracts: Total: 1;
Full costs to the federal government: Fiscal year: 2003: 125,496;
Full costs to the federal government: Fiscal year: 2004: 0;
Full costs to the federal government: Fiscal year: 2005: 0;
Full costs to the federal government: Total: 125,496.
District: Total;
Total number of continuing contracts: Fiscal year: 2003: 669;
Total number of continuing contracts: Fiscal year: 2004: 583;
Total number of continuing contracts: Fiscal year: 2005: 340;
Total number of continuing contracts: Total: 1,592;
Full costs to the federal government: Fiscal year: 2003:
$1,098,599,154;
Full costs to the federal government: Fiscal year: 2004:
$1,703,122,079;
Full costs to the federal government: Fiscal year: 2005:
$1,154,337,793;
Full costs to the federal government: Total: $3,956,059,026.
Source: GAO analysis of Corps contracting data.
[End of table]
[End of section]
Appendix III: Comments from the Department of Defense:
Department Of The Army:
Office Of The Assistant Secretary:
Civil Works:
108 Army Pentagon:
Washington DC 20310-0108:
Aug 25 2006:
Ms. Anu K. Mittal:
Director, Defense Capabilities and Management:
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, 'Army Corps Of Engineers: Improved Monitoring and Clear
Guidance Would Contribute to More Effective Use of Continuing
Contracts,' dated July 28, 2006, (GAO Code 360631/GAO-06-966).
The draft report is very constructive. DoD concurs with all three
recommendations (see enclosure). I look forward to GAO's completion and
transmittal of the report.
Very truly yours,
Signed by:
John Paul Woodley, Jr.
Assistant Secretary of the Army (Civil Works):
Enclosure:
GAO Draft Report - Dated July 28, 2006 GAO Code 360631/GAO-06-966:
"Army Corps Of Engineers: Improved Monitoring And Clear Guidance Would
Contribute To More Effective Use Of Continuing Contracts"
Department Of Defense Comments To The Recommendations:
Recommendation 1: The GAO recommended that the Secretary of Defense
direct the Commanding General and the Chief of Engineers of the U.S.
Army Corps of Engineers to eliminate the routine use of continuing
contracts by adopting good planning and management practices rather
than relying on continuing contracts. (p. 29/GAO Draft Report):
DOD Response: Concur.
Prior to Fiscal Year 2006, 33 U.S.C. 2331 prohibited the Corps of
Engineers from applying a fully allocated funding policy and required
the award of continuing contracts in certain situations. The Energy and
Water Development Appropriations Act for Fiscal Year (FY) 2006 limited
the applicability of 33 U.S.C. 2331. However, continuing contracts are
still required by law for some projects funded with operation and
maintenance appropriations.
Furthermore, prior to FY 2006 the Appropriations Committees had
provided guidance (see e.g. Senate Report 108-105 and House Report 108-
212) encouraging the use of continuing contracts and reprogramming to
obligate and expend available funds. The guidance of the Conference
Committee for FY 2006 superseded the prior guidance and discouraged
continuing contracts and reprogramming, and the FY 2006 Act included
provisions establishing funding requirements for continuing contracts
and modifications thereto, and requiring notification to the Committees
for reprogrammings exceeding certain thresholds.
The Corps of Engineers execution guidance for FY 2006 is contained in
Engineer Circular 11-2-189. This guidance implements the direction in
law and Committee reports for FY 2006, and, accordingly, represents a
substantial change from previous practice. With respect to continuing
contracts, it establishes a policy that (except where a continuing
contract is required by law) continuing contracts are to be used only
where there is a strong business case, as where other types of
contracting mechanisms are impractical, funding for the contractor's
future earnings under such a contract is relatively certain, and there
would be significant adverse consequences should the funded work not
proceed with the available funds. (It should be noted that in some
cases a good business case can be made for continuing contracts under
$10 million or of short duration.) In addition, it establishes planning
and management mechanisms for the review and approval of each proposed
continuing contract, in addition to other funds management mechanisms.
As a consequence of these actions, the number and dollar volume of new
continuing contracts has fallen substantially in FY 2006 compared to
previous years.
Once Congress has acted on FY 2007 appropriations, the Corps will
develop its implementing guidance for FY 2007. The guidance will
reflect any new direction in law or Committee reports, as well as
lessons learned from FY 2006.
Recommendation 2: The GAO recommended that the Secretary of Defense
direct the Commanding General and the Chief of Engineers of the U.S.
Army Corps of Engineers to establish meaningful criteria for the use of
continuing contracts, including an assessment of dollar value and
length of time needed to complete contracted work so that districts
have clear guidance on when it inappropriate to use a continuing
contract. (p. 29/GAO Draft Report).
DOD Response: Concur. The implementing guidance for FY 2006 established
criteria for the use of continuing contracts. Once Congress has acted
on FY 2007 appropriations, the Corps will develop its implementing
guidance for FY 2007 appropriations. The guidance will reflect lesson
learned from FY 2006, including establishing clearer criteria on when
it is appropriate to use continuing contracts. The criteria will
include explicit consideration of dollar value and length of time. The
guidance, however, must continue to ensure that Corps awards continuing
contracts when required by 33 U.S.C. 2331.
Recommendation 3: The GAO recommended that the Secretary of Defense
direct the Commanding General and the Chief of Engineers of the U.S.
