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This is the major explanation for the sharp trend downward in the number of projects shown on the previous chart.
However, it is not necessarily an argument against multipurpose projects. The point is that no one could foresee the Korean war, and as long as appropriations continued at the 1949–50 level, the decrease in the number of smaller projects would not have had too heavy an impact on the Nation as a whole.
Since an individual multipurpose project takes several years of appropriation buildup before it affects greatly the character of the appropriations structure, by the same token it also takes several years to adjust the multipurpose part of the program to a new situation of heavily reduced appropriations. If, of course, it could have been possible to transition the appropriation ceiling downward more slowly, the effect on the smaller projects would not have been so drastic.
RISE IN COST INDEX
Another factor, of course, adversely affecting the number of smaller projects in connection with the situation I have just described, has been the continuing rather sharp rise in the cost index of construction. This is shown by the next chart, chart No. 5.
You have seen this type of chart before, sir, so I merely indicate the upward trend during the year although it has leveled off in the last half.
Senator McCLELLAN. That chart indicates that since 1940 the cost of construction has gone up 200 points?
General Sturgis. Say about 260 index points. The cost has not gone up that much percentagewise but the index has risen.
General CHORPENING. About 21/2 times.
Senator McCLELLAN. It costs 272 times to construct a project now as it would have cost in 1940 ?
General CHORPENING. That is correct.
General STURGIS. I might say, sir, in connection with that year 1947 that the cost index shows a rise from 450 to 600 points. There is a substantial increase there even in that period.
Senator McCLELLAN. It has increased about 40 percent since 1947?
General STURGIS. About 50 percent, sir. That gain is the factor I am speaking about. That is an additional factor affecting the number of smaller projects we can afford to have. The money we have for them is much less and does not go as far.
BIDS FOR CONSTRUCTION
Senator HAYDEN. What is your recent experience with respect to bids for construction? Is there keen competition among contractors at this time? Recently it seemed to be leveling off.
General STURGIS. From talking to my division engineers and from my inspections in the field, the competition is getting a bit keenerI would not say it was really tough yet, but it is definitely getting keener than it was.
Senator McCLELLAN. There is more competition in bidding?
General STURGIS. I think so. Certainly, the prices are better. We have gotten some remarkable prices.
Senator McCLELLAN. Particularly on dirt moving, you get generally lower bids than your estimate, do you not! Has that not been your experience!
General STURGIS. That is the trend. I would not say it was sharp competition yet. It is definitely tightening, I would rather say.
In connection with the ever-diminishing spread between the appropriation ceiling and the multipurpose project requirements as demonstrated by the previous chart, this spread, the cost index, compared to say 1947, is not only smaller in dollars, but much more so in effective work value, due to the rise in the cost index.
I am only emphasizing the additional effect of this factor.
Again this means still fewer of the smaller projects spread throughout the country.
Therefore, I very strongly support the action of the President and the Bureau of the Budget in recommending 20 new starts and resumptions of smaller-type projects. This constitutes an excellent beginning on broadening the base of the civil-works program and meeting the increasingly urgent demand for small though highly justified projects in all parts of the Nation.
The new projects in general cover improvements of existing harbors or waterways to provide reliable and expeditious movement of traffic which will result in substantial monetary savings; or they are projects to give highly developed flood protection to urban areas, particularly those where defense or industrial activities are concentrated.
In addition to the new projects, there are included a number of resumptions of projects where the Federal Government has made a substantial investment, and further postponement would result in considerable economic loss. Included also is the Warrior lock and dam project which will replace existing structures that are now in such physical condition that further repairs are impracticable and a serious threat of failure and consequent closure of waterways makes the risk of further delay inadvisable. The new projects are small in cost and provide benefits for navigation, flood control, and related water uses other than hydroelectric power.
ADVANCE ENGINEERING AND DESIGN
The amount included for "Advance engineering and design, $2,500,000,” provides for the continuation of planning on 30 projects and initiation of planning on 14 projects. Twenty-seven projects will be brought to the point where they will be ready for initiation of construction. I cannot overemphasize the urgent need for providing funds for this activity. It is during this stage of a project that many detailed problems are resolved, a basic detail design is prepared, and a firm cost estimate is made.
The amount requested for 1955 is a minimum to make a reasonable number of projects ready for construction. As the fiscal requirements for continuing projects are reduced, the necessity of having new projects ready for construction increases. For example, the new projects in the 1955 budget will be taken off the shelf of our backlog of projects ready for construtcion, and we should be in a position to replace them with others.
