ARMY CORPS OF 

ENGINEERS

Actions Needed to 

Further Improve 

Management of 

Hopper Dredging

Report to the Ranking Member, 

Subcommittee on Water Resources 

and Environment, Committee on 

Transportation and Infrastructure, 

House of Representatives

April 2014

GAO-14-290

United States Government Accountability Office
United States Government Accountability Office

Highlights of GAO-14-290, a report to the 

Ranking Member, Subcommittee on Water 

Resources and Environment, Committee on 

Transportation and Infrastructure, House of 

Representatives

April 2014

ARMY CORPS OF ENGINEERS

Actions Needed to Further Improve Management of 

Hopper Dredging

Why GAO Did This Study

The Corps is responsible for dredging 

sediment from waterways to maintain 

shipping routes important for 

commerce. One dredge type, a hopper 

dredge, performs much of the dredging 

in ports and harbors, and the Corps 

uses its own fleet of hopper dredges 

and contracts with industry to carry out 

the work. In 2003, GAO examined the 

Corps’ hopper dredging program and 

made recommendations to improve its 

management. GAO was asked to 

review changes to the program.

This report examines (1) actions the 

Corps has taken to address GAO’s

2003 recommendations for improving 

the information needed to manage its 

hopper dredging program and develop 

cost estimates for industry contracts; 

(2) effects since 2003, if any, of the 

statutory restrictions placed on the use 

of the Corps’ hopper dredges; and (3) 

key challenges, if any, the Corps faces 

in managing its hopper dredge fleet.

GAO reviewed laws, regulations, and 

policies governing the Corps’ use of 

hopper dredges, and related Corps 

reports. GAO analyzed dredging 

contract and financial data for fiscal 

years 2003-2012, assessed the 

reliability of these data, and 

interviewed Corps and dredging 

stakeholders.

What GAO Recommends

GAO recommends the Corps provide 

written direction to its district offices on 

consistently populating its database

with no-bid and high-bid solicitations 

and develop a written plan for a study 

to obtain and periodically update 

certain hopper dredging cost data for 

its cost estimates. The Department of 

Defense concurred with the 

recommendations.

What GAO Found

The U.S. Army Corps of Engineers (Corps) has taken actions to address GAO’s 

2003 recommendations for improving information related to hopper dredging, but 

some data gaps remain. First, in response to GAO’s recommendation to obtain 

and analyze data needed to determine the appropriate use of its hopper dredge 

fleet, the Corps established a tracking log to document urgent or emergency 

work its dredges carry out. The Corps also modified its dredging database to 

track solicitations for industry contracts that received no bids and bids exceeding 

the Corps’ cost estimate by more than 25 percent, referred to as high bids. Corps 

district offices, however, do not consistently enter data on these solicitations, and 

Corps headquarters has not provided written direction to the district offices to 

ensure data are consistently entered. Tracking and analyzing no-bid and high-bid 

solicitation data could enable the Corps to identify and address gaps in industry’s 

ability to fulfill certain dredging needs as the Corps plans its future hopper 

dredging work. Second, in response to GAO’s recommendation, the Corps took 

action to assess the data and procedures it used for developing cost estimates 

when soliciting industry contracts. However, certain industry cost data the Corps 

relies on remain outdated. For example, some of the data it uses on hopper 

dredge equipment date back to the late 1980s. A senior Corps official stated that 

a study could be conducted to update the data, but the Corps has no plans to 

conduct such a study. Having a plan for obtaining updated data is important for 

developing sound cost estimates.

Statutory restrictions on the use of the Corps’ hopper dredges since 2003 have 

resulted in costs to the Corps, but the effect on competition in the hopper 

dredging industry is unclear. Restrictions limiting the number of days that Corps 

dredges can work have resulted in additional costs such as costs to maintain

certain Corps dredges while they are idle; the Corps incurs many of the costs for 

owning and operating its hopper dredges regardless of how much they are used. 

The restrictions, however, help ensure the Corps has the ability to use these 

dredges to respond to urgent or emergency dredging needs when industry 

dredges are unavailable. It is not clear to what extent restrictions have affected 

competition in the dredging industry. The number of U.S. companies with hopper 

dredges has not changed, but the number and size of these dredges have 

decreased since 2003. In addition, GAO did not find evidence of increased 

competition based on the number of bidders and winning bid prices for Corps 

hopper dredging projects since 2003.

Key challenges facing the Corps in managing its hopper dredge fleet are (1) 

ensuring the fiscal sustainability of its hopper dredges and (2) determining the 

fleet’s appropriate future composition. In 2012, the Corps determined that 

because of increasing ownership and operating costs, among other things, its 

hopper dredges would become unaffordable unless actions were taken, including

increasing the daily rates charged to projects using the Corps’ dredges. Factors 

such as the aging of the Corps’ fleet and the effect on industry of possible 

changes to the Corps’ fleet make it difficult for the Corps to determine the best 

fleet composition. In studies it conducted in 2011 and 2012, the Corps identified 

actions that could help address these challenges, such as reviewing the 

operating costs of hopper dredges to evaluate the affordability of certain dredges.

View GAO-14-290. For more information, 

contact Anne-Marie Fennell at (202) 512-3841 

or fennella@gao.gov.
Page i GAO-14-290 Army Corps Hopper Dredging

Letter 1

Background 6

The Corps Has Taken Actions to Address Our 2003 

Recommendations but Does Not Collect All of the 

Recommended Data 12

Statutory Restrictions on Corps Hopper Dredges Have Resulted in 

Additional Costs to the Corps, but Effects on Industry 

Competition Are Unclear 17

The Corps Faces Challenges Regarding the Fiscal Sustainability 

and the Future Composition of Its Hopper Dredge Fleet 27

Conclusions 32

Recommendations for Executive Action 33

Agency and Third-Party Comments and Our Evaluation 33

Appendix I Objectives, Scope, and Methodology 36

Appendix II The U.S. Hopper Dredge Fleet 40

Appendix III Comments from the Department of Defense 41

Appendix IV Comments from the Dredging Contractors of America 43

Appendix V GAO Contact and Staff Acknowledgments 54

Tables

Table 1: Statutory Restrictions and Other Information on the Use 

of the Corps’ Hopper Dredges 9

Table 2: Summary of Operations and Cost Data for the Corps 

Dredge McFarland 18

Table 3: Winning Bid Prices and Number of Bids for East Coast 

Maintenance Hopper Dredging Projects, Before and After 

the McFarland’s Placement in Ready Reserve 25

Table 4: Corps and Industry Hopper Dredge Fleets, 2014 40

Contents
Page ii GAO-14-290 Army Corps Hopper Dredging

Figures

Figure 1: Illustration of a Hopper Dredge 2

Figure 2: Corps Expenditures for Hopper Dredging and Amount of 

Material Removed by Corps and Industry Hopper 

Dredges, Fiscal Years 2003 through 2012 7

Figure 3: Ready Reserve Funding for the Corps Dredges Wheeler

and McFarland, Fiscal Years 2003 through 2012 19

Figure 4: Annual Average Number of Industry Bids per Corps 

Solicitation and Winning Bid as a Percentage of the 

Corps’ Cost Estimate, Fiscal Years 2003 through 2012 24

Abbreviations

DCA Dredging Contractors of America

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Page 1 GAO-14-290 Army Corps Hopper Dredging

441 G St. N.W.

Washington, DC 20548

April 10, 2014

The Honorable Timothy H. Bishop

Ranking Member 

Subcommittee on Water Resources and Environment

Committee on Transportation and Infrastructure

House of Representatives

Dear Mr. Bishop:

Maintaining the nation’s navigation channels and ports is vital to U.S. 

commerce, with nearly $1.8 trillion of import and export cargo passing 

through the nation’s waterways in 2012. The U.S. Army Corps of 

Engineers (Corps) is responsible for dredging—that is, removing 

sediment from the bottom of—ports, harbors, and other U.S. waterways 

to facilitate their navigation. Vessels called dredges are used to remove 

sediment in order to maintain navigation channels at the depths and 

widths necessary for shipping. Various types of dredging vessels exist, 

each designed to perform in certain conditions or locations. One type—

the hopper dredge—performs much of the dredging work in ports, 

harbors, and other waterways exposed to the ocean, where shipping 

traffic and operating conditions render the use of other types of dredges 

inefficient, impractical, or unsafe. A hopper dredge vacuums material 

(e.g., a mixture of sediment and water) into its “hopper” or containment 

area, where the material is stored before being transported to a 

placement site (see fig. 1). In fiscal year 2012, the Corps spent about 

$370 million for hopper dredging, removing nearly 72 million cubic yards 

of material from dozens of ports and harbors across the country.
Page 2 GAO-14-290 Army Corps Hopper Dredging

Figure 1: Illustration of a Hopper Dredge

The Corps carries out hopper dredging using a combination of its own 

fleet of dredging vessels and industry vessels operating under contract, 

and it is required to do so in the manner most economical and 

advantageous to the United States. Until 1978, the Corps performed all 

hopper dredging in the United States with its fleet of 14 hopper dredges. 

In 1978, legislation directed the Corps to (1) contract out much of its 

dredging work to private industry as industry demonstrated that it could 

perform the work at reasonable prices and in a timely manner, (2) reduce 
Page 3 GAO-14-290 Army Corps Hopper Dredging

the federal hopper fleet as industry demonstrated its ability to perform, 

and (3) maintain a minimum fleet of federal vessels.1 Specifically, the 

legislation directed the Corps to retain as much of its fleet as it 

determined necessary to ensure that the federal and private industry 

fleets together could carry out necessary dredging projects. According to 

the Corps, the purpose of the minimum fleet is to diminish risks to 

navigation by performing urgent, emergency, or national defense work, or 

to respond when industry either does not submit a reasonable bid for 

dredging solicitations or does not perform adequately under an existing 

contract.2

Beginning in 1993, Congress began imposing various statutory 

restrictions on the operations of certain Corps hopper dredges. For 

example, restrictions imposed by the Water Resources Development Act 

of 1996 effectively (1) reduced the annual authorized work schedule of 

the Essayons, McFarland, and Yaquina and (2) limited the number of 

days the Wheeler could be used annually by taking it out of active status 

and placing it in “ready reserve”—under which the Corps uses it primarily 

for training purposes and calls it into active status only in limited 

circumstances, such as urgent and emergency work.

Over time, the Corps has reduced the size of its hopper fleet to 

four vessels: the Essayons, McFarland, Wheeler, and Yaquina. 

Generally, Corps district offices, in coordination with Corps division offices 

to which the district offices report, are responsible for managing and 

contracting for the dredging that occurs within their districts, under the 

guidance of Corps headquarters.

3 According to a 

House committee report, the restrictions were intended to further 

encourage the Corps to contract with private industry for hopper 

dredging.4

 1

Pub. L. No. 95-269 (1978).

Over a decade later, Congress passed the Water Resources 

Development Act of 2007, which required that the Corps place the 

2

Corps of Engineers, Minimum Fleet Capital Investment Report, 2012-2061 (Washington, 

D.C.: Dec. 12, 2011; revised Apr. 26, 2013).

3

The Corps began implementing the restrictions on the workdays for the Essayons, 

McFarland, and Yaquina on October 1, 1993, and placed the Wheeler into ready reserve 

on October 1, 1997. See table 1 for the statutory restrictions in place on the use of the 

Corps’ hopper dredges, and how they have changed since fiscal year 2003.

4

H.R. Rep. No. 104-695 at 158-59 (1996). 
Page 4 GAO-14-290 Army Corps Hopper Dredging

McFarland in ready reserve and limited the use of the vessel’s work.5

In a review we conducted in 2003, we found that the restrictions in place 

at that time had imposed costs on the Corps’ dredging program but had 

not resulted in proven benefits, such as increased industry competition or 

lower prices for hopper dredging.

In 

contrast, the 2007 act lifted the restrictions that had been in place on the 

number of days the Essayons and Yaquina could work.

6

• obtain and analyze baseline data needed to determine the appropriate 

use of its hopper dredge fleet, such as data on emergency work 

performed by the Corps and solicitations that receive no bids;

In our 2003 report, we made three 

recommendations to the Corps for improving the information used to 

manage its hopper dredges and develop cost estimates for industry 

contracts. Specifically, we recommended that the Corps

• assess the data and procedures used to perform the cost estimate 

used when contracting dredging work to the hopper dredging industry; 

and

• prepare a comprehensive analysis of the costs and benefits of 

existing and proposed restrictions on the use of its hopper dredge 

fleet.

The Corps concurred with our recommendations and agreed to 

implement them.

You asked us to examine changes to the Corps’ hopper dredging 

program since our review in 2003. This report examines (1) the actions 

the Corps has taken to address our 2003 recommendations for improving 

the information needed to manage its hopper dredging program and 

develop cost estimates for industry contracts; (2) the effects since 2003, if 

any, of the statutory restrictions placed on the use of the Corps’ hopper 

dredges; and (3) key challenges, if any, the Corps faces in managing its 

hopper dredge fleet.

