GAO-06-966, Army Corps of Engineers: Improved Monitoring and Clear Guidance Would Contribute to More Effective Use of Continuing Contracts


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entitled 'Army Corps of Engineers: Improved Monitoring and Clear 
Guidance Would Contribute to More Effective Use of Continuing 
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Report to the Subcommittee on Energy and Water Development, Committee 
on Appropriations, House of Representatives: 

United States Government Accountability Office: 

GAO: 

September 2006: 

Army Corps Of Engineers: 

Improved Monitoring and Clear Guidance Would Contribute to More 
Effective Use of Continuing Contracts: 

Corps' Continuing Contracts: 

GAO-06-966: 

GAO Highlights: 

Highlights of GAO-06-966, a report to the Subcommittee on Energy and 
Water Development, Committee on Appropriations, House of 
Representatives 

Why GAO Did This Study: 

The U.S. Army Corps of Engineers (Corps) is authorized under the River 
and Harbor Act of 1922 to issue contracts with a continuing contracts 
clause to carry out certain projects. This allows the Corps to award 
multi-year contracts without having received appropriations to cover 
the full contract amount. The Corps has used these contracts for 
decades, but modified their use in 2005, in response to congressional 
committee concerns that their use may have been ineffective. 

GAO was asked to determine (1) the number and dollar amount of 
continuing contracts the Corps awarded during fiscal years 2003�05; 
(2) the circumstances in which the Corps used continuing contracts in 
fiscal years 2003�05; and (3) how the Corps� process for approving 
and using continuing contracts changed since 2005, and whether the 
changes reduced the use of these contracts. For these objectives, GAO 
reviewed the Corps� contracting data, a random sample of 107 continuing 
contracts, and districts� requests to use continuing contracts. 

What GAO Found: 

The Corps does not know how many continuing contracts it awarded in 
fiscal years 2003�05 or the dollar value of these contracts, because 
it does not track information on the contracts awarded with a 
continuing contracts clause. Although the Corps was directed to provide 
the appropriations committees with quarterly reports on their use of 
continuing contracts in fiscal year 2006, GAO found that the 
information was inaccurate. For example, at least 13 continuing 
contracts were missing from the reports and 10 continuing contracts had 
inaccurate values. Because the Corps could not provide information on 
the number of continuing contracts awarded for fiscal years 2003�05, 
GAO analyzed the Corps� contracting data and determined that 1,592 
contracts awarded in these 3 years most likely included and used a 
continuing contracts clause. These contracts were expected to cost more 
than $3.96 billion when awarded and would generally be funded to cover 
the full contract amount (fully funded) pursuant to requirements of the 
Antideficiency Act. However, continuing contracts are exempt from the 
act. Consequently, the Corps only obligated $655 million when it 
awarded these contracts, leaving an outstanding commitment of about 
$3.30 billion to be covered by future years� appropriations. 

During fiscal years 2003�05, the Corps� standard operating practice 
was to include a continuing contracts clause in most contracts. As a 
result, many continuing contracts were used for short term and low 
dollar value contracts. The Corps might have been able to fully fund 
some of these contracts if, at the time of award, the Corps had 
adequate appropriations to cover the contract amount. For example, for 
the 107 continuing contracts GAO reviewed, about one-third were valued 
at less than $1 million. In only 8 of 107 continuing contracts that GAO 
reviewed, the contract value was more than $10 million and involved 
work that required more than 12 calendar months to complete. The Corps 
also used continuing contracts extensively to move funds among projects 
and help meet its policy of expending all available appropriations in 
the fiscal year appropriated. For fiscal years 2003�05, GAO found 
that over half of the contracts reviewed were awarded during the last 
quarter of the fiscal year as continuing contracts with little or no 
associated obligations, thereby shifting the obligations to pay for 
these contracts into future years. 

The Corps responded to congressional committee direction in 2005 and 
again in 2006 to monitor the use of continuing contracts by, among 
other things, requiring districts to obtain headquarters� approval 
before using such contracts. The new processes reduced the use of 
continuing contracts, but have not prevented the approval of continuing 
contracts for short-term, low dollar value contracts. This occurred 
because the Corps established criteria on when contracts should be 
fully funded, but did not establish criteria for when continuing 
contracts should be used. 

What GAO Recommends: 

GAO recommends that the Corps eliminate its routine use of continuing 
contracts, establish meaningful criteria on the use of such contracts, 
and monitor its use of these contracts. In its comments on the draft 
report, the Department of Defense agreed with GAO抯 recommendations. 

[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-06-966]. 

To view the full product, including the scope and methodology, click on 
the link above. For more information, contact Anu Mittal at (202) 512-
3841 or mittala@gao.gov. 

[End of Section] 

Contents: 

Letter: 

Results in Brief: 

Background: 

The Corps Cannot Accurately Identify How Many Continuing Contracts It 
Has Awarded because It Does Not Track These Contracts: 

Prior to 2005, the Corps Routinely Included a Continuing Contracts 
Clause in Most Contracts: 

The Corps' Revised Processes for Approving Continuing Contracts Has 
Reduced Their Use, but It Still Lacks Criteria for When Their Use Is 
Appropriate: 

Conclusions: 

Recommendations for Executive Action: 

Agency Comments and Our Evaluation: 

Appendix I: Scope and Methodology: 

Appendix II: Characteristics of the Continuing Contracts Identified by 
GAO: 

Appendix III: Comments from the Department of Defense: 

Appendix IV: GAO Contact and Staff Acknowledgments: 

Tables: 

Table 1: Fiscal Years 2003-2005 Appropriations: 

Table 2: Total Number and Full Costs to the Federal Government of 
Continuing Contracts, Fiscal Years 2003-2005: 

Table 3: Total Number of the 107 Randomly Selected Continuing Contracts 
Awarded in Fiscal Years 2003-2005 by the Full Contract Costs and Number 
of Months to Complete the Contracted Work: 

Table 4: Headquarters' Reasons for Denying Seven Requests to Use a 
Continuing Contract and How Districts Proceeded with the Work: 

Table 5: Total Number of Approved Requests to Use a Continuing Contract 
in Fiscal Year 2005: 

Table 6: Total Number of Approved Requests to Use a Continuing Contract 
in Fiscal Year 2006: 

Table 7: Total Number of Continuing Contracts Awarded by the Full Costs 
to the Federal Government, Fiscal Years 2003-2005: 

Table 8: Total Number of Continuing Contracts by Percentage of Federal 
Funds Made Available in the First Year of the Contract, Fiscal Years 
2003-2005: 

Table 9: Commitments for Continuing Contracts Made by Appropriations 
Account, Fiscal Years 2003-2005: 

Table 10: Total Number of Continuing Contracts by Appropriations 
Account, Fiscal Years 2003-2005: 

Table 11: Total Number and Full Costs to the Federal Government of 
Continuing Contracts Awarded by Division, Fiscal Years 2003-2005: 

Table 12: Total Number and Full Costs to the Federal Government of 
Continuing Contracts Awarded by District, Fiscal Years 2003-2005: 

Figures: 

Figure 1: Obligations by Fiscal Year for Continuing Contracts Awarded, 
Fiscal Years 2003-2005: 

Figure 2: Total Number of Continuing Contracts by Fiscal Quarter of 
Award, Fiscal Years 2003-2005: 

United States Government Accountability Office: 
Washington, DC 20548: 

September 8, 2006: 

The Honorable David L. Hobson: 
Chairman: 
The Honorable Peter J. Visclosky: 
Ranking Minority Member: 
Subcommittee on Energy and Water Development: 
Committee on Appropriations: 
House of Representatives: 

Each year, Congress provides funding to the U.S. Army Corps of 
Engineers' (Corps) Civil Works program to plan, construct, operate, and 
maintain a wide range of water resources projects. During fiscal years 
2005 and 2006, the Corps received annual appropriations of more than $4 
billion for such projects. Water resources projects often take more 
than 1 fiscal year to complete, and the Corps usually relies on one or 
more contractors to complete these projects. Generally, agencies are 
required to obligate appropriations for all costs expected to be 
incurred at the time of award (i.e., fully fund contracts).[Footnote 1] 
However, the River and Harbor Act of 1922 provides the Corps a unique 
authority to use what is referred to as a "continuing contract" to 
carry out certain projects. The Corps' continuing contracts authority 
allows it to enter into, and commit the federal government for, the 
full amount of contracts that span more than 1 fiscal year--even though 
the Corps may not have sufficient funds to cover the full contract 
amount at the time the contract is awarded. For example, the Corps 
could award a 3-year, $12 million continuing contract even if it only 
had appropriations to cover the first year's work; the funds needed to 
cover the remaining contract amount would be obligated to subsequent 
years' appropriations. A continuing contract contains a continuing 
contracts clause that allows contractors to continue work on a project 
even when appropriations are not available. When funding becomes 
available, the Corps is committed to pay all of the outstanding costs 
incurred by the contractor for work performed under the contract, as 
well as any interest that may have accrued on these outstanding 
balances. 

A provision of law enacted in the Water Resources Development Act of 
1999 requires the Corps to use continuing contracts for certain water 
resources projects for which sufficient funds are not available to 
complete the project.[Footnote 2] However, in the conference report 
accompanying the Corps' 2004 appropriations, the conference committee 
noted its concerns about the Corps' policy of allowing contractors to 
choose their own pace for working on continuing contracts, which 
effectively allowed contractors, rather than the Corps, to determine 
how future appropriations would be allocated. In fiscal year 2005, the 
conference committee noted that continuing contracts are to allow the 
Corps to award large construction elements of a project to take 
advantage of the economies of scale and allow these large elements to 
be efficiently managed over several years.[Footnote 3] The committee 
reiterated its past concerns that the Corps' construction projects may 
have used continuing contracts ineffectively. 

In this context, you asked us to determine (1) the number and dollar 
amount of continuing contracts the Corps awarded during fiscal years 
2003-2005; (2) the circumstances in which the Corps used continuing 
contracts in fiscal years 2003-2005; and (3) how the Corps' process for 
approving and using continuing contracts changed since 2005, and 
whether these changes have reduced the use of these contracts. 

To address these objectives, we analyzed the Corps' contracting data 
for Civil Works fixed-price and indefinite-delivery contracts (both 
construction contracts and operation and maintenance contracts) for 
fiscal years 2003-2005. Of the contracts we reviewed, we identified all 
of the contracts for which the Corps did not obligate the full contract 
amount (i.e., partially funded). We excluded from our analysis 
contracts that the Corps identified as incrementally funded 
contracts.[Footnote 4] We assessed the reliability of the Corps' data 
and found that they were sufficiently reliable for our use. In 
addition, we reviewed 107 randomly selected continuing contract files 
from three Corps districts. The districts we selected used a large 
number of continuing contracts and were located in divisions that 
awarded a large percentage of continuing contracts in fiscal years 2003-
2005. We also reviewed Corps guidance for approving and using 
continuing contracts before and after 2005, when the Corps revised its 
process. We surveyed all eight Corps divisions to determine the total 
number of continuing contract requests that were approved and denied by 
Corps headquarters after the Corps revised its process. We performed 
our work between December 2005 and July 2006, in accordance with 
generally accepted government auditing standards. Appendix I provides a 
detailed description of our scope and methodology. 

