COMMITTEE ON APPROPRIATIONS

JERRY LEWIS, California, Chairman

FRANK M. CUSHING, Clerk and Staff Director

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ENERGY AND WATER DEVELOPMENT

APPROPRIATIONS FOR 2005

THURSDAY, MARCH 3, 2005.

DEPARTMENT OF THE ARMY

WITNESSES

JOHN PAUL WOODLEY, JR., OFFICE OF THE ASSISTANT SECRETARY OF THE ARMY (CIVIL WORKS)

LIEUTENANT GENERAL CARL STROCK, CHIEF OF ENGINEERS

OPENING STATEMENT

Mr. HOBSON. Okay, we will come to order.

Before I start, I would like to welcome John Blazey to our Committee. He is going to be doing the water accounts. He comes with a lot of experience from the front office and he knows how to manipulate all this stuff as good as anybody I know. So it will be interesting to see how well we do.

Let me start by welcoming everybody. And I want you to know, we have our Corps cups up here, guys, so we are all ready. Even the Secretary has one.

This is the first hearing of the Energy and Water Development Appropriations Committee. And we have one new member I should announce. Mr. Rehberg is with us today. He is our newest member of our Committee, and being from Montana, I am sure he is going to have a lot of interest in this Committee. I am sure he is going to make a great contribution to the committee. We welcome you. This is the first hearing of the Energy and Water Development Appropriations for the 109th Congress. All of us were here, except Mr. Rehberg, as we talked about before.

We are going to have several weeks of hearings scheduled before our Subcommittee. These hearings are an opportunity for the members of the Subcommittee to learn in depth about the programs and activity of the agencies under our jurisdiction and to become the full Committee's experts on energy and water programs. And while it is important for each of us to be concerned about the activities of the agencies under our jurisdiction as they affect our particular congressional districts, I encourage each of us to engage in more general oversight activities-which I am going to talk about later— so that we can ensure collectively that scarce Federal resources are expended officially and wisely. In fact, it is my desire that once we get through our bill, I intend to have additional oversight hearings.

This morning we have before us the Acting Secretary_of_the Army for Civil Works, the Honorable John Paul Woodley, Jr., and

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the Chief of Engineers, Lieutenant General Carl Strock, and Major General Riley.

The Fiscal Year 2006 budget requested for the Army Corps of Engineers Civil Works Program totals $4.5 billion, a reduction of about $150 million from the Fiscal Year 2005 levels, after adjusting for one-time emergency supplemental funding. The budget includes a proposal that reclassifies certain receipts of the Power Marketing Administration, which creates a hole of $181 million in the request for the Corps that may be very difficult to fill, given the backdrop of deficit reduction and scarce Federal resources.

The Administration applies a new performance-based ranking system in an effort to focus scarce resources on the completion of high-value projects. I appreciate the work of the Administration, especially Josh Bolten, the Director of Office of Management and Budget. It is fairly unusual for me to publicly thank them for anything, but I want to thank them for developing a rationale for focusing the limited Federal resources on finishing the most important projects in a timely manner. This proposal included in the request is a good place to start, but we will really learn today it has certain limitations that present some problems to us. But we do need to continue to work together to ensure that we spend scarce Federal resources efficiently, honor our commitments to project sponsors, and seek better ways to get more bang for our buck.

I said last year, and I want to reiterate this again this year, that the Civil Works Program needs to be more than a random assortment of projects supported by the Administration and members of Congress. The Civil Works Program must be a coherent program of interrelated projects. To this end, the Corps needs to step up to the plate, take some initiative, and articulate a bold, clear, longrange development plan. That road map must comport with the Corps's mission statement and strategic plan and should serve as a guide for future Corps and Congressional Budget decisions.

These reflections should not be viewed as threatening to the Corps, but rather as "tough love." Critical evaluations are opportunities to change and to grow. It is not a coincidence that the mascot of the Army is the mule, which is stubborn and resistant to change. Collectively, we can advance the Corps, and I look forward to our continuing work with the members of this Subcommittee, the Office of Management and Budget, and the Corps in these challenges.

And finally, we need to examine the ways in which the Corps manages its portfolio generally, and specifically with requested congressionally directed projects, its use of continuing contracts, and its implementation of the Subcommittee's guidelines-all in a concerted effort to ensure the effective management of appropriated funds and the timely delivery of critical infrastructure projects. In particular, the Subcommittee remains concerned regarding the execution of project funds, and particularly those funds for Congressionally directed projects. It appears as though massive amounts of monies are moved throughout the Corps without the knowledge or approval of the Subcommittee and for which, in the aggregate, significant IOUS are created. The Corps may be writing checks each year that they cannot cover in a given year and wait for succeeding Appropriations to make up the difference.