 5

Pub. L. No. 110–114, § 2047 (2007). The Corps placed the McFarland into ready reserve 

on December 30, 2009.

6

GAO, Corps of Engineers: Effects of Restrictions on Corps’ Hopper Dredges Should Be 

Comprehensively Analyzed, GAO-03-382 (Washington, D.C.: Mar. 31, 2003).
Page 5 GAO-14-290 Army Corps Hopper Dredging

To examine the actions the Corps has taken to address our 2003 

recommendations, we reviewed the Corps’ process for tracking and 

analyzing data on solicitations for private industry hopper dredging work, 

several sources of information the Corps maintains on the use of its 

hopper dredge fleet, the Corps’ 2005 report to Congress on hopper 

dredges, and Corps documentation related to developing government 

cost estimates. To examine the effects since 2003, if any, of the statutory 

restrictions placed on the use of the Corps’ hopper dredges, we analyzed 

the statutes and regulations governing the use of the Corps’ hopper 

dredge fleet, reviewed Corps reports and financial data on the fleet, 

obtained and reviewed information from the dredging industry on its fleet 

of hopper dredges, and analyzed dredging data collected by the Corps 

through its Dredging Information System. To assess the reliability of the 

data, we interviewed Corps officials who maintain the database, reviewed 

related documentation, and tested the data for missing or erroneous 

values. We determined that the data we used were sufficiently reliable for 

our purposes. To examine key challenges, if any, the Corps faces in 

managing its hopper dredge fleet, we reviewed Corps studies and 

financial data on its hopper dredge fleet. For all three objectives, we 

interviewed officials from Corps headquarters, division offices, and the 9 

Corps district offices with the largest hopper dredging workload during 

fiscal years 2003 through 2012 (out of a total of 17 district offices that 

contracted with industry for hopper dredging work during the time period). 

We also interviewed representatives from the five dredging companies 

that own and operate hopper dredges, and other stakeholders including 

local pilots’ associations and port authorities from the areas where the 

Corps’ hopper dredges are stationed, along with their national-level 

counterparts. In addition, we visited the Corps’ four hopper dredges and 

one industry hopper dredge for informational tours of these vessels to 

gain a better understanding of their physical characteristics and 

operations. Appendix I describes our objectives, scope, and methodology 

in greater detail.

We conducted this performance audit from January 2013 to April 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our 

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Page 6 GAO-14-290 Army Corps Hopper Dredging

Since 1824, the Corps has been responsible for maintaining a safe, 

reliable, and economically efficient navigation system in the United 

States. This system currently comprises more than 12,000 miles of inland 

and intracoastal waterways and about 180 ports handling at least 250,000 

tons of cargo per year. The accumulation of sediment in waterways—

known as shoaling—reduces their navigable depth and, without dredging, 

may result in restrictions on vessels passing through the waterways. 

These restrictions often apply to the vessels’ draft—the distance between 

the surface of the water and the bottom of the hull—which determine, in 

part, the minimum depth of water in which a vessel can safely navigate. 

Draft restrictions may result in delays and added costs as ships may need 

to off-load some of their cargo to reduce their draft, wait until high tide or 

until waterways are dredged, or sail into another port. For example, 

according to a 2011 Corps study, 1 foot of shoaling in the lower 

Mississippi River could result in $2.8 billion worth of cargo being disrupted 

annually.7

The Corps contracts with industry to perform most dredging, including 

work done by hopper dredges. According to the Corps, of the 

approximately $11 billion it spent for dredging from fiscal year 2003 

through fiscal year 2012, about $2.37 billion was for hopper dredging. Of 

that, industry hopper dredges accounted for about $1.8 billion, and Corps 

hopper dredges accounted for about $570 million. Corps spending on 

hopper dredging has more than doubled since fiscal year 2003, while the 

amount of material removed by hopper dredges has increased only 

slightly over that period, according to Corps data. Specifically, as shown 

in figure 2, the Corps spent nearly $170 million for Corps and industry 

hopper dredges to remove around 66 million cubic yards of material in 

fiscal year 2003. By fiscal year 2012, Corps spending on Corps and 

industry hopper dredging had increased to about $370 million, while the 

amount of material removed increased to nearly 72 million cubic yards. 

This growth in spending reflects costs for hopper dredging that, according 

To minimize such risks to navigation, the Corps removed an 

annual average of about 229 million cubic yards of material from U.S. 

waterways from fiscal year 2003 through fiscal year 2012, at an average 

annual cost of about $1.1 billion, according to the Corps. Even with these 

efforts, draft restrictions have regularly been in place on major waterways 

throughout the United States in the past several years, according to 

Corps documents and officials.

 7

Corps, 2011 Minimum Fleet Capital Investment Report.

Background
Page 7 GAO-14-290 Army Corps Hopper Dredging

to Corps documents, have increased because of rising costs for fuel and 

steel, among other factors.

Figure 2: Corps Expenditures for Hopper Dredging and Amount of Material 

Removed by Corps and Industry Hopper Dredges, Fiscal Years 2003 through 2012

Note: The Corps’ hopper dredging work is funded through the Corps’ annual civil works appropriation 

and, in most years since 2003, through supplemental appropriations, such as those for Hurricane 

Katrina recovery efforts, the American Recovery and Reinvestment Act, and other sources.

Hopper dredging today is generally performed in three regions of the 

United States—the East Coast, Gulf Coast, and West Coast—and each 

region has at least one Corps hopper dredge that typically operates in it: 

the McFarland on the East Coast, the Wheeler on the Gulf Coast, and the

Essayons and Yaquina on the West Coast. On the East and Gulf Coasts, 

the majority of the hopper dredging workload is carried out by industry 

dredges, while on the West Coast, Corps dredges remove more than half 

of the dredged material. Various factors can influence and complicate 

hopper dredging in each region. For example, on the East Coast, much of 

the hopper dredging must be performed during certain months of the year 

because environmental restrictions related to endangered sea turtles and 

other species prohibit dredging while those species are present. On the 

West Coast, the Corps must factor in the time and expense of moving 
Page 8 GAO-14-290 Army Corps Hopper Dredging

industry dredges through the Panama Canal if the only available industry 

hopper dredges are on the East or Gulf Coasts.

The sizes and capabilities of specific hopper dredges—and, therefore, the 

projects for which they are suited—vary. For instance, shallow ports and 

harbors cannot be dredged by vessels with deep drafts in many cases. 

The Corps uses the Yaquina, which is a small dredge with a draft of 

around 15 feet when its hopper is fully loaded,8

As noted, several pieces of legislation were enacted that sought to 

increase the role of industry in hopper dredging by placing restrictions on 

the use of the Corps’ hopper dredges. More specifically, in 1978, 

legislation directed the Corps to contract out much of its hopper dredging 

work to industry and reduce the Corps’ fleet to the minimum necessary to 

insure the capability of the federal government and industry together to 

carry out projects for the improvement of rivers and harbors. The Energy 

and Water Development Appropriations Act for fiscal year 1993, and 

subsequent appropriations acts in the early 1990s, required the Corps to 

offer for competitive bidding at least 7.5 million cubic yards of hopper 

dredging work previously performed by the federal fleet. The Corps 

addressed this requirement by reducing the use of each of its four 

dredges from about 230 workdays per year to about 180 workdays per 

year. The Water Resources Development Act of 1996 then required the 

Corps to take the Wheeler out of active status and place it into ready 

reserve. The Corps implemented this requirement beginning in fiscal year 

1998 by generally limiting the Wheeler to working 55 days a year plus any 

urgent or emergency work. More recently, the Water Resources 

Development Act of 2007 required that the Corps place the McFarland in 

ready reserve and limited the use of the vessel to 70 working days per 

year in the Delaware River and Bay, plus any urgent and emergency 

for dredging small and 

shallow ports along the California, Oregon, and Washington coasts. In 

contrast, the Corps uses the Wheeler, which is a large dredge with a draft 

of nearly 30 feet when its hopper is fully loaded, for deeper navigation 

channels such as those in the lower Mississippi River. See appendix II for 

a list of Corps and industry hopper dredges and their characteristics.

 8

A hopper dredge’s size is determined by the capacity of its containment area or its 

“hopper”—small hopper dredges have a capacity of up to 3,000 cubic yards, medium 

hopper dredges have a capacity of 3,001 to 6,000 cubic yards, and large hopper dredges 

have a capacity over 6,000 cubic yards.
Page 9 GAO-14-290 Army Corps Hopper Dredging

work.9 See table 1 for the statutory restrictions in place on the use of the 

Corps’ hopper dredges and how they have changed since fiscal year 

2003.10

Table 1: Statutory Restrictions and Other Information on the Use of the Corps’

Hopper Dredges

McFarland Wheeler Essayons Yaquina 

In ready reserve Yes Yes No No

Current limit on 

workdays

70 (in law) 70 None None a

Activities allowed 

within the limit

a

Routine dredging in 

the Delaware River 

and Bay to ensure 

its ability to perform 

urgent and 

emergency work

Routine dredging 

to ensure its 

ability to perform 

urgent and 

emergency work

Not 

applicable

Not 

applicable

Activities allowed 

beyond the limit

The Corps can call 

the dredge out of 

ready reserve for 

urgent or 

emergency 

dredging when 

industry dredges 

are unavailable

The Corps can 

call the dredge 

out of ready 

reserve for urgent 

or emergency 

dredging when 

industry dredges 

are unavailable

Not 

applicable

Not 

applicable

Changes since 

fiscal year 2003

Placed in ready 

reserve effective 

December 30, 

2009

Change in 

workday limit from 

55 to 70 effective 

fiscal year 2008

Removal of 

workday limit 

effective 

fiscal year 

2009

Removal of 

workday limit 

effective 

fiscal year 

2009

Sources: GAO analysis of selected legislation and Corps information.

a

 9

The 2007 act did not specify any change in the restrictions on the Wheeler; however, 

beginning in fiscal year 2008, the Corps increased the Wheeler’s training days from 55 to 

70 days. According to Corps officials, the Corps set the Wheeler’s training days at 70 days 

to be consistent with the day limit established for the McFarland by the 2007 act. 

Restrictions imposed by the Water Resources Development Act of 1996 effectively limited the

Essayons and Yaquina to about 180 workdays. The Water Resources Development Act of 2007 lifted 

these restrictions and these two vessels resumed operations without restrictions on October 1, 2008.

10There have been other legislative attempts to further alter the operations of the Corps 

fleet. For example, a House-passed bill in 2006 would have eliminated all funding for 

operating and maintaining the McFarland, but not for decommissioning the vessel. H.R. 

5427, § 104 (2006). A Senate appropriations bill for fiscal year 2012 would have required 

the Corps to fully utilize all Corps hopper dredges without restriction. H.R. 2354, § 110 

(2011).
Page 10 GAO-14-290 Army Corps Hopper Dredging

The Corps follows a process—known as the raise the flag procedure—for 

activating its ready reserve dredges to respond to urgent or emergency 

dredging needs. The Corps defines an urgent need for dredging as a 

time-sensitive situation that may require prompt action for providing a 

safe navigation channel, and an emergency as a situation that would 

result in an unacceptable hazard to life, a significant loss of property, or 

an immediate, unforeseen, and significant economic hardship if corrective 

action is not undertaken within a time period less than the normal contract 

procurement process. The raise the flag procedure includes a series of 

steps intended to allow industry the opportunity to respond to urgent or 

emergency dredging needs before the Corps uses its own dredges. The 

Corps district office with an urgent or emergency dredging need notifies 

the Corps division office overseeing it of the dredging need, and district 

and division staff review ongoing hopper dredging work under existing 

Corps contracts to see if any industry hopper dredges could be made 

available. If no industry hopper dredges could be made available, the 

offices notify Corps headquarters. The Corps’ Director of Civil Works may 

then decide whether to use one of the Corps’ ready reserve hopper 

dredges or make additional efforts to procure an industry dredge, such as 

by releasing a dredge from an existing contract.

The Corps contracts for most of the hopper dredging work by soliciting 

competitive bids from industry. To determine the reasonableness of 

contractor bids, the Corps develops a government cost estimate for its 

hopper dredging solicitations. Government cost estimates are developed 

using information on the costs of owning and operating hopper dredges—

including acquisition, fuel, and shipyard costs—along with information on 

the project for which the dredging is needed—including the amount and 

type of material to be removed, and the distance from the dredging site to 

the placement site. In soliciting bids from contractors, the Corps most 

commonly uses a sealed-bid process, through which it generally awards

the contract to the lowest bidder with a bid that is no more than 25 
Page 11 GAO-14-290 Army Corps Hopper Dredging

percent above the government cost estimate.11

The costs to own and operate hopper dredges include costs such as 

payroll for the crews, fuel, repairs, and depreciation. Hopper dredging 

requires large capital outlays—a modern hopper dredge comparable in 

size to the Wheeler, for instance, would cost around $100 million to build, 

according to Corps and industry estimates—and related costs such as 

depreciation and replacement of engines or other major equipment can 

represent a relatively large portion of the dredges’ total costs. The Corps 

and industry incur much of the costs for their hopper dredges—such as 

paying a crew and keeping engines and other systems in ready working 

condition—regardless of how much the dredges are used.