Results in Brief: 

The Corps does not track information on the number of contracts with a 
continuing contracts clause that it awards, and therefore does not know 
how many continuing contracts it awarded during fiscal years 2003-2005. 
It also does not know the dollar value of these contractual 
obligations. The Corps was directed to provide the appropriations 
committees with quarterly reports on its use of on-going continuing 
contracts in fiscal year 2006, but we found that the information 
submitted in these reports was inaccurate. For example, we found that 
at least 13 continuing contracts were missing from the Corps' quarterly 
reports and 10 continuing contracts had incorrect dollar values. 
Because the Corps cannot determine how many continuing contracts it 
awarded for fiscal years 2003-2005, we analyzed the Corps' contracting 
data. We found that 1,592 of the 16,532 contracts awarded in this 3- 
year period most likely included and exercised (used) a continuing 
contracts clause. These 1,592 contracts accounted for more than 60 
percent of the Corps' annual obligations for new contracts awarded 
during these 3 years. The 1,592 contracts were expected to cost the 
government more than $3.96 billion at the time of award, but the Corps 
only obligated $655 million to current appropriations when these 
contracts were awarded; as a result, the federal government was left 
with about $3.30 billion in outstanding commitments. The value of 
individual continuing contracts ranged from as little as $12,000 to as 
much as $564 million. 

During fiscal years 2003-2005, it was standard operating practice for 
the Corps to include a continuing contracts clause in most of its 
contracts. This occurred, according to Corps officials, because a 
provision in the Water Resources Development Act of 1999 required the 
agency to use continuing contracts when a project could not be fully 
funded with available appropriations. Our review of 107 randomly 
selected continuing contracts awarded during fiscal years 2003-2005 
found numerous examples of the Corps' overuse of this requirement for 
contracts where a continuing contract may not have been needed. For 
example, in about one-third of the continuing contracts that we 
reviewed, the contracted work required 6 months or less to complete or 
had a contract value of less than $1 million. Therefore, we believe 
that these contracts did not need to be awarded as continuing contracts 
given their relatively short-term and small dollar values. The Corps 
might have been able to fully fund some of these contracts if, at the 
time of award, the Corps had adequate appropriations to cover the 
contract amount. Only 8 of the 107 continuing contracts we reviewed 
involved a relatively large dollar amount--for the purposes of our 
review, more than $10 million--and required more than 12 calendar 
months to complete, thereby, in our opinion, establishing a rationale 
for a continuing contract. Another factor contributing to the routine 
use of continuing contracts was the Corps' policy of expending all 
available appropriations in the fiscal year for which it was 
appropriated, rather than carrying balances into the next fiscal year. 
According to Corps officials, the use of continuing contracts helped to 
meet this policy by allowing the Corps to move funds from projects that 
had excess funds either (1) to other ongoing projects that could use 
them or (2) to start new projects at the end of the fiscal year by 
using partially funded continuing contracts. For fiscal years 2003- 
2005, we found that over half of the contracts we reviewed were awarded 
during the last quarter of the fiscal year as continuing contracts with 
little or no associated obligations, thus committing the federal 
government to cover the costs of these contracts in future years' 
appropriations. 

In response to congressional committee direction in 2005 and again in 
2006, the Corps created new processes that, among other things, require 
districts to obtain Corps headquarters' approval before using 
continuing contracts. These new processes reduced the number of 
continuing contracts awarded by the Corps since 2005, but have not 
prevented the use of continuing contracts for short-term, low dollar 
value contracts. The Corps might have been able to fully fund some of 
these contracts if, at the time of award, the Corps had adequate 
appropriations to cover the contract amount. Under the new processes, 
in addition to obtaining headquarters' approval, districts were 
instructed to fully fund contracts when, among other things, they had 
sufficient funds. Districts were also instructed to stop contractors 
from working on a contract once fiscal year 2006 appropriations had 
been spent. However, the Corps did not establish criteria for when it 
was appropriate to use continuing contracts. Consequently, we 
determined that, despite the implementation of the new processes, Corps 
headquarters received requests for and approved the use of continuing 
contracts for short-term, low dollar value contracts. For example, in 
fiscal year 2005, even with the new processes and guidance in place, 
headquarters approved 38 of 141 requests for continuing contracts that 
were valued at below $10 million and that required less than 12 
calendar months to complete, including 3 requests that were for 
contracts valued at less than $500,000. Similarly, for the first 6 
months of fiscal year 2006, of the 17 continuing contract requests 
approved by headquarters, 2 approvals were for work valued at below $10 
million and required less than 12 calendar months to complete. 

We are making recommendations that the Secretary of Defense direct the 
Commanding General and Chief of Engineers of the U.S. Army Corps of 
Engineers to eliminate the routine use of continuing contracts, 
establish meaningful criteria for the use of such contracts, and 
monitor the Corps' use of these contracts. In commenting on a draft of 
this report, the Department of Defense stated that it was a 
constructive report and concurred with our recommendations. 

Background: 

The Corps' Civil Works program is responsible for planning, developing, 
and maintaining the nation's water and related environmental resources. 
The Corps' headquarters is in Washington D.C; eight regional divisions 
and 38 districts carry out its domestic civil works responsibilities. 

Each year the Corps' Civil Works program receives funding through the 
Energy and Water Development Appropriations Act. The act normally 
appropriates a sum for water resources projects to several different 
appropriations accounts, including construction; operation and 
maintenance; and flood control, Mississippi River and tributaries. The 
construction account finances construction and major rehabilitation 
projects that relate to navigation, flood control, water supply, 
hydroelectric power, and environmental restoration. The operation and 
maintenance account finances the preservation, operation, maintenance, 
and care of existing river and harbor, flood-control, and related 
activities at the projects that the Corps operates and maintains. The 
flood control, Mississippi River and tributaries account provides flood 
protection for the alluvial valley of the Mississippi River from Cape 
Girardeau, Missouri, to the Head of Passes, Louisiana; and improvement 
of the Mississippi River for navigation from Cairo, Illinois, to Baton 
Rouge, Louisiana. Table 1 shows the appropriations received in fiscal 
years 2003-2005 for these accounts. 

Table 1: Fiscal Years 2003-2005 Appropriations: 

Appropriations account: Construction; 
Fiscal year 2003 budget authority: $1,756,012; 
Fiscal year 2004 budget authority: $1,722,319; 
Fiscal year 2005 budget authority: $1,796,089. 

Appropriations account: Operation and maintenance; 
Fiscal year 2003 budget authority: 1,940,167; 
Fiscal year 2004 budget authority: 1,967,925; 
Fiscal year 2005 budget authority: 1,959,101. 

Appropriations account: Flood control, Mississippi River and 
tributaries; 
Fiscal year 2003 budget authority: 344,574; 
Fiscal year 2004 budget authority: 324,222; 
Fiscal year 2005 budget authority: 324,500. 

Appropriations account: Total; 
Fiscal year 2003 budget authority: $4,040,753; 
Fiscal year 2004 budget authority: $4,014,466; 
Fiscal year 2005 budget authority: $4,079,690. 

Sources: Fiscal years 2003, 2004, and 2005 Energy and Water Development 
Appropriations Acts. 

[End of table] 

The conference report accompanying the Energy and Water Development 
Appropriations Act generally lists individual projects and designates 
amounts for each project.[Footnote 5] Through this report, the 
appropriations committees essentially establish their priorities for 
the Corps' water resources projects. In recent years, Congress has 
appropriated less funding than the sum of the amounts designated to 
individual projects in the conference report. Districts are responsible 
for executing projects. 

The Corps receives "no year" appropriations that remain available until 
spent. As part of the budget process, the Corps has historically 
requested appropriations from Congress to cover only those contract 
payments expected to be made in the upcoming fiscal year; it generally 
has not requested appropriations to fully fund its Civil Works 
contracts. According to the Corps, to comply with congressional 
direction that the agency give careful consideration to the disposition 
of appropriated funds to ensure that they are applied effectively, and 
that the agency effectively move (reprogram) funds from projects that 
are not moving forward, the Corps developed policies and business 
practices to expend all available appropriations in the fiscal year 
appropriated and thereby minimize carrying appropriated funds over to 
following years. In fiscal year 2006, again in response to changing 
congressional direction in the Energy and Water Development 
Appropriations Act and the accompanying conference report, the Corps 
modified its program execution process to focus on expending funds only 
on the projects for which they were specified, even if the appropriated 
funds could not be completely expended in the fiscal year, and 
minimizing reprogramming unless it was absolutely essential.[Footnote 
6] Consequently, a higher level of carry-over balances is anticipated 
starting in fiscal year 2006. The Corps has also stated that it will 
begin requesting sufficient appropriations to fully fund most contracts 
beginning in fiscal year 2008. 

The Corps primarily uses fixed-price and indefinite-delivery contracts 
to complete its work. Fixed-price contracts are awarded for a specific 
price, regardless of the final cost to the contractor. If the contract 
is completed for less than the fixed price, the contractor benefits 
from greater profits; if the costs exceed the fixed price, then the 
contractor bears the loss. Indefinite-delivery contracts allow the 
Corps to obtain services or supplies through multiple task or delivery 
orders, as needed, to carry out project construction, and operation and 
maintenance activities. 

History of the Corps' Continuing Contracts Authority: 

Starting with the River and Harbor Act of 1892 and continuing 
intermittently through the River and Harbor Act of 1916, Congress gave 
the Corps authorization to enter into contracts to complete a limited 
number of projects even though the Corps did not have appropriations to 
cover the full contract amounts. In 1922, the Corps sought and received 
from Congress permanent authority to enter into these types of 
"continuing contracts." The River and Harbor Act of 1922 gave the Corps 
authority to use continuing contracts for specifically authorized 
projects on canals, rivers, and harbors. 

When the Corps sought its 1922 authority to use continuing contracts, 
it stated that this authority would enable it to enter into contracts 
that exceeded the amount of funding that had been appropriated. At that 
time, the Corps noted that the continuing contract option would be 
advantageous for some projects--such as a lock and dam project that 
required several million dollars and 3 to 4 years to complete--because 
it would help avoid tying up appropriations over a long period of time 
and carrying large sums of unexpended appropriations for several years. 
The Corps also noted that awarding contracts with a larger scope of 
work that covered several years would help encourage active competition 
among contractors. 

Since 1922, the Corps has used its continuing contracts authority to 
varying degrees for different types of projects and activities. In 
recent years, Congress has provided both guidance and specific 
direction to the Corps on how to use continuing contracts. These 
include the following: 

* The Water Resources Development Act of 1999. Congress broadened the 
types of projects and work covered by the Corps' continuing contracts 
authority. Specifically, it directed the Corps to award continuing 
contracts if sufficient funding was not available to complete a project 
funded from the construction; operation and maintenance; or flood 
control, Mississippi River and tributaries appropriations accounts. 

* The Energy and Water Development Appropriations Act of 2004. Congress 
included a provision, not limited to fiscal year 2004, to also allow 
the use of continuing contracts for those contracts that were funded 
from the investigations appropriations account. The investigations 
account is used to collect and study basic information for, among other 
things, river and harbor and flood control activities; miscellaneous 
investigations; and surveys and detailed studies for projects before 
construction. 

* The committee report accompanying the Corps' fiscal year 2005 
appropriations. The conference committee expressed concern about the 
Corps' use of continuing contracts and noted that continuing contracts 
are to allow the Corps to award large construction elements of a 
project and take advantage of the economies of scale and allow these 
large elements to be efficiently managed over several years. 

* The Energy and Water Development Appropriations Act of 2006. Congress 
included a provision that modifies the types of projects and work for 
which the Corps is required to use a continuing contract. The 
provision, not limited to fiscal year 2006, states that the 
requirements regarding the use of continuing contracts in the Water 
Resources Development Act of 1999 shall apply only to projects funded 
from the operation and maintenance account and the operation and 
maintenance subaccount of the Mississippi River and tributaries 
account. The 2006 act also prohibits the Corps from entering into a 
continuing contract or modifying an existing contract that commits an 
amount for a project "in excess of the amount appropriated for such 
project pursuant to this act." 

