Maintenance Costs on the Atlantic Intracoastal Waterway Can Be Reduced

Published by the Government Accountability Office on 1977-03-18.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

                                           UNITED STATES GENERAL ACCOUNTING OFFICE
                                                              WASHINGTON,          DC        20548

  DEVELOPMENT         DIVISION          si\$”

            Lieutenant     General                   J    W Morris
            Chief     of Engineers
            Corps of Engineers
            Department     of the                  Army                "$d-
            Washlngton,      D.C.

            Dear      General      Morris

                     We recently       completed      a survey of the Corps of Englneers'                operation
            and maintenance         actlvltles        on the lntracoastal          waterways     (Code 08007)
            The survey was performed                at the Corps'     dlstrlct       offlces   In Norfolk,
            Vrrglnla,      Wllmrngton,         North   Carolina,    and New Orleans,         Loulslana         We
            also had dlscusslons             with Corps headquarters           offlclals     In Washington,

                    We ldentlfled                    the following         three      areas      In    the   survey     which    offer
            potential     savings                  to the Corps

                      --consolldatlon                    of   small    dredging       Jobs     to obtain        less    costly
                          contract              rates,

                      --more     extensive  dredging,  where feasible,                                  to reduce      both
                         long    term costs and dredging    frequency,                                and

                      --more    efflclent                 scheduling       of Corps-owned              sldecastlng

            These areas are not included           in our follow-on           review     of the operation
            of Corps facllltles        on the Atlantic        Intracoastal         Waterway      (Code 08016)
            Although    we have not attempted          to validate        the expected        savings,     this
            letter   summarizes     our observations        on these matters           bringing       them to
            your attention      for any actlon       or follow-up        you feel      1s warranted


                    In carryrng      out rts responslblllty                              for constructing,          operating,         and
           malntalnlng       Federal     river  and harbor                          proJects,    the Corps each year determines
           the capabllltles          of active   projects                         to serve current         navlgatlon         requlre-
           ments       Following      such determlnatlons,                             requests    are made for authorlzatlon
and funds       to perform        maintenance     dredging        The actual      volume   of
waterway      traffic       and the avallablllty          of funds    govern    the extent       of
maintenance         work    undertaken        According      to Corps    headquarters      offlclals,
Corps-wide        expenditures         for maintenance      dredging     amounted      to $167 mllllon
for    fiscal     year    1976


         Corps’      pollcles         require       that     dredging        be done in           the most economical
manner          One method           available        to the Corps,           which      may      afford      savings,     1s
the consolldatlon                of small        dredging       Jobs     into     larger        contracts           Corps
drstrlct        personnel          stated      that     larger      dredging        contracts          usually      result
In less       costly       rates      per cubic         yard       The contractors               view     the larger       con-
tracts      as being         more attractive              because      they    can better             schedule      and plan
their     work,      and can avoid             Idle     time and expensive               set      up costs

         The districts           we visited          seemed to place          different         emphases         on con-
solldatlon          of contracts              For instance,         the Wllmlngton            District         let only
two contracts            for under         300,000      cubic   yards     from June 1968 through                     1975,
whereas        the Norfolk        District         let    29 contracts        under       300,000        cubic     yards
during       the same period                We noted       that   some dlstrlcts             are maklng          efforts
to consolidate             small    -jobs        For example,         the Wilmington            District         recently
completed         dredging       12 locations           along    a 43-mile        stretch       of the Atlantic
Intracoastal           Waterway        under     one contract            The contract           provided         for
dredging         763,000      cubic      yards     at a cost      of $581,000              The $ 76 per cubic
yard     rate     for    this    contract        1s substantially           less      than the per cubic                 yard
rate     would      have been had the contracts                   not been combined

         An example          of the cheaper             rates      obtainable         by consolldatrng             contracts
occurred       on a waterway              along      the coast        of Vlrglnla             The Norfolk          District
has dredged         or 1s planning                to dredge        12 different           shoaling       areas     on the
waterway           One of these              areas,     Fisherman’s          Inlet,      was dredged          in October
1976 at a total              cost     of $63,629          for    23,195      cubic      yards      or $2 74 per cubic
yard       Another        area      1s    Bradford        Bay    and    the    dredging        contract       was let        in
February       1977          On the basis            of the Corps           estimated        volume       of 61,700         cubic
yards,     the total           cost     will      be $122,930         or $1 99 per cubic                yard       Finally,
 the Norfolk        District          intends        to let one contract                for    the other        10 areas
sometime       around        July     1977          The Corps       estimates         the total         volume     to be
450,000       cubic     yards       and the total             cost    to be $510,000             for a cost        per cubic
yard     of $1 13            Thus,      larger       contracts        offer      a lower       cubic     yard    rate       and
result      in monetary            savings

          We analyzed       Norfolk‘s          50 dredging       contracts      which             were     let     during     the
1968 through         1975 period               To depict      the magnitude        of            potential         savings,      we
arbitrarily          selected         as     an ideal    cubic     yard    rate  the             average       rate     for