If the Corps does not 

receive any bids or if all bids exceed the government cost estimate by 

more than 25 percent, the Corps may pursue a number of options, 

including (1) negotiating with bidders to get the bid within an awardable 

range of the cost estimate; (2) reviewing the cost estimate and revising it 

based on additional information, as appropriate, or (3) performing the 

work itself such as through its raise the flag procedure.

The Corps uses two funding sources from its annual civil works 

appropriation to pay for its hopper dredges. First, for the ready reserve 

vessels McFarland and Wheeler, funds are provided for each dredge to 

cover their costs while they are idle in ready reserve. Second, the Corps 

pays for the use of its dredges with project funds based on a daily rate it 

establishes for its dredges. According to Corps officials, the Corps sets a 

daily rate specific to each of its hopper dredges at least annually, based 

on factors such as the costs of owning and operating the dredge, and the 

amount of work the dredge is expected to perform. As the Corps uses its 

hopper dredges for projects, the Corps uses funds allocated for those 

specific projects to pay its dredges, based on the number of days its 

dredges work and the dredges’ daily rate.

 11In addition to being no more than 25 percent above the government cost estimate, bids 

must be considered responsive in order to be awarded. One element the contractor 

generally must have in order for the Corps to consider a bid to be responsive is access to 

the required equipment for performing the scope of work. In addition to sealed-bid 

solicitations, the Corps awards hopper dredging contracts using requests for proposals, 

which allow the Corps to evaluate proposals on the basis of criteria other than price. Using 

the request for proposals process, the Corps may award a contract on a sole-source basis 

after negotiating with a single company because, for instance, there is an urgent need for 

dredging and soliciting work from multiple contractors would cause unacceptable delays. 

Additionally, a bidder who provides a responsive bid must be considered a responsible 

bidder which entails, among other things, that the bidder has adequate financial capability.
Page 12 GAO-14-290 Army Corps Hopper Dredging

Since our 2003 review,12 the Corps has taken actions to address our 

recommendations for improving the information needed to manage its 

hopper dredging program and develop cost estimates for industry 

contracts, but some data gaps remain. First, the Corps collects data on 

urgent or emergency hopper dredging work but does not consistently 

collect the data that we recommended on solicitations that received no 

bids or where all the bids received exceeded the Corps’ cost estimate by 

more than 25 percent. Second, the Corps assessed the data and 

procedures for performing the cost estimates it uses when soliciting 

industry contracts in response to our recommendation, but the Corps has 

not obtained updated data for some costs used in these estimates. Third, 

in response to our recommendation to prepare an analysis of the costs 

and benefits of existing and proposed restrictions on the use of its hopper 

dredge fleet, the Corps developed a report analyzing options on how to 

best maintain and operate its fleet.

In response to our 2003 recommendation to obtain and analyze baseline 

data needed to determine the appropriate use of its hopper dredge fleet,

the Corps established a tracking log as part of its raise the flag procedure 

to maintain and review urgent or emergency work its hopper dredges 

carry out, but it does not consistently collect certain solicitation 

information that we recommended. Having a means to track urgent or 

emergency dredging work helps the Corps ensure it is documenting and 

evaluating when and under what circumstances it will use its ready 

reserve dredges. According to Corps officials, the Corps established a 

tracking log in 2007 to systematically track information on the 

circumstances when urgent or emergency hopper dredging may be 

needed, and specifically when Corps’ dredges would be used to meet 

those needs. Corps district offices that are faced with critical hopper 

dredging needs submit information on their plans to address the needs to 

their division and Corps headquarters for review and approval. The 

Corps’ decision-making process for determining whether to use its ready 

reserve vessels is also documented via its tracking log. For example, in 

January 2013, a hopper dredge was needed to perform work along the 

North Carolina coast because certain areas had become severely 

shoaled and were impeding safe navigation. One industry bid was 

received to perform the work, but it exceeded the government cost 

 12GAO-03-382.

The Corps Has Taken 

Actions to Address 

Our 2003 

Recommendations 

but Does Not Collect 

All of the 

Recommended Data

The Corps Collects 

Recommended Data on 

Urgent or Emergency 

Dredging but Does Not 

Consistently Collect Data 

on Certain Solicitations
Page 13 GAO-14-290 Army Corps Hopper Dredging

estimate by more than 25 percent. After determining its cost estimate was 

reasonable, the Corps negotiated with the industry bidder in an attempt to 

get the bid within an awardable range of the Corps’ cost estimate, but the 

parties were unable to come to an agreement. As a result, the Corps 

initiated its raise the flag procedure because of the urgent nature of the 

situation. Because no other industry contractors were available 

immediately to respond, the Corps used the McFarland to perform the 

dredging and documented its decision-making process in its tracking log.

We also recommended that the Corps obtain and analyze other data that 

could be useful in determining the appropriate use of the Corps’ hopper 

dredges, including data on solicitations that receive no bids or where all 

the bids received exceeded the Corps’ cost estimate by more than 25 

percent. Corps officials we spoke with said that they are aware when a 

no-bid or high-bid situation occur, particularly when they use a Corps 

dredge through their raise the flag procedure because of such a situation. 

But by tracking and analyzing no-bid and high-bid solicitation data, the 

Corps may be better positioned to identify gaps in industry’s ability to fulfill 

certain dredging needs—such as during certain times of the year, in 

particular geographic areas, or for particular types of projects—and avoid 

or address any gaps identified. In 2004, the Corps took steps to address 

our recommendation by modifying data fields in its dredging database, 

the Corps’ database for maintaining dredging information on each of its 

dredging projects, to collect data on no-bid and high-bid solicitations. We 

found, however, that data for these solicitations were not consistently 

entered into the database across the Corps district offices responsible for 

entering it. In our review of the Corps’ dredging database, we found that 

one district office entered data on no-bid and high-bid solicitations. Corps 

officials from several district offices told us that entering information into 

the database is tedious and time-consuming. They also indicated that 

they do not enter information for all data fields because the officials 

primarily use information from the database for planning and scheduling 

future dredging work, not for reviewing data on past solicitations or 

solicitations that did not result in an awarded contract, which would 

include no-bid and high-bid solicitations.

Corps headquarters officials we spoke with recognized that tracking and 

analyzing data on no-bid and high-bid solicitations is important and could 

serve as a useful decision-making tool in planning future hopper dredging 

work. However, they have not provided written direction to the district 

offices to help ensure data on these solicitations are consistently entered 

into the database. According to officials we spoke with, they have not 

done so because of other higher-priority action items. The officials added 
Page 14 GAO-14-290 Army Corps Hopper Dredging

that they have made efforts to ensure district offices consistently enter 

accurate and complete data into the dredging database, such as 

emphasizing this activity during periodic meetings with district offices. 

These outreach efforts have been targeted at entering data into the 

dredging database as a whole, however, and have not focused 

specifically on the importance of the data field for tracking no-bid or highbid solicitations, according to the officials. Federal internal control 

standards state that management should develop written policies and 

procedures that staff are to follow as intended.13

In response to our recommendation to assess the data and procedures 

used to perform the cost estimate used when contracting dredging work 

to the hopper dredging industry, the Corps took several actions to 

improve its cost estimates, but some of the information it relies on 

remains outdated, such as its dredge equipment cost information dating 

back to the late 1980s.

Without complete data

on no-bid and high-bid solicitations, the Corps may be missing 

opportunities to plan future hopper dredging work that identifies and 

addresses potential gaps in industry’s ability to fulfill certain dredging 

needs based on this solicitation information.

14

 13GAO, Standards for Internal Control in the Federal Government,

In 2004, and again in 2008, the Corps took 

actions to evaluate and update certain cost data used in its cost 

estimates. In 2004, the Corps prepared an internal document that 

summarized the steps it took to analyze, evaluate, and update certain 

cost data used in its cost estimates. For example, according to the 

document, the Corps examined repair and maintenance costs for industry 

hopper dredges and updated some data for dredge engines. In 2008, the 

Corps partnered with the Dredging Contractors of America (DCA)—a 

national association for the dredging industry—to update industry cost 

data. Corps documentation related to the effort indicated that the Corps 

learned important information through discussions with industry, and a 

senior Corps cost-estimating official that we spoke with said that, on the 

basis of these discussions, the Corps updated the training it provides to 

Corps staff on preparing hopper dredge cost estimates.

GAO/AIMD-00-21.3.1

(Washington, D.C.: Nov. 1, 1999).

14As part of this recommendation, we also recommended that the Corps examine the 

policies related to calculating transit costs—the costs for an industry dredge to travel to a 

project site—because the Corps was relying on an expired policy for some of its 

solicitations. The Corps updated the regulation containing its policies on calculating transit 

costs in 2008.

The Corps Reviewed Data 

and Procedures for 

Performing Cost 

Estimates, but Some 

Information Remains 

Outdated
Page 15 GAO-14-290 Army Corps Hopper Dredging

Some of the data the Corps uses in preparing its hopper dredging cost 

estimates, however, remain outdated despite the Corps’ attempt to 

update the information. Specifically, the Corps has not obtained updated 

technical data on industry hopper dredge equipment or labor rates but 

instead is relying on outdated information, some of which dates back to 

the late 1980s. During efforts to update the Corps’ cost-estimating data in 

2008, the Corps prepared a survey to collect industry dredge equipment 

information from the five dredging companies that owned hopper 

dredges. In cooperation with the Corps, DCA sent the survey to the 

companies. In the August 2008 letter accompanying the survey, the 

dredging association stated that “much of the cost basis the Corps uses 

for industry dredges is old data and limited due to lack of industry input”

and noted that the Corps’ ability to obtain the data would be mutually 

beneficial to the companies and the Corps. Among other things, data the 

survey sought to collect included costs of dredge acquisition, capital 

improvements, and certain types of repairs. Efforts to obtain these data 

were unsuccessful, however, due in part to industry’s concerns about 

sharing business-sensitive data with the Corps. Industry representatives 

from one hopper dredging company we spoke with explained that they 

were concerned that cost data provided to the Corps might become 

accessible to their competitors and therefore the data were not provided. 

A senior Corps cost-estimating official we spoke with told us that the 

Corps limits the release of cost data used in preparing cost estimates 

within the Corps and that updated industry cost data would assist the 

Corps in preparing its cost estimates for hopper dredge work. The official 

also stated that other efforts could be made to obtain updated cost data, 

including performing a Corps-wide study to evaluate information from 

each Corps district office with hopper dredging contracts or reviewing 

contract audits. The Corps, however, has no plans for conducting such a 

study. In conducting a study, the Corps could assess the most effective 

and efficient approach for obtaining updated cost data, including 

examining whether and to what extent it would base its study approach 

on a review of contracts or contract audits, working directly with industry, 

or other approaches. Federal internal control standards state the need for 

federal agencies to establish plans to help ensure goals and objectives 

can be met.15

 15

A written plan would assist the Corps in obtaining updated 

cost data and following sound cost estimating practices, as described in 

our 2009 cost estimating and assessment guide, which is a compilation of 

GAO/AIMD-00-21.3.1.
Page 16 GAO-14-290 Army Corps Hopper Dredging

cost-estimating best practices drawn from across government and 

industry.16 Obtaining reliable and up-to-date data are important for 

developing sound cost estimates, and the Corps’ cost estimate credibility 

may suffer if technical data are not updated and maintained, as noted in 

our cost estimating guide.

In response to our 2003 recommendation that the Corps prepare a 

comprehensive analysis of the costs and benefits of existing and 

proposed restrictions on the use of the Corps’ hopper dredge fleet, the 

Corps prepared an analysis of its fleet for a 2005 report to Congress.17

 16GAO, Cost Estimating and Assessment Guide: Best Practices for Developing and 

Managing Capital Program Costs, 

In 

its report, the Corps analyzed a number of options for operating its 

hopper dredges and made a recommendation to Congress for adjusting 

its fleet based on costs and benefits outlined in its analysis. The Corps 

recommended an option that it said would, among other things, ensure 

there was a viable reserve capability ready to respond to unforeseen 

requirements and ensure the timely accomplishment and reasonable cost 

for federal projects requiring hopper dredges. Under the option it 

recommended, the Corps would have (1) increased the Essayons’s

dredging by about 35 days, and kept the Yaquina’s dredging days the 

same; (2) continued to keep the Wheeler in ready reserve; and (3) retired 

the McFarland. The Water Resources Development Act of 2007 did not 

specifically address these recommendations, but instead placed the 

McFarland in ready reserve and removed the then-existing restrictions on 

the Essayons and Yaquina.

GAO-09-3SP (Washington, D.C.: March 2009). The 

guide states that updating and keeping cost estimates current to reflect changes in 

technical assumptions is one of the features of a high-quality, cost-estimating process and 

a best practice that helps develop reliable cost estimates that management can use for 

informed decisions.

