Army Corps of Engineers: Factors Contributing to Cost Increases and Schedule Delays in the Olmsted Locks and Dam Project
Published: 2017-02-16T00:00:00

Fast Facts:
The Corps is responsible for planning and constructing the Olmsted Locks and Dam project on the Ohio River, 17 miles upstream from the Mississippi River. The project was authorized in 1988 at a cost of $775 million and estimated to take 7 years. In 2012, the Corps sought an increase in its authorized cost to $2.918 billion, with an estimated completion date of 2024. Reports by the Corps and others identified factors such as the selection of an innovative construction method, the use of a cost-reimbursement contract, and limited funding as contributing to cost increases and schedule delays.

Highlights:
section_title: Why GAO Did This Study
paragraphs: The Corps is responsible for planning and constructing the Olmsted Locks and Dam project on the Ohio River, 17 miles upstream from the Mississippi River. The project will replace two locks and dams, which are beyond their design lives, with new locks and a new dam. According to the Corps, more tonnage passes through Olmsted annually than any other place in the nation's inland navigation system. The Water Resources Development Act of 1988 authorized the Olmsted project at a cost of $775 million. The Corps estimated construction would take 7 years. In 2012, the Corps submitted a PACR to Congress, seeking to increase the Olmsted project's authorized cost to $2.918 billion, with an estimated completion date of 2024.
The Water Resources Reform and Development Act of 2014 included a provision for GAO to report on why the Olmsted project exceeded its budget and was not completed as scheduled, among other things. This report examines (1) the factors that the Corps and others have identified as contributing to cost increases and schedule delays and (2) what is known about the costs of benefits foregone because of project delays. GAO compared the factors cited in the PACR and three relevant Corps and consultant reports, examined the Corps' economic analyses and developed an estimate of construction interest incurred because of project delays, and interviewed Corps officials and industry representatives.
GAO is not making recommendations in this report. The Department of Defense had no comments to add to the report.
section_title: What GAO Found
paragraphs: Reports by the U.S. Army Corps of Engineers (Corps) and consultants it hired identified the construction method, contract type, and other factors as primary contributors to cost increases and schedule delays in the Olmsted Locks and Dam project. Specifically, the 2012 Corps' post-authorization change report (PACR) and a 2012 consultant report identified the Corps' 1997 selection of an innovative in-the-wet method to construct the dam as a contributing factor. With this method, concrete sections of the dam, or shells, are built on shore, carried out into the river, and set in place in the riverbed. The Corps decided to use this method based on projections that it would cost less and allow the project to be completed sooner than the traditional in-the-dry method using temporary, watertight structures, or cofferdams, to drain the riverbed to allow work. However, the Corps' initial cost estimate was low and did not adequately consider such things as river conditions that slowed construction. A 2012 Corps study compared the in-the-wet and in-the-dry methods and found that continuing to use the in-the-wet method would cost more but would allow the project to be completed sooner. Based on this study, the Corps continued to use the in-the-wet method. In addition, the PACR and a 2008 consultant report found that the Corps' decision to use a cost-reimbursement contract for the dam construction after receiving no offers for a firm fixed -price contract contributed to increased administrative and overhead costs. The reports noted that managing a cost-reimbursement contract was more cost- and time-intensive than managing a firm fixed-price contract, which the Corps typically uses. The Corps and consultant reports also identified other contributing factors, including limited funding; market condition changes, such as unexpected and significant increases in the price of construction materials; and design changes during the dam construction in response to soil conditions and other issues.
The benefits foregone because of delays at Olmsted are uncertain, primarily because the Corps' estimates for the project are no longer relevant or are of limited use for estimating the benefits that might have been generated had the project opened as planned in 2006. The Corps estimated the benefits associated with the project several times, including in a 1990 study. Corps officials said, however, that the benefit estimates from this study are no longer relevant for estimating benefits foregone because of past project delays. In particular, the 1990 study did not anticipate the regulatory and market factors that reduced the demand for coal shipments on the Ohio River, beginning in the 1990s. In the 2012 PACR, the Corps updated its benefit estimates based on a revised opening date of 2020, but they are of limited use for estimating benefits foregone for several reasons. For example, the analysis was based on assumptions about barge forecasts that may not represent the actual traffic that transited the locks and dams during past delays. According to Corps economists, the additional interest incurred during construction because of project delays is another type of benefit foregone because it represents the hypothetical return or “benefit” that could have been earned by investing the money in some other use. GAO found that the difference in interest estimated in 1990 and in the PACR to be about $400 million, which represents an estimate of the additional interest associated with such factors as changes in the project design that led to the construction delays and increased construction costs.

section_title: Letter
paragraphs: The U.S. Army Corps of Engineers (Corps) is responsible for planning  and constructing the Olmsted Locks and Dam project, which is on the  Ohio River, 17 miles upstream from the Mississippi River. The project will  replace two locks and dams, which are beyond their design lives and  unreliable, with a new set of locks and a new dam. The project is in a key  location. Virtually all barge traffic moving between the Ohio River and its  tributaries and the Mississippi River system must pass through this  stretch of river. According to Corps documents, more tonnage passes  through Olmsted annually than any other place in the nation’s inland  navigation system.
The Water Resources Development Act (WRDA) of 1988 authorized the  Olmsted project at a cost of $775 million (in October 1987 price levels),  with the costs of construction shared equally between funds appropriated  to the Corps and from the Inland Waterways Trust Fund. At the time, the Corps estimated construction would take 7 years. The Corps also  estimated benefits, such as transportation cost savings, associated with  the project. However, once the project was going to exceed its maximum  authorized cost, the Corps prepared and submitted a post-authorization  change report (PACR) to Congress in 2012, seeking to increase the  Olmsted project’s authorized cost to $2.918 billion (in October 2011 price  levels), with an estimated operational date of 2020 and completion date of  2024. The Corps submitted the PACR for an independent external peer  review before it was submitted to Congress. Subsequently, the  Continuing Appropriations Act, 2014, increased the project’s authorized  cost to $2.918 billion.
In recent years, the Olmsted project used the majority of trust fund  appropriations, which constrained the amount available for other projects  on the inland navigation system. The Consolidated Appropriations Act,  2014, reduced the trust fund’s cost share for the Olmsted project from 50  to 25 percent for fiscal year 2014. For subsequent fiscal years, the Water  Resources Reform and Development Act of 2014 (WRRDA 2014) further  reduced the trust fund’s share to 15 percent. According to a  congressional committee report accompanying the bill, since the project  impacts the pace of other projects in need of recapitalization, the  committee recommended a change in cost share to speed the pace of  other projects on the inland navigation system. The act also expressed  the sense of Congress that the annual appropriation for the Olmsted  project should not be less than $150 million until construction is  completed.
