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WILMINGTON DISTRICT SIDECASTER DREDGE REPLACEMENT

Senator JOHNSTON. What is the cause of the delay in beginning construction of the Wilmington District sidecaster dredge replacement?

General HEIBERG. The sidecaster dredge replacement has been delayed due to design changes. As originally conceived the dredge would have had the capability to dredge in more than one mode. This additional capability, it was felt, would make the vessel more efficient by increasing its potential utilization. However as the design progressed the Corps realized that a multi-mode dredge would not be as effective in any mode as one designed for a single mode of operation and directed that the design be changed to permit only sidecaster operation. The dredging requirements in the area to be served by this dredge are primarily those requiring sidecaster capabilities.

OTHER FLOATING PLANT

Senator JOHNSTON. It appears that many of the vessels identified for replacement in 1987 and 1988 under other floating plant replacement have been delayed or slipped by a minimum of one year. Could you provide a brief explanation of any delays related to specific vessels?

General HEIBERG. There are a variety of events which can affect the acquisition schedule of an item of floating plant including bid protests and design changes. The Corps requested approval to acquire three replacement survey boats in its FY 1986 program. It was estimated at that time that acquisition of the first one would be completed the following year. All three have slipped a year because the firm with whom the Corps had contracted to buy the first vessel declared bankruptcy. The Corps has now received delivery of the first and is testing it before proceeding with acquisition of the remaining two. The crane barge replacement for the Mobile District and the derrick boat replacement for the Huntington District have both been delayed as the result of design changes. Finally, acquisition of a towboat replacement for the Rock Island District which was also first programmed in FY 1986 has been delayed while the Corps explored the possibility of acquiring a used vessel at a considerable savings. The three available used vessels were tested and none was found to meet minimum specifications. Because of these slippages we have deferred all FY 1989 requested floating plant new starts.

COMMUNICATIONS REPLACEMENT PROGRAM

Senator JOHNSTON. Why has the expected program cost for the out years increased from $23,000,000 to $33,000,000?

General HEIBERG. Unanticipated requirements to replace existing telephone systems currently being leased by Corps activities located in GSA operated facilities have substantially increased the program cost for communications in the out-years. The GSA mandate requiring tenants to purchase telephone systems will also impact on future occupants of GSA facilities. In addition, advances in the areas of microwave transmission, fiber optics, multi - channel transceivers, and other areas of communications technology have provided opportunities to acquire equipment with capabilities and proven reliability that was not available a few yeas ago.

REVOLVING FUND

Senator JOHNSTON. The budget request includes an appropriation of $35,174,000 to the Revolving Fund in fiscal 1989. Provide a detailed breakdown of the request for the record.

General HEIBERG. The requested appropriation of $35,174,000 is for the Corps of Engineers Automation Plan ($22,904,000) and the replacement dustpan dredge ($12,270,000). Both are continuing items for which appropriations have been received in prior years.

MAJOR CHANGES TO CONSTRUCTION PROJECTS

Senator JOHNSTON. As with any large construction program, conditions change and unforeseen things happen which alter the Corps needs and schedules on individual projects.

Could you provide for the record a list of those projects where major changed conditions make it impossible for the full use of the funds provided for that project in FY 1988, along with a brief explanation of the problem and schedule for proceeding.

Mr. PAGE. Yes, I will provide the requested table for the record based on revocations to date in FY 1988 equal to or greater than $1 million.

However, it should be noted that it is still early in the fiscal year and the revocations reflect our expected delays on these projects as of the present time. Circumstances such as increased contractor earnings due to accelerated rate of operations, settled claims, or real estate deficiency judgements may increase the funding requirements for many of these projects. In a few cases, pending decisions may support restoration of previous revocations. Furthermore, any available funds surplus to the needs of listed projects will be needed to meet funding requirements of other projects. The large number of projects added by the Congress to the FY 1988 program and the unusually high rate of savings and slippage (13 %) exacerbate this need. We expect the delays on many affected projects, particularly those with LCA's under negotiation, to be overcome well before the end of FV 1988, so that there would be no reduction from the requirements reflected for each project in FY 1989.

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CONSTRUCTION PRODUCTIVITY ADVANCEMENT RESEARCH

Senator JOHNSTON. A new program for construction productivity advancement is to be initiated in 1988 with reprogrammed funds. Could you explain the purpose and need for this program?

Mr. PAGE. The need for the program stems from the fact that levels of construction research and development spending over recent years, both by government and private industry, have been deficient. The result has been a loss of competitiveness and productivity by the U.S. construction industry, not only in this nation but abroad. This has further resulted in unnecessarily high costs for both public and private construction. Cost savings from increased productivity would accrue directly to the Corps of Engineers water resource construction program, as well as benefit the construction industry and nation in general.

Senator JOHNSTON. You propose to reprogram $300,000 to determine the feasibility and potential for a joint program with the private sector. does take $300,000 to make this determination?

Why

Mr. PAGE. This is a new program and a new approach to Corps research and development. New research and development programs require effort and funds to develop. This particular program involves not only the normal costs associated with such a research and development program but entails efforts to make the program widely known to industry, professional and industry associations, academia, and other government agencies. Construction Productivity Advancement Research has to be explained to these potential participants because without their participation there can be no program since cost sharing is an essential feature of the program. It takes considerable effort to do this.

