(N) Sinall Navigation Projects not (FC) Small Projects for Flood Control and (FC) Recreation Facilities, Completed Projects 90,000 750,000 1,000,000 Gavins Point Dam and Lewis and Clark Lake, Nebr. & S. Dak. (Relocation of Niobrara, Nebr.) 1,750,000 100,000 732,000 1,150,000 100,000 200,000 200,000 100,000 $4,332,000 200,000 45,649,000 Mr. EVINS. $40.5 million of these reserve funds are scheduled for release in fiscal year 1972. What will be the effect on the completion schedule of these projects as compared with the plan approved by Congress last year? General CLARKE. For the new planning, land acquisition, and construction starts added by Congress, this would essentially mean a 1-year delay. There also were 14 continuing construction projects on which the amounts added by Congress would have permitted an advance in schedule of from a few months to several months. Establishment of the budgetary reserve prevented these advances in schedules. However, other factors such as the large overall slippage reduction, and delays in planning or local cooperation would have prevented the contemplated advances in schedule on some of these projects. Mr. EVINS. At the time of the freeze there were some budgeted items included in this freeze, were there not? General CLARKE. Yes, sir. Mr. EVINS. How many of those, Mr. Cohen? Nineteen? Mr. COHEN. I believe there may have been more than that. The idea here was to hold up starting of all projects until the 1972 budget was formulated. Once that was formulated, all the money except this $45.649,000 was released. Mr. EVINS. Were not these budgeted items later released? Mr. COHEN. Yes, sir. Mr. EVINS. The only ones being held up now are the ones added by Congress? Mr. COHEN. That is right, yes, sir. Mr. EVINS. Again, what is the Corps going to do about this? General CLARKE. Of the $45,649,000, all except $5,145,000 are planned for release in fiscal 1972. Mr. EVINS. They have been held up a year, the others will be- PROJECTS SCHEDULED FOR RELEASE AFTER FISCAL YEAR 1972 Mr. EVINS. It is noted that $5.1 million of the funds in reserve involving nine projects, are not scheduled for release until after fiscal year 1972. Please outline the projects involved and indicate the basis for delaying these projects even beyond next fiscal year. General CLARKE. The nine projects on which budgetary reserve will not be released until after fiscal year 1972 and the reasons are as follows: 1. Oak Orchard Harbor, N.Y. 2. Monterey Harbor, Calif. 3. Irondequoit Bay, N.Y. These three projects are being deferred consistent with the administration's proposed legislation for increased local participation in the operation and maintenance of recreational boat harbors. The deferral is without prejudice to the specific projects and, at such time as the legislation is enacted, consideration will again be given to starting these projects as well as other recreation boat harbors. 4. Lafayette Lake, Ind. This project is being deferred due to expressions of local opposition. 5. Lukfata Lake, Okla. As a result of the scenic river controversy on Glover Creek and the actions required to comply with the National Environmental Policy Act of 1969, further studies are underway. It would be premature to proceed with construction until after fiscal year 1972. 6. Oakland Harbor, Calif. 7. Burnside Lake, W. Va. 8. Mermentan River, La. (Bridge). 9. Chariton-Little Chariton River, Mo. These four projects are considered to be low priority and are being deferred for that reason. JOBS CREATED IF FUNDS RELEASED Mr. EVINS. How many jobs would be created if the funds in reserve were released to initiate construction on the projects involved? General CLARKE. That would amount to almost a thousand manyears of employment, sir. COST OF DELAY Mr. EVINS. Has the Corps arrived at any figures as to what this delay will cost by way of increased construction costs and loss of benefits? I would like for you to elaborate on this. The committee is very much interested in knowing how much this delay is going to cost by way of increased costs. If you do not have this, supply it in more detail for the record. General CLARKE. Very briefly, and we may want to amplify this for the record. If we base it on the annual benefits that will be received from these projects, it is estimated there will be a loss of $206 million in benefits from the budget's slowdown as a whole. Mr. EVINS. For 1 year? General CLARKE. Some of these are less than a year and some are more than a year. I am not speaking with respect to this $45 million reserve. We have taken the schedules that we had last year and the