The amount provided for the "Operation and maintenance, general," appropriation is below the actual appropriation for fiscal year 1954. This amount contemplates the deferment of urgently needed maintenance work until such time as the budgetary policy will permit the novomplishment of that work. Chart No. 6 shows that navigation tonnage, beginning with the calendar year 1947 as compared to the annual appropriations for navigation maintenance and compared to the same appropriations adjusted for rising costs.
This chart shows in black over here [indicating) the tonnage; that is, the waterborne commerce in millions of tons and on a calendar year basis. As you know, we receive our reports on commerce on a calendar year basis. Therefore, these blocks do not quite coincide with the fiscal-year blocks and curves which I shall compare.
You can see a gradual rise in our waterborne commerce. While there has been some decline during this year, largely attributable to certain factors, particularly the steel strike, and its effect on the Great Lakes tonnage—we know that is going up very strongly again this year. I can assure you the curve continues markedly upward.
At the same time, the red line here in dollars opposed to the dash line represents our appropriations for navigation maintenance in millions of dollars. You can note by following the appropriation line that it is somewhat downward, while the tonnage line is going up. Also, our structures are getting older and older. Now if we adjust our maintenance appropriations by the ENR index, it then gives us a true picture of the situation by indicating the work we can do, that is, the manpower hours we can obtain for the money appropriated. Then you see a very marked change downward. With the rise in commerce and with the increasing age of the structures our problem is becoming very acute.
Senator McCLELLAN. In other words, we are not at all protecting the investment the country has in these works?
General STURGIS. Exactly, sir.
GENERAL EXPENSES APPROPRIATION
The funds requested for the “General expenses appropriation," $9,800,000, is essentially the same as was appropriated for fiscal year 1954. However, it should be noted that the amount for 1955 includes the entire cost for collection of commercial statistics and for other regulatory activities such as the issuance of permits. In previous years a substantial part of these costs has been charged to projects under maintenance appropriations. The funds actually available for comparable activities under this appropriation in fiscal year 1954 are approximately $10,800,000.
Accordingly, it can be seen that the 1955 budget contemplates a reduction of about a million dollars for the administrative expenses of the Corps of Engineers. To do this will require the curtailment of some activities in order that the functions most necessary to the operation of the program can be continued.
MISSISSIPPI RIVER PROJECT
The appropriation request for the Mississippi River project contemplates a further reduction of over $6 million from the appropriation for fiscal year 1954. The amount requested will require the deferment of essential operations, particularly with respect to bank, stabilization work. Large sums of money have already been expended on this project, and extremely large benefits have been realized.
The integrity of the levees already built, and which are well advanced to completion, is continuously endangered by the river trying to resume its natural course. It is essential that we proceed as rapidly as funds permit with the bank-stabilization work if we are to avoid the necessity of expending large sums for levee setbacks and for maintenance of levees.
Mr. Chairman, this concludes my statement. It is a real pleasure to appear before your committee. I thank you for giving me your attention for such a long period.
Senator McCLELLAN. You have made a very comprehensive statement and a very informative one. It will serve as a basis for continuous study throughout these hearings. The committee wishes to thank you for the presentation you have made.
We have a few additional questions, General, which we will ask you to furnish the answer to for the record.
(The questions and answers referred to follow :) Question. In discussing the reaction of local interests concerning their willing. ness and ability to assume operations and maintenance of local flood-protection projects, you state that information concerning the need for legislation to accomplish the objectives of the committee will be furnished at the time that the complete report on this project is presented. Is it your opinion that such legislation will be required ?
Answer. Yes, sir.
Question. In discussing the backlog of the authorized survey program and the classifications that you are making of these studies, it would appear that unless the Congress and the committee deauthorize these studies, you have not reduced the actual backlog of authorized investigations.
Answer. Yes, sir.
Question. In discussing methods for carrying out your survey work at less cost you state that last month you issued a letter of instruction which should effect the simplification of reports and considerable savings in cost. What is the nature of these instructions?