The Corps' continuing contracts contain either a "basic clause" or an 
"alternate clause." Districts may only use the basic continuing 
contracts clause for those contracts awarded for congressionally 
authorized Civil Works water resources projects, which are typically 
authorized in a Water Resources Development Act. The alternate clause 
can be used for projects that are not specifically authorized, but are 
covered by the Continuing Authorities Program.[Footnote 7] The Corps' 
continuing contracts authority applies to specific types of projects, 
which do not include water-related environmental infrastructure and 
resource development projects, such as wastewater treatment, water 
supply, storm water retention and remediation, environmental 
restoration, and surface water resource protection and development. 
Districts historically made the decision to use continuing contracts 
without oversight from the division or Corps headquarters. 

In our prior reports on governmentwide funding practices, we have 
observed that full funding for capital asset acquisitions is the best 
way to ensure that all financial decisions are fully accounted for and 
recognized as part of the budget process, and that full funding also 
helps ensure that governmentwide fiscal control is maintained.[Footnote 
8] Unlike a project started with a partially funded continuing 
contract, an agency receives budget authority for the project's full 
estimated costs before a commitment is made for a fully funded capital 
project. Otherwise, distortions in resource allocations can result when 
the full costs of the commitments are not recognized at the time budget 
decisions are made. 

The Corps Cannot Accurately Identify How Many Continuing Contracts It 
Has Awarded because It Does Not Track These Contracts: 

The Corps does not track information on the number of contracts that it 
awards with a continuing contracts clause; therefore, it could not 
identify the number or the dollar value of such contracts awarded in 
fiscal years 2003-2005. Because the Corps does not track its use of 
continuing contracts, the quarterly reports it submitted to the 
appropriations committees in fiscal year 2006, on the use of such 
contracts, were inaccurate. We independently identified the number of 
continuing contracts awarded by the Corps in fiscal years 2003-2005 by 
reviewing the agency's contracting data, and we determined that 1,592 
(about 10 percent) of all contracts awarded during this 3-year period 
most likely included and used a continuing contracts clause. These 
1,592 contracts accounted for more than 60 percent of the Corps' annual 
obligations for new contracts awarded during these 3 years. 

The Corps Does Not Track Its Use of Continuing Contracts: 

The Corps does not systematically track the extent to which it uses a 
continuing contracts clause, and could not provide reliable information 
on the number of continuing contracts awarded in fiscal years 2003-2005 
or the dollar value of these contracts. Moreover, according to Corps 
officials, nearly all multi-year contracts awarded by the Corps prior 
to fiscal year 2005 routinely included a continuing contracts clause, 
and the agency had no requirement for districts to track when this 
clause was actually used. 

In fiscal years 2005 and 2006, the conference committees, in the 
reports accompanying the Corps' appropriation acts, directed the Corps 
to monitor its use of continuing contracts. The Corps was also directed 
to provide the appropriations committees with a quarterly report on the 
agency's use of such contracts, starting in fiscal year 2006. Because 
the Corps does not have a tracking system for continuing contracts, it 
gathered the information submitted in the two quarterly reports for 
fiscal year 2006 by asking each division to provide information on 
their existing continuing contracts and expected obligations for the 
federal costs associated with these contracts. We reviewed these two 
quarterly reports and determined that they included inaccurate 
information. For example, we found at least 13 continuing contracts 
that were missing from the reports sent to the committees, and we found 
wrong contract values (the expected total costs for a contractor to 
complete the work) listed for 10 contracts. 

Continuing Contracts Most Likely Accounted for About 10 Percent of All 
Contracts Awarded by the Corps in Fiscal Years 2003-2005: 

Our analysis of the Corps' contracting data indicates that the Corps 
awarded 16,532 fixed-price and indefinite-delivery contracts (both 
construction contracts and operation and maintenance contracts) during 
fiscal years 2003-2005.[Footnote 9] According to Corps officials, the 
agency included a continuing contracts clause in most of its multi-year 
contracts. However, most of the 16,532 contracts were fully funded and, 
therefore, would not have needed to use a continuing contracts clause 
even if it was included in the contract.[Footnote 10] We found 1,592 of 
the 16,532 contracts (about 10 percent) were partially funded contracts 
at award and, therefore, most likely would have included and used a 
continuing contracts clause. The 1,592 contracts included 402 contracts 
that were partially funded at award but were fully funded by the end of 
the first fiscal year.[Footnote 11] The 1,592 contracts accounted for 
more than 60 percent of the Corps' annual obligations for new contracts 
awarded during these 3 years.[Footnote 12] The full costs to the 
federal government of the 1,592 contracts were more than $3.96 billion 
at award. However, the Corps only obligated $655 million to current 
appropriations when these contracts were awarded; the outstanding 
commitment at the time of award was about $3.30 billion, and the Corps 
expects to obligate this amount to subsequent years' appropriations. 
Table 2 summarizes the total number and full costs to the federal 
government of continuing contracts awarded during fiscal years 2003- 
2005. 

Table 2: Total Number and Full Costs to the Federal Government of 
Continuing Contracts, Fiscal Years 2003-2005: 

Number of continuing contracts; 
Fiscal year: 2003: 669; 
Fiscal year: 2004: 583; 
Fiscal year: 2005: 340; 
Total: 1,592. 

Full costs to federal government at award; 
Fiscal year: 2003: $1,098,599,154; 
Fiscal year: 2004: 1,703,122,079; 
Fiscal year: 2005: 1,154,337,793; 
Total: $3,956,059,026. 

Obligations at award; 
Fiscal year: 2003: $201,528,606; 
Fiscal year: 2004: 213,814,098; 
Fiscal year: 2005: 240,013,268; 
Total: $655,355,972. 

Outstanding commitment at award; 
Fiscal year: 2003: $897,070,548; 
Fiscal year: 2004: 1,489,307,981; 
Fiscal year: 2005: 914,324,525; 
Total: $3,300,703,054. 

Source: GAO analysis of Corps contracting data. 

[End of table] 

Other characteristics that we identified for these 1,592 continuing 
contracts included the following: 

* All 38 districts used at least one continuing contract during fiscal 
years 2003-2005. Five districts--Jacksonville, Vicksburg, Memphis, 
Walla Walla, and Portland--awarded only about 2.8 percent of the total 
number of contracts for this time period, but accounted for about 30 
percent of the continuing contracts. 

* About 65 percent of the continuing contracts were valued at $1 
million or less; 26 percent were valued at between $1 million and $5 
million; 5 percent were valued between $5 million and $10 million; 
and 4 percent were valued at more than $10 million. 

* Several appropriations accounts funded these continuing 
contracts.[Footnote 13] About 54 percent of the obligations were from 
the construction account; 25 percent from the operation and maintenance 
account; 7 percent from the flood control, Mississippi River and 
tributaries account; 9 percent from the Inland Waterway Trust Fund; 
and 6 percent from other accounts.[Footnote 14] 

* When contractors continue to work even after appropriations are not 
available, the Corps is committed to pay all of the outstanding costs 
incurred by the contractor and any interest that may have accrued on 
these outstanding balances. The Corps could not provide data on the 
interest it paid in fiscal year 2003 for these continuing contracts, 
but for fiscal years 2004 and 2005, the Corps paid about $497,000 and 
$288,000 in interest payments, respectively. Monthly interest payments 
on these contracts ranged from about $1 to more than $76,000 for 
individual districts. 

* Continuing contracts were generally used more often for fixed-price 
contracts than for indefinite-delivery contracts. About 50 percent of 
fixed-price contracts were continuing contracts, compared to only about 
5 percent of indefinite-delivery contracts. The full costs to the 
federal government of fixed-price continuing contracts ranged from 
about $21,000 to more than $564 million, while indefinite-delivery 
continuing contracts ranged from as small as $12,000 to more than $22.5 
million. The median dollar value of all 1,592 continuing contracts was 
about $440,000; the median value of the fixed-price continuing 
contracts was about $1.2 million; and the median value of the 
indefinite-delivery continuing contracts was about $147,000. 

Appendix II provides more information on the characteristics of the 
continuing contracts that we identified for fiscal years 2003-2005. 

Prior to 2005, the Corps Routinely Included a Continuing Contracts 
Clause in Most Contracts: 

The Corps' routine practice was to include a continuing contracts 
clause in most of the contracts it awarded during fiscal years 2003- 
2005. According to the Corps, this occurred, in part, because a 
provision of the Water Resources Development Act of 1999 requires the 
agency to use continuing contracts for certain projects if sufficient 
funding is not available to complete the project. The Corps interpreted 
this provision to mean that, if sufficient funds were not available to 
complete the entire project, then all contracts associated with the 
project must be continuing contracts. The Corps' interpretation of this 
provision resulted, in our opinion, in the overuse of the continuing 
contracts authority because the provision does not require all 
contracts awarded for a given project to be continuing contracts. The 
Corps might have been able to fully fund some short-term, low dollar 
value contracts if, at the time of award, the Corps had adequate 
appropriations to cover the contract amount.[Footnote 15] Moreover, the 
Corps relied on its use of continuing contracts to help meet its policy 
of not carrying over unexpended appropriations into future fiscal 
years. By routinely including a continuing contracts clause into all of 
its contracts, the Corps could more easily move funds among contracts 
at the end of the year. Appropriations that could not be expended on a 
contract would be obligated to a contract that could expend the funds. 
In addition, districts cited a variety of other reasons for a large 
number of continuing contracts being awarded at the end of the fiscal 
year. 

In the late 1990s, large carry-over amounts of unexpended Corps 
appropriations at the end of each fiscal year became a concern to 
Congress. Through a provision of the Water Resources Development Act of 
1999, Congress instructed the Corps to use continuing contracts for 
certain water resources projects if sufficient funding was not 
available to complete the project--in effect, this made permanent the 
direction that the appropriations committees had given to the Corps for 
a number of years through fiscal year 1998. As a result, the Corps 
implemented policies designed to maximize expenditures from all 
available appropriations in the year appropriated. These policies, in 
turn, encouraged the Corps' use of continuing contracts to ensure that 
only the appropriations required for expenditure in a given year were 
obligated on the contract. 

However, we believe that the Corps' implementation of the 1999 law has 
resulted in an overuse of the continuing contracts authority and the 
frequent awarding of continuing contracts for short-term, low dollar 
value contracts.[Footnote 16] The Corps might have been able to fully 
fund some of these contracts if, at the time of award, the Corps had 
adequate appropriations to cover the contract amount. For example, for 
the 107 randomly selected continuing contracts awarded in fiscal years 
2003-2005 that we reviewed, we found only 8 continuing contracts that 
were valued at more than $10 million dollars and involved contracted 
work that required more than 12 calendar months to complete. In 
contrast, many of the 107 continuing contracts we reviewed were short- 
term and/or low dollar value contracts. For example, we found that, 39 
continuing contracts were for work that lasted 6 months or less; 
34 continuing contracts had a contract value of less than $1 million; 
and 10 continuing contracts had a contract value of less than $1 
million and included work that took less than 6 months to 
complete.[Footnote 17] Some specific examples of the kinds of short-
term, low dollar value continuing contracts we identified were: 

* The Jacksonville district used a continuing contract to partially 
fund a $695,285 contract that required 90 days to complete. 

* The Galveston district used a continuing contract for an $868,812 
contract that required 30 days to complete. The district awarded the 
contract on September 29, 2004, and did not give the contractor 
permission to begin the work until the next fiscal year on November 1, 
2004. Therefore, the contracted work was actually completed in one 
fiscal year and was not a multi-year contract. 

