Detailed Information on the
Inland Waterways Navigation Assessment

The Budget places priority on maintaining high commercial use segments.

The Corps is developing a new economic model so that it will be able to estimate properly the benefits of a range of possible improvements on the Upper Mississippi River and Illinois Waterway system.

The Corps is implementing Total Average Annual Benefits (Present Value) realized by construction projects completed in a Fiscal Year as a Program performance measure. See comments.

The Corps has initiated Risk and Reliability Metrics for inland waterways in collaboration with stakeholders and users at 5 waterway systems (GIWW, Ohio River, Mississippi River, McClellan-Kerr and Alabama-Coosa).

Measure: Percent of time that all Inland Waterways segments with high commercial activity are available when customers want to use them.

Explanation:

Measure: Percent of projects exceeding facilities condition index (FCI) standard. This measure assesses agancy's performance in meeting goals of the President's Real Property Asset Management Initiative.

Explanation:Measure is under development. The Facility Condition Index Assessment policies and procedures are being developed as part of the agency's integrated program approach to accomplishing the President's Real Property Asset Management Initiative. It is premature to establish performance targets until baseline information is acquired.

Measure: Measures under development

Explanation:

Is the program purpose clear?

Explanation: The purpose of the program is to operate, maintain, and upgrade (either through major rehabilitations or new investments) the 11,000 mile Inland Waterway Navigation System in order to provide water transportation, an efficient, low cost method of commercial transport.

Evidence: The annual lock traffic is 2.7 million barges and 600,000 recreation vessels. Inland waterway moves 630 million tons. Waterway share of freight shipments in the U.S. 17% is in tons and 20% in ton-miles. About 16% of all domestic coal and 50% of US grain bound for export move on inland waterway.

Does the program address a specific interest, problem or need?

Explanation: Corps navigation facilities provide efficient transportation at low cost to shippers. The savings are passed to the nations' consumers and producers.

Evidence: Data suggest that water transportation is more fuel-efficient than shipment by rail or truck. On average, inland waterway barges move one ton of cargo 514 miles per gallon of fuel, compared with 202 miles for rail or 59 miles for truck. A single 1500-ton hopper barge holds the equivalent cargo of 15 rail cars or 58 trucks. This efficiency results in average transportation cost savings of $10.70 per ton to shippers and consumers.

Is the program designed to have a significant impact in addressing the interest, problem or need?

Explanation: Federal operation, maintenance and management is critical for a system that is open to all users and, unlike railroads, is managed for multiple national objectives (navigation, flood damage reduction, hydropower, water supply, recreation, and environmental stewardship) that transcend state boundaries. Private operation of the system by users would create conflicts with other water resource management objectives. State operation would be impractical, leading to conflicts between upstream and downstream states with different water management priorities. States also vary in having the financial resources for planning, design, construction, operation and maintenance of new and existing water resource infrastructure. Reservoir storage for navigation and other downstream purposes may occur in states without direct access to or financial benefit from navigation.

Evidence: The vast majority of the inland waterway system is a single network comprised of 11,000 miles of rivers, canals, and intracoastal waterways that pass through and between 21 states. In FY 99, 3.4M vessels (towboats, barges and recreational craft) passed through Corps locks in over 735 K lockages.

Is the program designed to make a unique contribution in addressing the interest, problem or need (i.e., not needlessly redundant of any other Federal, state, local or private efforts)?

Explanation: Maintaining investment in facilities and operating inland waterways ensures continuation of the efficiencies of a low cost method of transport. These efficiencies make the nation's consumers and producers better off by reducing the cost of transporting basic commodities, contribute to the economy of the nation's heartland, and facilitate international trade. There is only one Inland Waterway System. It is not redundant of state, local or private efforts. The Corps has attempted to transfer facilities with little commercial traffic to States, but has had limited success meeting the financial demands of the potential new owners.

Evidence: Over $73 billion in cargo move on inland waterway shipped from 38 states. Recent data show that internal traffic accounts for 59% of all domestic waterborne commerce tonnage. Coastwise tonnage is 21% of the total, likewise 11% and intraport and inter-territory 9%.

Is the program optimally designed to address the interest, problem or need?