WRRDA 2014 included a provision for us to report on why the Olmsted  project exceeded its budget and was not completed as scheduled, among  other things. This report examines (1) the factors that the Corps and  others have identified as contributing to cost increases and schedule  delays and (2) what is known about the costs of benefits foregone  because of project delays.
To determine what factors the Corps and others have identified as  contributing to cost increases and schedule delays, we focused on  increases in the Olmsted project’s estimated cost and schedule from  authorization to the 2012 PACR, which documented the factors  contributing to the Olmsted project’s authorized cost increasing to $2.918  billion. We visited the project site in October 2015 to familiarize  ourselves with the project and to interview Corps officials on the Olmsted  project delivery team to obtain information on such things as the project’s  chronology, costs, schedule, engineering methods, project management,  and reasons for cost increases and schedule delays. Based on our  discussions with Corps officials and our previous work, we identified two  Corps reports and two consultant reports prepared for the Corps that  discussed the reasons for cost increases and schedule delays in the  Olmsted project, including the Corps’ 2012 PACR, a 2008 Corps  report, a 2008 consultant report, and a 2012 consultant report. We reviewed these reports using criteria such as whether the conclusions are  consistent with the findings, and determined that they were sufficiently  reliable as evidence of the factors that the Corps and others have  identified as contributing to cost increases and schedule delays. We did  not verify the numbers cited in the reports we reviewed. We identified and  compared the factors cited in the PACR and those cited in relevant  reports to identify discrepancies or omissions, if any, in the PACR. We  interviewed Corps headquarters and district officials and current and  former members of the Inland Waterways Users Board knowledgeable  about the project to clarify information in the PACR, discussed factors  cited in the PACR and other reports, and obtained documentation where  necessary to clarify information about factors cited in the PACR  compared with other reports we reviewed. We also reviewed the  comments of the PACR’s independent external peer review panels to  determine the extent to which the Corps addressed these comments in  the final PACR and associated cost estimate.
To determine what is known about the costs of benefits foregone because  of delays in the construction of the Olmsted Locks and Dam project (e.g.,  the delay in benefits because of a change in the project operational date),  we examined the Corps’ analyses of the Olmsted project’s benefits and  costs and compared them with economic guidance, including the  Economic and Environmental Principles and Guidelines for Water and  Related Land Resources Implementation Studies. To develop an  estimate of one type of benefit foregone because of project delays—the  additional interest during construction—we compared in the same present  value terms the Corps’ 1990 estimate of interest during construction with  its 2012 estimate. According to the Corps economists, the additional  interest is a benefit foregone because it represents the hypothetical return  or “benefit” that could have been earned by investing the money in some  other use. We selected this component because it was quantifiable, using  available information that we determined was sufficiently reliable for  purposes of this report. We interviewed Corps economists to obtain  information on the Corps’ analyses and application of benefit-cost  analysis to Corps projects. We did not independently assess whether the  potential benefits of the Olmsted project would outweigh its costs.
We conducted this performance audit from July 2015 to February 2017 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.
subsections: section_title: Background
paragraphs: This section discusses the Corps’ organizational structure; the Olmsted  Locks and Dam project; the project’s timeline, maximum project cost,  funding, and construction method; and the economic benefits and costs of  navigation projects.
subsections: section_title: Corps Organizational Structure
paragraphs: Located within the Department of Defense, the Corps has both military  and civilian responsibilities. Through its Civil Works program, the Corps  plans, designs, constructs, operates, and maintains a wide range of water  resources projects for purposes such as navigation, flood control, and  environmental restoration. The Civil Works program is organized into  three tiers: headquarters in Washington, D.C.; eight regional divisions that  were established generally according to watershed boundaries; and 38  districts nationwide. The eight divisions, commanded by military officers,  coordinate civil works projects in the districts within their respective  geographic areas. Corps districts, also commanded by military officers,  are responsible for planning, engineering, constructing, and managing  projects in their districts. Each project has a project delivery team of  civilian employees that manages the project over its life cycle. Each team  is led by a project manager and comprises members from the planning,  engineering, construction, operations, and real estate functions. The  Louisville District, located within the Great Lakes and Ohio River Division,  is responsible for managing the Olmsted project.
In addition, the Civil Works program maintains a number of centers of  expertise to assist Corps division and district offices. One of these  centers is the Cost Engineering and Agency Technical Review Mandatory  Center of Expertise located in Walla Walla, Washington. This center  provides technical support and assistance to the districts on cost  engineering issues, such as developing cost estimates and performing  agency technical reviews of cost estimates included in all decision  documents.
section_title: Project Description
paragraphs: The Olmsted Locks and Dam project is located at Ohio River Mile 964.4  between Ballard County, Kentucky, and Pulaski County, Illinois (see fig.  1). The project replaces Locks and Dams 52 and 53, which were  completed in 1928 and 1929, respectively. Temporary 1,200-foot-long  lock chambers were added in 1969 at Locks and Dam 52, and in 1979 at  Locks and Dam 53. Because of their antiquated design and age, these  structures are unable to meet current traffic demands without significant  delays, according to Corps documents. Corps documents also stated that  the existing structures have deteriorated and are overstressed during  normal operating conditions. The temporary locks at Locks and Dams 52  and 53 have significantly passed their 15-year design life.
The Olmsted project consists of two 110-by-1,200-foot locks adjacent to  the Illinois bank, and a dam composed of five 110-foot-wide tainter  gates, a 1,400-foot-wide navigable pass controlled by 140 boat- operated wickets, and a fixed weir extending to the Kentucky bank (see fig. 2). A lock and dam enable vessels to navigate through a shallow  or steep section of river. A lock is an enclosed chamber in a waterway  with watertight gates at each end, for raising or lowering vessels from one  water level to another by admitting or releasing water. A dam is a barrier  that is built across a stream or river to obstruct the flow of water, creating  a pool of water deep enough to allow boats and barges to move upstream  or downstream. Once the Olmsted dam is completed, the wickets will be  raised during periods when the river is low to maintain the upper pool and  lowered at other times to form a navigable pass, allowing river traffic to  pass through without going through a lock. The tainter gates can be  raised or lowered to adjust water flow without adjusting the dam.
section_title: Project Timeline
paragraphs: Figure 3, an interactive graphic, shows a timeline of key events in the  Olmsted Locks and Dam project.