17U.S. Army Corps of Engineers, Report to Congress: Hopper Dredges (Washington, 

D.C.: June 3, 2005). The 2004 Energy and Water Appropriations Act conference report 

referenced our 2003 report on the Corps’ hopper dredges and also directed, among other 

things, that the Corps prepare an analysis of the costs and benefits of the existing and 

proposed restrictions on the use of its hopper dredges.

The Corps Analyzed 

Options for Operating Its 

Hopper Dredges in a 

Report to Congress
Page 17 GAO-14-290 Army Corps Hopper Dredging

Since 2003, statutory restrictions on the use of the Corps’ hopper dredges 

have resulted in additional costs, but it is unclear whether the restrictions 

have affected competition in the hopper dredging industry.18 Restrictions 

effectively limiting the number of days that Corps dredges can work have 

resulted in additional costs to the Corps, such as costs to maintain the 

ready reserve vessels while idle. On the other hand, the restrictions help 

ensure the Corps’ ability to respond to urgent and emergency dredging 

needs when industry dredges may be unavailable. The extent to which 

restrictions on the use of the Corps’ hopper dredges have affected 

competition in the dredging industry—as measured by the number of 

companies with hopper dredges and the number of bidders and winning 

bid prices for Corps projects—is unclear, based on our analysis of data 

on industry bids per Corps solicitation and other factors.

Since 2003, statutory restrictions on the use of the four Corps’ hopper 

dredges—in particular, the Wheeler and the McFarland—have resulted in 

additional costs to the Corps. First, the vessels have needed annual 

funding to maintain them in ready reserve because, given their limited 

use, the Corps is unable to recoup their costs with revenues from 

dredging work. The Corps incurs many of the costs for its hopper 

dredges—such as paying a crew and keeping engines and other systems 

in ready working condition—regardless of how much the dredges are 

used. For instance, placing the McFarland in ready reserve resulted in a 

substantial decrease in its dredging work (as measured in days worked 

and amount of material removed) but a relatively small decrease in its 

operating costs. As shown in table 2, the average annual cubic yards of 

material removed by the McFarland declined by 60 percent, while its 

average annual operating costs declined by 16 percent.19

 18Similarly, we found, in 2003, that the restrictions on the Corps’ hopper dredge fleet at 

that time had imposed costs on the Corps’ dredging program, but had not yet resulted in 

proven benefits—such as more bids per Corps solicitation or lower prices for winning bids. 

See GAO-03-382.

19We found, in 2003, that in the 4 years after the Wheeler was placed in ready reserve, 

the average cubic yards it dredged per year decreased by 56 percent from its average 

over the 4 years prior to being placed in ready reserve, while its average costs decreased 

by 20 percent over the same period. See GAO-03-382.

Statutory Restrictions 

on Corps Hopper 

Dredges Have 

Resulted in Additional 

Costs to the Corps, 

but Effects on 

Industry Competition 

Are Unclear

Statutory Restrictions 

Have Resulted in 

Additional Costs for Corps 

Hopper Dredging
Page 18 GAO-14-290 Army Corps Hopper Dredging

Table 2: Summary of Operations and Cost Data for the Corps Dredge McFarland

Operations and cost 

data

Before ready 

reserve (fiscal years 

2008 and 2009)

After ready reserve 

(fiscal years 2011 

and 2012) a

Percentage 

change a

Average days worked 144 85 -41%

Average cubic yards of 

material removed 1,706,570 685,957 -60%

Average operating cost $9,208,887 $7,766,939 -16%

Labor costs $4,420,847 $3,919,780 -11%

Fuel, lubricants, and

water costs

$2,545,462 $1,677,801 -34%

Other operating costs $2,242,578 b $2,169,358 -3%

Source: GAO analysis of U.S. Army Corps of Engineers data.

Note: All cost amounts are in constant 2013 dollars. Hopper dredges in ready reserve are used 

primarily for training purposes and can be called into active status only in limited circumstances, such 

as emergencies.

a

The McFarland was placed in ready reserve on December 30, 2009. Therefore, the period before 

ready reserve includes the 2 full fiscal years prior to ready reserve—2008 and 2009—while the period 

after ready reserve includes the 2 full fiscal years following ready reserve—2011 and 2012. Limiting 

the period before ready reserve to 2 fiscal years reduced the effect of long-term changes, such as 

increasing fuel prices, on the McFarland’s costs prior to ready reserve.

b

Other operating costs include overhead, crew training, and information technology services, among 

others.

Annual funding needed to maintain the Wheeler and the McFarland in 

ready reserve, which is provided through the Corps’ civil works 

appropriation, has increased since 2003. Specifically, in fiscal year 2003, 

ready reserve funding for the Wheeler was $7.6 million, and it increased 

to $13.6 million in fiscal year 2012. In addition, the McFarland has 

received ready reserve funding of over $11 million each fiscal year since 

it was placed in ready reserve, resulting in total ready reserve funding for 

the vessels of over $25 million in fiscal year 2012 (see fig. 3).
Page 19 GAO-14-290 Army Corps Hopper Dredging

Figure 3: Ready Reserve Funding for the Corps Dredges Wheeler and McFarland, 

Fiscal Years 2003 through 2012

Note: Hopper dredges in ready reserve are used primarily for training purposes and can be called into 

active status only in limited circumstances, such as emergencies.

a

The McFarland was placed in ready reserve on December 30, 2009, and it began receiving ready 

reserve funding in fiscal year 2010.

Second, the ready reserve restrictions have contributed to increases in 

the daily rate the Corps charges projects for use of the Wheeler’s service, 

and future increases in the McFarland’s daily rate may also be needed if it 

experiences unanticipated cost increases.20

 20Daily rates for Corps hopper dredges have increased and may continue to increase due 

to several factors such as increasing fuel costs and changes in Corps accounting 

methods, in addition to ready reserve restrictions. While future increases in the 

McFarland’s daily rate may be needed if unanticipated cost increases are experienced, 

such increases could also apply to any of the Corps’ hopper dredges. We did not quantify 

the extent to which individual factors contributed to increases in daily rates.

Increases in daily rates may 

result in either increasing costs, fewer cubic yards of material removed, or 

both, for the projects that use the Wheeler and McFarland —primarily 
Page 20 GAO-14-290 Army Corps Hopper Dredging

projects in the Delaware River and the Mississippi River mouth, 

respectively. Officials from Corps headquarters and district offices 

responsible for the ready reserve hopper dredges told us they set the 

dredges’ daily rates in part based on how many days they expect the 

dredges to work in the coming year and that, in the case of the Wheeler, 

the limited dredging days since being placed in ready reserve have 

contributed to higher daily rates. For instance, the Wheeler’s daily rate 

has increased from $75,000 in fiscal year 2003 to $140,000 in fiscal year 

2012, and the Corps expects a rate of $165,000 during fiscal year 2014. 

Furthermore, although costs for industry hopper dredge work have also 

increased, officials from a Corps district office that historically used the 

Wheeler told us that they would now be reluctant to use the vessel 

instead of an industry hopper dredge because of its high daily rate. In the 

case of the McFarland, the Corps has increased the vessel’s daily rate 

from $94,000 in fiscal year 2009 (the last full fiscal year before it was 

placed in ready reserve) to $100,000 in fiscal year 2012, and officials said 

they planned to increase and then maintain the daily rate at $110,000 for 

the next several fiscal years. If there are unanticipated increases in costs 

for the McFarland, however, such as an unexpected increase in repair 

costs, Corps officials said they would likely have to increase the vessel’s 

daily rate to cover such costs. As the officials explained, they set the 

McFarland’s daily rate with an expectation that the vessel will work 70 

days because the ready reserve restrictions do not allow them to increase 

the number of days the McFarland can work. Therefore, raising the 

vessel’s daily rate would be the Corps’ primary option to cover an 

increase in costs.

On the West Coast, restrictions on the number of days the Corps’ hopper 

dredges Essayons and Yaquina could work had led to inefficiencies in 

completing their work before those restrictions were lifted by the Water 

Resources Development Act of 2007, according to Corps officials. Before 

the 2007 act, the Essayons and the Yaquina were restricted to working 

about 180 workdays annually and, for several years, they reached their 

operating limits and, therefore, had to return to port before the projects 

they were working on were finished. The dredges were then sent back to 

complete the projects once the new fiscal year began, which was in 

October when weather conditions had begun to deteriorate. As a result, 

the Corps incurred additional transit and payroll costs while returning to 

complete the projects. Since the restrictions on these dredges were 

removed under the 2007 act, Corps officials said they have not had to 

interrupt ongoing work due to operating limits on the dredges and have 

had greater flexibility regarding when to perform work.
Page 21 GAO-14-290 Army Corps Hopper Dredging

The ready reserve restrictions on the Wheeler and McFarland help 

ensure that they are available to the Corps for responding to urgent and 

emergency dredging needs, especially in the regions where the dredges 

are stationed. Demand for hopper dredging often varies substantially from 

year to year, and month to month, due in part to severe weather events 

such as hurricanes and floods, other events such as the Deepwater 

Horizon oil spill in 2010, or environmental restrictions that limit dredging 

work to certain months of the year. This variability has resulted in periods 

of high demand during which the Corps has used its ready reserve 

hopper dredges to respond to urgent or emergency dredging needs when 

industry hopper dredges were not available. As the Corps noted in its 

2005 report to Congress, having the Wheeler in ready reserve is 

important to ensure that the vessel is available when unforeseen dredging 

needs occur, while more fully utilizing the Wheeler could limit the Corps’

capability to respond to peak workload demands.21 Specifically, the Corps 

has used the Wheeler to respond to urgent or emergency dredging needs 

15 times during fiscal years 2003 through 2012.22 In these cases, 

according to Corps documents, industry dredges were unavailable to 

immediately respond to time-sensitive dredging needs at the mouth of the 

Mississippi River, and the Corps was able to quickly move the Wheeler to 

the site and conduct the work. Similarly, local pilots and a local port 

authority we spoke with told us that the McFarland has been critical in 

addressing dredging needs on the Delaware River and Bay, where the 

vessel is stationed in ready reserve. Since its placement in ready reserve 

at the end of 2009, the Corps has used the McFarland to respond to 

urgent or emergency needs 4 times. Industry representatives from most 

dredging companies we spoke with agreed that there is a need for Corps 

hopper dredges, specifically those placed in ready reserve, to respond to 

urgent or emergency situations when industry hopper dredges are 

unavailable.

 21U.S. Army Corps of Engineers, Report to Congress: Hopper Dredges (Washington, 

D.C.: June 3, 2005).

22Private industry hopper dredges may also respond to urgent or emergency dredging 

needs, precluding the need for the Corps to use one of its dredges. The Corps does not 

systematically track data on when it contracts with private industry to respond to urgent or 

emergency dredging events, however, and so data are not available to compare the use 

of Corps’ dredges and industry dredges to respond to urgent or emergency events.

Ready Reserve 

Restrictions Help Ensure 

the Corps’ Ability to 

Respond to Critical 

Dredging Needs
Page 22 GAO-14-290 Army Corps Hopper Dredging

Since 2003, the extent to which restrictions on the use of the Corps’

hopper dredges have affected competition in the dredging industry—as 

measured by the number of companies with hopper dredges and the 

number of bidders and winning bid prices for Corps projects—is unclear. 

A possible benefit of restrictions on the amount of work performed by the 

Corps’ hopper dredges is that the increased demand for industry hopper 

dredging services could encourage existing firms to add dredging 

capacity or new firms to enter the market, which could promote 

competition, raising the number of bidders and lowering winning bid 

prices for hopper dredging contracts. In addition, according to dredging 

industry representatives we spoke with, the more industry dredges can be 

utilized instead of Corps dredges, the lower the contract prices will be 

because contractors can spread their costs over more days of operation. 

However, on the basis of our analysis of (1) the dredging industry, (2) the 

number of bidders and bid prices for Corps dredging contracts, and (3) 

other factors that may have affected the level of competition for hopper 

dredging contracts, it is unclear whether or to what extent the restrictions 

on the Corps’ hopper dredges may have increased the level of 

competition in the hopper dredging industry.

First, since 2003, the number of companies with hopper dredges in the 

United States has not changed, although the number of industry hopper 

dredges and the total size of these dredges have decreased. Specifically, 

at the end of 2013, five companies operated one or more hopper 

dredges. The same number of companies operated hopper dredges in 

2003. Of the five companies we reported on in 2003, two sold their 

hopper dredges and exited the hopper dredging market while two new 

companies that had not been in the market acquired hopper dredges, and 

three companies remained the same. Since 2003, the total number of 

industry vessels decreased from 16 to 13, and the total capacity of these 

vessels, as measured in cubic yards, decreased by 16 percent. The 

decrease from 16 to 13 vessels resulted from one company relocating 

four of its U.S. hopper dredges overseas to perform dredging work 

The Extent to Which 

Restrictions Have Affected 

Industry Competition Is 

Unclear
Page 23 GAO-14-290 Army Corps Hopper Dredging

primarily in the Middle East,23

Second, we did not find evidence of increased competition based on the 

number of bidders and winning bid prices for Corps hopper dredging 

projects since 2003. Economic principles suggest that an increase in the 

number of competitive bidders in the market should lead to lower prices. 