schedules we have this year, and the loss in benefits we estimate would be about $206 million. Mr. EVINS. The loss in benefits is $206 million? General CLARKE. That is right. Mr. EVINS. What will be the increased construction costs because of the delay? General CLARKE. We anticipate that the slipped schedules, based on forecasting cost escalation for the delay period, will cost about $92 million additional, sir. Then of course we also have increased Government time on these contracts for supervision and inspection; that will run about $9 million. These are the costs that we have. The much more difficult area is how much added costs there are to contractors from stretching out schedules as compared to what might have been a more compressed schedule. Mr. EVINS. The year's delay will mean a minimum of $307 million more costs, if we total your figures? General CLARKE. That is right; if you consider the benefits as a cost. Mr. RHODES. Is the $206 million an annual benefit? General CLARKE. It is the one-time benefit that would be lost because of funding delays on these projects, for whatever period they are delayed. Some are delayed a few months, some for a year. Mr. EVINS. Please provide a breakdown of the $307 million by division. (The information follows:) Mr. DAVIS. I think in order to complete the record here, Mr. Chairman, these have to be estimates, of course, but I think we would have to, in order to have this figure be at all meaningful, include offsets because of the interest that would have to be paid and because this is going to be all borrowed money; and second, the probable impact of inflation that would be caused by virtue of increased Federal spending at this particular time. So I think those are legitimate offsets. General CLARKE. We could do the first part, but Mr. DAVIS. I am not sure about the other. That is why I mention this. We ought not to say this is $307 million as an added cost to the Government. General CLARKE. Particularly with respect to trying to estimate the escalation of construction costs, these are forecast trends, but we cannot possibly predict what these would be. ESTIMATED LOST BENEFITS AND COST OF DELAYS AT CONSTRUCTION, GENERAL CONSTRUCTION PROJECTS DUE TO FISCAL YEAR 1972 BUDGET AMOUNTS 1 Based on experienced ENR increases for period of time of delay of contract awards. INCREASE IN CONSTRUCTION COSTS Mr. DAVIS. What sort of an increase in the cost of construction have you built into your estimates for this year? For the last few years you have been including a factor here based upon, the Engineering News-Record? General CLARKE. Yes, based on those indices. The last year it was 10.2 percent. That is for fiscal 1970. So far in the 7 months of this year, it has been 3.8 percent. We are just citing now from the Engineering News-Record. Mr. COHEN. What would be reflected in our cost estimates would be the increase to July 1970, or the 10.2 percent that General Clarke mentioned. Mr. DAVIS. 10.2 percent increase since the prior year? Mr. COHEN. Since the prior year. In other words, our estimates before you are based on July 1970 price levels. We cannot build them in as we go along. We build them in once a year. Mr. RHODES. The 10.2 percent for calendar 1970? General CLARKE. For fiscal 1970. Mr. RHODES. Thus far for fiscal 1971, the comparable figure is 3.8? General CLARKE. For 7 months. PROJECT DELAYS Mr. EVINS. I note from your statement that the budget request provides for continuing work on going projects at a considerably slower rate than would be required to meet the schedules presented to the committee last year. How many projects are involved, and what will be the extent of the new delays that are planned? General CLARKE. The budget level for fiscal year 1972 created delays on 92 projects of from 3 months to 1 year. Mr. EvINS. What additional funds would be required to restore these projects to last year's schedules? General CLARKE. Mr. Chairman, not all of the schedules can be restored on the 92 projects because of the contract award times required as against the date we could expect funds to become available. In some cases we have probably already passed the time when those awards need to be made. We can regain part or all of the delays on 58 of these projects and this would require a total of $126 million in addition to the budget. Mr. EVINS. Please provide a project breakdown for the record. How many jobs would be created next year if the higher level of funding was available? General CLARKE. We estimate that the $126 million additional funds would provide 3,000 man-years of employment. (The information follows:) |