WRDA 1988 authorized construction of the Olmsted project at a cost of  $775 million (in October 1987 price levels) based on the report of the  Chief of Engineers, dated August 20, 1986. The authorized cost was  based on the detailed baseline cost estimate for the recommended plan  presented in the 1985 Lower Ohio River Navigation Feasibility Report. At  the time of authorization, the Corps estimated that construction would  take 7 years. As with all civil works projects, the authorized cost does not  include inflation and is based on the assumption that the project will  receive the maximum amount of appropriations that can be efficiently and  effectively used each year. The Corps received its first appropriation for  construction in fiscal year 1991, and awarded the first major construction  contract in 1993 for the construction of the lock cofferdam.
section_title: Maximum Project Cost
paragraphs: When Congress authorizes a specific amount of money for a project, this  authorized project cost provides the basis for the project’s maximum cost.  Section 902 of WRDA 1986, as amended, defines the maximum project  cost as the sum of (1) the authorized cost, with the costs of unconstructed  project features adjusted for inflation; (2) the costs of modifications that  do not materially alter the scope of the project, up to 20 percent of the  authorized cost (without adjustment for inflation); and (3) the cost of  additional studies, modifications, and actions authorized by WRDA 1986  or any later law or required by changes in federal law. The maximum cost  is known as the 902 limit.
Each district with an ongoing construction project is to update the 902  limit established for the project to account for inflation every time the  district calculates a new cost estimate or benefit-to-cost ratio. If the  project’s estimated costs are approaching the 902 limit, the project  delivery team may start preparing a PACR to seek an increase in the  project’s authorized cost. If the project’s actual costs reach its 902 limit  before congressional action, construction must stop until the project gets  a new authorization that increases its costs and therefore its 902 limit.
section_title: Funding
paragraphs: The Corps’ Civil Works program typically receives an appropriation  annually through the Energy and Water Development Appropriations Act  or an omnibus appropriations act. These acts have typically appropriated  a sum to each civil works appropriation account, including  investigations, construction, and operation and maintenance, to fund  projects related to the nation’s water resources. Accompanying  congressional reports often specifically list individual projects and the  amount directed to each project.
When the Olmsted project was first authorized in WRDA 1988, its  construction costs were to be shared equally between funds appropriated  to the Corps and from the Inland Waterways Trust Fund. The trust fund  receives a portion of the revenue from a fuel tax levied on commercial  towing companies using the inland and intracoastal waterways. The  trust fund is administered by the U.S. Department of the Treasury.  However, after congressional appropriation of revenues from the fuel tax  and Office of Management and Budget apportionment, the Corps is  responsible for determining the timing and amount of trust fund  expenditures. By 2009, however, the Olmsted project was using the  majority of trust fund appropriations, which constrained the amount  available for other projects on the inland navigation system. In 2014, two  laws were enacted that reduced the trust fund’s contribution for Olmsted  construction costs from 50 to 25 percent in fiscal year 2014 and then to  15 percent in subsequent years.
section_title: In-the-Wet versus In-the- Dry Construction Methods
paragraphs: The Olmsted dam is being constructed using a construction method  called in-the-wet, in which concrete sections of the dam, known as shells,  are built on shore and then carried out into the river and set in place in the  riverbed. At Olmsted, the shells are lifted by a wheel-mounted super  gantry crane—the largest crane of its kind in the world and capable of  lifting 5,100 tons—along rails and taken to the shore. The shells are then  floated out onto the river by a catamaran barge that has a capacity of  4,500 tons and lowered onto foundations installed in the riverbed.
This method differs from traditional in-the-dry construction, which uses  cofferdams to drain the riverbed to allow work, such as building the  Olmsted locks. A cofferdam is a temporary, watertight structure that  surrounds a construction site to prevent water from flooding the area.  Cofferdams can vary in design from simple earthen dikes heaped up  around a construction site, to more complicated and costly structures  constructed of steel sheet piling.
section_title: Economic Benefits and Costs of Navigation Projects
paragraphs: Federal guidance serves as the key source for the Corps’ analyses of the  benefits and costs associated with alternative plans for achieving water  and related land resource objectives. Based on this guidance, the Corps  is to identify the project plan that would provide the greatest net benefit to  society. Moreover, the Corps is to identify and clearly describe areas of  risk and uncertainty so that it can make decisions knowing the reliability of  the estimated benefits and costs and of the effectiveness of alternative  plans.
To estimate benefits and costs, the Corps compares the economic  conditions expected under the proposed alternatives with those expected  without the project (i.e., business as usual) during the period of analysis  (e.g., 50 years). Potential benefits include any reduction in the  transportation cost for barge traffic expected to use the waterway over the  analysis period. Potential costs include the outlays made to construct the  project (e.g., for labor and materials) and interest during construction,  which represents the hypothetical return or “benefit” that could have been  earned by investing the money in some other use. To calculate the  interest cost, compound interest is added to the construction costs  incurred during the construction period, at the applicable project discount  rate, from the date the expenditures are incurred to the beginning of the  period of analysis (i.e., the date the project begins to generate benefits).  Federal policy establishes the discount rate for this purpose. According to  Corps planning guidance for civil works projects, the total investment cost  of the project equals construction cost plus interest during construction.