* The Vicksburg district used a continuing contract for a $102,051 
contract that required 195 days to complete. Because the contract 
spanned more than one fiscal year, the Corps considered this a multi- 
year contract that justified the use of a continuing contract, even 
though the contract required less than 7 months to complete and had a 
relatively low dollar amount. 

Table 3 summarizes the full contract costs and length of time needed to 
complete contracted work for the 107 randomly selected continuing 
contracts we reviewed. 

Table 3: Total Number of the 107 Randomly Selected Continuing Contracts 
Awarded in Fiscal Years 2003-2005 by the Full Contract Costs and Number 
of Months to Complete the Contracted Work: 

Number of months to complete work: Six or less; 
Contract value at award: Less than $1 million: 10; 
Contract value at award: From $1 million to less than $5 million: 26; 
Contract value at award: From $5 million to less than $10 million: 3; 
Contract value at award: More than $10 million: 0; 
Contract value at award: Total number of contracts: 39. 

Number of months to complete work: Between 6 and 12; 
Contract value at award: Less than $1 million: 16; 
Contract value at award: From $1 million to less than $5 million: 12; 
Contract value at award: From $5 million to less than $10 million: 2; 
Contract value at award: More than $10 million: 0; 
Contract value at award: Total number of contracts: 30. 

Number of months to complete work: Between 12 and 24; 
Contract value at award: Less than $1 million: 3; 
Contract value at award: From $1 million to less than $5 million: 6; 
Contract value at award: From $5 million to less than $10 million: 4; 
Contract value at award: More than $10 million: 4; 
Contract value at award: Total number of contracts: 17. 

Number of months to complete work: Greater than 24; 
Contract value at award: Less than $1 million: 1; 
Contract value at award: From $1 million to less than $5 million: 0; 
Contract value at award: From $5 million to less than $10 million: 0; 
Contract value at award: More than $10 million: 4; 
Contract value at award: Total number of contracts: 5. 

Number of months to complete work: Unknown; 
Contract value at award: Less than $1 million: 4; 
Contract value at award: From $1 million to less than $5 million: 9; 
Contract value at award: From $5 million to less than $10 million: 2; 
Contract value at award: More than $10 million: 1; 
Contract value at award: Total number of contracts: 16. 

Number of months to complete work: Total; 
Contract value at award: Less than $1 million: 34; 
Contract value at award: From $1 million to less than $5 million: 53; 
Contract value at award: From $5 million to less than $10 million: 11; 
Contract value at award: More than $10 million: 9; 
Contract value at award: Total number of contracts: 107. 

Source: GAO analysis of Corps contracting data from randomly selected 
continuing contract files. 

Note: These costs include both the federal government and nonfederal 
sponsor's share of the contract costs. 

[End of table] 

The Corps also routinely included a continuing contracts clause in its 
contracts to help meet its policy of expending all available 
appropriations in the fiscal year appropriated, and to minimize 
carrying over unexpended appropriations into the next fiscal year. 
According to the Corps, it allocates appropriations to projects at the 
beginning of the fiscal year. The only way to reallocate appropriations 
to avoid carryover is through reprogramming. Reprogramming provides the 
Corps with the flexibility to move excess funds from projects that are 
behind schedule to projects that may be able to use the funds because 
they are ahead of schedule. Generally, federal agencies are required to 
fully fund contracts at the time of award. The Corps would not have 
been able to easily move the funds from a contract unless it included a 
continuing contracts clause. According to agency officials, the Corps 
has had a standard practice to include a continuing contracts clause in 
most contracts as a precaution in the event that it might need to move 
funds from a project at a later date in the fiscal year to meet the 
agency's policy of expending all available appropriations in the fiscal 
year appropriated. 

As we reported in 2005, the Corps had come to rely excessively on 
reprogramming as its primary method to manage Civil Works project 
funds, with little consideration to pending needs or long-term 
financial planning and priority-setting.[Footnote 18] In our 2005 
report, we identified numerous instances where the Corps' policy of 
expending all available appropriations in the fiscal year appropriated 
had resulted in reprogramming actions that were inconsistent with the 
Corps' reprogramming guidance. Similarly, during this review of the 
Corps' use of continuing contracts, we found a number of instances 
where the Corps used its continuing contracts authority primarily to 
reprogram funds in furtherance of the agency's policy of expending all 
available appropriations in the fiscal year appropriated. For example, 
in some cases, we found that the Corps included a continuing contracts 
clause even in contracts that had been fully funded at the time of 
award, in case it needed to reprogram funds sometime later during the 
year from these contracts. In some other cases, according to Corps 
district officials, we found that the Corps modified fully funded 
contracts and converted them into continuing contracts so that 
obligations could be reprogrammed from these contracts. In addition, 
other continuing contracts were awarded in a manner that was 
inconsistent with the Corps' own guidance for the use of continuing 
contracts, but which allowed the agency to award end-of-year contracts 
and not carry over any end-of-year balances. A continuing contracts 
clause should identify the portion of the contract value that the Corps 
will reserve for the contract for the first fiscal year. However, we 
found four contracts that were awarded at the end of the fiscal year 
where the district initially obligated $50,000 to each of the 
contracts, but deobligated the entire $50,000 from each contract within 
1 day. These actions helped the Corps meets its policy of expending all 
available appropriations in the fiscal year appropriated by allowing 
the money to be spent on other contracts. 

A variety of other factors may also lead to the award of many 
continuing contracts late in the fiscal year.[Footnote 19] According to 
district officials, it is not uncommon for a continuing contract to be 
awarded late in the fiscal year in situations where (1) the district 
commander committed to awarding the contract in that fiscal year, (2) 
the district had agreements with the nonfederal sponsor that certain 
contracts would be awarded in that fiscal year, or (3) the district ran 
out of money to fully fund a contract. Of the 107 contracts we 
reviewed, over half of these (58) were awarded in the fourth quarter of 
the fiscal year. Of these, 27 were awarded in September, the last month 
of the fiscal year, and 15 of the 27 September contracts were awarded 
in the last week of the fiscal year. Because the Corps only obligated a 
small portion of the total contract amount to these contracts in the 
year that they were awarded, the bulk of the funds needed to cover most 
of the contracts had to come from future years' appropriations. 

The Corps' Revised Processes for Approving Continuing Contracts Has 
Reduced Their Use, but It Still Lacks Criteria for When Their Use Is 
Appropriate: 

In fiscal year 2005 and again in 2006, in response to congressional 
committee direction, the Corps implemented new processes that require 
districts to, among other things, obtain headquarters' approval before 
using continuing contracts. The new processes have reduced the total 
number of continuing contracts the Corps awarded in fiscal years 2005 
and 2006. However, the Corps has not established clear criteria for 
when it is appropriate to request and approve the use of continuing 
contracts. As a result, headquarters continues to receive and approve 
continuing contracts for short-term, low dollar value contracts. The 
Corps might have been able to fully fund some of these contracts if, at 
the time of award, the Corps had adequate appropriations to cover the 
contract amount. 

Fiscal Year 2005 Process Changes for Approving Continuing Contracts: 

Congressional committee direction contained in the conference report to 
the Consolidated Appropriations Act of 2005 required the Corps to 
monitor its use of continuing contracts and stated that the award of 
such contracts should be guided by responsible financial management 
practices. Further, according to Corps officials, based on their 
discussions with the House Subcommittee on Energy and Water 
Development, the Corps created a new process that required districts to 
obtain headquarters' approval before using continuing contracts. Corps 
headquarters' primary criterion for approving a request to use a 
continuing contract was whether or not the project was likely to 
receive appropriations in the next fiscal year. The first continuing 
contracts were approved using this criterion on March 30, 2005. In June 
2005, the Corps documented this change in procedure by issuing an 
interim policy guidance memorandum. The guidance stated that 
headquarters' approval was required for all continuing contracts, and 
that districts should seek to fully fund contracts whenever possible. 
The guidance also established criteria for the kinds of situations in 
which a contract should generally be fully funded. These situations 
include the following: 

* when the contract will span 2 fiscal years but will begin or end a 
short amount of time before or after a fiscal year, and sufficient 
appropriations can be made available to fully fund the contract without 
adversely affecting progress on other projects or prior reprogramming 
commitments; 

* when the contract will span 2 fiscal years but requires only a small 
amount of funding in the first or last fiscal year, and sufficient 
appropriations can be made available to fully fund the contract without 
adversely affecting progress on other projects or prior reprogramming 
commitments; 

* when future allocations of appropriated funds in amounts needed to 
support a continuing contract are unlikely, and appropriations already 
allocated for the project could be used to fully fund the contract; 
and: 

* for all, or portions of, Continuing Authorities Program 
projects.[Footnote 20] 

Unlike in the past when no oversight was provided to the districts' use 
of continuing contracts, Corps officials told us the new fiscal year 
2005 process for approving and using continuing contracts involved all 
levels of the agency--the district, division, and headquarters. The 
districts were required to submit written requests to their divisions 
if they were seeking approval to use continuing contracts. The requests 
were to include a discussion of alternative contracting options, 
whether the project would be budgeted for in subsequent fiscal years, 
the likelihood of the project receiving appropriations in subsequent 
fiscal years, and whether the needs identified in subsequent fiscal 
years' appropriations were reasonable given the Corps' budget 
environment. After the division reviewed the districts' request, the 
division either denied the request or forwarded it to headquarters. If 
the division denied the request, it might have suggested that the 
district provide additional information to support the request, fully 
fund the work, use an alternate contracting option, or wait until the 
next fiscal year to proceed with the work. Under the 2005 process, 
requests forwarded to headquarters for review were approved, withdrawn 
by the division, sent back to the division for more information, or 
denied. 

Fiscal Year 2006 Process Changes for Continuing Contracts: 

For fiscal year 2006, Congress provided additional direction to the 
Corps in the Energy and Water Development Appropriations Act of 2006. 
The law states that, (1) with certain exceptions, none of the funds 
made available in the act may be used to award any continuing contract 
or make modifications to any existing continuing contract that commits 
an amount for a project in excess of the amount appropriated for the 
project; and (2) notwithstanding any other provision of the law, the 
requirements regarding the use of continuing contracts under the Water 
Resources Development Act of 1999 shall apply only to projects funded 
under the operation and maintenance account and the operation and 
maintenance subaccount of the flood control, Mississippi River and 
tributaries account. To respond to these new congressional 
requirements, in December 2005, the Corps issued additional guidance 
that is effective through the end of fiscal year 2006, which, among 
other things:[Footnote 21] 

* reaffirmed its policy that districts should use fully funded 
contracts as their primary contracting option; 

* directed that continuing contracts should only be used as the 
contracting option of last resort; 

* summarized new information that the districts are required to provide 
in their requests to use continuing contracts, including an explanation 
on why using a continuing contract is in the best interest of the 
government; and: 

* directed districts to take measures to ensure that contractor costs 
generally do not exceed the amount appropriated for projects in fiscal 
year 2006. 

The Corps also continued to make additional policy changes in fiscal 
year 2006 to better manage the use of continuing contracts in response 
to the Energy and Water Development Appropriations Act of 2006. For 
example, in March 2006, to help districts comply with the requirement 
that contractors stop working on a contract once appropriations for the 
fiscal year were spent, Corps headquarters developed two new continuing 
contracts clauses.[Footnote 22] Corps headquarters directed districts 
to replace the existing continuing contracts clause with either one of 
two new continuing contracts clauses for most continuing contracts. 
These new clauses do not permit the contractor to work beyond the 
amount obligated in the contract for that year. Under the previous 
continuing contracts clause the contractor could continue working on 
the contract, which required the Corps to either reprogram funds or to 
make payments from the next fiscal year's funds when they were 
appropriated. By requiring the contractor to stop work once all 
reserved funds for a given project are spent, the Corps is effectively 
reasserting control in determining how future appropriations will be 
spent for specific contracts. 

