House panel takes aim at Army Corps' contract practices

Citing lean budgets, House lawmakers are proposing the most significant changes in the Army Corps of Engineers' contracting practices in nearly a century, which if enacted would curb funding of construction projects spread out over multiple years.

First authorized by Congress in 1890, the practice of awarding "continuing contracts" traditionally has been aimed at allowing the Corps flexibility in managing large construction projects, which can be slowed because of unanticipated weather conditions, funding shortfalls, and even the discovery of antiquities on a project site.

But House appropriators argue the Corps has abused the practice in recent years, awarding continuing contracts on projects for which the White House has requested no funding, small-scale projects with contracts extending for only a few months into the next fiscal year and obligating more funds for a project than what has been provided in a fiscal year.

"Over the last two years, the committee has grown increasingly concerned with the Corps' liberal use of and inadequate budgeting for continuing contracts," states the report accompanying the bill, drafted by House Energy and Water Appropriations Subcommittee Chairman David Hobson, R-Ohio, and ranking member Peter Visclosky, D-Ind.

Since 1995, when one continuing contract was executed, according to the committee, the Corps has used the practice 599 times at a $5.6 billion cost.

This year, the Corps has proposed to execute 17 continuing contracts on projects the Bush administration did not request in its fiscal 2006 budget, according to the Appropriations Committee.

"The cost of these contracts are not reflected anywhere in the budget, yet the Corps is poised to obligate the federal government for millions of dollars in contravention of the administration's proposed policies," the committee report states.

There are also proposed contracts for projects that received no fiscal 2005 funds, nor did the White House request any in 2006, such as a one-year, $6.7 million irrigation project contract in El Dorado County, Calif., submitted by the Corps in early April.

The Corps also has over-promised funds in lieu of appropriated dollars, the committee found, such as an Oakland, Calif., project for which the Corps has spent $54 million, with only $39 million available -- creating a $15 million hole for appropriators to fill.

Accordingly, the bill proposes to prevent the Corps from executing or modifying any continuing contracts that reserve funds for a project greater than allotted in the 2006 spending measure. It also would prohibit continuing contracts for any projects proposed for deferral or suspension in the following fiscal year, and permanently limit work performed on projects to funds provided in a given fiscal year.

The House Transportation and Infrastructure Committee has taken issue with some of the provisions, arguing they should be considered in the context of the Water Resources Development Act reauthorization bill the panel plans to take up in June, although the panels appear to agree that some proposed contracts for unauthorized projects should be curtailed.

For example, the Corps wants to execute a continuing contract for a Florida Everglades project -- spending $450,000 this year and $33 million in 2006 -- that it has subsequently told lawmakers it does not have authority to carry out.

But most important, Senate appropriators have taken a dim view of what Hobson is trying to do with the Army Corps budget. "They are setting up a huge fight with the Senate," a Senate Appropriations Committee aide said.

As an example of the pitfalls ahead, in a letter to Defense Secretary Donald Rumsfeld dated April 19, Hobson expressed general concerns with continuing contracts and with a "particular environmental infrastructure project" he said the Corps lacks legal authority to execute. Sources said that project is the Coors Vacuum Pump Station project in Bernalillo County, N.M., in the home state of Senate Energy and Water Appropriations Subcommittee Chairman Pete Domenici, R-N.M., who will sit across the table from Hobson in conference.