The Corps has conducted several analyses of the Olmsted project’s  benefits and costs, beginning with a feasibility study in 1985. The Corps  later updated its estimates in 1990 (Benefit Update) and in 2012  (PACR). According to Corps economists, the PACR analysis of benefits  and costs was thoroughly reviewed, within the Corps and by an  independent peer review panel. Also in 2012, the Corps used the PACR  analysis to examine the benefits and costs associated with changing the  construction method for the dam from the in-the-wet method to the more  traditional in-the-dry method.
section_title: The Corps and Consultant Reports Identified the Construction Method, Contract Type, and Other Factors as Primary Contributors to Cost Increases and Schedule Delays
paragraphs: Reports by the Corps and others identified the in-the-wet construction  method, the contract type, and other factors as primary contributors to  cost increases and schedule delays in the Olmsted project, most of which  were associated with constructing the dam. The PACR and the 2012  consultant report identified the selection of the in-the-wet method to  construct the dam as contributing to cost increases and schedule days. In  addition, the Corps’ decision to use a cost-reimbursement contract  contributed to increased management costs, according to the PACR and  the 2008 consultant report. The reports by the Corps and others also  identified other key factors that contributed to cost increases and  schedule delays, including limited funding, changes in market conditions,  and design changes.
subsections: section_title: Selection of the In-the-Wet Method and Accompanying Construction Challenges Identified as Contributing to Project Cost Increases and Schedule Delays
paragraphs: The Corps’ 1997 decision to construct the Olmsted dam using the in-the- wet method was based on projections that this method would cost less  and would allow the project to be completed more rapidly than the  traditional in-the-dry method. The Corps had originally planned to  construct the Olmsted project using an in-the-dry method using four  cofferdams. However, the Olmsted project was the subject of many  studies and reviews seeking to improve on the authorized plan by  incorporating innovative design and construction methods, according to  the PACR. One of these methods was in-the-wet construction, which had  been used to construct tunnels and bridges in a marine environment, but  which had not been used to construct a project such as Olmsted in a river  environment.
In the early to mid-1990s, the Corps commissioned several studies to  look at different ways to construct the dam, including using the in-the-wet  method. One study examined using a mobile cofferdam instead of a  conventional fixed cofferdam. Another study looked at alternate  methods for constructing the tainter gate section of the dam. A third  study performed a life cycle cost analysis of five different alternatives of  dam types and construction methods, including in-the-dry, in-the-wet, and  a combination of the two methods. A fourth study, issued in December  1997, evaluated and compared using the in-the-wet and in-the-dry  construction methods, as well as using a combination of both methods to  provide a basis for deciding between the methods. This study found that  using the in-the-wet method under two different construction schedule  scenarios would cost either $54.9 million less and allow the project to be  completed 2 years earlier or about $63.2 million less and be completed 5- 1/2 years earlier.
Prior to the issuance of the 1997 study, the Corps established a team of  Corps engineers, program managers, and others to review the study and  recommend a construction method. The team members evaluated  specific project components, including structural engineering, cost  estimating, and design. The team said in a July 1997 document that it  would be feasible to construct the dam with either the in-the-wet or in-the- dry method. However, using the in-the-wet method option would more  likely allow the project to be completed 1-1/2 to 2 years earlier than using  the in-the-dry method and the estimated cost savings would be  approximately $40 million. Some team members expressed concerns with  the in-the-wet method, including three engineers, one of whom stated that  the in-the-wet method’s foundation would be more expensive than the  foundation required for the in-the-dry method, another who expressed  doubts over whether the project would be finished according to schedule,  and another who noted that the Corps’ Louisville District had little or no  experience using the in-the-wet method. The Corps district decided to use  the in-the-wet method, citing four reasons—lower cost, shorter  construction schedule, less impact on navigation during construction, and  the potential for fewer negative environmental impacts. At the time, the  Corps’ decision to select in-the-wet as the method of construction was not  required to undergo an agency technical review or an independent  external peer review.
The PACR stated that the independent government estimate for the in- the-wet dam construction was low and that cost increases resulted from  several factors that were not known at the time of the contract award.  These include certain river conditions that slowed construction, the  effect of the site’s seismic conditions on fabricating the shells, and  funding constraints. Also, the 2012 consultant report stated that the  independent government estimate, prepared in 2003, inadequately  characterized the uncertainty and risk in pursuing an innovative in-the-wet  construction method and set expectations of project cost and duration far  too low. The Corps agreed with the consultant’s findings and  recommendation that the agency undertake research and development to  generate more robust cost and schedule estimates when using novel  technology such as in-the-wet construction.
According to the PACR, the construction challenges associated with the  in-the-wet construction method were overcome but required “a lot more  effort than ever could have been envisioned.” Also, according to a Corps  official, there was a learning curve associated with the in-the-wet method  and one-of-a kind infrastructure that cost more than the Corps thought.  For example, according to the PACR, as the project design continued  following the 1989 General Design Memorandum, the Corps planned to  construct a hydraulic wicket dam. In May 1994, the Corps awarded a  contract to construct a full-sized prototype of the dam to test how the gate  would operate and to test maintenance procedures, and this contract was  completed in December 1995. This modeling revealed the complexity of  the design, and the Corps revised the design to construct tainter gates  and boat-operated wickets instead. In addition, the PACR stated that the  in-the-wet method required specialized equipment that increased costs,  such as the super gantry crane and the catamaran barge, which have  minimal salvage value.
In January 2012, the Corps’ Deputy Commanding General for Civil and  Emergency Operations directed the Great Lakes and Ohio River Division  to explore alternative construction methods and to present  recommendations to Corps headquarters by June 1, 2012. In providing  this direction, the Deputy Commanding General stated that the in-the-wet  construction method had proven more expensive and time-consuming  than originally envisioned. Among other things, the division was to  develop concept-level designs for in-the-dry construction that could be  used to develop a reliable cost estimate, and to compare that estimate to  the in-the-wet estimate.
The Corps completed its review of the in-the-wet versus in-the-dry  methods in a May 2012 study, which underwent agency technical review  and was certified by its Cost Engineering and Agency Technical Review  Mandatory Center of Expertise. The study concluded that constructing the  dam components using the in-the-dry method was a technically feasible  alternative. The study found that continuing to use the in-the-wet method  would cost more than switching to the in-the-dry method, but it would  allow the project to be operational sooner. Specifically, the study  estimated that the in-the-dry method would cost $2.810 billion compared  to the PACR’s $2.918 billion estimate of performing the work with the in- the-wet method. However, the study found that using the in-the-dry  method would result in the project not being operational until 2022, which  is 2 years later than the PACR’s estimated operational date of 2020.