Explanation: The Corps operates and maintains the Inland Waterway System, within its existing authority, from the perspective of the national interest, pursing multipurpose management objectives, including navigation, hydropower, water supply, recreation, flood damage reduction, and environmental stewardship. Staffing at locks is at minimum levels. Parts of the system experience congestion and delays from seasonal traffic peaks due to aging locks that are undersized for modern tow configurations. The Corps works closely with the towing industry to manage these delays through industry towboat-assist measures and improved crew training, and in the long-term, through economically justified investments in lock modernization. However, there are justified projects awaiting construction. Management options, such as lock scheduling and/or lockage fees, and reducing operations on low-use segments, have not been embraced by either Corps or by user groups.

Evidence: The National Academy of Science recommended that the Corps consider lock scheduling and lockage fees in both operating the system and evaluating new investments. Some believe that Corps overstates the economic importance of many low-use navigation segments. When viewing the construction backlog, users point to the surplus in the Inland Waterway Trust Fund, which is funded by diesel fuel taxes levied on them. This fund is only available to appropriate half of cost of eligible construction projects. Each year, more funds come into the fund than are spent for this purpose. However, each year, general funds provide the other half of construction plus all of the operating and maintenance costs.

Does the program have a limited number of specific, ambitious long-term performance goals that focus on outcomes and meaningfully reflect the purpose of the program?

Explanation: The Corps' long term goal is to provide efficient movement of waterway commerce in light of transport demand--keeping barge waiting times down at locks and to keep the entire system (high-use and low-use segments) in running order.

Evidence: Basically, this goal is to maintain the status quo. It is indistinguishable from the annual goal. The Corps is working with OMB to develop specific, long-term goals that focus on outcomes.

Does the program have a limited number of annual performance goals that demonstrate progress toward achieving the long-term goals?

Explanation: The Corps' performance goal for investment is to make economically efficient investments to support the needs of waterborne commerce. The Corps invests in projects where benefits exceeds cost. Its goal for each project under construction is to keep costs down sufficiently to maintain a benefit-cost ratio greater than one. Also, the Corps reports total expected annual benefts from projects under construction. The Corps operating goal is to maintain a high degree of system availability. This goal is reflected in its annual performance targets, which are measured in terms of (1) the percent of time that system facilities are available for barge users when the want to use the facilities and (2) the ratio of costs for breakdown maintenance to total costs of scheduled maintenance. The Corps goals are to maintain a high degree of facility availability and to minimize the ratio of breakdown to preventative maintenance expenditures.

Evidence: The goal of the investment component is to undertake investments when benefits exceed costs and to hold construction costs down sufficiently to keep expected benefits less than costs. This is not an ambitious cost-containment goal. The higher the benefit-cost ratio the more room there is for cost growth. The Corps should devise a goal that focuses directly on cost-containment. Also, the Corps reports expected annual benefits of projects under construction, but does not explicitly manage its construction portfolio to maximize such benefits. One operating goal is to maintain high degree of availability of its facilities. Recently, the Corps has set a more ambitious goal for high-use waterways than for low-use waterways. This encourages better use of resources. The goal of minimizing the ratio of breakdown maintenance to preventative maintenance is not an outcome measure.

Do all partners (grantees, sub-grantees, contractors, etc.) support program planning efforts by committing to the annual and/or long-term goals of the program?

Explanation: The Corps inland waterway navigation system users are represented by the Inland Waterway Users Board. It recommends priorities for new system increments and major rehabilitations. Highest priorities are accorded to those projects that reduce waiting times at key locks.

Evidence: For 2002 the Inland Waterways User Board made recommendations on 4 studies, 5 projects under design, 6 projects under construction, and 5 major rehabilitations. The Board has not supported operational changes and has opposed fees.

Does the program collaborate and coordinate effectively with related programs that share similar goals and objectives?

Explanation: The Corps is a member of a multiagency, intermodal (trucking, rail, port and waterways) team addressing what is needed to meet the nation's navigation (Marine transportation System) needs by the year 2020.

Evidence: None

Are independent and quality evaluations of sufficient scope conducted on a regular basis or as needed to fill gaps in performance information to support program improvements and evaluate effectiveness?

Explanation: For each of the major components of the Inland System, the Corps identifies problems and conducts economic feasibility studies of new facilities or on navigation facilities needing rehabilitation. Such studies include system effects and are conducted by the Corps as part of open process that includes stake holders. Independent evaluations do not occur on a regular basis. In one such evaluation, the National Academy of Science (NAS) criticized the Corp's Upper MS navigation study. It commended the Corps for attempting to use a new economic model for evaluating inland waterway benefits, but had serious problems with assumptions and data used.