Norfolk's      21 contracts    which exceeded    300,000    cubic yards     The analysis,
on page 4, illustrates         (1) the decreased       per cubic yard rate of the
larger    contracts     and (2) the potential     for a decrease     in costs of $1 3
mllllon     for the other     29 contracts     Slmllar     savings  may be possible     If
contracts      are combined    In the future

        Dlstrlct        offlclals        agreed     that    the principle          of consolldatlon          has
merit    but stated           It 1s not always           feasible       because      of emergencies        or
fundlng       constraints            Moreover,        it 1s not always            economical      to combine
dredging        contracts         at sites     which require          different        types of dredging
equipment        or which are not In close                  proxlmlty           These offlclals         also
told    us that       consolldatlng           contracts       would not exclude            any contractor
because       of size and that             the contractors           prefer     the larger      contracts

        Although        we   do not advocate         any particular            volume   as ideal     and we
realize       that    some     dredging    contracts       may not be          feasibly   combined,     our
survey      indicates        that     the practice      of comblnlng           dredging   contracts,
whenever        possible,        could   be cost-beneficial          to      the Government       and should
be considered           In   preparing     contract      bid packages


         While   Corps'       policy      provides        for "advance           maintenance"        dredging,
particularly          in fast      shoaling      areas,        our survey          lndlcated      that     some
dlstrlcts       might      not be optlmlzlng              this      practice       to achieve       savings
The principle           of more extensive             dredging          (deeper,      wider,     and for longer
distances)        in some areas requlrlng                   repetitive         dredging       could     increase
the time intervals             between dredgings                   We realize,          however,      that    some
areas refill          quickly       regardless        of the extensiveness                  of the dredging
Nevertheless,           Corps district          offlclals           stated      that,     where feasible,
"advance       maintenance"           dredging      offers       the following            types of benefits
and savings

        --reduce       moblllzatlon         and demoblllzatlon              costs     for    dredges,

        --encourage        better    contract      prices         because      of   larger      dredging
           volume,       as discussed      previously,            and

        --decrease      Corps'  efforts      nn locating      and acquiring    disposal
           sites,    and costs    for studies      associated     with dredging      and
           disposing     of dredged     materials

        Equipment     moblllzatlon   and demobllrzatron       costs may be quite
extensive         These expenses   included   moving,   setting        up, and dlsmantllng
equipment         Between 1968 and 1976, the Norfolk          District     admlnlstered                              51

                                                                              cost          cu yds                                 Potential
    Cubic yards           Con-               Volume             Contract      per             rate             Ideal               decrease
      dredged             tracts             (cu yds >           costs        cu yd         (note a)           cost                in costs
    50,000 or
       less                    9               247,361     $     405,526      $1 60          $ 63          $   155, 837           $   249,689

    50,001 -
       100,000                 7               558,306           715,219       1 41            63              351,733                363,486
    100,001 -
      150,000                  6               700,934           601,206         92            63              441,588                159,618
c   150,001 -
I     300,000                  L            1,477,902          1,499,954         86            63              931,078                568,876
          Totals              =29           2,984,503      $3,221,905         $1 08         $ 63           $1,880,236             $1,341,669

    a/Based      on average         cost of Norfolk's    21 contracts      which exceeded   300,000    cubic   yards     during   the period

        contracts with equipment moblllzatlon          and demoblllzatlon   costs totaling
        $1,283,000    Theoretically     each dredging Interval       which could be avolded
        could result in savrngs of about $25,000 (based on Norfolk's             average
        cost for moblllzatlon      and demoblllzatlon)

               Environmental    costs associated with dredging 1s another area In
        which savings may be realized           In the past, the Corps has frequently
        dredged many waterway sections to the required             depth wlthout extensive
        advance maintenance dredging          This practice      mlnlmlzed the quantity          of
        material     requiring  disposal and llmlted       the amount of research efforts
        needed to satisfy      envlronmental    requirements       Corps district      offlclals
        told us that the costs for research to comply with envlronmental                     requlre-
        ments are currently       about the same for small as well as large dredging
        Jobs     Increasing    the interval   between dredging Jobs through more ex-
        tensive dredging may reduce some of the costs                The environmental         costs
        for the Corps' South Atlantic        Dlvlslon    totaled   about $3 mllllon        for
        fiscal   years 1974-76 for operation         and maintenance proJects

              The Norfolk Dlstrlct     currently    has a proJect underway which may
        serve as an example of this prlnclple             'Ihis prolect involves   extensive
        advance maintenance dredging for several shoaling areas on the Rappahannock
        River     The river has many isolated        shoaling areas along Its length which
        have different     fill rates.    Some of these areas have required        dredging
        about once every 3 years        In the current proJect Norfolk         1s studying
        whether the more extensive      dredging could prolong the dredging Interval
        to 6 or 7 years and thus result         In long-term    savings

              We noted many areas that require     frequent   repetltlve     dredging
        Within the Norfolk Dlstrlct,    there  are   12 areas  which     are dredged  every
        1 to 5 years    The following   table summarizes the number of frequently
        dredged areas on the lntracoastal     waterway for the Wllmlngton Dlstrlct

                     Areas requiring                           Dredging intervals
                  repetitive   dredging                             (months)