The correlation between the number of companies competing for hopper 

dredging contracts and the winning bid prices for those contracts is 

demonstrated by the Corps’ historical data.

while another company built a new hopper 

dredge for the U.S. market. In addition, as of January 2014, one company 

had begun building a new hopper dredge that it expects will be completed 

in late 2014 or early 2015, and another company announced plans to 

build a new hopper dredge that it expects will be completed in 2015. If no 

companies remove existing hopper dredges from the U.S. market, these 

two dredges, if built as planned, would increase total industry capacity to 

13 percent above 2003 levels. According to industry representatives with 

whom we spoke, dredging companies consider restrictions on the Corps’

hopper dredges in deciding whether to acquire or build a new hopper 

dredge, but they also consider other factors, such as anticipated funding 

levels by the Corps, as well as nonfederal work.

24 As shown in figure 4, in 

years where there were more industry bids per Corps solicitation, the 

average winning industry bid, as a percentage of the Corps’ cost 

estimate, was generally lower, consistent with economic principles.25

 23According to a representative from DCA, a lack of work in the United States was also a 

factor in the relocation of some of these industry vessels. A vessel may engage in 

dredging in U. S. waters only if it is built, owned, and flagged in the United States. As a 

result, vessels that are relocated overseas and operated under a foreign flag are unable to 

dredge in the United States. The process of reflagging under the U.S. flag is generally so 

costly that it would effectively cause a dredge to be unable to compete in the United 

States, according to dredging industry representatives. As a result, the Corps and the 

dredging industry do not consider U.S.-owned dredges operating in foreign markets in 

their planning or analyses of the U.S. market.

24This analysis shows a relationship between the number of bids per Corps solicitation 

and the winning bid prices for those solicitations, but it does not establish a cause-andeffect relationship.

25Similarly, we found, in 2003, that from fiscal year 1990 through fiscal year 2002, years 

with more industry bids per Corps solicitation for hopper dredging generally had lower 

winning bid prices on average relative to the Corps’ cost estimate. See GAO-03-382.
Page 24 GAO-14-290 Army Corps Hopper Dredging

Figure 4: Annual Average Number of Industry Bids per Corps Solicitation and 

Winning Bid as a Percentage of the Corps’ Cost Estimate, Fiscal Years 2003 

through 2012

Note: Each point represents a fiscal year. We limited this analysis to awarded, sealed-bid solicitations 

because those are the solicitations for which the Corps has reliable data on numbers of bids and bid 

prices. We also limited the analysis to maintenance projects because, according to Corps officials 

and industry representatives, new construction projects are inherently uncertain and, therefore, new 

construction cost estimates and bid prices have greater variation and less accuracy than those for 

maintenance projects, which tend to occur regularly and have a history of price information.

Moreover, available Corps data related to the placement of the McFarland

in ready reserve do not show evidence of increased competition in the 

dredging industry. Specifically, as shown in table 3, after the McFarland

was placed in ready reserve, average winning bid prices increased for 

East Coast maintenance projects (i.e., projects the McFarland might 

undertake if use of the vessel were not restricted), and the average 

number of bids for those same projects decreased slightly.26

 26Similarly, we found, in 2003, that after restrictions were placed on the number of days 

the Corps’ hopper dredges could work, the average number of bids per Corps solicitation 

decreased, and the percentage of winning bids below the Corps’ cost estimate decreased.
Page 25 GAO-14-290 Army Corps Hopper Dredging

Table 3: Winning Bid Prices and Number of Bids for East Coast Maintenance 

Hopper Dredging Projects, Before and After the McFarland’s Placement in Ready 

Reserve

Before ready reserve (fiscal 

years 2003 through 2009)

After ready reserve (fiscal 

years 2011 and 2012)

Winning bid as a 

percentage of Corps’ cost 

estimate

a

84 percent 92 percent 

Average number of bids 

per solicitation

2.9 2.8

Source: GAO analysis of U.S. Army Corps of Engineers data.

Note: We limited this analysis to awarded, sealed-bid solicitations because those are the solicitations 

for which the Corps has reliable data on numbers of bidders and bid prices. In sealed bidding, a 

contract is awarded to the responsible bidder with a bid that conforms to the invitation for bid and is 

the most advantageous for the government considering price and price-related factors included in the 

invitation. Approximately 76 percent of hopper dredging contracts awarded by the Corps from fiscal 

year 2003 through fiscal year 2012 were awarded through a sealed-bid process. We also limited the 

analysis to maintenance projects, because Corps dredges do not generally perform other types of 

projects such as new construction and, therefore, restrictions on Corps dredges would not have had 

an effect on industry competition for such projects.

a

The period after ready reserve includes the 2 full fiscal years following the McFarland’s placement in 

ready reserve on December 30, 2009.

Third, other factors aside from the ready reserve restrictions may have 

affected the level of competition in the dredging industry since 2003. 

Examples of such factors include the following:

• Environmental restrictions. Multiple Corps officials and industry 

representatives told us that environmental restrictions related to 

endangered sea turtles and other species—which prohibit dredging 

during the time of year that those species are present—have 

contributed to fewer bidders for hopper dredging projects, particularly 

on parts of the East Coast. For instance, because of environmental 

restrictions, navigation dredging in fiscal year 2014 is limited to 

December 15, 2013, through March 31, 2014, in much of the Corps’

South Atlantic Division,27

 27The Corps’ South Atlantic Division extends from North Carolina to the eastern portion of 

the Gulf Coast.

during which time there are 48 potential 

Corps dredging projects planned, according to a 2013 Corps planning 

document. Corps officials attributed the absence of awardable bids for 

several recent East Coast hopper dredging solicitations to the 

unavailability of industry hopper dredges when the projects were 
Page 26 GAO-14-290 Army Corps Hopper Dredging

scheduled to occur—during the period of high demand for hopper 

dredges caused by environmental restrictions. In addition, they 

expressed concern that similar shortages of bids could occur in the 

future.

• Coordination among Corps district offices. Increased coordination in 

scheduling hopper dredging projects across Corps district offices has 

helped distribute projects more evenly over time so that more 

companies had hopper dredges available with which to bid on 

projects, according to Corps officials. In contrast, when a large 

number of projects occur at the same time, dredging companies may 

not have enough dredges available to bid on all projects, thereby 

reducing the number of bidders for the projects. According to Corps 

officials we spoke with, increased regional coordination and sharing of 

up-to-date information on upcoming dredging needs across district 

offices has helped the Corps to better inform industry of planned work 

and align the scheduling of projects with the availability of industry 

dredges. In particular, Corps officials said increased coordination 

helped the Corps avoid scheduling too many projects simultaneously 

during a period of increased demand for hopper dredging work 

following Hurricane Sandy and a Gulf Coast rebuilding effort to protect 

against the coastal impacts of oil spills.

• Demand for nonfederal hopper dredging work. Corps officials and 

industry representatives also told us that demand for hopper dredging 

work from states, private sources, and foreign governments has 

reduced the number of industry hopper dredges available for Corps 

projects. For instance, following the Deepwater Horizon oil spill in 

2010, there was an increase in private and state funding for hopper 

dredge work to construct barrier islands to protect the coastline from 

the effects of the oil spill. Demand for hopper dredges for this work 

affected the dredges’ availability for Corps navigation projects, 

according to Corps documents and officials, and industry 

representatives. In addition, representatives from one company said 

that, in part, because of increasing demand for hopper dredges from 

foreign governments—specifically in the Middle East—the company 

relocated several hopper dredges overseas, removing them from the 

U.S. market.

• Differences in hopper dredge capabilities. Because there are 

important variations in the size and capabilities of hopper dredges, the 

requirements of specific dredging projects can result in a limited 

number of dredges that may be able to effectively compete for a 

particular dredging project. For instance, the state of California 
Page 27 GAO-14-290 Army Corps Hopper Dredging

requires hopper dredges to use reduced-emissions engines, in 

accordance with state air quality regulations. Of the 13 industry 

hopper dredges, only 3 have such engines, according to a Corps 

official. Similarly, according to Corps documents, a hopper dredge 

working at the mouth of the Columbia River in Oregon must be able to 

dredge against strong currents and endure large waves—capabilities 

that less than half of the industry fleet possesses, according to a 

Corps official. Other requirements, such as the depth of the waterway 

being dredged, or whether the material removed needs to be pumped 

onto the shore, can also limit which dredges can effectively compete 

for and carry out the work.

Key challenges the Corps faces in managing its hopper dredge fleet are 

(1) ensuring the fiscal sustainability of its hopper dredges and (2) making 

decisions about the future of its hopper fleet composition, including the 

utilization of its existing fleet, changes to its existing fleet—including 

repairs, and the replacement or retirement of any vessels—and the 

utilization of any new replacement vessels.

The Corps faces challenges in ensuring the fiscal sustainability of its 

hopper dredges. In a 2012 study the Corps conducted on the fiscal 

condition of its hopper dredges, it identified increasing ownership and 

operating costs for its four hopper dredges, among other things, as a 

cause for concern and stated that the dredges would become 

unaffordable unless actions were taken.28

 28Army Corps of Engineers, USACE Dredge Back to Black Plan (Washington, D.C.: June 

29, 2012).

For instance, the Corps’ study 

projected that, in fiscal year 2012, the Corps’ total end of fiscal year 

account balance for its four hopper dredges would exceed their funding 

levels by over $15 million dollars, and that fiscal problems would continue 

for the four hopper dredges through fiscal year 2016. The Corps stated in 

the study that it was concerned that project funding, which the Corps’

hopper dredges depend on to varying degrees, was not increasing and, in 

some cases, was decreasing.

The Corps Faces 

Challenges 

Regarding the Fiscal 

Sustainability and the 

Future Composition 

of Its Hopper Dredge 

Fleet

The Corps Faces 

Challenges in Ensuring 

the Fiscal Sustainability of 

Its Hopper Dredges
Page 28 GAO-14-290 Army Corps Hopper Dredging

The Corps’ 2012 study identified several actions to take to operate all of 

its hopper dredges with a positive account balance by the end of fiscal 

year 2015. For example, based on the study, a corresponding July 2012 

implementation memorandum, and our discussions with Corps officials, 

the Corps

• increased the daily rates all four of the Corps’ hopper dredges charge 

to projects that use the dredges, beginning in fiscal year 2012;

• increased funding in fiscal years 2013 and 2014 budgets for projects 

that use its hopper dredges to compensate for the vessels’

corresponding increases in daily rates; and

• formed a team to conduct a hopper dredge operating cost review 

including, among other things, an evaluation of the affordability of two 

hopper dredges, the Wheeler and the Yaquina, by June 30, 2014.29

Corps officials told us that the actions identified in its study will help return 

the Corps’ hopper dredges to a fiscally sustainable position by the end of 

fiscal year 2015. Since the Corps prepared its study, however, two of its 

hopper dredges encountered problems that significantly increased the 

dredges’ total deficit: the Essayons had a dredging accident in 2013, and 

the Wheeler experienced an unforeseen delay in completing its engine 

replacement.30

 29According to Corps criteria for these studies, the Corps’ evaluation of these vessels will 

include examining current and future Corps mission requirements, and the affordability of 

the vessel, including operating costs, program support, likely alternative funding sources, 

planned investments along with those to date, and the additional hidden costs of vessel 

support (such as spare parts inventory, shoreside personnel and facilities, and the impacts 

of any personnel action, etc.).

Even with these added costs, Corps officials said they 

expect to be able to reach their goal of returning each of the hopper 

dredges to fiscal sustainability by the end of fiscal year 2015, but they 

also acknowledged that this goal has become more challenging. For 

example, the officials said that, while the Essayons’ accident increased its 

30A Corps official told us that the August 2013 grounding accident that the Essayons’

experienced while dredging made the vessel inoperable for about a month while it 

underwent repairs. In the case of the Wheeler, a Corps official estimated that the delays in 

replacing the Wheeler’s engines caused the vessel to remain out of operation at least 4 

months more than the Corps initially planned. In addition, during this time, a cruise vessel 

broke free from its moorings during a storm and collided with the Wheeler when it was in 

the repair yard, which further delayed the Wheeler’s return to work, according to the 

Corps.
Page 29 GAO-14-290 Army Corps Hopper Dredging

deficit by about $2 million, increasing the vessel’s daily rate in fiscal year 

2014 and dredging work in fiscal years 2014 and 2015 would give the 

vessel a positive account balance. Corps officials acknowledged that the 

Wheeler’s situation was more precarious because it ended fiscal year 

2013 with a deficit of over $5 million more than projected in the Corps’

2012 study, given the engine replacement delay. To get the Wheeler to a 

positive account balance by the end of fiscal year 2015, Corps officials 

said that they anticipated increasing the Wheeler’s daily rate and potential 

dredging activity to more than 70 days under ready reserve in fiscal year 

2014. Corps officials said they believe they have some flexibility with the 

number of days the vessel can dredge since there is not a set amount 

specified in statute.31 Corps officials stated they are not planning further 

actions beyond those identified in the 2012 study at this time, but they 

acknowledged that additional measures, such as pursuing a permanent 

increase in the amount of days that the Wheeler may dredge each year 

under ready reserve, might be warranted if the vessel’s fiscal situation 

does not improve by the end of fiscal year 2014.