Evidence: Ongoing Corps regional studies have identified at least another 16 projects as likely candidates over the next decade at a cost of over $1.1 billion. The Corps responded to the NAS Upper MS study by substituting an older model that appears to overstate benefits by not considering the effect on demand of alternative product destinations or congestion. Subsequently, Congress authorized the Corps to contract with the NAS on options for incorporating external review into its planning process. This report recommended regular external reviews and was forwarded to Congress in July 2002 and the Corps is considering its findings.

Is the program budget aligned with the program goals in such a way that the impact of funding, policy, and legislative changes on performance is readily known?

Explanation: The Corps receives its appropriations in accounts that reflect the life cycle of its projects --general investigations (reconnaissance & feasibility studies), construction, and operations and maintenance rather than by business purposes -- navigation, flood control, ecosystem restoration, recreation, etc. These accounts support all business purposes. The Corps breaks out appropriations by business line and aligns them with performance objectives in its annual performance plan.

Evidence: The impact of alternative funding levels on navigation and other business lines is provided in the Corps' annual budget request.

Has the program taken meaningful steps to address its strategic planning deficiencies?

Explanation: The Strategic Plan is continually reviewed and revised. It includes all interested parties in the mix of commentators through publication on the "WEB"

Evidence: Meetings with interested parties and with principals from other agencies & development of specialized training to improve project development processes

Are acquisition program plans adjusted in response to performance data and changing conditions?

Explanation: Corps inland navigation system has a performance goal of system availability and development and construction of justified rehabilitations or new facilities. Definable "deliverables" relate to O&M packages and to completion of a construction project (either rehab or new project.)

Evidence: Average waterway O&M costs/ton mile is 1.6 mills compared to 3.9 mills for railway. Waterway capital costs /ton mile is 1.7 mills compared t o 2.6 for railway. Data are needed to compare performance with systems in Europe and Latin America.

Has the agency/program conducted a recent, meaningful, credible analysis of alternatives that includes trade-offs between cost, schedule and performance goals?

Explanation: In its economic analyses of proposed new investments, the Corps assumes that the projects could be built on an efficient schedule, which may not be achievable due to funding constraints. The Corps recognizes such funding constraints in its annual budget request in presenting the impact of alternative 10-year schedules on costs and benefits.

Evidence: Regarding operation and maintenance, the Corps has analyzed the Inland Waterway System for cost savings since 1997 and has conducted a benefit-cost analysis. The benefit- cost analysis concluded that all but one segment was justified. However, the analysis is based on national averages and the findings may not be applicable to low-use segments. Additional study of these segments is required to improve outputs and performance.

Does the agency regularly collect timely and credible performance information, including information from key program partners, and use it to manage the program and improve performance?

Explanation: The Corps collects physical performance data and uses it to manage facilities. Other measures are focused on financial activities; e.g., expenditures on schedule, activities completed on schedule.

Evidence: The Corps collects data on lock outages, ship grounding, shoaling, and water levels and aggregates these data into overall "availability."

Are Federal managers and program partners (grantees, subgrantees, contractors, etc.) held accountable for cost, schedule and performance results?

Explanation: Projects that "slip" in execution have funds reprogrammed to meet overall program obligations and expenditure goals. Managers are accountable for schedules and for having projects open and available for traffic.

Evidence: None

Are all funds (Federal and partners') obligated in a timely manner and spent for the intended purpose?

Explanation: Funds for each FY are scheduled to be expended in the FY received. Non-Federal funds are usually requested in the year needed and usage is scheduled accordingly.

Evidence: The Corps execution rates for General Investigations, Construction, and O&M for FY 2001 were 98%, 100%, and 100%. There are no data by business purposes.

Does the program have incentives and procedures (e.g., competitive sourcing/cost comparisons, IT improvements) to measure and achieve efficiencies and cost effectiveness in program execution?

Explanation: (1) Each project undergoes value engineering analysis to identify ways to construct project at less cost and more efficiently. (2) The principle of cost sharing with non-Federal project sponsors, represented through the Inland Waterway User Board, results in a strong incentive to achieve cost efficiencies and an effective project.

Evidence: None

Does the agency estimate and budget for the full annual costs of operating the program (including all administrative costs and allocated overhead) so that program performance changes are identified with changes in funding levels?