A June 2012 Corps internal memorandum stated that based on the  findings of the in-the-dry study, the Great Lakes and Ohio River Division  recommended continuing to use the in-the-wet construction method for  Olmsted. The memorandum stated that if the Corps changed course and  used the in-the-dry method, it would require that a new contract be  awarded. As a result, potentially two contracts would be ongoing for a  period of time, which would likely exceed available funds and cause a  delay. The memorandum also stated that because the Corps does not  have the authority to use incremental funding or a continuing contracts  clause, it would need to award another cost-reimbursement contract for  the in-the-dry construction. The Deputy Commanding General for Civil  and Emergency Operations directed the division to explore the possibility  of soliciting opinions of industry rather than prescribing the construction  method. In response, a Corps official presented the study’s findings in an  August 2012 meeting of the Inland Waterways Users Board, which is  composed of members of industry. This official said that the division  recommended using the in-the-wet construction method, in part based on  the Corps having learned from its experience with the construction and  having become more efficient at setting shells. This official also stated  that the contractor was about to begin setting shells for the navigable  pass and, compared to the shells for tainter gates, these shells were  smaller, lighter, and uniform in size, which would allow the contractor to  set them more quickly. Board members stated that they deferred to the  Corps as the engineering experts to decide on the method of  construction. A Corps official said that the Corps decided to continue  using the in-the-wet method in November 2012.
section_title: Corps’ Decision to Use a Cost-Reimbursement Contract Seen as a Source of Increasing Management Costs
paragraphs: The Corps’ decision to use a cost-reimbursement contract for the dam  construction after not receiving offers for a firm fixed-price contract  contributed to increased administrative and overhead costs, according  to the PACR and the 2008 consultant report. In September 2002, the  Corps requested proposals for the dam construction contract as a firm  fixed-price contract—the contract type the agency typically uses for civil  works projects—but received no offers. According to the 2008 Corps  report and the 2012 consultant report, the agency received no offers  because the construction method was innovative, the river conditions  were too risky, and the contractor could not get bonding. The Corps  amended the request for proposals to include, among other things, a  provision that the government would pay a stipend for satisfactory and  reasonable contractor proposals, but received no offers.
After considering different options, the Corps decided to request  proposals for a cost-reimbursement contract rather than a firm fixed-price  contract. According to a district official, the construction of Olmsted dam  was not practical for a firm fixed-price contract because of the risks to the  contractor in undertaking a complex project and the unknowns associated  with the in-the-wet construction method. Specifically, the Corps requested  proposals for a cost-plus-award-fee contract, rather than a cost-plus- incentive-fee or a cost-plus-fixed-fee contract, because according to a  Corps official, it was the best fit for the project. According to the Federal  Acquisition Regulation, an award fee contract is suitable for use when the  work to be performed is such that it is neither feasible nor effective to  devise predetermined objective incentive targets applicable to cost,  technical performance, and schedule. Alternatively, an incentive fee  contract should be used when cost and performance targets are objective  and can be predetermined, allowing a formula to adjust the negotiated fee  based on variations relative to the targets. A district official stated that a  cost-plus-incentive-fee contract was not appropriate because targets  could not have been reasonably determined since the in-the-wet  construction method had never been attempted before. Difficult river  conditions provided additional risks to the contractor. According to the  Corps official, a cost-plus-fixed-fee contract would not have provided  sufficient incentive for the contractor because the fee would not change.
In May 2003, the Corps requested proposals for the dam construction as  a cost-plus-award-fee contract and received two offers, and awarded the  contract in January 2004 to a joint venture. According to a Corps cost analysis of the proposals, the winning proposal included a lower  maximum award fee of 5 percent, capped overhead costs, and had more  overall budgeted cost savings than the other proposal. The winning  proposal was $564 million, which was more than 25 percent higher than  the independent government estimate. However, the Corps’ Office of  the Chief Counsel said that the statutory prohibition on the Corps  awarding a contract for river and harbor improvements with a price that  exceeds 125 percent of the independent government estimate did not  apply to the Olmsted dam contract because it was a cost-reimbursement  contract.
The PACR and the 2008 consultant report noted that the effort to manage  a cost-reimbursement contract is more cost- and time-intensive than  managing a firm fixed-price contract. For example, the PACR stated that  there are additional activities associated with a cost-reimbursement  contract, such as audit services, voucher reviews, and award fee  evaluation boards. The PACR estimated that the Corps’ cost of  construction management for these additional activities increased by  more than $74 million (in October 2011 price levels), in part because the  change in completion date had extended the construction schedule. The  2008 consultant report stated that the cost-reimbursement contract  necessitated a substantial amount of administrative effort to track, record,  and evaluate the contractor’s performance, and that doing so increased  the Corps’ staff needs by approximately 40 percent. A district official said  that the Corps hired 3 additional staff and the contractor hired 10 to 15  additional staff to perform these administrative tasks.
In 2009, we reviewed federal agencies’ use of cost-reimbursement  contracts and found that they involve significantly more government  oversight than do fixed-price contracts, which means the government  incurs additional administrative costs on top of what it is paying the  contractor. For example, we found that the government must determine  that the contractor’s accounting system is adequate for determining costs  related to the contract and update this determination periodically. In  addition, we found that contractor costs need to be monitored—known as  cost surveillance—to provide reasonable assurance that efficient methods  and effective cost controls are used.
Another cost associated with the cost-reimbursement contract is  evaluating the contractor’s award fee. For each evaluation period, the  Corps is to assess the contractor’s performance against explicit criteria  relating to cost, schedule, quality, and safety and environmental  compliance, as set forth in the award fee plan. The 2012 consultant report  found that the Olmsted project team did not have the experience to  manage a cost-reimbursement contract, but that the team had instituted  management methods and techniques to control project costs, many of  which were industry best practices and consistent with Corps and  Department of Defense guidance. The Corps agreed with the report’s  recommendation that if the Corps plans to use a cost-reimbursement  contract for other civil works projects, the agency needs to identify  training required for project members when it develops the acquisition  strategy. The report also concluded that the Corps’ management of the  cost-reimbursement contract was not a significant factor in explaining the  project’s cost and schedule overruns, and Corps officials we interviewed  agreed.
Within the last few years, the Corps has taken actions to help improve its  management of civil works projects, including Olmsted. In 2012, the  Corps designated Olmsted as a mega-project because of its cost,  importance, and complexity, among other things. The Corps issued  guidance in 2012 on managing mega-projects. According to the 2012  guidance, the Great Lakes and Ohio River Division is to provide progress  reports to Corps headquarters and an integrated project schedule and  cost estimate that the project team updates monthly. Corps officials said  that the Corps created its Integrated Project Office in 2012 to help  increase its management focus on Olmsted. In 2016, the Corps updated  its mega-project guidance to require quarterly reports on such things as  analysis of risk. The Corps also has daily, weekly, and monthly  meetings to discuss how the dam contractor is staying on schedule,  controlling cost, and managing risks. In 2014, the Corps adopted a  recommendation from a 2010 report prepared by navigation industry  representatives and Corps navigation experts to prioritize new  construction and rehabilitation projects based on an examination of  factors such as economic return, risk-based analysis, and the estimated  cost and construction schedule. As a result, the Corps made Olmsted its  top priority construction project. In the Corps’ March 2016 capital  investment plan, prepared in response to WRRDA 2014, Olmsted  remained its top priority construction project.
section_title: Other Key Factors Identified as Contributing to Cost Increases and Schedule Delays
paragraphs: The reports by the Corps and others also identified other key factors that  contributed to cost increases and schedule delays, including limited  funding, changes in market conditions, and design changes.