The conference report accompanying the Energy and Water Development 
Appropriations Act of 2006 also specified that the Assistant Secretary 
of the Army for Civil Works would be responsible for approving the 
award of each continuing contract. According to the Corps, to simplify 
the administration of this provision, the Assistant Secretary of the 
Army for Civil Works, after coordination with the House and Senate 
Subcommittees for energy and water development appropriations, issued a 
memorandum in March 2006 pre-approving continuing contracts that met 
certain conditions for operation and maintenance work. These conditions 
include, among other things, being financed from the operation and 
maintenance account or the maintenance subaccount of the Mississippi 
River and tributaries account, and that districts have determined that 
using a continuing contract is the most cost-effective acquisition 
mechanism. In May 2006, the Corps delegated, to the divisions and 
districts, the authority to determine whether operation and maintenance 
contracts meet the conditions for pre-approval. As a consequence, Corps 
headquarters is no longer directly involved in the approval of these 
new operation and maintenance continuing contracts. Because these 
changes are relatively recent, it is too early to determine the effect 
that they will have on the districts' use of continuing contracts for 
operation and maintenance work. 

Process Changes Have Reduced the Number of Continuing Contracts, but 
Approvals Continue for Short-Term, Low Dollar Value Contracts: 

The Corps process changes in fiscal years 2005 and 2006 reduced the 
number of requests districts made to use continuing contracts. In 
fiscal year 2005, headquarters approved 141 requests during the 6 
months that the new procedures were in place (March 30 through 
September 30, 2005)[Footnote 23], but only 17 requests were approved 
during the first 6 months of fiscal year 2006 (October 1, 2005, through 
March 30, 2006). According to the Corps, the process changes that were 
made in response to discussions with the House Subcommittee on Energy 
and Water Development and the enactment of the Energy and Water 
Development Appropriations Act of 2006 were key in reducing the use of 
continuing contracts. 

Between March 30, 2005 (when the new approval process was implemented), 
and March 30, 2006, Corps headquarters approved most of the continuing 
contract requests that it received. The divisions received 180 requests 
from the districts, 175 of which were forwarded to headquarters for 
approval and 5 of which were denied.[Footnote 24] Of the 175 requests 
forwarded to headquarters for approval, 10 were withdrawn by the 
divisions prior to receiving approval.[Footnote 25] Headquarters 
approved 158 of the 165 requests it considered and denied 7 of them. 
The seven requests were denied primarily because they did not identify 
subsequent years' funding in their requests. The districts ultimately 
fully funded five of the seven requests that were denied. Table 4 
summarizes headquarters' reasons for denying the seven requests and how 
the districts proceeded with the work after the denial. 

Table 4: Headquarters' Reasons for Denying Seven Requests to Use a 
Continuing Contract and How Districts Proceeded with the Work: 

Contract: 1; 
Reason for denial: Contract could be fully funded: X; 
Reason for denial: Contract did not identify subsequent years' funding: 
[Empty]; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: X; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Contract: 2; 
Reason for denial: Contract could be fully funded: X; 
Reason for denial: Contract did not identify subsequent years' funding: 
[Empty]; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: X; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Contract: 3; 
Reason for denial: Contract could be fully funded: [Empty]; 
Reason for denial: Contract did not identify subsequent years' funding: 
X; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: X; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Contract: 4; 
Reason for denial: Contract could be fully funded: [Empty]; 
Reason for denial: Contract did not identify subsequent years' funding: 
X; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: X; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Contract: 5; 
Reason for denial: Contract could be fully funded: [Empty]; 
Reason for denial: Contract did not identify subsequent years' funding: 
X; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: 
[Empty]; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: X. 

Contract: 6; 
Reason for denial: Contract could be fully funded: [Empty]; 
Reason for denial: Contract did not identify subsequent years' funding: 
[Empty]; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
X; 
Reason for denial: Contracted work cannot use a continuing contract: 
[Empty]; 
Action taken to proceed with the work: Contract was fully funded: 
[Empty]; 
Action taken to proceed with the work: District assessing alternate 
contracting options: X; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Contract: 7; 
Reason for denial: Contract could be fully funded: [Empty]; 
Reason for denial: Contract did not identify subsequent years' funding: 
[Empty]; 
Reason for denial: Contract not in president's fiscal year 2007 budget: 
[Empty]; 
Reason for denial: Contracted work cannot use a continuing contract: 
X[A]; 
Action taken to proceed with the work: Contract was fully funded: X; 
Action taken to proceed with the work: District assessing alternate 
contracting options: [Empty]; 
Action taken to proceed with the work: Contract will use a new 
continuing contracts clause: [Empty]. 

Source: GAO analysis of Corps information. 

[A] This contract was for an environmental infrastructure project, 
which cannot use a continuing contract. 

[End of table] 

Although the Corps' revised approval processes reduced the number of 
continuing contracts districts used, they have not adequately addressed 
when the use of continuing contracts is appropriate. This is because 
the Corps' revised guidance established the situations in which 
districts should consider fully funding contracts, but did not 
establish similar criteria for when to use continuing contracts. 
Consequently, even with the new process changes, districts requested 
and headquarters approved the use of continuing contracts for 
contracted work that is of short term and has a low dollar value. The 
Corps believes that these requests demonstrated a strong business case 
for using a continuing contract;[Footnote 26] however, we believe that 
the Corps might have been able to fully fund some of these contracts 
if, at the time of award, the Corps had adequate appropriations to 
cover the contract amount. 

Moreover, under the new processes, in fiscal year 2005, Corps 
headquarters' primary criterion for approving a request to use a 
continuing contract was whether or not the project was likely to 
receive appropriations in the next fiscal year. If headquarters 
determined that there was little likelihood of the project receiving 
future years' appropriations it would generally deny the request for a 
continuing contract. By focusing its review on just this criterion, the 
Corps did not address factors such as length of work and dollar value 
of the contract, which we believe are also important factors to 
consider when justifying the need to use a continuing contract. Of the 
141 requests approved by headquarters between March 30 through 
September 30, 2005, only 24 (about 17 percent) were for contracts 
valued at more than $10 million and that required more than 12 calendar 
months to complete. In contrast, headquarters approved 38 of 141 
requests (almost 27 percent) for contracts valued at less than $10 
million and that required less than 12 calendar months to complete, and 
included 3 requests that were for contracts for less than $500,000. 
Table 5 summarizes information on the requests approved in fiscal year 
2005. 

Table 5: Total Number of Approved Requests to Use a Continuing Contract 
in Fiscal Year 2005: 

Number of months to complete work: Six or less; 
Contract value at award[A]: Less than $1 million: 2; 
Contract value at award[A]: From $1 million to less than $5 million: 
14; 
Contract value at award[A]: From $5 million to less than $10 million: 
1; 
Contract value at award[A]: More than $10 million: 1; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 18. 

Number of months to complete work: Between 6 and 12; 
Contract value at award[A]: Less than $1 million: 5; 
Contract value at award[A]: From $1 million to less than $5 million: 
15; 
Contract value at award[A]: From $5 million to less than $10 million: 
1; 
Contract value at award[A]: More than $10 million: 2; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 23. 

Number of months to complete work: Between 12 and 24; 
Contract value at award[A]: Less than $1 million: 1; 
Contract value at award[A]: From $1 million to less than $5 million: 
14; 
Contract value at award[A]: From $5 million to less than $10 million: 
5; 
Contract value at award[A]: More than $10 million: 5; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 25. 

Number of months to complete work: Greater than 24; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 
10; 
Contract value at award[A]: From $5 million to less than $10 million: 
9; 
Contract value at award[A]: More than $10 million: 19; 
Contract value at award[A]: Unknown: 1; 
Contract value at award[A]: Total number of approved requests: 39. 

Number of months to complete work: Unknown; 
Contract value at award[A]: Less than $1 million: 8; 
Contract value at award[A]: From $1 million to less than $5 million: 
23; 
Contract value at award[A]: From $5 million to less than $10 million: 
5; 
Contract value at award[A]: More than $10 million: 0; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 36. 

Number of months to complete work: Total; 
Contract value at award[A]: Less than $1 million: 16; 
Contract value at award[A]: From $1 million to less than $5 million: 
76; 
Contract value at award[A]: From $5 million to less than $10 million: 
21; 
Contract value at award[A]: More than $10 million: 27; 
Contract value at award[A]: Unknown: 1; 
Contract value at award[A]: Total number of approved requests: 141.  

Source: GAO analysis of Corps information. 

Note: Fiscal year 2005 requests include those approved during the 
period March 30 through September 30, 2005. 

[A] The contract value generally includes only the federal government's 
costs, except for those requests that did not distinguish between the 
federal government and a nonfederal sponsor's share of the costs. 

[End of table]

In fiscal year 2006, the Corps further revised headquarters' criteria 
for approving continuing contract requests (or for recommending 
approval by the Assistant Secretary, pursuant to the conference report 
guidance); however, these changes also did not address our concern 
about approving short-term, low dollar value continuing contracts. As a 
result, the Corps and the Assistant Secretary continued to approve such 
contracts as continuing contracts in fiscal year 2006. Of the 17 
requests approved by headquarters in fiscal year 2006 (as of March 30, 
2006), only 4 of the requests (about 24 percent) were for contracted 
work that required more than $10 million and more than 12 calendar 
months to complete; 2 approved continuing contract requests were for 
short-term, low dollar value requests. Table 6 summarizes information 
on the requests approved for fiscal year 2006, as of March 30, 2006. 

Table 6: Total Number of Approved Requests to Use a Continuing Contract 
in Fiscal Year 2006: 

Number of months to complete work: Six or less; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 2; 
Contract value at award[A]: From $5 million to less than $10 million: 
0; 
Contract value at award[A]: More than $10 million: 0; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 2. 

Number of months to complete work: Between 6 and 12; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 0; 
Contract value at award[A]: From $5 million to less than $10 million: 
0; 
Contract value at award[A]: More than $10 million: 0; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 0. 

Number of months to complete work: Between 12 and 24; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 2; 
Contract value at award[A]: From $5 million to less than $10 million: 
1; 
Contract value at award[A]: More than $10 million: 1; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 4. 

Number of months to complete work: Greater than 24; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 0; 
Contract value at award[A]: From $5 million to less than $10 million: 
3[B]; 
Contract value at award[A]: More than $10 million: 3; 
Contract value at award[A]: Unknown: 2; 
Contract value at award[A]: Total number of approved requests: 8. 

Number of months to complete work: Unknown; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 2; 
Contract value at award[A]: From $5 million to less than $10 million: 
0; 
Contract value at award[A]: More than $10 million: 1; 
Contract value at award[A]: Unknown: 0; 
Contract value at award[A]: Total number of approved requests: 3. 

Number of months to complete work: Total; 
Contract value at award[A]: Less than $1 million: 0; 
Contract value at award[A]: From $1 million to less than $5 million: 6; 
Contract value at award[A]: From $5 million to less than $10 million: 
4; 
Contract value at award[A]: More than $10 million: 5; 
Contract value at award[A]: Unknown: 2; 
Contract value at award[A]: Total number of approved requests: 17. 

Source: GAO analysis of Corps information. 

Note: Fiscal year 2006 requests include those approved from October 1, 
2005, through March 30, 2006. 

[A] The contract value generally includes only the federal government's 
costs, except in those requests that did not distinguish between the 
federal government and a nonfederal sponsor's share of the costs. 

[B] The Corps approved the use of a continuing contract for two of the 
requests because requiring that the two requests be fully funded would 
have required that the local communities fully fund their share of the 
project, thus creating an economic hardship. 