Army Corps of Engineers to develop a tracking system to monitor the use
of continuing contracts. (p. 29/GAO Draft Report):
DOD Response: Concur. As an interim measure, the Corps performed a
review of its data on continuing contracts awarded through the second-
quarter of FY 2006, and corrections are being included in the third
quarter report to the Appropriations Committees. For the longer term,
an automated tracking system will be established through the
implementing guidance for FY 2007 appropriations, and will be retained
indefinitely.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Anu K. Mittal (202) 512-3841:
Staff Acknowledgments:
In addition to the individual named above, Edward Zadjura, Assistant
Director; Lisa Berardi; Brandon Booth; Diana Cheng Goody; Joel
Grossman; Ken Lightner; John Mingus; Alison O'Neill; and Barbara
Timmerman made key contributions to this report. Also contributing to
this report were Thomas Armstrong, Christine Bonham, Molly Boyle,
Doreen Feldman, Cynthia Norris, and Amelia Shachoy.
FOOTNOTES
[1] The Antideficiency Act prohibits agencies from entering into
contracts which exceed currently available appropriations or which
obligate appropriations not yet made.
[2] 33 U.S.C. § 2331. The law applies to projects funded from the
construction;
operation and maintenance;
and flood control, Mississippi River and tributaries appropriations
accounts. A provision of the Energy and Water Development
Appropriations Act of 2006 limited this requirement to projects funded
from the operation and maintenance account and the operation and
maintenance subaccount of the Mississippi River and tributaries
account.
[3] The committee did not define what it meant by large contracts. For
the purposes of our review, we defined large contracts as those that
cost more than $10 million.
[4] Notwithstanding how the Corps views their continuing contracts,
these contracts are also incrementally funded. Incremental funding is
the practice of providing budget authority for only a portion of a
capital acquisition or project.
[5] Nonfederal sponsors (state, tribal, county, and local agencies)
generally share the costs for a project with the Corps and provide,
among other things, financial contributions, to complete the work.
[6] The changes to the Corps' program execution process are in the
Corps' December 2005 Engineering Circular 11-2-189.
[7] Continuing Authorities Program projects, such as beach erosion,
navigation, and flood control activities, generally do not receive
specific congressional authorization or appropriations and are
conducted at the Corps' discretion based on the availability of funds.
[8] These governmentwide reports include: Budget Issues: Alternative
Approaches to Finance Federal Capital, GAO-03-1011 (Washington, D.C.:
Aug. 21, 2003);
Executive Guide: Leading Practices in Capital Decision- Making,
GAO/AIMD-99-32 (Washington, D.C.: Dec. 1998);
and Budget Issues: Budgeting for Federal Capital, GAO/AIMD-97-5
(Washington, D.C.: Nov. 12, 1996).
[9] We analyzed the Corps' contracting data contained in the Army's
Standard Procurement System database. For more information on the
methodology for our analysis, see appendix I.
[10] These fully funded contracts ranged from as small as $1 to as
large as $49 million at award, with a median value of $17,894.
[11] About half of these contracts were awarded in the first fiscal
quarter while the Corps was under a continuing budget resolution
authority;
its final appropriation was not known at the time of this report.
[12] The Corps' annual $4 billion budget includes appropriations for
both new and on-going contracts.
[13] The Corps may fund a continuing contract from more than one
appropriations account.
[14] These accounts include, among others, the investigations, flood
control and coastal emergencies, revolving funds, and regulatory
programs accounts.
[15] For example, one district awarded a continuing contract for
$14,614 in April 2003 and only obligated $6,739 to that fiscal year's
appropriations. The district subsequently awarded 38 more continuing
contracts in that fiscal year and obligated over $9.7 million to these
contracts. We believe the district could likely have obligated the
remaining $7,875 to the April 2003 contract from this $9.7 million.
[16] For the purposes of this report low dollar value is a contract
that is for less than $10 million.
[17] Although not included in the 107 contracts, we found that--in
addition to construction, and operation and maintenance work--
continuing contracts were also used for service contracts, such as
archaeological work, marine benthic surveys, and a purchase order for
the operation of a visitor's center. Generally, these additional
contracts were valued at less than $500,000.
[18] For additional information on the Corps' use of reprogramming, see
GAO, Army Corps of Engineers: Improved Planning and Financial
Management Should Replace Reliance on Reprogramming Actions to Manage
Project Funds, GAO-05-946 (Washington, D.C.: Sept. 16, 2005).
[19] In addition, Corps officials said that environmental windows to
protect, among others, sea turtles, can cause continuing contracts to
be awarded late in the year to ensure that dredging work begins at the
start of the next fiscal year.
[20] Continuing Authorities Program projects are conducted at the
Corps' discretion based on the availability of funds and generally do
not receive specific congressional authorization or appropriations.
These projects include activities for beach erosion, navigation, and
flood control.
[21] The Corps issued this guidance in its Engineering Circular 11-2-
189.
[22] The Corps issued this guidance in Principal Assistant Responsible
for Contracting Instruction letter 2006-05, Continuing Contracts and
Incrementally Funded Contracts for Fiscal Year 2006.
[23] Districts may not have proceeded with a continuing contract for
all of the requests that were approved by headquarters because, in some
instances, the districts chose not to.
[24] Divisions used the following reasons for denying the requests:
fiscal year 2005 appropriations were insufficient to cover the
contractor's expenses, the contract could be fully funded, there were
problems with the cost estimate, and the contract was for an
environmental infrastructure project (which must be fully funded,
according to Corps guidance).
[25] Divisions withdrew these requests, primarily because the work
could be fully funded or because there was uncertainty about
appropriations.
[26] The Corps also noted there could be some cases in which a
continuing contract may be required, such as when a nonfederal sponsor,
i.e., the local community, could not afford to match federal funds
under the lump-sum approach.
[27] Notwithstanding how the Corps views their continuing contracts,
these contracts are also incrementally funded. Incremental funding is
the practice of providing budget authority for only a portion of a
capital acquisition or project.
[28] The limitation of funds clause is found at the Federal Acquisition
Regulation 52.232-22;
the Department of Defense's incremental funding clause is found at the
Defense Federal Acquisition Regulation Supplement 252.232-7007.
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