The Corps also faces challenges in making decisions about the future 

composition of its hopper dredge fleet. Some of the factors that make it 

difficult for the Corps to determine what composition of its fleet would best 

allow it to conduct dredging activities in the manner most economical and 

advantageous to the United States include the following:

• Aging Corps’ fleet. The aging of the Corps’ hopper fleet, contrasted 

with the millions of dollars the Corps has invested to upgrade the 

vessels, has made it challenging for the Corps to determine the longterm sustainability of its hopper dredges. Three of the Corps’ four 

hopper dredges—Essayons, Wheeler, and Yaquina—have been in 

service for at least 30 years, and the McFarland has been in service 

over 45 years. According to Corps documentation, the Corps plans a 

50-year investment life for its hopper dredges and, based on historical 

records, major repairs are typically needed when a dredge is about 30 

years old. Since 2009, the Corps has invested millions of dollars in 

 31The Wheeler is not statutorily limited to a specific number of annual training days under 

ready reserve, but, since fiscal year 2008, the Corps has targeted the vessel’s work to 70 

training days annually, which is the same number of days the McFarland is permitted to 

work by statute under ready reserve. Both ready reserve vessels can also be used in 

urgent or emergency situations beyond their 70-day limits. See table 1 for the statutory 

restrictions in place on the use of all the Corps’ hopper dredges.

The Corps Faces 

Challenges in Determining 

the Future Composition of 

Its Hopper Dredge Fleet
Page 30 GAO-14-290 Army Corps Hopper Dredging

replacing and upgrading needed equipment on its four hopper 

dredges. For example, among other things, the Essayons, Wheeler, 

and Yaquina all had their engines replaced within the last 5 years 

allowing them to meet higher air quality emission standards. Similarly, 

the McFarland’s electrical systems were replaced in fiscal year 2011, 

which increased the vessel’s efficiency, since many of the systems 

were original equipment. According to Corps documents and officials, 

overall, all four hopper dredges are in good operating condition, but 

given the age of the vessels, the Corps has recognized the need to 

assess future repair or replacement options for its hopper dredges.

• Effects on industry. Because the Corps relies on both its own dredges 

and industry dredges to complete hopper dredging work, it needs to 

factor in both fleets in making future decisions about the composition 

of its own fleet. As of March 2014, 13 hopper dredges in the U.S. 

industry fleet had been in service for an average of about 27 years, 

though information on the extent to which these vessels have been 

maintained, upgraded, or may be close to going out of service has not 

been shared by industry with the Corps. During a discussion with 

industry representatives, however, representatives said that the 

hopper dredging industry is driven by competition, and they maintain 

their dredges to be as efficient as possible to improve their 

competitiveness in the market. Corps officials from several district 

offices we spoke with said that, because of the increasing use of 

industry hopper dredges for nonfederal beach nourishment projects, 

as well as anticipated increases in federal hopper dredging projects, 

industry’s availability to respond to the nation’s navigation dredging 

needs may be stretched. These officials said that, as a result, 

maintaining the Corps’ current fleet composition and perhaps 

increasing the use of some of the vessels, may be warranted. In 

contrast, most of the industry representatives we spoke with said they 

believe that industry has the ability to handle any increases in 

dredging projects, and the Corps’ fleet should be further restricted or 

even reduced. These representatives stated that if the Corps 

increased its hopper dredge capability, then industry’s portion of the 

overall dredging work would be reduced possibly leading companies 

to increase prices to cover their operating costs or potentially relocate 

their hopper dredges overseas.

• Funding uncertainties. Variability regarding federal funding for 

dredging also poses challenges to the Corps’ plans for its fleet. While 

funding for hopper dredging has increased since fiscal year 2003 and 

was about $370 million in fiscal year 2012, Corps officials and 

stakeholders we spoke with said that, at recent funding levels, there 
Page 31 GAO-14-290 Army Corps Hopper Dredging

were substantial unmet hopper dredging needs such as providing 

dredging for small ports and harbors.32

In a 2011 study related to the capital investment in its minimum dredge 

fleet, the Corps recognized the need to examine whether it should change 

the composition of its hopper fleet, such as by retiring one or more of its 

vessels, with or without a replacement.33

• evaluating the McFarland’s replacement options in 2017, which would 

consider replacing it and the Wheeler with one medium-sized hopper 

dredge;

Among the reasons the Corps 

listed for preparing this study were increases in the dredges’ operating 

costs, the estimated costs of replacing the vessels, their increasing age, 

and the potential risk to navigation from reduced minimum fleet 

availability. The study found that the Corps’ current approach to operating 

its minimum fleet would eventually increase the risk to navigating the 

waterways the Corps was responsible for dredging. To minimize that risk, 

the study and its corresponding August 2013 implementation 

memorandum, identified several actions, along with targeted time frames, 

that the Corps should take, including

34

• deferring minimum fleet sustainment and improvement actions, such 

as modifications to improve certain hopper dredges’ engine 

emissions, until at least fiscal year 2016 and possibly longer; and

 32As of the time of this report, pending water resources development legislation in both the 

House and Senate would propose increasing annual funding for maintenance dredging 

through fiscal year 2020 and beyond. In addition, the Senate bill would require the Corps 

to study, among other things, “the needs of the United States for dredging, including the 

need to increase the size of private and Corps of Engineers dredging fleets to meet 

demands for additional construction or maintenance dredging needed as of the date of 

enactment of this Act and in the subsequent 20 years.” H.R. 3080 (as amended by the 

Senate) § 2024(b)(2) (2013).

33Corps, 2011 Minimum Fleet Capital Investment Report. This study encompassed all 10 

dredges in the Corps’ minimum dredge fleet, which includes the 4 hopper dredges 

reviewed in this report, and 6 other dredges of different types that are generally used for 

different dredging projects.

34According to the minimum fleet study, “replacement options” include replacement, 

recapitalization, retirement, or divestment. The study noted that the McFarland and 

Wheeler were two primary vessels where consolidation is most likely to be considered, 

although the study also showed that the Wheeler was not scheduled to be evaluated for 

replacement until 2037.
Page 32 GAO-14-290 Army Corps Hopper Dredging

• conducting a life-cycle cost analysis to support funding plans for future 

dredging needs which would include a cost comparison to either (1) 

use and then replace the vessels or (2) repair and sustain the vessels.

The 2011 study developed options based on three funding scenarios—

increased, sustained, or decreased—and, as stated in the study and the 

Corps’ implementation memorandum, the Corps selected the option 

associated with sustained funding levels as the best course of action. 

Should increased funding become available for dredging, a Corps official 

we spoke with said the Corps may need to adjust its planned course of 

action. The officials said that the 2011 study could provide the Corps with 

direction for adjusting its actions. For example, as noted in the study 

under the increased funding scenario, the Corps could continue with its 

planned fleet improvements instead of deferring them under the sustained 

option.

Hopper dredges play a vital role in keeping the nation’s ports, harbors, 

and other waterways open for commerce. Over the past several decades, 

the Corps has increasingly relied on industry to carry out hopper dredging 

work, but it has also maintained its own minimum fleet of four hopper 

dredges, in part to ensure its ability to respond to critical dredging needs 

during periods of high demand. The Corps is faced with the task of 

balancing the hopper dredging work it contracts out to industry and 

maintaining the viability of its own fleet. The Corps has recognized the 

need to make changes to manage its hopper dredge fleet in a fiscally 

sustainable manner and has taken several actions to do so, including 

assessing the need to potentially modify the composition of its fleet. Since 

our 2003 report, the Corps has also made progress in addressing our 

recommendations to improve the information it maintains to manage its 

hopper dredging program, including modifying data fields in its dredging 

database to track solicitations that receive no bids or where all the bids 

received exceeded the Corps’ cost estimate by more than 25 percent. 

However, because Corps district offices are not consistently populating 

the database with these solicitation data, the Corps does not have 

accurate or complete information that may help it identify potential gaps in 

industry’s ability to fulfill certain dredging needs, which could inform its 

plans for future hopper dredging work. Additionally, the Corps made 

attempts to update the industry cost data it uses to prepare its cost 

estimates for hopper dredging contracts. Yet, some of the data it relies on 

remain outdated, and the Corps has no plans to update the information, 

such as through a Corps-wide study. Until the Corps has a plan for 

Conclusions
Page 33 GAO-14-290 Army Corps Hopper Dredging

obtaining and then consistently updating reliable cost data, the Corps’

ability to ensure the soundness of its cost estimates may suffer.

We recommend that the Secretary of Defense direct the Corps of 

Engineers to take the following two actions:

To ensure the Corps of Engineers has the information it needs to analyze 

and make informed decisions regarding future hopper dredging work, 

provide written direction to its district offices on the importance of and 

need to accurately and consistently populate the data fields in its 

dredging database that track solicitations that receive no bids or where all 

the bids received exceeded the Corps’ cost estimate by more than 25 

percent.

To assist the Corps in preparing sound and credible cost estimates for 

soliciting bids for hopper dredge work by industry, develop a written plan 

for conducting a study to obtain and periodically update data on hopper 

dredging costs for its cost estimates, including reliable data on industry 

hopper dredge equipment and labor rates.

We provided a draft of this report to the Department of Defense and the 

Dredging Contractors of America (DCA) for review and comment. In its 

written comments, reprinted in appendix III, the Department of Defense 

concurred with our recommendations and stated that (1) the Corps will 

issue a letter to the district offices reinforcing the need to provide 

accurately and timely information in the Corps’ dredging database, 

including information for solicitations that receive no bids or where all the 

bids received exceeded the Corps’ cost estimate by more than 25 percent

and (2) the Corps will develop a written plan as resources allow. The 

Corps also provided technical comments that we incorporated, as

appropriate.

DCA provided written comments, which are summarized below and 

reprinted in appendix IV along with our responses. DCA neither agreed 

nor disagreed with our recommendations but disagreed with several 

statements in our report and raised objections to certain aspects of our 

scope and methodology. We disagree with DCA’s comments as 

discussed below. Specifically, in its comments, DCA disagreed with our 

statement that a direct and valid comparison of work performed by 

industry to work performed by the Corps is not possible and stated that a 

third-party consultant performed an analysis of the Corps and industry 

Recommendations for 

Executive Action

Agency and ThirdParty Comments and 

Our Evaluation
Page 34 GAO-14-290 Army Corps Hopper Dredging

hopper dredges performing similar work. According to DCA’s comments, 

the industry hopper dredges can work for significantly less than Corps 

dredges. As we state in our report, we believe that a number of factors 

prohibit a direct and valid comparison of the Corps’ and industry’s costs of 

performing hopper dredge work, including limits to the number of days 

some Corps’ dredges may operate and differences between dredging 

projects, such as the type of material dredged. In providing its estimates 

of cost savings for industry dredging, DCA did not provide information 

indicating how or whether it took such factors into account or to enable us 

to evaluate the reasonableness of its estimates.

DCA also questioned how, if one of the fundamental conclusions of our 

study is that the Corps has not made sufficient progress to improve the 

accuracy of its cost estimates, we could use those same government cost 

estimates to make industry competitiveness inferences. We concluded, 

however, that it is unclear whether statutory restrictions have affected 

competition in the hopper dredging industry. In reaching that conclusion, 

we analyzed a number of factors—including the number of companies 

with hopper dredges, the number of bidders and winning bid prices for 

Corps projects, and other factors such as environmental restrictions, the 

demand for nonfederal hopper dredging work, and differences in hopper 

dredge capabilities. We agree that obtaining reliable and up-to-date data

are important for developing sound cost estimates, and our report 

recommends that the Corps develop a written plan for conducting a study 

to obtain and periodically update data on hopper dredging costs for its 

cost estimates.

DCA disagreed with our discussion on the capacity of the industry hopper 

dredge fleet, stating specifically that one industry dredge, the Long Island, 

should not have been included in our analysis because it had not been 

used for maintenance dredging and had not been used on a project for 

quite a few years. For our report, we did not limit our analysis to particular 

types of hopper dredging projects, such as maintenance projects, and we 

compared industry’s total capacity today with what we reported in 2003,

which we believe is a valid comparison. Moreover, in its comments on our 

2003 report on hopper dredging, DCA included the Long Island in its list 

of industry dredges to support its point that industry hopper dredging 

capacity had increased in the decade leading up to 2003. As a result, we 

continue to believe it was appropriate to include the Long Island as a part 

of our analysis.