[End of table] 

Although the Corps' current criteria does not consider the duration and 
dollar value of contracts when making decisions about whether or not to 
award continuing contracts, agency officials are evaluating guidance 
for the fiscal year 2008 budget (and beyond) under which they would 
propose full funding of the federal government's commitment for 
contracts that are below a certain threshold. According to the Corps, 
this approach would reduce the use of continuing contracts up to 90 
percent by fiscal year 2010. 

Conclusions: 

The continuing contracts authority is a unique authority that provides 
the Corps with important flexibilities to manage multi-year, multi- 
million-dollar water resources projects. However, this authority also 
allows the Corps to commit the federal government to future financial 
obligations without appropriated funds to meet them. Because of the 
potential to create significant future liabilities for the federal 
government, it is critical that the Corps have appropriate processes 
and practices in place to ensure that the use of the continuing 
contracts privilege is not misused or overused. We continue to advocate 
that fully funding contracts at the time of award is the best way for 
federal agencies to manage contractual obligations. If the Corps 
continues to use continuing contracts, then it must be able to monitor 
and track the extent to which they are used. This will enable the Corps 
to accurately determine the extent to which it has committed future 
years' appropriations, and also readily provide information on the full 
amount of these financial commitments. 

Moreover, the Corps' past practice of routinely awarding continuing 
contracts (especially at the end of the fiscal year) to reprogram funds 
and avoid large carryover of unexpended balances, exemplifies, in our 
opinion, the need for clear criteria on when continuing contracts 
should be used. Even though the Corps has recently implemented new 
approval processes to restrict the use of continuing contracts, it has 
not yet established clear criteria to guide their use. As a result, 
while the Corps has reduced its reliance on continuing contracts, it 
continues to approve short-term, low dollar value contracts that may 
not justify the use of a continuing contract. Without meaningful 
criteria that include factors such as the length of time needed to 
complete the work and the dollar value of the contract, we believe that 
the Corps will not be able to assure that it uses continuing contracts 
appropriately. 

Recommendations for Executive Action: 

To ensure the judicious use of continuing contracts by the Corps 
districts and to provide better management of projects that use such 
contracts, we recommend that the Secretary of Defense direct the 
Commanding General and the Chief of Engineers of the U.S. Army Corps of 
Engineers to take the following three actions: 

* eliminate the routine use of continuing contracts by adopting good 
project planning and management practices rather than relying on 
continuing contracts; 

* establish meaningful criteria for the use of continuing contracts, 
including an assessment of dollar value and length of time needed to 
complete contracted work so that districts have clear guidance on when 
a continuing contract may be used; and: 

* develop a tracking system to monitor the use of continuing contracts. 

Agency Comments and Our Evaluation: 

We provided a draft copy of this report to the Department of Defense 
for review and comment. The Department stated that the report was very 
constructive and concurred with our recommendations. Specifically, the 
Department concurred with the recommendation that the Corps eliminate 
the routine use of continuing contracts by adopting good planning and 
management practices rather than relying on continuing contracts. The 
Department stated that it incorporated the appropriations committees' 
direction that discouraged continuing contracts and reprogramming in 
its execution guidance for fiscal year 2006. As a consequence, the 
number and dollar volume of new continuing contracts fell substantially 
in fiscal year 2006 compared to previous years. For its implementation 
guidance for fiscal year 2007, the Department stated that it will 
incorporate any new direction in law or committee reports, as well as 
lessons learned from fiscal year 2006. 

The Department concurred with our recommendation that the Corps 
establish meaningful criteria for the use of continuing contracts, 
including an assessment of dollar value and length of time needed to 
complete contracted work so that districts have clear guidance on when 
a continuing contract may be used. The Department stated that in its 
fiscal year 2007 implementation guidance it will include, among other 
things, clearer criteria on when it is appropriate to use continuing 
contracts including explicit consideration of dollar value and length 
of time. 

The Department concurred with our recommendation that the Corps develop 
a tracking system to monitor the use of continuing contracts. The 
Department said it has reviewed its data on continuing contracts and 
included corrections in its third quarterly report to the 
appropriations committees. The Department also stated that an automated 
tracking system will be established for its fiscal year 2007 
appropriations and retained indefinitely. 

The Department of Defense's comments on our draft report are included 
in appendix III. 

We will send copies of this report to interested congressional 
committees, the Commanding General and Chief of Engineers of the U.S. 
Army Corps of Engineers, the Secretary of Defense, and the Director of 
the Office of Management and Budget. We will make copies available to 
others on request. In addition, this report will be available at no 
charge on the GAO Web site at http://www.gao.gov. 

If you or your staff have questions about this report, please call me 
at (202) 512-3841 or contact me at mittala@gao.gov. Contact points for 
our Offices of Congressional Relations and Public Affairs may be found 
on the last page of this report. GAO staff who made key contributions 
to this report are listed in appendix IV. 

Signed by: 

Anu K. Mittal: 
Director, Natural Resources and Environment: 

[End of section] 

Appendix I: Scope and Methodology: 

To determine the number and dollar amount of continuing contracts the 
U.S. Army Corps of Engineers (Corps) awarded during fiscal years 2003- 
2005, we reviewed the Corps' quarterly reports to the appropriations 
committees on their use of these contracts. We also obtained the Corps' 
contracting data from the Army's Standard Procurement System. We 
analyzed information on the Corps' domestic Civil Works fixed-price and 
indefinite-delivery contracts (both construction contracts and 
operation and maintenance contracts) for fiscal years 2003-2005. We 
excluded the base contract of indefinite-delivery contracts from our 
analysis because these base contracts have no value and no work 
associated with them. Like the Corps, we treated individual task orders 
awarded against the base contract to carry out the work as separate 
contracts. Because the Corps does not track information on contracts 
that included a continuing contracts clause, we developed a methodology 
for identifying these contracts. Of the contracts we reviewed, we 
identified all of the contracts for which the Corps did not obligate 
the full contract amount. According to the Corps, in order to partially 
fund a contract, the contract has to be either an incrementally funded 
contract[Footnote 27] or a continuing contract. Using the data, we 
eliminated contracts identified by the Corps as incrementally funded 
that used either the limitation of funds clause or the Defense Federal 
Acquisition Regulations Supplement's incremental funding 
clause.[Footnote 28] We based our analyses on the most current data 
available and only included the federal portion of the continuing 
contracts' costs. We obtained from Corps officials monthly interest 
payment information contained in the Corps of Engineers' Financial 
Management System. We determined, based on interviews with Corps 
officials, comparison of data to contract files, and electronic data 
testing, that the data were sufficiently reliable for our purposes. 

To determine the circumstances in which the Corps used continuing 
contracts in fiscal years 2003-2005, we judgmentally selected three 
Corps districts that used a large number of continuing contracts and 
were located in divisions that awarded a large percentage of continuing 
contracts in fiscal years 2003-2005. We selected Galveston (Southwest 
division), Jacksonville (South Atlantic division), and Vicksburg 
(Mississippi Valley division). We identified and reviewed a random 
sample of 107 continuing contracts from these three districts. Within 
the three districts, we ordered the districts' continuing contracts in 
a random list using the continuing contracts identified in the Corps of 
Engineers' Financial Management System and a list of contracts the 
Corps identified as continuing contracts. We reviewed the continuing 
contract files based on this random list. We reviewed fixed-price and 
indefinite-delivery contracts and eliminated from our sample contracts 
that were fully funded. For each contract, we reviewed the contract 
files and entered information into a data collection instrument to 
ensure uniformity. We also interviewed the contracting and program 
management officials to obtain additional information on the contract, 
including information on the circumstances when continuing contracts 
were used. We entered information from the data collection instruments 
into a database for analysis and independently verified the contents of 
the database with information from the data collection instruments. We 
also reviewed the Corps' guidance documents and interviewed Corps 
officials at districts, divisions, and headquarters to determine the 
Corps' polices and procedures for using a continuing contract. We 
compared the information collected from each contract to the Corps' 
general policies and procedures for using continuing contracts. 

To determine how the Corps' process for approving and using continuing 
contracts changed since 2005 and whether the changes reduced their use 
of these contracts, we obtained Corps guidance documents for approving 
and using continuing contracts and interviewed Corps officials at 
districts, divisions, and headquarters. We also obtained information 
from Corps headquarters on districts' requests to use continuing 
contracts. For the purpose of our review, we treated a request as being 
equivalent to a contract. For example, if in one request, a district 
submitted information to justify the use of a continuing contract for 
two different contracts, then we counted this as two individual 
requests. We also surveyed the Corps' eight divisions to obtain 
information on the total number of requests to use continuing contracts 
submitted by each of their districts, requests forward by the division 
to headquarters, requests that were denied by the division, and 
requests that were denied by headquarters. We obtained responses from 
all eight divisions to our survey. We compared the information from the 
divisions' surveys to information that we obtained from Corps 
headquarters, and reconciled any differences. We entered information 
from the requests to use a continuing contract into a spreadsheet for 
analysis and independently verified the contents of the spreadsheet 
with information from the requests. We compared the requests to the 
Corps' internal guidance on the use of continuing contracts. 

We performed our work between December 2005 and July 2006, in 
accordance with generally accepted government auditing standards. 

[End of section] 

Appendix II: Characteristics of the Continuing Contracts Identified by 
GAO: 

This appendix provides additional characteristics of the continuing 
contracts awarded by the Corps during fiscal years 2003-2005 that we 
identified using the Corps' contracting data in the Army's Standard 
Procurement System. We summarize the 1,592 continuing contracts and 
include information on the total number of continuing contracts awarded 
by contract value and award date during this 3-year time frame. We also 
summarize the total number of continuing contracts awarded in each 
division and district during fiscal years 2003-2005. 

According to the Corps' contracting data for fiscal years 2003-2005, 
the contract values of 1,043 of 1,592 (over 65 percent) continuing 
contracts awarded were less than $1 million; only 64 of 1,592 (about 4 
percent) of the contracts were for more than $10 million. Table 7 
summarizes the full costs to the federal government for the 1,592 
continuing contracts. 

Table 7: Total Number of Continuing Contracts Awarded by the Full Costs 
to the Federal Government, Fiscal Years 2003-2005: 

Contract value: $1 million; 
Fiscal year: 2003: 464; 
Fiscal year: 2004: 386; 
Fiscal year: 2005: 193; 
Total number of continuing contracts: 1,043. 

Contract value: > $1million and $5 million; 
Fiscal year: 2003: 161; 
Fiscal year: 2004: 149; 
Fiscal year: 2005: 98; 
Total number of continuing contracts: 408. 

Contract value: > $5 million and $10 million; 
Fiscal year: 2003: 28; 
Fiscal year: 2004: 26; 
Fiscal year: 2005: 23; 
Total number of continuing contracts: 77. 

Contract value: > $10 million; 
Fiscal year: 2003: 16; 
Fiscal year: 2004: 22; 
Fiscal year: 2005: 26; 
Total number of continuing contracts: 64. 

Contract value: Total; 
Fiscal year: 2003: 669; 
Fiscal year: 2004: 583; 
Fiscal year: 2005: 340; 
Total number of continuing contracts: 1,592. 

Source: GAO analysis of Corps contracting data. 

[End of table] 

Our analysis of the Corps' contracting data indicates that 402 of 1,592 
(about 25 percent) of the continuing contracts awarded in fiscal years 
2003-2005 were fully funded within the fiscal year that they were 
awarded. About half of these contracts were awarded in the first fiscal 
quarter while the Corps was under a continuing budget resolution 
authority and its final appropriation was not yet known. We found 
another 66 contracts where a continuing contract was used to start a 
contract with no money. Table 8 summarizes the total number of 
continuing contracts by the percentage of federal funds made available 
in the first year for continuing contracts awarded in fiscal years 2003-
2005. 