Explanation: Corps budget accounts (e.g.,General Investigations, Construction, and Operations and Maintenance) contain all annual costs for the studies, construction, and operation and maintenance associated with navigation facilities. Appropriate indirect, overhead, and administrative costs are included in these estimates. Proposed spending for each navigation project is identified in Congressional Justifications. Project costs are budgeted incrementally (both studies and construction) with the full costs budgeted over a period of years. This procedure is pursuant to 33 US Code 621 and authorized in the River and Harbors Act of 1922.

Evidence: Corps regulations govern calculation of indirect, overhead, and indirect rates and charges. The Corps does not account retirement costs funded through the Office of Personnel Management, but has consistently allocated costs among construction projects. The Corps absorbs executive direction (headquarters, etc) in the general expenses account. All other costs are allocated to projects.

Does the program use strong financial management practices?

Explanation: The Corps has a real time database (CEFMS) which tracks appropriated, scheduled, and expended funds. Projects which are behind schedule may have funds reprogrammed to other projects. The Corps has been making substantial progress in producing sound annual financial statements. Its major obstacle is in determining the original cost of existing plant, property, and equipment, which affects its balance sheet.

Evidence: None

Has the program taken meaningful steps to address its management deficiencies?

Explanation: The Corps uses yearly evaluations at the national, regional, and field operations levels to identify and correct management deficiencies.

Evidence: Management deficiencies are identified through a proven internal control procedure developed by the Corps management audit program and governed by an Engineering Regulation. This management control system is common to all business programs in the Corps. This program and yearly evaluation is applied at the national program level, the regional level, and the field operations level. There are mandatory corrective actions as a result of this program.

Does the program define the required quality, capability, and performance objectives for deliverables?

Explanation: Corps inland navigation system has a performance goal of system availability and development and construction of justified rehabilitations or new facilities. Definable "deliverables" relate to O&M packages and to completion of a construction project (either rehab or new project.)

Evidence: Average waterway O&M costs/ton mile is 1.6 mills compared to 3.9 mills for railway. Waterway capital costs /ton mile is 1.7 mills compared t o 2.6 for railway transportation. Data are needed to compare performance with systems in Europe and Latin America.

Has the program established appropriate, credible, cost and schedule goals?

Explanation: When formulating proposed investments, the Corps assumes schedules that do not reflect likely funding constraints. When total project costs exceed estimates by 20% in real terms, the Corps will examine the discrepancy. The Corps may estimate costs well, but it does not routinely collect data that would support an assessment of the overall quality of its cost estimates. Corps regions are developing plans for replacement of aging navigation facilities. Although there is no formal national plan, the Inland Waterways User Board recommends nationwide-priorities.

Evidence: Corps FY budget data contains overall expenditure and completion schedules. Internal "operating budget" at each District breaks out expenditure schedules by month. Recently, the Corps has adopted a performance measure where it compares the estimated costs of completed projects with the projected benefits to ensure that the project's benefit cost ratio is maintained. This is another way of monitoring costs and should prove useful.

Has the program conducted a recent, credible, cost-benefit analysis that shows a net benefit?

Explanation: The Corps continually analyzes new investments and major rehabilitations and recently analyzed current operations. Regarding new investments, the Corps (per the Principles and Guidelines) uses efficient construction schedules in its benefit-cost analyses that my not be implementable due to funding constraints. Also, the National Academy of Science evaluated the Corps analysis of the Upper Ms River Inland Navigation Project and concluded that its economic model was an improvement over current practice, but had some theoretical and data problems. The results of this study raise questions about current Corps inland navigation benefit-cost studies. Studies of new investments are public and are reviewed within the Corps, but are not independently reviewed. The operating study was not independently reviewed.

Evidence: The average benefit-cost ratio for new projects and major rehabilitations is 3 to 1, which the Corps characterizes as robust investments. But these ratios do not account for the the possible effects of constrained funding causing construction delays. The Corps benefit-cost analysis of its waterway operations concludes that there is a 14.1 to 1 benefit/cost ratio and operating all but one segment is justified. The benefits (transportation savings) are $6.584 million and the average costs are $477 million. The study assumes that the transportation savings for each commodity shipped is equal to the average transportation cost savings for that commodity. This finding may not be correct for low-use segments of the waterway.

Does the program have a comprehensive strategy for risk management that appropriately shares risk between the government and contractor?

Explanation: The Corps does not use performance-based contracts as often as it should. The way in which it uses "continuing" contracts can constrain the ability of the government to allocate available funds for the following year to a higher-priority project or purpose.