The Olmsted project’s authorized cost was based on the Corps’  assumption that each year the agency would receive the maximum  amount of funding that it could efficiently and effectively spend. However,  according to the reports by the Corps and others, the Olmsted project  was significantly underfunded in some years, which contributed to cost  increases and schedule delays. Specifically, according to these reports,  the amount the Corps allocated for the Olmsted project from its annual  appropriation, together with the amount appropriated from the Inland  Waterways Trust Fund, was less than optimal for construction, and in  2004 and 2005, the Corps reprogrammed appropriations from Olmsted to  another project. Incremental funding from the Inland Waterways Trust  Fund also contributed to delays and increased costs, according to the  2012 consultant report.
According to the Corps reports, limited funding resulted in delayed  contract awards and increased contract durations to conform to the  funding received. For example, according to the PACR, the approach wall  contract was awarded 2 years later than originally planned because of  limited funding, which delayed the award of the dam contract by 2  years. About 2 months before the award of the Olmsted dam  construction contract, the Corps told the offerors to develop revised  estimates based on the assumption that $17.5 million would be available  the first year, with $80 million available each year thereafter, which  increased proposal costs by $18.2 million and added 1 year to the  completion date, according to the PACR. However, according to the  reports by the Corps and others, during the first 2 years of the dam  contract, the project had less funding than assumed. Specifically,  according to the 2012 consultant report, the dam contract received  approximately $5 million of the anticipated $17.5 million in 2004. The  other funds were reprogrammed to the McAlpine locks, which the Corps  viewed as urgent because their failure would cause the Ohio River  navigation system to fail. In 2005, funds were again reprogrammed, with  the dam contract receiving approximately $47 million of the anticipated  $80 million for the year. However, according to the 2008 Corps and 2012  consultant reports, reprogramming was curtailed significantly in fiscal year  2006 in accordance with the Energy and Water Development  Appropriations Act and accompanying congressional committee reports.
Also, according to a Corps headquarters official, in fiscal year 2003, the  balance of the Inland Waterways Trust Fund, which generally pays half of  the construction costs of navigation and rehabilitation projects, started to  decline because so many projects were under construction. The official  said that from fiscal years 2005 to 2009, there was a sharp decrease in  the balance of the trust fund as fuel tax revenues started to decline, and  that by fiscal year 2009, the fund was nearly depleted. As a result,  expenditures from the fund were limited to the amount of annual fuel tax  revenues collected for that particular year. According to the 2012  consultant report and the headquarters official, the Olmsted project was  funded on a monthly basis, and this incremental funding also contributed  to delays and increased costs. For example, incremental funding caused  the 2009 shell fabrication season to be split between 2009 and 2010,  according to the 2012 consultant report.
According to the reports by the Corps and others, changes in construction  market conditions contributed to increases in the cost of the dam. After  the Corps awarded the dam contract in January 2004, unexpected and  significant increases in the price of construction equipment and materials  occurred. According to the PACR and the consultant reports, the 2005  hurricane season, which included Hurricanes Katrina and Rita, created a  scarcity of barges and cranes at the time when the contractor was trying  to mobilize the necessary equipment to construct the dam. Specifically,  according to the 2012 consultant report, most of the barges scheduled for  use in building the dam were under construction in shipyards along the  Gulf Coast when the hurricanes struck. As a result, barge production  slowed tremendously and prices doubled as the demand for existing  barges increased because of the hurricane restoration efforts.
Also, according to the reports by the Corps and others, domestic and  international construction booms created a high demand for construction  materials after the award of the construction contract. The Corps reports  presented data from the U.S. Department of Labor’s Bureau of Labor  Statistics, which showed that the price of construction materials increased  significantly after 2004. According to the 2008 consultant report, from  2002 to 2007, the price of fabricated steel increased about 300 percent,  the price of cement increased about 90 percent, the price of riprap  increased by 100 to 200 percent, and the price of fuel increased about  300 percent. In addition, insurance and bonding cost increased about 230  percent. Since the dam construction contract was awarded in January  2004, the contractor’s proposal did not include these increases in the cost  of materials.
The reports by the Corps and others identified design changes during the  dam construction as contributing to increased costs. However, the reports  do not provide the amount by which the changes increased costs.  Examples of design changes included the following:
The consultant reports cited the use of a super gantry crane instead of  sleds to move the precast shells into the river as a design change that  contributed to increased cost. The Corps’ 2016 Lessons Learned  Report stated that the change was made because design issues  related to sled deflection could not be overcome.
The PACR and the 2012 consultant report cited the need to reinforce  the site for the shell precast yard and the marine skidway as  contributing to increased cost. According to the PACR, after  awarding the construction contract, it was determined that the soil  conditions at the site for the precast yard and the marine skidway  were inadequate to support the foundation loads and that an  extensive amount of piling was required to support their weight.
The Corps reports and the 2012 consultant report cited the need to  address slope stability issues on the shore as contributing to  increased cost. The Corps reports stated that an active slide was  observed during monitoring of the Illinois bank at the site of the locks.  A district official said that the Corps observed the slide. Defining the  extent of the slide problem and determining the best solution required  additional effort. The Corps reports stated that these problems also  added to the effort required to design and build the precast yard and  marine launching facility.