Table 8: Total Number of Continuing Contracts by Percentage of Federal 
Funds Made Available in the First Year of the Contract, Fiscal Years 
2003-2005: 

Percentage of federal funds made available in first year of continuing 
contract: 0%; 
Fiscal year: 2003: 29; 
Fiscal year: 2004: 24; 
Fiscal year: 2005: 13; 
Total number of continuing contracts: 66. 

Percentage of federal funds made available in first year of continuing 
contract: > 0 and 10; 
Fiscal year: 2003: 127; 
Fiscal year: 2004: 115; 
Fiscal year: 2005: 49; 
Total number of continuing contracts: 291. 

Percentage of federal funds made available in first year of continuing 
contract: > 10 and 25; 
Fiscal year: 2003: 78; 
Fiscal year: 2004: 70; 
Fiscal year: 2005: 42; 
Total number of continuing contracts: 190. 

Percentage of federal funds made available in first year of continuing 
contract: > 25 and 50; 
Fiscal year: 2003: 91; 
Fiscal year: 2004: 95; 
Fiscal year: 2005: 43; 
Total number of continuing contracts: 229. 

Percentage of federal funds made available in first year of continuing 
contract: > 50 and 75; 
Fiscal year: 2003: 96; 
Fiscal year: 2004: 66; 
Fiscal year: 2005: 47; 
Total number of continuing contracts: 209. 

Percentage of federal funds made available in first year of continuing 
contract: > 75 and < 100; 
Fiscal year: 2003: 81; 
Fiscal year: 2004: 82; 
Fiscal year: 2005: 42; 
Total number of continuing contracts: 205. 

Percentage of federal funds made available in first year of continuing 
contract: 100%; 
Fiscal year: 2003: 167; 
Fiscal year: 2004: 131; 
Fiscal year: 2005: 104; 
Total number of continuing contracts: 402. 

Percentage of federal funds made available in first year of continuing 
contract: Total; 
Fiscal year: 2003: 669; 
Fiscal year: 2004: 583; 
Fiscal year: 2005: 340; 
Total number of continuing contracts: 1,592. 

Source: GAO analysis of Corps contracting data. 

Note: Contracts with 100 percent of funds available in the first year 
were partially funded at award but fully funded within the fiscal year 
they were awarded. 

[End of table] 

According to the Corps' contracting data for fiscal years 2003-2005, a 
large portion of each year's appropriations was obligated to continuing 
contracts awarded in previous fiscal years. For example, in fiscal year 
2005, the Corps obligated more than $781 million to continuing 
contracts awarded in fiscal years 2003 and 2004. Figure 1 summarizes 
the Corps' obligations by fiscal year for the 1,592 continuing 
contracts awarded during fiscal years 2003-2005. 

Figure 1: Obligations by Fiscal Year for Continuing Contracts Awarded, 
Fiscal Years 2003-2005: 

[See PDF for image] 

Source: GAO analysis of Corps contracting data. 

[End of figure] 

According to the Corps' contracting data for fiscal years 2003-2005, 
almost 44 percent of the 1,592 continuing contracts were awarded during 
the fourth quarter of the fiscal year. Figure 2 summarizes the total 
number of continuing contracts awarded, by quarter, in fiscal years 
2003-2005. 

Figure 2: Total Number of Continuing Contracts by Fiscal Quarter of 
Award, Fiscal Years 2003-2005: 

[See PDF for image] 

Source: GAO analysis of Corps contracting data. 

[End of figure] 

According to the Corps' contracting data for fiscal years 2003-2005, 
most of the commitments for continuing contracts came from the 
construction appropriations account. Table 9 summarizes the commitments 
for continuing contracts by appropriations accounts. 

Table 9: Commitments for Continuing Contracts Made by Appropriations 
Account, Fiscal Years 2003-2005: 

Dollars in millions. 

Appropriations account: Construction; 
Fiscal year: 2003: $585; 
Fiscal year: 2004: $923; 
Fiscal year: 2005: $617; 
Total: $2,125. 

Appropriations account: Operation and maintenance; 
Fiscal year: 2003: 301; 
Fiscal year: 2004: 387; 
Fiscal year: 2005: 282; 
Total: 970. 

Appropriations account: Flood control, Mississippi River and 
tributaries; 
Fiscal year: 2003: 103; 
Fiscal year: 2004: 62; 
Fiscal year: 2005: 105; 
Total: 269. 

Appropriations account: Other[A]; 
Fiscal year: 2003: 110; 
Fiscal year: 2004: 331; 
Fiscal year: 2005: 150; 
Total: 591. 

Appropriations account: Total; 
Fiscal year: 2003: $1,099; 
Fiscal year: 2004: $1,703; 
Fiscal year: 2005: $1,154; 
Total: $3,956. 

Source: GAO analysis of Corps contracting data. 

Note: During the 3-year period, the Corps received an additional $170 
million from nonfederal project sponsors. 

[A] The other account includes the following: investigations, flood 
control and coastal emergencies, regulatory programs, revolving funds, 
and the Inland Waterway Trust Fund. 

[End of table] 

The construction appropriations account was the source for the largest 
number of continuing contracts awarded. Some continuing contracts 
received appropriations from more than one account. Table 10 summarizes 
the total number of continuing contracts funded by each appropriations 
account. 

Table 10: Total Number of Continuing Contracts by Appropriations 
Account, Fiscal Years 2003-2005: 

Appropriations accounts: Construction; 
Fiscal year: 2003: 276; 
Fiscal year: 2004: 250; 
Fiscal year: 2005: 129; 
Total[B]: 655. 

Appropriations accounts: Operation and maintenance; 
Fiscal year: 2003: 233; 
Fiscal year: 2004: 224; 
Fiscal year: 2005: 116; 
Total[B]: 573. 

Appropriations accounts: Flood control, Mississippi River and 
tributaries; 
Fiscal year: 2003: 76; 
Fiscal year: 2004: 41; 
Fiscal year: 2005: 37; 
Total[B]: 154. 

Appropriations accounts: Other[A]; 
Fiscal year: 2003: 101; 
Fiscal year: 2004: 90; 
Fiscal year: 2005: 78; 
Total[B]: 269. 

Appropriations accounts: Total[B]; 
Fiscal year: 2003: 686; 
Fiscal year: 2004: 605; 
Fiscal year: 2005: 360; 
Total[B]: 1,651. 

Source: GAO analysis of Corps contracting data. 

[A] The other account includes the following: investigations, flood 
control and coastal emergencies, regulatory programs, revolving funds, 
and the Inland Waterway Trust Fund. 

[B] Some continuing contracts received appropriations from more than 
one account and are included in more than one account. 

[End of table] 

Of the Corps' eight divisions, four divisions--Mississippi Valley, 
South Atlantic, Great Lakes, and Northwest--account for about 72 
percent (and over 66 percent of the value) of the 1,592 continuing 
contracts awarded during fiscal years 2003-2005. Table 11 summarizes 
the total number and full costs to the federal government of continuing 
contracts awarded by division. 

Table 11: Total Number and Full Costs to the Federal Government of 
Continuing Contracts Awarded by Division, Fiscal Years 2003-2005: 

Division: Mississippi Valley; 
Total number of continuing contracts: Fiscal year: 2003: 148; 
Total number of continuing contracts: Fiscal year: 2004: 120; 
Total number of continuing contracts: Fiscal year: 2005: 70; 
Total number of continuing contracts: Total: 338; 
Full costs to the federal government: Fiscal year: 2003: $211,354,085; 
Full costs to the federal government: Fiscal year: 2004: $200,471,639; 
Full costs to the federal government: Fiscal year: 2005: $223,623,848; 
Full costs to the federal government: Fiscal year: Total: $635,449,572. 

Division: South Atlantic; 
Total number of continuing contracts: Fiscal year: 2003: 133; 
Total number of continuing contracts: Fiscal year: 2004: 101; 
Total number of continuing contracts: Fiscal year: 2005: 57; 
Total number of continuing contracts: Total: 291; 
Full costs to the federal government: Fiscal year: 2003: 256,418,689; 
Full costs to the federal government: Fiscal year: 2004: 277,679,098; 
Full costs to the federal government: Fiscal year: 2005: 171,286,604; 
Full costs to the federal government: Fiscal year: Total: 705,384,392. 

Division: Great Lakes; 
Total number of continuing contracts: Fiscal year: 2003: 105; 
Total number of continuing contracts: Fiscal year: 2004: 98; 
Total number of continuing contracts: Fiscal year: 2005: 62; 
Total number of continuing contracts: Total: 265; 
Full costs to the federal government: Fiscal year: 2003: 66,341,407; 
Full costs to the federal government: Fiscal year: 2004: 776,307,678; 
Full costs to the federal government: Fiscal year: 2005: 250,408,627; 
Full costs to the federal government: Fiscal year: Total: 
1,093,057,712. 

Division: Northwest; 
Total number of continuing contracts: Fiscal year: 2003: 111; 
Total number of continuing contracts: Fiscal year: 2004: 98; 
Total number of continuing contracts: Fiscal year: 2005: 48; 
Total number of continuing contracts: Total: 257; 
Full costs to the federal government: Fiscal year: 2003: 75,881,917; 
Full costs to the federal government: Fiscal year: 2004: 112,441,841; 
Full costs to the federal government: Fiscal year: 2005: 95,168,247; 
Full costs to the federal government: Fiscal year: Total: 283,492,005. 

Division: North Atlantic; 
Total number of continuing contracts: Fiscal year: 2003: 59; 
Total number of continuing contracts: Fiscal year: 2004: 63; 
Total number of continuing contracts: Fiscal year: 2005: 32; 
Total number of continuing contracts: Total: 154; 
Full costs to the federal government: Fiscal year: 2003: 93,427,779; 
Full costs to the federal government: Fiscal year: 2004: 108,228,554; 
Full costs to the federal government: Fiscal year: 2005: 126,398,547; 
Full costs to the federal government: Fiscal year: Total: 328,054,880. 

Division: Southwest; 
Total number of continuing contracts: Fiscal year: 2003: 61; 
Total number of continuing contracts: Fiscal year: 2004: 51; 
Total number of continuing contracts: Fiscal year: 2005: 37; 
Total number of continuing contracts: Total: 149; 
Full costs to the federal government: Fiscal year: 2003: 109,168,860; 
Full costs to the federal government: Fiscal year: 2004: 76,430,950; 
Full costs to the federal government: Fiscal year: 2005: 181,682,768; 
Full costs to the federal government: Fiscal year: Total: 367,282,578. 

Division: South Pacific; 
Total number of continuing contracts: Fiscal year: 2003: 48; 
Total number of continuing contracts: Fiscal year: 2004: 49; 
Total number of continuing contracts: Fiscal year: 2005: 32;  
Total number of continuing contracts: Total: 129; 
Full costs to the federal government: Fiscal year: 2003: 245,833,752; 
Full costs to the federal government: Fiscal year: 2004: 142,725,841; 
Full costs to the federal government: Fiscal year: 2005: 78,820,802; 
Full costs to the federal government: Fiscal year: Total: 467,380,395. 

Division: Pacific Ocean; 
Total number of continuing contracts: Fiscal year: 2003: 4; 
Total number of continuing contracts: Fiscal year: 2004: 3; 
Total number of continuing contracts: Fiscal year: 2005: 2; 
Total number of continuing contracts: Total: 9; 
Full costs to the federal government: Fiscal year: 2003: 40,172,666; 
Full costs to the federal government: Fiscal year: 2004: 8,836,477; 
Full costs to the federal government: Fiscal year: 2005: 26,948,350; 
Full costs to the federal government: Fiscal year: Total: 75,957,493. 