DCA stated our analysis of how the Corps’ manages its hopper dredges 

was not comprehensive or objective and questioned why we did not 
Page 35 GAO-14-290 Army Corps Hopper Dredging

examine options for retiring or further reducing the use of Corps’ dredges. 

DCA suggested that such an examination should take place and would be 

in line with the congressional intent of increasing the use of private 

industry dredges. However, DCA quotes selectively from the main statute 

that governs the Corps' hopper dredging activities.35

As agreed with your office, unless you publicly announce the contents of 

this report earlier, we plan no further distribution until 30 days from the 

report date. At that time, we will send copies to the Secretary of Defense, 

Chief of Engineers and Commanding General of the U.S. Army Corps of 

Engineers, and the appropriate congressional committees, and other 

interested parties. In addition, the report will be available at no charge on 

the GAO website at 

While those portions 

of the law read in isolation could suggest that the Corps should take 

further steps to privatize its hopper dredge work, other provisions of the 

same law either (1) give the Corps broad discretion to implement its 

hopper dredge responsibilities or (2) directly restrict the Corps' ability to 

reduce or eliminate Corps’ dredges. It was not the purpose of our report 

to examine policy options for carrying out the Corps’ hopper dredge work, 

including those not presently authorized under statute. We did examine 

and discuss actions the Corps has taken or plans to take in managing its 

hopper dredges, which include, among other things, conducting a hopper 

dredge operating cost review and evaluating retirement or replacement

options.

http://www.gao.gov.

If you or your staff members have any questions about this report, please 

contact me at (202) 512-3841 or fennella@gao.gov. Contact points for 

our Offices of Congressional Relations and Public Affairs may be found 

on the last page of this report. Key contributors to this report are listed in 

appendix V.

Sincerely yours,

Anne-Marie Fennell

Director, Natural Resources and Environment

 3533 U.S.C. § 622. 
Appendix I: Objectives, Scope, and 

Methodology

Page 36 GAO-14-290 Army Corps Hopper Dredging

This report examines (1) the actions the Corps has taken to address our 

2003 recommendations for improving the information needed to manage 

its hopper dredging program and develop cost estimates for industry 

contracts; (2) the effects since 2003, if any, of the statutory restrictions 

placed on the use of the Corps’ hopper dredges; and (3) key challenges, 

if any, the Corps faces in managing its hopper dredge fleet.

To conduct our work, we reviewed Pub. L. No. 95-269, which established 

the Corps’ minimum fleet, the Water Resources Development Acts of 

1996 and 2007, and other laws, regulations, and Corps’ policy and 

guidance governing the Corps’ use of hopper dredges. We interviewed 

officials from Corps headquarters, division offices, and the 9 Corps district 

offices with the largest hopper dredging workload during fiscal year 2003 

through fiscal year 2012 (out of a total of 17 district offices that contracted 

with industry for hopper dredging work during the time period): Galveston, 

Jacksonville, Mobile, New Orleans, New York, Philadelphia, Portland, 

San Francisco, and Seattle. We also visited the Corps’ four hopper 

dredges and one industry hopper dredge for informational tours of these 

vessels to gain a better understanding of their physical characteristics 

and operations. We interviewed representatives from the national 

association for the dredging industry, the Dredging Contractors of 

America, and the five dredging companies that own and operate hopper 

dredges—Cashman Dredging, Dutra Group, Great Lakes Dredge & Dock 

Company, Manson Construction Co., and Weeks Marine, Inc. We also 

interviewed other stakeholders involved in hopper dredging, including a 

national pilots’ association and a national port authority association, and 

local pilots’ associations and port authorities from the areas where Corps 

hopper dredges are stationed—New Orleans, LA; Philadelphia, PA; and 

Portland, OR. We focused our review on the 10-year period between 

fiscal year 2003—when we conducted our previous review of the Corps’

hopper dredges1

 1

—and fiscal year 2012—the most recent year for which 

Corps information on hopper dredging was readily available. In addition, 

we focused our review on the four hopper dredges in the Corps’ minimum 

GAO-03-382.

Appendix I: Objectives, Scope, and 

Methodology
Appendix I: Objectives, Scope, and 

Methodology

Page 37 GAO-14-290 Army Corps Hopper Dredging

dredge fleet during the period of our review: the Essayons, McFarland, 

Wheeler, and Yaquina, and did not include other dredge types.2

To examine the actions the Corps has taken to address our 2003 

recommendations for improving the information needed to manage its 

hopper dredging program and develop cost estimates for industry 

contracts, we reviewed the Corps’ process for tracking and analyzing data 

on solicitations for industry hopper dredging work, both at district offices 

and Corps headquarters. We also reviewed several sources of 

information the Corps maintains on the use of its hopper dredge fleet, 

including information maintained by the district offices responsible for 

operating the Corps’ four hopper dredges, and the tracking log the Corps 

maintains with information on the urgent and emergency work its ready 

reserve vessels undertake. In addition, we reviewed the Corps’ 2005 

report to Congress on hopper dredges,3

To examine the effects since 2003, if any, of the statutory restrictions 

placed on the use of the Corps’ hopper dredges, we reviewed the 

statutes, regulations, and Corps’ reports and other documents governing 

the use of the Corps’ hopper dredge fleet. To assess changes in industry 

hopper dredging contracts since 2003, we reviewed and analyzed data 

from the Corps’ Dredging Information System, the database it uses to 

maintain information on each of its dredging projects, including data on 

the type and location of the dredging work, the type of contract, and the 

other Corps studies and policy 

documents on the use of its hopper dredge fleet, and the information it 

uses to prepare hopper dredging cost estimates when soliciting bids by 

industry, including the engineering regulations and the computer program 

used to develop government cost estimates. We interviewed officials from 

the Corps’ cost engineering center of expertise, who were responsible for 

developing cost estimating policies and software and officials from Corps 

district offices who were responsible for developing cost estimates for 

hopper dredging projects.

 2

We did not include the Corps’ two “special purpose” hopper dredges—the Currituck and 

the Murden—because though these two vessels share some characteristics with the four 

larger hopper dredges, such as having hoppers and drag arms, they are substantially 

smaller than the rest of the Corps’ or industry hopper dredge fleet. Specifically, the 

Currituck has a hopper capacity of 315 cubic yards, and the Murden has a hopper 

capacity of 512 cubic yards. 

3

U.S. Army Corps of Engineers, Report to Congress: Hopper Dredges (Washington, D.C.: 

June 3, 2005).
Appendix I: Objectives, Scope, and 

Methodology

Page 38 GAO-14-290 Army Corps Hopper Dredging

numbers of bids and bid prices for the contracts. To assess the reliability 

of the data, we interviewed officials from the Corps’ Navigation Data 

Center who maintain the database, as well as officials from nine Corps 

district offices who are responsible for entering and updating data on their 

district offices’ dredging activities. We reviewed documentation related to 

the database, such as the user’s guide and data dictionary, and 

electronically tested the data for missing or erroneous values and, in 

several cases, obtained updated or corrected data from the Corps. We 

determined the data we used on the type and location of the dredging 

work, the type of contract, and the number of industry bids and bid prices 

for sealed-bid solicitations were sufficiently reliable for our purposes. We 

also analyzed financial data on the Corps’ hopper dredges, including their 

operating and ownership costs, and income from ready reserve funding. 

To assess the reliability of the Corps’ financial data, we interviewed Corps 

officials who maintain these data, compared the data to other sources of 

information on the Corps’ hopper dredges, and obtained clarifying 

information from the Corps for certain items such as ready reserve 

funding. We determined the data were sufficiently reliable for our 

purposes. We obtained and reviewed information from the five dredging 

companies that own and operate hopper dredges, including information 

on their hopper dredges’ capabilities, dredging work they performed, and 

changes to their hopper dredge fleet since 2003. We did not directly 

compare work performed by industry hopper dredges with work 

performed by the Corps’ hopper dredges because, as we first reported in 

2003, a direct and valid comparison of the Corps’ and industry’s costs to 

perform hopper dredge work is not possible due to various factors.4

To examine key challenges, if any, the Corps faces in managing its 

hopper dredge fleet, we reviewed Corps reports and financial data on its 

hopper dredge fleet, including a 2011 study on capital investment plans 

for its minimum fleet composition5

 4

and a 2012 study of the fiscal condition 

GAO-03-382. These factors include, among other things, design features in the Corps’

vessels in support of national defense missions, which add weight to the vessels and 

make them less efficient than industry vessels; limits to the number of days some of the 

Corps’ vessels may operate; and differences between dredging projects—such as type of 

material dredged, type of work and corresponding risk level, and distance from the 

dredging operations to the placement site.

5

Army Corps of Engineers, Minimum Fleet Capital Investment Report, 2012-2061

(Washington, D.C.: Dec. 12, 2011; revised Apr. 26, 2013) and Army Corps of Engineers, 

USACE Dredge Back to Black Plan (Washington, D.C.: June 29, 2012).
Appendix I: Objectives, Scope, and 

Methodology

Page 39 GAO-14-290 Army Corps Hopper Dredging

of its hopper dredges. In addition to reviewing the 2012 fiscal study, we 

also obtained and analyzed additional data related to the financial 

condition of the Corps’ hopper dredges. We also obtained and reviewed 

the Corps’ 2012 and 2013 implementation memorandums related to both 

studies and discussed with Corps officials the actions the Corps has 

taken—and plans to take—related to the memorandums. We examined 

changes and potential challenges the Corps faces related to managing its 

hopper dredge fleet, including dredging accidents, repair delays, and 

potential funding changes. We discussed general Corps fleet 

management and composition options with industry officials and the other 

stakeholders we interviewed.

We conducted this performance audit from January 2013 to April 2014 in 

accordance with generally accepted government auditing standards. 

Those standards require that we plan and perform the audit to obtain 

sufficient, appropriate evidence to provide a reasonable basis for our

findings and conclusions based on our audit objectives. We believe that 

the evidence obtained provides a reasonable basis for our findings and 

conclusions based on our audit objectives.
Appendix II: The U.S. Hopper Dredge Fleet

Page 40 GAO-14-290 Army Corps Hopper Dredging

As of March 2014, 17 hopper dredges were operating in the United States, 13 

of which were owned by industry (see table 4). In addition, 2 industry hopper 

dredges are expected to be added to the U.S. fleet by 2015.

Table 4: Corps and Industry Hopper Dredge Fleets, 2014

Owner Vessel Sizea Capacity (in 

cubic yards)b Year built

Loaded draft 

(feet)

Cashman Dredging Atchafalaya Small 1,300 1980 14.7

Dutra Group Stuyvesant Large 9,870 1981 35.0

Columbia Medium 4,350 1986 16.5 c

Great Lakes Dredge & Dock 

Company

Liberty Island Large 6,540 2002 28.3

Terrapin Island Large d 6,400 1981 22.3

Dodge Island Medium 3,600 1980 19.5

Padre Island Medium 3,600 1981 19.6

Manson Construction Co. Glenn Edwards Large 13,500 2006 28.0

Bayport Medium 4,855 1999 22.0

Newport Medium 4,000 1983 19.0

Westport Small 1,800 1978 11.0

Weeks Marine, Inc. R.N. Weeks Medium 4,000 1987 19.6

B.E. Lindholm Medium 4,000 1985 22.3

Corps Wheeler Large 8,256 1982 29.5

Essayons Large 6,852 1983 33.0

McFarland Medium 3,140 1967 23.1

Yaquina Small 1,042 1981 14.7

Hopper dredges planned 

Weeks Marine, Inc. Magdalen Large 8,500 Under construction; estimated 

completion late 2014 or early 2015

25.3

Great Lakes Dredge & Dock 

Company

New build Large 15,000 Construction scheduled to begin in 

2014; estimated completion 2015

29.0

Sources: U.S. Army Corps of Engineers and dredging industry.

a

A hopper dredge’s size is determined by the capacity of its hopper—small hopper dredges have a 

capacity of up to 3,000 cubic yards, medium hopper dredges have a capacity of 3,001 to 6,000 cubic 

yards, and large hopper dredges have a capacity over 6,000 cubic yards.

b

The capacities of several Corps and industry hopper dredges listed differ slightly from their 

capacities listed in our 2003 report. The capacities listed in this table are based on current information 

provided by the Corps and dredging companies.

c

The Columbia was originally built in 1944 to transport military equipment in World War II, was later 

converted to a hopper dredge, and began its service as a hopper dredge in 1986, according to Corps 

documents.

d

Appendix II: The U.S. Hopper Dredge Fleet

The Terrapin Island was formerly the Eagle I, owned by Bean Stuyvesant LLC. Great Lakes Dredge 

& Dock Company acquired and renamed the dredge in 2007.
Appendix III: Comments from the Department 

of Defense

Page 41 GAO-14-290 Army Corps Hopper Dredging

Appendix III: Comments from the 

Department of Defense
Appendix III: Comments from the Department 

of Defense

Page 42 GAO-14-290 Army Corps Hopper Dredging
Appendix IV: Comments from the Dredging 

Contractors of America

Page 43 GAO-14-290 Army Corps Hopper Dredging

Appendix IV: Comments from the Dredging 

Contractors of America

Note: GAO comments 

supplementing those in 

the report text appear 

at the end of this 

appendix.
Appendix IV: Comments from the Dredging 

Contractors of America

Page 44 GAO-14-290 Army Corps Hopper Dredging

See comment 1.