Evidence: The Corps mostly uses fixed-price contracts that include safeguards to cover unsatisfactory performance.

Has the program demonstrated adequate progress in achieving its long-term outcome goal(s)?

Explanation: The Corps' long term goals are (1) to invest in modern, efficient transportation systems to improve commodity movement by keeping barge waiting times down at locks and (2) to keep the system in running order. The long term goals are indistinguishable from the annual goal.

Evidence: The Corps has made investments to increase transport efficiency and decrease waiting times and has operated and maintained the system. Since 1990, twelve new waterway lock chambers on eight rivers have opened to move traffic more efficiently, but there is congestion at key locks. The Corps has kept the system in running order, but maintenance backlogs have increased. FY03 and FY04 budgets proposed to give maintenance priority to high-use segments over low use segments.

Does the program (including program partners) achieve its annual performance goals?

Explanation: (1) Annual Investment goals: to produce net annual benefits and complete navigation projects meeting a benefit-cost investment criterion. (2) Annual operating goal: make facilities available when the tows and barges want to use them and minimize ratio of breakdown maintenance expenditures to preventive maintenance expenditures (new measure)

Evidence: The Corps continues to make economically justified investments that will produce net benefits, but it did not complete any inland waterway projects in FY 01 and FY02. It does not allocate construction funds to maximize program net benefits. The Corps met its system FY01 availability goals for the entire waterway, but system available data are unavailable for FY 02. The Corps' proposed new measure (the ratio of breakdown expenditures to preventative maintenance expenditures) is not an outcome measure.

Does the program demonstrate improved efficiencies and cost effectiveness in achieving program goals each year?

Explanation: Key investments have enabled system throughput to rise over time to meet growing demands. The results of a cost-savings initiative for operations have been implemented Corps-wide. New technologies have been applied to reduce the duration of scheduled and unscheduled outages. Beginning in FY 2002, budgets have proposed redirecting funds from low-use segments (<1 million-ton-miles) that provide lesser economic return to high-use (>1million ton segments that provide higher economic return for the constrained O&M dollars.

Evidence: A Development Program to reduce costs has produced several innovations. "Float in" (components constructed of site and hauled in by water) and "in the wet" (working on construction in the water) technology is expect to save a total of $74 M at the new Braddock Locks and Dam on the Monongahela River (PA) and the Olmsted Locks and Dam on the Ohio River. The McAlpine Lock incorporates roller compacted concrete for lock chamber facilities and is expected to save $51M during its construction. J.T. Myers Lock extension uses "in-the-wet" construction and is expected to provide $22M in construction cost savings. A new gate lifter (the SHREVE) can reduce the "down time" for lock miter gate replacement from 30 days to 7 days.

Does the performance of this program compare favorably to other programs with similar purpose and goals?

Explanation: Corps inland waterway navigation facilities provide an alternative method of transporting non-perishable goods, including movement of military equipment and supplies..

Evidence: Published data confirms that Inland Waterway compares favorably with domestic competitors, but data for international waterway comparisons are needed.

Do independent and quality evaluations of this program indicate that the program is effective and achieving results?

Explanation: The Corps performs economic feasibility analyzes of investments in new facilities and major rehabilitations. New investments are reviewed through the National Environmental Policy Act (NEPA) process by the public, interest groups and other Federal agencies. The National Academy of Science criticized the Corps's economic analysis of one proposed inland waterway investment suggesting changes to the Corps' overall approach may be appropriations. Regarding operations, the Corps performed a benefit/cost analysis to justify current operations of total inland waterway program.

Evidence: The Corps' overall cost benefit analysis using figures from between 1995 and 1999 show an annual cost savings (benefits) of $6,583.6 million at an average O&M cost of $476.57 million for a benefit to cost ratio of 13.81. This finding is applicable to the overall program, but not to the low-use segments.

Were program goals achieved within budgeted costs and established schedules?

Explanation: Some cost increases and schedule slippages occur for the Inland Waterway construction program. Cost per ton-mile of operating some tributaries is high relative to mainstream facilities. Nevertheless, Inland Navigation's Operation and Maintenance Program has generally stayed within budget and met annual schedules.

Evidence: Users monitor construction costs because they share them. High operating costs do not concern partners because they do not pay. Projects are authorized with a cost-ceiling that allows for a maximum of a 25 percent increase in constant dollars. Congress must approve projects exceeding the maximum.