In Pursuit Of Efficient Funding
“We share [Assistant Secretary of the Army for Civil Works] Michael Connor’s goal of attending fewer ground-breakings and more ribbon-cuttings,” said Spencer Murphy, chairman of the Inland Waterways Users Board.
The most significant news from the April 11 meeting of the Users Board was the Corps’ report of progress on its updates to the Capital Investment Strategy (CIS). Its goal is more transparency and to help the Corps move money to projects more efficiently. The 2025 Capital Investment Strategy is scheduled (tentatively) to be reviewed by Connor in September. Following that internal review, Connor’s office will submit it to the Office of Management and Budget for review and approval before the final report is transmitted to Congress. The Corps reportedly would like to finalize the CIS before the November elections, but that’s not certain.
The Corps intends to change how it categorizes projects. New categories would separate projects that are physically under construction and projects that have received construction funding but are still undergoing design, with no physical work ongoing. The distinction is important, since projects with active work on site are at a higher risk of budget and schedule impacts—and cost overruns—if needed funding is not received. For example, an active construction project might have contract options that expire. If a project doesn’t receive sufficient and timely funding, the Corps might then be forced to rebid the work covered by the option. This affects the bottom line, while potentially also having safety implications.
For a brief moment after passage of the 2020 Bipartisan Infrastructure Law (also known as the Infrastructure Investment and Jobs Act), the inland industry allowed itself to relax and even rejoice a little. Thanks to many, many years of hard work and cooperation, Congress had changed the funding formula for lock and dam projects to 65 percent from the federal treasury and 35 percent from the Inland Waterways Trust Fund.
The BIL also funded to completion several important lock and dam projects. But the Fed benchmark interest rate is currently at more than 5 percent, and the cost of construction continues to rise. Construction employment is tight, and labor and materials costs combine for a higher inflation rate in construction than for consumers.
In short, lock and dam appropriations from Congress are losing the race against inflation. The 2025 CIS, as proposed, hopes to counteract that trend, but only time will tell.
