Recommendations on future hopper dredge fleet forwarded to Congress

News - November 16, 2005

McFarland would be retired under the Corps' preferred plan.

The US Army Corps of Engineers has forwarded to Congress a report detailing its recommendations for the future operation and minimum composition of the Corps’ hopper dredge fleet.

The Corps currently owns and operates four hopper dredges. Essayons, Wheeler and Yaquina were launched in the early 1980s, and McFarland was launched in 1966. Portland District operates Essayons (large hopper class) and Yaquina (small hopper class), New Orleans District operates Wheeler (large hopper class), and Philadelphia District operates McFarland (medium hopper class).

The Corps’s recommended option in the report would schedule Essayons for 215 days of annual dredging, schedule Yaquina for 178 days, keep Wheeler in ready reserve and retire McFarland.

The option will result in a US$10.1 million net reduction in the total cost for hopper dredging and will offer approximately 55 days of additional work to industry annually. It also ensures the Corps has a viable reserve capability ready to respond to unforeseen requirements, and ensures that federal projects requiring hopper dredging can be accomplished in a timely manner and at reasonable cost.

The recommended option is one of 12 considered by the Corps that ranged from making no changes to the fleet’s current configuration and operation to retiring all four hopper dredges.

"The recommendations contained in The Hopper Dredge Report to Congress represent the best business case that the Corps can make for the future service to the nation of its hopper dredge fleet," said Maj Gen Don T Riley, the Corps’s Director of Civil Works.

"We believe this report strikes the right balance between the continued capabilities and utilization of the Corps’ minimum fleet and the capacity of our industry partners who maintain the nation’s commercial hopper dredges," added Riley.

Wheeler has been in ready reserve status since October 1, 1997, in accordance with Public Law 104-303, Water Resources Development Act of 1996 (WRDA 96), Section 237. One of the following two circumstances must exist before Wheeler may be activated from ready reserve status for an urgent dredging assignment:

• Private industry failed to submit a responsive and responsible bid for work advertised.
• A private industry contractor failed to comply with contract specifications.

McFarland is the oldest dredge in the fleet and operates at a daily rate that substantially exceeds comparable industry medium-class hopper dredges. Retiring McFarland will affect approximately 75 Philadelphia District full-time employees. McFarland would require approximately US$20 million in rehabilitation and repowering if it were to be kept in the minimum fleet.

The Corps proposes a timeline of two years for retirement of McFarland if Congress accepts the recommendations in the report.

The Corps prepared The Hopper Dredge Report to Congress to meet a requirement of the Conference Report for the 2004 Energy and Water Appropriations Act. The Conference Report directed the Corps to report to the Energy and Water Appropriations committees with a detailed plan of how the Corps planned to correct issues raised in the March 2003 GAO report entitled Effects of Restrictions on Corps’ Hopper Dredges Should be Comprehensively Analyzed.

The GAO report reviewed the impacts of operational changes to the Corps’ hopper dredges fleet since fiscal year 1993. GAO found that additional costs had been imposed upon the Corps with congressionally mandated reductions in the use of the fleet beginning in 1978, and that corresponding benefits had not been realized.

In addition, the GAO found that the Corps’ contracting process for hopper dredges was not effective. The GAO also reported that the Corps lacked a system to evaluate the costs and benefits of the varying operational levels of its hopper dredge fleet, and did it have a means to make fleet maintenance and repair decisions taking operational use into consideration.

The Corps’ detailed response to Congress was to include how the Corps intended to establish a baseline for determining the appropriate use of its hopper dredges fleet in the future. The conferees also requested that the Corps include a comprehensive analysis of the costs and benefits of the existing and proposed restrictions on the use of the fleet, and expected the Corps to put in place measures by which better investment decisions regarding the fleet could be made.

Five companies own the 15 industry hopper dredges used by the Corps in its navigation mission. Commercial industry currently accomplishes more than 80 percent of the nation’s hopper dredge workload.

Congress will make the final decision on the recommendations in the report. Any changes to the makeup and configuration of the minimum hopper dredge fleet will require legislative action.

Four provisions of Public Law 95-269, enacted 26 August 1978, serve as the basis for the current composition and utilization of the Corps’ minimum hopper dredges fleet, and were used as the basis for the analysis in the Hopper Dredges Report to Congress.

They are:

• The Corps is directed to use private industry when it has the capability to do the work at reasonable prices and in a timely manner.
• The Corps is directed to retire dredges when industry demonstrates capability, timeliness and reasonable prices.
• The Corps may retain only the minimum federally-owned fleet to carry out emergency and national defense work. The Corps may set aside work as reasonably necessary to keep this minimum fleet fully operational.
• The Corps may retain enough of the federally-owned fleet to ensure sufficient capability of the combined federal and private industry to carry out the workload.

The Corps’ hopper dredges minimum fleet is critical to the accomplishment of the hopper dredging requirements of the navigation program. The Corps’ minimum fleet serves as a source of knowledge and expertise for the Corps, ensuring the Corps has the depth of understanding and technical expertise to negotiate and manage industry hopper dredge operations and contracts. The Corps’ hopper dredges also serve to ensure that costs will be reasonable in times of high demand or when there are limited bids for dredging projects.

The Hopper Dredge Report to Congress can be accessed on the web at http://www.usace.army.mil/inet/functions/cw/hot_topics/hopperdredgesreport.htm.