The PACR cited the need to increase the length of the foundation  piles for the tainter gate portion of the dam and to conduct additional  excavation because of sand waves as contributing to increased  cost. According to a district official, sand waves are constantly  migrating downriver to the construction site, and as sand collects on  the footprint of the foundation, the riverbed has to be excavated so  that shells can be set correctly, which increases cost.
section_title: Total Cost of Benefits Foregone from Project Delays at Olmsted Is Uncertain
paragraphs: The total cost of benefits foregone from project delays that have occurred  at Olmsted is uncertain, primarily because the estimates that the Corps  developed for the project are no longer relevant or are of limited use for  estimating the benefits that might have been generated had the project  become operational as planned in 2006. The extent to which the project  incurs another type of benefit foregone—the additional interest during  construction incurred because of the longer construction period— depends on economic factors, such as the project discount rate.
subsections: section_title: Benefits That the Olmsted Project Would Have Generated Had It Become Operational as Planned Are Uncertain
paragraphs: The benefits that the Olmsted project would have generated had it  become operational as planned in 2006 are uncertain, primarily because  the estimates that the Corps has made are no longer relevant or are of  limited use for this purpose. The Corps analyzed the benefits and costs  associated with the project several times, including in a 1990 study. In  that study, for example, the Corps estimated that the project would begin  generating average annual benefits of about $920 million in 2006.  According to the PACR, the Olmsted locks and dam project once  operational would reduce the cost of shipping products on the Ohio River  by processing barge shipments more efficiently than the two existing  locks and dams. Corps officials said, however, that this estimate is no  longer relevant for estimating the benefits foregone from past project  delays. In particular, as noted in the PACR, the 1990 study did not  anticipate the regulatory and market factors that reduced the demand for  coal and coal shipments on the Ohio River, beginning in the 1990s. In  addition, because the 1990 study did not assess the uncertainty  associated with key assumptions, such as the barge traffic forecast, it  cannot be used to assess what the benefits might have been, beginning  in 2006, under lower barge traffic forecast assumptions. In general, fewer  barge shipments mean less congestion and delay and lower benefits from  replacing the existing locks and dams, if all else remains the same.
In 2012, the Corps updated its analysis of the benefits and costs  associated with the Olmsted project, based on a revised operational date  of 2020. The Corps estimated, for example, that the project would  generate average annual benefits of about $875 million per year over 50  years, beginning in 2020. The Corps used the analysis to estimate the  benefits foregone from potential delays in the future, should the project  opening be delayed again. In a June 2012 presentation before the Inland  Waterways Users Board, for example, the Corps indicated that a pause in  construction at Olmsted (e.g., to shift funding to other Corps projects)  could delay its opening 4 years to 2024, which could result in benefits  foregone of about $3.5 billion ($875 million each year).
The updated estimates from the PACR could be viewed as rough  estimates of the benefits foregone since the delayed 2006 opening, but  the estimates are of limited use for this purpose for several reasons. First,  the PACR economic analysis assesses whether the potential benefits of  the Olmsted project would outweigh its remaining costs. Corps  economists said that the analysis was not designed to estimate the  benefits foregone from project delays that occurred in the past, and as a  result, the benefit estimates would be less reliable when used for that  purpose.
Second, the PACR estimates were based on assumptions about  economic conditions expected in the future and may not represent the  economic conditions that existed when past project delays occurred. For  the PACR analysis, the Corps assumed that the existing locks and dams  would need to be closed for repairs several times over the period of  analysis (i.e., beginning in 2020) and that this would reduce the volume of  shipments that could transit the locks during those closures. As a result,  transportation cost savings could be generated by replacing the existing  facilities with the Olmsted project, which is expected to be closed less  often. These assumptions, however, may not align with the actual  performance of the existing locks and dams in the past. For example,  Corps economists said that the existing facilities have performed more  reliably than expected, in part because funds were expended to maintain  them in an operating condition. Moreover, changes in the PACR  assumptions about the reliability of the existing locks and dams can  significantly affect the benefit estimates. As a result, the PACR benefit  estimates would be less reliable as a measure of benefits foregone if the  assumptions about the expected performance of the existing facilities do  not align with their actual performance in the past.
Third, the benefit estimates, which are based on forecasts of barge  shipments through the locks beginning in 2020, may not represent the  actual traffic that transited the locks and dams in the past. For example,  the PACR assumed that barge shipments through Locks and Dam 52  would reach about 113 million tons in 2020 and grow thereafter. This  tonnage is greater than the roughly 94 million tons that the PACR  indicates were shipped through the same locks in 2006—the year that the  Olmsted project was projected to open. In addition, according to Corps  documentation, barge shipments through the existing locks have  generally fallen since 2006. Barge traffic is a key input in the benefit  analysis because it is used in estimating the effect of congestion and  delay at the locks and the transportation cost savings expected to be  generated by replacing the existing structures with the Olmsted project.  The PACR indicated that the benefit estimates are extremely sensitive to  changes in barge traffic assumptions, but did not present the benefits  associated with alternative traffic forecasts.
Finally, the barge traffic forecasts on which the PACR benefit estimates  are based were developed in the early 2000s. However, the forecasts do  not incorporate factors that have reduced the demand for barge  shipments, particularly for coal, since the forecasts were developed.  According to the PACR, for example, coal is the dominant commodity in  terms of volume on the Ohio River System. In 2015, we found that coal’s  share of electricity generation had declined from 2001 through 2013,  partly because of plant retirements brought about by comparatively low  natural gas prices and the potential need to invest in new equipment to  comply with environmental regulations. In addition, in 2014, we found  that power companies plan to retire an even greater percentage of coal- fired generating capacity than expected earlier. The panel that  conducted the peer review of the PACR in 2010 found that the traffic  forecasts should be updated to include more recent actual barge traffic  (i.e., for years 2006 through 2009) and that additional sensitivity testing  should be conducted to analyze uncertainty associated with coal-related  environmental issues. In addition, Corps officials said that barge  shipments containing coal are expected to continue to decline over the  short and medium terms, but that shipments for some other commodities,  such as those related to natural gas production, have increased.
section_title: Another Type of Benefit Foregone—Additional Interest Incurred during Construction—Depends on Factors Such as the Project Discount Rate
paragraphs: According to Corps economists, another type of benefit foregone is the  additional interest during construction incurred as a result of project  delays. Corps guidance states that costs incurred during the construction  period should be increased by adding compound interest at the applicable  project discount rate from the date that expenditures are incurred up to  the year the project begins operation. The interest represents the  hypothetical return or “benefit” that could have been earned by investing  the money in some other use. Delays that increase the construction  period can also increase the interest because interest is compounded  over a longer construction period. The Corps’ 1990 study assumed that  the construction period would last from 1991 to 2006, and the PACR  extended the time frame for the construction to 2024.