See comment 2.
Appendix IV: Comments from the Dredging 

Contractors of America

Page 45 GAO-14-290 Army Corps Hopper Dredging

See comment 4.

See comment 5.

See comment 4 and 6.

See comment 3.
Appendix IV: Comments from the Dredging 

Contractors of America

Page 46 GAO-14-290 Army Corps Hopper Dredging

See comment 8.

See comment 9.

See comment 10.

See comment 7.
Appendix IV: Comments from the Dredging 

Contractors of America

Page 47 GAO-14-290 Army Corps Hopper Dredging

See comment 3.

See comment 11.

See comment 12.

See comment 13.

See comment 14.
Appendix IV: Comments from the Dredging 

Contractors of America

Page 48 GAO-14-290 Army Corps Hopper Dredging

See comment 16

See comment 15.

.
Appendix IV: Comments from 

the Dredging Contractors of 

America

Page 49 GAO-14-290 Army Corps Hopper Dredging

The following are GAO’s comments on the letter from the Dredging 

Contractors of America dated March 11, 2014.

1. We believe that various factors prohibit a direct and valid comparison 

of the Corps’ and industry’s costs to perform hopper dredge work 

including: (1) design features in the Corps’ vessels in support of national 

defense missions, which add weight to the vessels and make them less 

efficient than industry dredges; (2) limits to the number of days some of 

the Corps’ vessels may operate; and (3) differences between dredging 

projects—such as type of material dredged, type of work, corresponding 

risk level, and distance from the dredging operations to the placement 

site. In providing its estimates of cost savings for industry dredging, DCA 

provided no information indicating how or whether its third-party 

consultant took such factors into account. DCA also did not provide 

enough information on the consultant’s analysis for us to be able to 

determine how it reached its conclusions that industry dredges can work 

for less than Corps dredges. Based on our work, we continue to believe, 

as we state in our report, that since 2003, statutory restrictions on the use 

of Corps’ hopper dredges have resulted in additional costs to the Corps.

2. DCA referred to three appendixes in their written comments. These 

appendixes included Excel spreadsheets with various dredging data. We 

did not reprint these spreadsheets with DCA’s written comments.

3. It was not the purpose of our report to evaluate policy options for 

carrying out the Corps’ hopper dredge work, including those not presently 

authorized by law, such as vessel retirements or alternative ready reserve 

methods. The Corps' authority to retire its hopper dredges or reduce their 

workload is limited by statute, and DCA did not indicate why it believes 

retirements would be consistent with existing law. According to statute, 

the Corps "may not further reduce the readiness status of any Federal 

hopper dredge below a ready reserve status except any vessel placed in 

such status for not less than 5 years that the Secretary determines has 

not been used sufficiently to justify retaining the vessel in such status."1

 1

33 U.S.C. § 622(c)(7)(A).

The Corps has made no such determination. In addition, the Corps may 

"not reduce the availability and utilization of Federal hopper dredge 

vessels stationed on the Pacific and Atlantic coasts below that which 

occurred in fiscal year 1996 to meet the navigation dredging needs of the 
Appendix IV: Comments from 

the Dredging Contractors of 

America

Page 50 GAO-14-290 Army Corps Hopper Dredging

ports on those coasts."2 In the Water Resources and Development Act of 

2007, Congress directed the Corps to place the McFarland in ready 

reserve.3 But even assuming this provision implicitly repealed the prior 

statute as applied to the McFarland, the Water Resources and 

Development Act of 2007 provided that the McFarland must be 

maintained in a "ready reserve fully operational condition." Similarly, the 

law requires the Wheeler to be maintained in a "fully operational 

condition."4 Furthermore, the law assigns to the Corps the responsibility 

for carrying out hopper dredge work "in the manner most economical and 

advantageous to the United States."5 This language "evidences 

congressional intent to confer on the Army Corps wide discretion in 

matters relating to its dredging activities.”6

4. We used only the Dredging Information System data that we 

determined were sufficiently reliable for our purposes. Specifically, as 

noted in our report, we used data on the type and location of dredging 

work, the type of contract, and the number of industry bids and bid prices 

for sealed-bid solicitations. DCA stated that, with the introduction of 

Multiple Award Task Order Contracting, our analysis of the number of 

bidders and bid prices may be distorted. As noted in our report, however, 

we limited our analysis to awarded, sealed-bid solicitations for which the 

Corps had reliable data on the numbers of bids and bid prices, and we did 

not include the procurement method mentioned by DCA. Our analysis of 

the Dredging Information System data indicates that about 76 percent of 

hopper dredging contracts awarded by the Corps from fiscal year 2003 

through fiscal year 2012 (and about 89 percent of hopper dredging 

contracts awarded in fiscal year 2012 alone) were awarded through the 

sealed-bid process.

5. In characterizing urgent and emergency work in our report, we relied 

on the definitions outlined in the Corps’ raise the flag procedure, which we 

believe was the appropriate way to define and report on how the Corps 

 2

33 U.S.C. § 622(c)(7)(C).

3

Pub. L. No. 110-114, § 2047, 121 Stat. 1105.

4

33 U.S.C. § 622(c)(3).

5

33 U.S.C. § 622(a).

6

Northlight Harbor LLC v. United States, 561 F.Supp.2d 517, 523 (D.N.J. 2008).
Appendix IV: Comments from 

the Dredging Contractors of 

America

Page 51 GAO-14-290 Army Corps Hopper Dredging

collects and tracks the urgent or emergency work its hopper dredges 

carry out. Corps data show that urgent and emergency work have 

occurred from fiscal year 2003 through fiscal year 2012 as we state in our

report.

6. We did not comment on the lack of evidence of increased competition 

based solely on the number of bidders and winning bid prices for Corps 

hopper dredging projects. Rather, we reached our conclusion—that it is 

unclear whether statutory restrictions have affected competition in the 

hopper dredging industry— after analyzing a number of factors, including 

the number of companies with hopper dredges, the number of bidders 

and winning bid prices for Corps projects, and other factors such as 

environmental restrictions, the Corps' efforts to better coordinate dredging 

activities, demand for nonfederal hopper dredging work, and differences 

in hopper dredge capabilities. See also comment 4.

7. We did not make industry competitiveness inferences based on the 

Corps’ cost estimates alone, see comment 6. We agree that obtaining 

reliable and up-to-date data are important for developing sound cost 

estimates, and our report recommends that the Corps develop a written 

plan for conducting a study to obtain and periodically update data on 

hopper dredging costs for its cost estimates.

8. We included the industry hopper dredge Long Island as available 

hopper dredge capacity in 2003, based on information provided by the 

Corps and DCA. In official comments on our 2003 report on hopper 

dredging, DCA included the Long Island in its list of industry dredges to 

support the point that industry hopper dredging capacity had increased in 

the decade leading up to 2003. This dredge was since removed from the 

U.S. market and, therefore, we factored its removal in our calculation of 

the change in overall industry capacity since 2003. We included all 

hopper dredging projects in our analysis and did not limit our analysis to 

maintenance projects. In addition, we did not examine use, but rather 

industry capacity.

9. During interviews with the industry representatives who owned the 

dredges that were removed from the U.S. market, we were told that the 

dredges were moved overseas, in part, because of increasing demand for 

hopper dredges by foreign governments, and, that the dredges have 

performed work overseas, indicating overseas demand. We also 

recognize a lack of work in the United States may have also been a factor 

in the relocation of these dredges, and we have added text to our report 

to note this.
Appendix IV: Comments from 

the Dredging Contractors of 

America

Page 52 GAO-14-290 Army Corps Hopper Dredging

10. We used the Corps’ definition of its minimum hopper dredge fleet in 

determining the scope of our review. The law establishing the minimum 

fleet gave the Corps discretion to determine the fleet’s size and 

composition.7

11. The law makes no reference to "training days" and does not impose a 

specific cap on the number of days for which the Wheeler may operate. 

The Corps has, as a matter of practice, scheduled training work for the 

Wheeler in order to "periodically perform routine tests of the equipment of 

the vessel to ensure the vessel's ability to perform emergency work.”

In addition, the capacity of the four Corps’ hopper dredges 

ranges from about 1,050 cubic yards to about 8,300 cubic yards, which is 

similar to the private industry hopper dredges’ capacity, which ranges 

from 1,300 cubic yards to 13,500 cubic yards. In contrast, the Murden and 

Currituck’s total capacity is 512 and 315 cubic yards, respectively, making 

them significantly smaller dredges than the hopper dredges in the Corps’ 

and private industry’s fleet. Moreover, the Murden was commissioned into 

active duty in May 2013, and it was, therefore, not part of the Corps’ fleet 

during the period of our review, from fiscal year 2003 through fiscal year

2012.

8

12. An examination of using industry dredges in a ready reserve mode 

was beyond the scope of this review.

13. In our report, we make frequent references to the fact that legislation 

placed the Wheeler and the McFarland in ready reserve, and we provide 

funding information for the Corps’ dredging program, including the 

specific funding to support the Wheeler and McFarland in their ready 

reserve status. We did not identify alternatives for how the Corps might 

reduce the costs to operate these vessels, but we did examine and 

discuss actions the Corps has taken or plans to take in managing its 

hopper fleet, which include, among other things, conducting a hopper 

dredge operating cost review and evaluating retirement or replacement

options.

 7

The law provides that the Secretary of the Army, acting through the Corps, “may retain so 

much of the federally owned fleet as he determines necessary, for so long as he 

determines necessary, to insure the capability of the Federal Government and private 

industry together to carry out projects for improvements of rivers and harbors “(33 U.S.C. 

§ 622(b) (emphasis added).

8

33 U.S.C. § 622(c)(3).
Appendix IV: Comments from 

the Dredging Contractors of 

America

Page 53 GAO-14-290 Army Corps Hopper Dredging

14. The way that hopper dredges recover their costs is by actively 

dredging, and, fewer days of work will equate to higher rates when work 

is performed because of the fewer days available to spread out costs. As 

noted in our report, daily rates for Corps hopper dredges have increased 

and may continue to increase due to several factors such as increasing 

fuel costs and changes in Corps accounting methods, in addition to ready 

reserve restrictions on two of the dredges. We did not quantify the extent 

to which individual factors contributed to increases in daily rates, rather 

we report that restrictions on the number of days ready reserve hopper 

dredges can work have contributed to increases in their daily rates. We 

agree that the Essayons, operating on the West Coast with no 

restrictions, has increased its annual costs and daily rates since 

becoming unrestricted. However, we found that the increase in the 

Essayons daily rate from $95,000 in fiscal year 2008—the last year in 

which it was restricted—to $100,000 in fiscal year 2012 was substantially 

smaller than that of the Wheeler, with a daily rate increase from $95,000 

to $140,000 over the same period.

15. We agree that one basic congressional tenet of the Water Resources 

Development Act of 1996 was to increase the use of private industry 

hopper dredges but, as we have noted, the law also directly restricts the 

Corps' ability to reduce the use of or eliminate Corps’ dredges. See 

comment 3. We do not agree that collecting more solicitation information 

would result in enhanced opportunities for the Corps’ hopper dredges to 

be used more. Rather, we believe that in collecting this solicitation 

information, the Corps may be able to better plan for future hopper 

dredging work, whether done by industry dredges or Corps dredges.

16. Based on our review of Corps’ documentation related to the example 

cited, we found that industry was provided several opportunities to bid on 

the work. Specifically, after soliciting bids for the work and receiving only 

one bid, which was more than 25 percent above the government cost 

estimate, the Corps reviewed its cost estimate, found it to be reasonable, 

and began negotiations with the company that had submitted the bid. The 

parties were unable to agree on a price for the work, however, so the 

Corps then provided a second notification to industry, indicating that there 

was an urgent need for dredging. According to Corps documentation, no 

dredging company expressed both the availability and the capability to 

address the dredging need and, therefore, the Corps used one of its own 

dredges to complete the work.
Appendix V: GAO Contact and 

Staff Acknowledgments

Page 54 GAO-14-290 Army Corps Hopper Dredging

Anne-Marie Fennell, (202) 512-3841 or fennella@gao.gov

In addition to the individual listed above, Alyssa M. Hundrup, Assistant 

Director; Hiwotte Amare; John Delicath; Cindy Gilbert; Miles Ingram; 

Richard P. Johnson; Delwen Jones; Kirk D. Menard; Samuel Morris; 

Mehrzad Nadji; Dan Royer; and Tatiana T. Winger made key 

contributions to this report.

Appendix V: GAO Contact and Staff 

Acknowledgments

GAO Contact

Staff 

Acknowledgments

(361469)
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