Senator JOHNSTON. Are the funds to be reprogrammed from within the Research and Development budget? will committee approval be required?

Mr. PAGE. The funds are to be reprogrammed from within the General Investigations Research and Development budget. We are desirous of working together with Congress on this proposal and toward that end, we have informed the committee of our plans to reprogram $300,000 from the seven program areas of the overall General Investigations Research and Development program.

Senator JOHNSTON. Provide for the record detailed breakout of how the funds are to be used, including a table breaking down the request by object classification.

Mr. PAGE. The reprogrammed funds will be used to develop the details of the proposed program, including identification and description of technologies the Corps believes need improvement and technologies the Corps has under development on which industry may wish to join in a cost sharing effort; detailed procedures for program management; detailed briefings and briefing materials to describe the program to industry; preparation and printing of brochures and other written material to describe the program; preparation and distribution of advertisements and direct mail material describing the program and announcing meetings regarding the program; and preparation of responses to Inquiries concerning the program. These activities require involvement of Corps research and development personnel, travel, printing and other direct and indirect costs which are shown in the following table by object classification.

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*Contracts, printing of brochures, advertisements, conference facilities

Senator JOHNSTON. What level of funding is included in the FY 1989 budget to continue this program?

Mr. PAGE. We have included no funds for the Construction Productivity Advancement Research program in the FY 1989 budget request, pending identification of research needs and sources of non-Federal financing through joint efforts by the Corps of Engineers and industry, professional associations, academia, and other representatives. If these initial efforts are successful, we would anticipate advising this subcommittee and Congress at some later date of our plans to continue the effort within the total General Investigations resources proposed in the FY 1989 budget.

Provide a funding profile for this activity for the next

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Mr. PAGE. It is not possible at this time to provide a funding profile over the next five years since we have not yet had the opportunity to interact with industry and other non- Federal representatives to determine if they will participate in the cost-shared Construction Productivity Advancement Research program and to what extent they may participate. We will be in a better position to make an estimate of such a funding profile after our initial efforts to inform industry and others of the Construction Productivity Advancement Research program are complete.

Senator JOHNSTON. This proposal appears to run counter to Administration efforts to have the private sector take over more of the activities performed by the federal government?

Mr. PAGE. In the area of technology transfer both Congress and the Administration support an active federal program to enhance productivity in U.S. industry. Through the Stevenson-Wydler Technology Innovation Act of 1980, Public Law 96-480, as amended by Technology Transfer Act of 1986, Public Law 99-502, Congress has authorized cooperative efforts between the private sector and the Federal Government to meet these needs. The legislation recognized that: no comprehensive national policy exists to enhance technological innovation for commercial and public purposes. There is a need for such a policy, including a strong national policy supporting domestic technology transfer and utilization of the science and technology resources of the Federal Government. P.L. 96-480, as amended by P.L. 99-502, Section 2.8.

In his April 10, 1987 statement accompany Executive Order 12591, implementing the Act, President Reagan stated: I believe a vigorous science and technology enterprise involving the private sector is essential to our economic and national security as we approach the 21st century.

The Corps of Engineers Construction Productivity Advancement Research Program is 'a comprehensive attempt to support the goals of the Act in the specific area of construction related technology. The Construction Productivity Advancement Research Program is designed to facilitate: technology transfer from our laboratories; and the utilization of the science and technology resources of the Corps of Engineers. Studies by the National Research Council, the Office of Technology Assessment, and others have shown

Related Land Resources Implementation Studies, dated March 10, 1983, Federal water resource agencies use normalized commodity prices issued periodically by the Department of Agriculture to evaluate the National Economic Development or NED agricultural benefits of water projects.

In the past, these prices included an upward bias, reflecting the impact of the Government's own price support programs for surplus crops. In the 1970's, this was small. Today, as all of us are aware, the bias has become significant. This results in project benefits from production of surplus crops being overestimated, making uneconomic projects appear economically justified.

Department of Agriculture is now estimating the surplus commodity prices free of subsidy effects. Agriculture first promulgated a list of its new normalized prices on March 31, 1987.

In implementing the new prices, project outputs or benefits, from "program commodities" would be evaluated using the program-free prices. Outputs from "non-program commodities" would be evaluated using the prices based on market conditions with government programs. Program commodities are defined as commodities for which a Department of Agriculture acreage-reduction, price-suport, or deficiency-payment program is in effect for the year when the normalized prices are promulgated.

Normalized prices based on market conditions would be used for all commodities, both program and non-program, to establish the "with" and "without" project conditions, as called for under the Principles and Guidelines, and calculate a farmer's or irrigator's "ability to pay," where required to make this calculation under current law.

PROJECTS IMPACTED

Senator JOHNSON. What projects will be impacted in fiscal 1988 due to postponement of economic evaluation and how much funding originally envisioned for use of these studies will not now be used ?

Mr. PAGE. We are currently in the process of providing implementing guidance on postponing economic evaluation, to field offices and do not have a count on the number of impacted studies. No change in funding requirements is expected since the economic evaluation is merely being postponed to FY 89 and other study activities may be accelerated during the remainder of FY 88.

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