                            4                                            6
                            9                                           12
                           10                                           24
                           11                                           36
                           10                                           48
                           -1                                           60


In addltlon,     the Wllmlngton Dlstrlct      dredges 28 other areas not on the
lntracoastal     wfiterway as frequently     as every 6 months     If the Wllmlngton
Dlstrlct     were able to perform advance maintenance dredging on some of the
above areas requlrlng      repetitive    dredging,   long-term savings may result

       Corps offrclals  at the drstrlcts    we visited     agreed that more exten-
sive dredging should prolong the dredging interval           and would result    in
reduced maintenance costs       However, they polnted out that further          lmple-
mentatlon of this prlnclple     would necessitate      a higher lnltlal   outlay of
funds     This Initial  outlay should be compared to the long-term         savings
possible when considering     more extensive    dredging


      We reported     to the Congress In May 1972 on selected aspects of the
Corps' dredging actlvltles       and problems      One issue In the report was
the low utlllzatlon      of nonhopper dredges owned and operated by the Corps
The report noted that the sldecastlng         dredge Schwelzer was transferred
to the Wllmlngton Dlstrlct       from New Orleans to Improve its utlllzatlon
Our survey at Wllmlngton       showed that this dredge 1s still      not being used
extensively       The Wllmlngton Dlstrlct     operates another sldecastlng     dredge,
the Merritt       Both dredges are generally      operated on a one-shift,    40-hour
week basis and cost over $700,000 annually             The followrng  summarizes their
productive    use

                                    Percentage of time used
      Fiscal     year           productively   for dredging (note          a)
                                   Schwelzer                Merritt
          1973                                                    14 0
          1974                       88                           17.2
          1975                       76                           14 6

&/Based on 24-hour day, 365 days per year                Non-productive
   time for the dredges consists prlmarlly          of    lay time (non-
  work hours),   loss due to natural       elements,      transferring
   between Jobs, traveling       to and from wharf       or anchorage,
   and minor operating     repalrs

        During fiscal    years 1973-75, the Merritt     spent about 1,100 hours
traveling     between North Carolina,      Florida, South Carolina    and New Jersey
While the Merritt       spends some time dredging emergency shoals, Improved
scheduling     might reduce transit     time if areas could be dredged in geo-
graphical     sequence.    A typical   dredging operational   pattern   for the Merritt
1s shown below.

Dredging    period                          Location                          distance traveled

Sept    3-30,    1972                 New River      Inlet,      N.C.                Start

Oct. 1-29                             Barden Inlet,           N.C.             North-65      mrles

Oct. 30 - Nov        4                Wllmlngton,       N.C.                   South-120      miles

Nov. 5 - Dee         12               St   Lucre     Inlet,      Fla           South-625      miles

Dee    13 - Jan          6            Core Creek,       N C.                   North-715      miles

Jan    7 - Feb       1                Oregon Inlet,           N.C.             North-125      miles

Feb    2 - Mar       10               New River      Inlet,      N.C.          South-175      miles

Mar    11-27                          Ponce de Leon Inlet,              Fla    South-525      miles

Mar    28 - May 12                    Murrells      Inlet,      S.C.           North-400      mxles

May 13 - June 10, 1973                New Bern,      N.C.                      North-215      miles
            TOTAL MILES                                                              2,965

      From the       above table, It appears that opportunltles     may exist to
plan dredging        patterns more systematically      Although these sites and
others have a        predictable  need for dredging,   we recognize that some
sites have to        be dredged at different    times than scheduled because of

        A Corps offlclal    stated that the Schwelzer 1s primarily used to
dredge only two areas annually because its deeper draft restricts          its
efficient     usage to fewer areas     This contributes to the Schwelzer's
lower utilization        lhe areas the Schwelzer dredges are more subJect
to storms which also causes lower utlllzatlon.

      Despite the apparent low productlvlty            of these dredges, we were
told that they are required       for sites which can only be dredged by
sidecasters,     and that private    contractors     do not have this type of
dredge      Nevertheless,   more efflcrent      dredging patterns might increase
the productive      time of these dredges        Increased    operating   hours
(beyond 40 hours a week) offers         another posslblllty       for lncreaslng
the productive      time

                                            - 7-
       In summary, we belleve   that potentral       may exist for reducing
operation   and maintenance costs through consolldatlng            dredging Jobs
Into fewer and larger contracts,        maklng more extensive       use of advance
maintenance dredging,     and improving    utllzzatlon      of Corps-owned dredges
We would appreciate    any comments you may have on these areas In partl-
cular regard to (1) whether you believe          they offer potential      for savings,
(2) an estimate of the amount of Corps-wide            savings,  if any, and (3) any
actions or plans you may have to pursue these matters further.

      We are sending copies of this report to the Secretary of Defense,
Secretary of the Army, and the Chief, ll.S Army Audit Agency

      We appreciate  the cooperation  received   during our survey and we
wrll be glad to meet wrth you or your representatives       to discuss these
matters    If you have any questlons,    p lease call Mr Carl Bannerman of
my offlce  at 693-8287

                                         Sincerely   yours,

                                         Assrstant   Director