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Feature September/October 2009 Storm Surge: The Ongoing Evolution Of the Army Corps of Engineers Post-Katrina rebuilding and the Mideast wars have pushed the Corps to tackle new delivery methods By Angelle Bergeron
The U.S. Army Corps of Engineers has some new project-delivery tools in its arsenal, but obtaining them and learning to use them effectively sometimes has seemed like an uphill battle. Still, evolution of delivery methods in times of need, rather than revolution, seems to have been the best course. The Corps’ tools must constantly change to fulfill its mission to “provide public engineering services in peace and war,” and the changes are “more evolutionary than revolutionary,” says Chris Jahrling, vice president of Turner Construction Group’s government practice in Washington, D.C. One of the Corps’ struggles has been with design-build project delivery. Turner has been performing military construction work since 1917, and working with the Corps since the 1970s. Turner, a member of multiple AGC chapters, also has been doing design-build since the company’s inception and “as a bona fide delivery method in the market- place for the last 25 years,” Jahrling says. But the Corps was limited to only a couple of design-build projects per year until the Federal Acquisition Regulations were changed in the mid-1990s, says Richmond Kendrick, deputy of program execution for the Corps’ Hurricane Protection Office in New Orleans. Kendrick was the Corps’ civilian program manager for construction of the John J. Sparkman Center, headquarters for the U.S. Army Aviation and Missile Command and Logistics Support Activity in Huntsville, Ala. The 1992 groundbreaking on the project marked the first Army construction at the Redstone Arsenal since 1960. The Corps earmarked the project as design-build, and it was approved.
“Legislatively, we could only do two design-build projects per service per year,” Kendrick says. The performance-driven contract was such a success (built in 23 months for $88 per sq ft) that Kendrick began traveling the country giving Corps personnel training in design-build delivery.
“I would say the Corps changes differently than the private sector,” Kendrick says. “There has always been adaptability, but when the Corps makes changes, perhaps it is a little more cautious. It is a big organization with a rich history and does not want to jump on just anything new.” The Corps likes to think of itself as innovative, but the jury is still out on that issue, says Daniel Hitchings, former director of the Corps’ Task Force Hope and now program manager for Bioengineering-Arcadis LLC, Metairie, La., which performs design and construction management for Corps projects in south Louisiana. Innovation is often stymied when weighing public funding and risk, Hitchings says. “Most of the projects they are doing, certainly on the civil-works side, have to do with public safety,” he adds. “How much risk do you want to take? If you do not have the confidence [a project] will work, the Corps will not do it.”
For projects like military barracks, the Corps has as little more wiggle room, Hitchings says. “You hear continually in technical circles that the Corps waits too long to adopt an idea that others have, but look what happens when something is not quite right,” he says, referring to levee failures in New Orleans and ongoing, intense public scrutiny of Corps contracts since then.“The Corps does stress innovative solutions, but you can be innovative without being risky,” Hitchings says. “It is a constant question of, How much innovation and risk is enough? The third thing is trying to keep costs under control.” At times, the Corps leads private industry in innovation, says Michael B. Rogers, USACE account director for KBR Inc. in Arlington, Va., and former senior executive service member responsible for programs in the Corps’ Mississippi Valley Division. “The Corps changes, at least during my 25-year tenure, when the need arises to do something different,” Rogers says. For example, in the mid- to late 1980s, the Mississippi Valley Division had a tremendous backlog of claims and contract changes and modifications. “Contractors were making a lot of money from claims for equitable adjustment,” Rogers says. So the Corps started partnering with the contracting community. “We really did not change our contracting methods, but we built a good relationship with the contracting community and opened up a dialogue that helped improve understanding and contracts,” Rogers adds. Customer-Driven
Customers’ demands and needs also drive change, Rogers says. For example, “the Air Force really had a problem with change orders and how fast things were being delivered,” he says. “They began to like design-build and drove the Corps to use it. In the end, the Corps did what it had to do to satisfy its customers’ desires.” Mission and customers drive Corps changes, agrees Mike Rossi, chief operating officer of Vali Cooper International LLC’s Louisiana division in Madisonville, La., and a former commander of the Corps’ Kansas City District and the Washington, D.C., area’s $4.5-billion Base Realignment and Closure (BRAC) program. “Mission allows you to assume risk. A lot of time, the guys on the ground want to do it, but often it is the bureaucracy that pushes down innovation to buy down risk,” Rossi says. Rossi is credited with introducing Early Contractor Involvement, a Corps variation of CM-at-risk, to the Kansas City District in 2003 and later to the Mississippi Valley Division and New Orleans. He says he felt the district was not getting enough bidders for work. So, “we went out to the big [contractors] in the Midwest and asked them why they were not bidding our work. They told us our risks were all wrong,” he says.
Although the move seemed natural to Rossi, there is some internal pushback within the Corps to something new, he says. “They are worried about being exposed or setting precedent,” Rossi says. “Nobody will try a new contracting method without vetting it with their lawyers.” The Corps has had a lot of growing pains since Hurricane Katrina revved up the pace of contracting and delivery for emergency repairs. When it became clear the program would be large (another $14.3 billion to bring the Greater New Orleans Hurricane and Storm Damage Risk Reduction System to 100-year levels by 2011) and done as quickly as possible, Hitchings says he began pulling in people like Kendrick and Rossi to introduce contracting methods necessary to make it all happen. “We knew the normal Corps process was going to take too much time,” Hitchings says. “We knew that perhaps we were going to have to use cost-reimbursable contracts instead of firm-fixed price and maybe design-build instead of traditional.” Fully funded and with a deadline, the program in post-Katrina New Orleans demands innovation from everyone, Hitchings says. Communication Luckily, some key AGC members, like Tony Zelenka, New Orleans chairman for AGC’s Corps committee, had seen similar changes in Corps work with MILCON and BRAC. “With BRAC, they had to do about $62 billion in five years, and we have $14.3 billion in two years,” Zelenka says. The Corps made additional changes to support the mission in New Orleans, including formally assigning other districts to specific tasks in New Orleans, says Karen Durham-Aguilera, director of Task Force Hope. “It is like the reach-back we have been doing in Iraq and Afghanistan. It is not just help; it means those districts are responsible for project management.” People often lose sight of the enormity of the mission in New Orleans, where the Corps’ pre-Katrina construction budget was $300 million a year, she says.
“We realize how extremely complex and huge this work is in New Orleans,” says Freddie Rush, executive vice president of the Mississippi Valley AGC. But contractors need to better understand new contracting methods so they are not excluded from work, Rush says. Zelenka says the Corps has made changes in New Orleans as it communicates with contractors. That evolution also was true of the Corps’ mission in Iraq. “Because of the $12-billion mission and conditions unknown, we started off with design-build in Iraq,” Durham-Aguilera says. “As time went on, we found you have to tailor the types of acquisition for the project. In Iraq, we transitioned away from design-build for technically complex work and used Multiple Award Task Order Contracts for brick-and-mortar projects.” It is a challenge to demand change from contractors used to doing things a certain way, Rogers says. “But it is important to communicate with the Corps, and the Corps with you,” he says. “Nothing is going to stay stagnant.”
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