To illustrate the potential effect of past delays on the interest cost during  construction, we compared the Corps’ estimate of interest during  construction from the PACR with its estimate of the interest during  construction from the 1990 study. The interest estimate in the PACR  represents the interest cost expected over the entire construction period  estimated by the Corps, including delays, from 1991 through 2024. The  interest estimate from the 1990 study represents the interest expected  over a shorter construction period, from 1991 through 2006 (i.e., updated  in terms of price level and present value using a 4 percent project  discount rate). We found the difference in interest to be about $400  million, which represents the additional interest associated with factors  such as changes in the project design, spending levels, and market  conditions that led to the construction delays and increased construction  costs. For the PACR analysis, for example, the Corps estimated that the  Olmsted project would incur about $1.3 billion in interest during  construction by the time construction was completed in 2024. Based on  the 1990 study, the Olmsted project was expected to incur about $900  million in interest during construction. Nonetheless, the estimate of  additional interest would change if factors such as the project discount  rate were changed. For example, the additional interest cost would be  about $300 million, based on the 7 percent discount rate that Office of  Management and Budget economic guidance indicates should be used  for evaluating proposed federal investments.
section_title: Agency Comments
paragraphs: We provided a draft of this report to the Department of Defense for review  and comment. We received a written response from the department,  reprinted in appendix II. The department said it appreciates the  opportunity to review the report and it has no comments to add to the  report.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, and other interested parties. In  addition, the report is available at no charge on the GAO website at  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. GAO staff members who made key  contributions to this report are listed in appendix III.
section_title: Appendix I: Full Text for Figure 3, Timeline of Key Events in the Olmsted Locks and Dam Project, 1985–2014
paragraphs: The following information appears as interactive content in figure 3 when  viewed electronically.
1985: Lower Ohio River Navigation Feasibility Report  The Louisville District of the U.S. Army Corps of Engineers (Corps)  completed the Lower Ohio River Navigation Feasibility Report. The  report recommended replacing Locks and Dams 52 and 53 with a  single project consisting of a new set of locks and a new dam.  Construction was estimated to take 7 years.
1986: Chief of Engineers Report  The Chief of Engineers completed a report recommending that  Congress authorize the construction of the Olmsted project. The  report provided a detailed baseline cost estimate for the  recommended plan presented in the 1985 feasibility report.
1988: Water Resources Development Act of 1988  The Water Resources Development Act of 1988 authorized  construction of the Olmsted project at a cost of $775 million based on  the Chief of Engineers Report, with the costs of construction shared  equally between funds appropriated to the Corps and from the Inland  Waterways Trust Fund. At the time of authorization, the Corps  estimated that construction would take 7 years.
1989: General Design Memorandum  The Louisville District issued its design plan for the Olmsted project.  The plan estimated the total project cost to be $801 million (October  1988 price levels) and construction to take about 12 years.
1990: General Design Memorandum Supplement  The Louisville District issued a modified project design plan resulting  from comments on the General Design Memorandum and from  changes in the dam configuration and project scope as presented in  the General Design Memorandum.
1990: First appropriation for construction  The Corps received its first appropriation for construction of the  Olmsted project.
1993: Award of lock cofferdam construction contract  The first major contract was awarded for the construction of the lock  cofferdam.
1997: Method of Construction Study  A consultant study compared the in-the-wet and in-the-dry  construction methods and found that the in-the-wet method would  cost less, provide the greatest schedule flexibility, and be just as  reliable as in-the-dry construction. For these reasons, the study  recommended that the Corps select the in-the-wet method to  construct the dam.
1997: Decision to construct the dam using the in-the-wet method  The Louisville District decided to construct the dam using the in-the- wet method because of lower cost, shorter construction schedule,  reduced impact on navigation during construction, and potential for  fewer negative environmental impacts. It was estimated that it would  take 6 years to construct the dam.
1999: Design Memorandum No. 8, Dam  The Louisville District issued its proposed design for the Olmsted  dam, which incorporates changes made after the completion of the  General Design Memorandum and Supplement.
2002: Request for proposals for the dam construction as a firm  The Corps requested proposals for the dam construction contract as a  firm fixed-price contract, but received no offers.
2003: Request for proposals for the dam construction as a cost- The Corps requested proposals for the dam construction as a cost- reimbursement contract and received two offers.
2004: Award of dam contract  The Corps awarded the dam construction contract to a joint venture  contractor. The winning proposal was $564 million. The dam was  estimated to be completed in 8 years.
2006: Dam rebaseline estimate  A rebaseline estimate increased the total estimated cost of the dam  construction contract by approximately $81.6 million.
2011: Dam rebaseline estimate  A rebaseline estimate extended the schedule by 4 to 5 years and  increased the cost of the dam construction contract by approximately  $551.1 million.
2012: In-the-Dry Study  The Corps conducted a study to determine whether to complete the  dam using the in-the-wet construction method or the in-the-dry  method. The study estimated that continuing to use in-the-wet  construction would cost more, but would allow the project to be  completed sooner. For this reason, the Corps decided to complete the  dam using the in-the-wet method.
2012: Post-authorization change report  Because the project would exceed its maximum authorized cost, the  Corps submitted a post-authorization change report to Congress in  2012, seeking an increase in the Olmsted project’s authorized cost to  $2.918 billion, with an estimated completion date of 2024.
2013: Continuing Appropriations Act, 2014  The Continuing Appropriations Act, 2014, increased the Olmsted  project’s authorized cost to $2.918 billion.
2014: Consolidated Appropriations Act, 2014  The Consolidated Appropriations Act, 2014, provided that for fiscal  year 2014, 25 percent of the funding proposed for the Olmsted project  would be derived from the Inland Waterways Trust Fund.
2014: Water Resources Reform and Development Act of 2014  The Water Resources Reform and Development Act of 2014 specified  that beginning with fiscal year 2015, only 15 percent of the Olmsted  project’s construction costs are to be paid from the Inland Waterways  Trust Fund.
section_title: Appendix II: Comments from the Department of Defense
section_title: Appendix III: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
paragraphs: Anne-Marie Fennell, (202) 512-3841 or fennella@gao.gov.
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Vondalee R. Hunt (Assistant  Director), Marie Bancroft, Timothy Guinane, and Susan Malone made key  contributions to this report. Important contributions were also made by  Michael Armes, Martin (Greg) Campbell, Patricia Farrell Donahue, Jason  Lee, Oliver Richard, Dan Royer, Jeanette Soares, Kiki Theodoropoulos,  and William T. Woods.