Answer. The cited letter of instructions, issued to all division and district engineers concerned with civil works, emphasized the need for maximum efficiency in use of appropriated funds for surveys and prompt reporting thereon. The letter outlined the nature of the minimum basic data, surveys and studies required for sound conclusions, and firm and reliable estimates. Sources of potential savings in the more expensive phases of field investigations were pointed out. Maximum efficiency and economy are to be sought in decisive and coordinated action through the conduct of the survey, with proper scheduling of elements of study that affect one another. Unproductive lines of investigations are to be curtailed as soon as this becomes evident. Field offices are to request the assistance and advice of higher echelons sufficiently early for proper guidance. Increased use of written plans of surveys was suggested for proper and continuing direction of effort, with due recognition of the need of flexibility as studies progress. Early coordination with local interests and other Federal agencies should be undertaken. Firm local interest and support for proposed improvements, and local assistance in providing basic data, estimates and views are to he secured insofar as practicable. Expenses on preliminary examination reports are to be reduced to the minimum, and letter-type reports used in such cases as adaptable to abbreviated presentation. In longer survey reports, the body of the report should be concise and direct, with supporting data in appendixes; nonessential studies and details are to be eliminated, and those phases more proper
to final design studies are to be deferred until after authorization. Adequate treatment of project formulation assumptions is essential, however, and reports are to summarize basic data, particularly on economic justification with full supporting data to be organized and available for further reference.
Question. You state in your opening remarks that you have revised your realestate policy so as to acquire only the minimum land essential to the construction operation and maintenance of your project. Will you explain the broad general policy involved? Then when we consider the individual projects we can discuss the application of the new policy to these projects.
Answer. The joint real-estate acquisition policy, which is now applicable to lands being acquired for dam and reservoir projects of the Corps of Engineers and the Bureau of Reclamation, is the culmination of several months of intensive study by the Departments of the Army and Interior. The policy provides for the acquisition of such lands and interests therein as are essential for the primary purposes for which the projects are authorized. In addition thereto, the policy also provides for acquisition of such lands as may be needed to provide for limited public use and reasonable access in accordance with applicable law. The policy has been approved by the Secretary of the Army and the Secretary of the Interior.
The acquisition of lands for reservoir projects is governed basically by the primary purposes of flood control, navigation, irrigation, hydroelectric power and related uses for which the projects are authorized. In general, fee-simple title to lands will be acquired in in areas required for permanent structures; in areas permanently inundated; in areas so frequently inundated as to destroy their usefulness to the owner; and in areas required for operation and maintenance of the project. In addition, the policy allows acquisition of land in fee 300 feet horizontally from the edge of the conservation pools required for storing water for navigation, power, irrigation, and other conservation purposes; or where discretionary action is desirable, fee title may be acquired to those lands which are inundated by the 5-year flood frequency above those pools. Acquisition of interests in lands situated between the fee-taking line and the project design flood plus a reasonable freeboard, or spillway design flood, is limited generally to easements.
The policy as outlined above provides for a minimum of outright purchase of land and calls for maximum reliance upon securing the right to flood lands by purchases of easements. This will result in acquisition of considerable less land in fee than previously, and should reduce real-estate costs to the Federal Government.
The above policy will govern the determination as to acquisition of any tract on which title to the United States has not been vested or final judgment in condemnation has not been entered except for projects on which land acquisition has progressed to the point where application of the policy would be unreasonable or to the distinct disadvantage of the United States or to the general public.
Time elapsing since adoption of this real-estate acquisition policy has not permitted reexamination of project requirements and revision of estimated costs. Accordingly, the project estimates in the fiscal year 1955 budget requests do not reflect the savings that may be made in projects to which the new policy will apply.
Question. You also discussed the three supergrade positions that have been allowed the Corps of Engineers. Would you identify these positions for the committee?
Answer. (1) Chief, Engineering Division, Civil Works; (2) Special Assistent to the Chief of Engineers; (3) Recently authorized-awaiting decision of the Chief of Engineers as to position to put in the vacancy.
Question. You state that you have been risking serious interruptions to vital navigation routes because of the obsolescence of structures and the lack of minimum adequate means to maintain channels properly. As soon as the fiscal conditions will permit these deficiencies also should be eliminated. In the meantime the calculated risk looms increasingly larger each year. Specifically, what calculated risks do you have in mind?
Answer. Limited funds available for the accomplishment of maintenance have required the imposition of restrictive criteria to determine the portions of required work which will be undertaken. These restrictions include:
No maintenance in channels where project depths or depths required by current navigation are generally available for 80 percent of the completed channel widths;