Division: Total; 
Total number of continuing contracts: Fiscal year: 2003: 669; 
Total number of continuing contracts: Fiscal year: 2004: 583; 
Total number of continuing contracts: Fiscal year: 2005: 340; 
Total number of continuing contracts: Total: 1,592; 
Full costs to the federal government: Fiscal year: 2003: 
$1,098,599,154; 
Full costs to the federal government: Fiscal year: 2004: 
$1,703,122,079; 
Full costs to the federal government: Fiscal year: 2005: 
$1,154,337,793; 
Full costs to the federal government: Fiscal year: Total: 
$3,956,059,026. 

Source: GAO analysis of Corps contracting data. 

[End of table] 

All 38 of the Corps' domestic districts awarded at least one continuing 
contract during fiscal years 2003-2005. Districts' use of continuing 
contracts ranged from Honolulu's 1 continuing contract to 
Jacksonville's 142 continuing contracts during the 3-year time frame. 
Table 12 summarizes the total number and full costs to the federal 
government of continuing contracts awarded by each district during 
fiscal years 2003-2005. 

Table 12: Total Number and Full Costs to the Federal Government of 
Continuing Contracts Awarded by District, Fiscal Years 2003-2005: 

District: Jacksonville; 
Total number of continuing contracts: Fiscal year: 2003: 65; 
Total number of continuing contracts: Fiscal year: 2004: 51; 
Total number of continuing contracts: Fiscal year: 2005: 26; 
Total number of continuing contracts: Total: 142;  
Full costs to the federal government: Fiscal year: 2003: $144,396,151; 
Full costs to the federal government: Fiscal year: 2004: $142,584,020; 
Full costs to the federal government: Fiscal year: 2005: $119,645,647; 
Full costs to the federal government: Total: $406,625,819. 

District: Vicksburg; 
Total number of continuing contracts: Fiscal year: 2003: 50; 
Total number of continuing contracts: Fiscal year: 2004: 22; 
Total number of continuing contracts: Fiscal year: 2005: 22; 
Total number of continuing contracts: Total: 94; 
Full costs to the federal government: Fiscal year: 2003: 88,066,978; 
Full costs to the federal government: Fiscal year: 2004: 30,913,686; 
Full costs to the federal government: Fiscal year: 2005: 61,997,017; 
Full costs to the federal government: Total: 180,977,681. 

District: Memphis; 
Total number of continuing contracts: Fiscal year: 2003: 31; 
Total number of continuing contracts: Fiscal year: 2004: 31; 
Total number of continuing contracts: Fiscal year: 2005: 20; 
Total number of continuing contracts: Total: 82; 
Full costs to the federal government: Fiscal year: 2003: 48,249,456; 
Full costs to the federal government: Fiscal year: 2004: 70,903,673; 
Full costs to the federal government: Fiscal year: 2005: 63,557,543; 
Full costs to the federal government: Total: 182,710,673. 

District: Walla Walla; 
Total number of continuing contracts: Fiscal year: 2003: 32; 
Total number of continuing contracts: Fiscal year: 2004: 36; 
Total number of continuing contracts: Fiscal year: 2005: 12; 
Total number of continuing contracts: Total: 80; 
Full costs to the federal government: Fiscal year: 2003: 13,152,231; 
Full costs to the federal government: Fiscal year: 2004: 27,424,601; 
Full costs to the federal government: Fiscal year: 2005: 5,103,979; 
Full costs to the federal government: Total: 45,680,811. 

District: Portland; 
Total number of continuing contracts: Fiscal year: 2003: 38; 
Total number of continuing contracts: Fiscal year: 2004: 16; 
Total number of continuing contracts: Fiscal year: 2005: 19; 
Total number of continuing contracts: Total: 73; 
Full costs to the federal government: Fiscal year: 2003: 23,312,900; 
Full costs to the federal government: Fiscal year: 2004: 18,123,246; 
Full costs to the federal government: Fiscal year: 2005: 56,232,398; 
Full costs to the federal government: Total: 97,668,544. 

District: Mobile; 
Total number of continuing contracts: Fiscal year: 2003: 28; 
Total number of continuing contracts: Fiscal year: 2004: 27; 
Total number of continuing contracts: Fiscal year: 2005: 15; 
Total number of continuing contracts: Total: 70; 
Full costs to the federal government: Fiscal year: 2003: 73,363,467; 
Full costs to the federal government: Fiscal year: 2004: 40,665,764; 
Full costs to the federal government: Fiscal year: 2005: 20,256,737; 
Full costs to the federal government: Total: 134,285,968. 

District: Louisville; 
Total number of continuing contracts: Fiscal year: 2003: 29; 
Total number of continuing contracts: Fiscal year: 2004: 35; 
Total number of continuing contracts: Fiscal year: 2005: 4; 
Total number of continuing contracts: Total: 68; 
Full costs to the federal government: Fiscal year: 2003: 28,295,240; 
Full costs to the federal government: Fiscal year: 2004: 577,885,226; 
Full costs to the federal government: Fiscal year: 2005: 23,612,598; 
Full costs to the federal government: Total: 629,793,064. 

District: Galveston; 
Total number of continuing contracts: Fiscal year: 2003: 34; 
Total number of continuing contracts: Fiscal year: 2004: 18; 
Total number of continuing contracts: Fiscal year: 2005: 16; 
Total number of continuing contracts: Total: 68; 
Full costs to the federal government: Fiscal year: 2003: 83,037,690; 
Full costs to the federal government: Fiscal year: 2004: 52,916,826; 
Full costs to the federal government: Fiscal year: 2005: 28,904,950;  
Full costs to the federal government: Total: 164,859,467. 

District: New Orleans; 
Total number of continuing contracts: Fiscal year: 2003: 34; 
Total number of continuing contracts: Fiscal year: 2004: 24; 
Total number of continuing contracts: Fiscal year: 2005: 9; 
Total number of continuing contracts: Total: 67; 
Full costs to the federal government: Fiscal year: 2003: 33,500,736; 
Full costs to the federal government: Fiscal year: 2004: 11,153,745; 
Full costs to the federal government: Fiscal year: 2005: 23,279,233; 
Full costs to the federal government: Total: 67,933,714. 

District: Sacramento; 
Total number of continuing contracts: Fiscal year: 2003: 10; 
Total number of continuing contracts: Fiscal year: 2004: 24; 
Total number of continuing contracts: Fiscal year: 2005: 14; 
Total number of continuing contracts: Total: 48; 
Full costs to the federal government: Fiscal year: 2003: 25,722,603; 
Full costs to the federal government: Fiscal year: 2004: 38,407,869; 
Full costs to the federal government: Fiscal year: 2005: 23,559,019; 
Full costs to the federal government: Total: 87,689,491. 

District: Los Angeles; 
Total number of continuing contracts: Fiscal year: 2003: 22; 
Total number of continuing contracts: Fiscal year: 2004: 12; 
Total number of continuing contracts: Fiscal year: 2005: 12; 
Total number of continuing contracts: Total: 46; 
Full costs to the federal government: Fiscal year: 2003: 124,079,132; 
Full costs to the federal government: Fiscal year: 2004: 25,874,734; 
Full costs to the federal government: Fiscal year: 2005: 51,808,004; 
Full costs to the federal government: Total: 201,761,870. 

District: Baltimore; 
Total number of continuing contracts: Fiscal year: 2003: 15; 
Total number of continuing contracts: Fiscal year: 2004: 18; 
Total number of continuing contracts: Fiscal year: 2005: 11; 
Total number of continuing contracts: Total: 44; 
Full costs to the federal government: Fiscal year: 2003: 16,114,744; 
Full costs to the federal government: Fiscal year: 2004: 31,392,195; 
Full costs to the federal government: Fiscal year: 2005: 35,984,641; 
Full costs to the federal government: Total: 83,491,580. 

District: Little Rock; 
Total number of continuing contracts: Fiscal year: 2003: 11; 
Total number of continuing contracts: Fiscal year: 2004: 19; 
Total number of continuing contracts: Fiscal year: 2005: 12; 
Total number of continuing contracts: Total: 42; 
Full costs to the federal government: Fiscal year: 2003: 6,524,151; 
Full costs to the federal government: Fiscal year: 2004: 13,641,946; 
Full costs to the federal government: Fiscal year: 2005: 124,103,897; 
Full costs to the federal government: Total: 144,269,993. 

District: St. Paul; 
Total number of continuing contracts: Fiscal year: 2003: 15; 
Total number of continuing contracts: Fiscal year: 2004: 19; 
Total number of continuing contracts: Fiscal year: 2005: 8; 
Total number of continuing contracts: Total: 42; 
Full costs to the federal government: Fiscal year: 2003: 21,314,700; 
Full costs to the federal government: Fiscal year: 2004: 54,179,480; 
Full costs to the federal government: Fiscal year: 2005: 28,469,738; 
Full costs to the federal government: Total: 103,963,918. 

District: Huntington; 
Total number of continuing contracts: Fiscal year: 2003: 20; 
Total number of continuing contracts: Fiscal year: 2004: 12; 
Total number of continuing contracts: Fiscal year: 2005: 9; 
Total number of continuing contracts: Total: 41; 
Full costs to the federal government: Fiscal year: 2003: 7,015,273; 
Full costs to the federal government: Fiscal year: 2004: 30,287,886; 
Full costs to the federal government: Fiscal year: 2005: 39,103,622; 
Full costs to the federal government: Total: 76,406,781. 

District: Kansas City; 
Total number of continuing contracts: Fiscal year: 2003: 12; 
Total number of continuing contracts: Fiscal year: 2004: 22; 
Total number of continuing contracts: Fiscal year: 2005: 5; 
Total number of continuing contracts: Total: 39; 
Full costs to the federal government: Fiscal year: 2003: 4,488,255; 
Full costs to the federal government: Fiscal year: 2004: 19,174,960; 
Full costs to the federal government: Fiscal year: 2005: 1,108,519; 
Full costs to the federal government: Total: 24,771,734. 

District: St. Louis; 
Total number of continuing contracts: Fiscal year: 2003: 14; 
Total number of continuing contracts: Fiscal year: 2004: 20; 
Total number of continuing contracts: Fiscal year: 2005: 5; 
Total number of continuing contracts: Total: 39; 
Full costs to the federal government: Fiscal year: 2003: 19,525,371; 
Full costs to the federal government: Fiscal year: 2004: 28,502,106; 
Full costs to the federal government: Fiscal year: 2005: 5,191,377; 
Full costs to the federal government: Total: 53,218,854. 

District: Wilmington; 
Total number of continuing contracts: Fiscal year: 2003: 17; 
Total number of continuing contracts: Fiscal year: 2004: 13; 
Total number of continuing contracts: Fiscal year: 2005: 7; 
Total number of continuing contracts: Total: 37; 
Full costs to the federal government: Fiscal year: 2003: 12,325,462; 
Full costs to the federal government: Fiscal year: 2004: 13,149,898; 
Full costs to the federal government: Fiscal year: 2005: 12,271,767; 
Full costs to the federal government: Total: 37,747,126. 

District: Seattle; 
Total number of continuing contracts: Fiscal year: 2003: 18; 
Total number of continuing contracts: Fiscal year: 2004: 11; 
Total number of continuing contracts: Fiscal year: 2005: 6; 
Total number of continuing contracts: Total: 35; 
Full costs to the federal government: Fiscal year: 2003: 14,423,451; 
Full costs to the federal government: Fiscal year: 2004: 19,607,356; 
Full costs to the federal government: Fiscal year: 2005: 21,635,892; 
Full costs to the federal government: Total: 55,666,699. 

District: Detroit; 
Total number of continuing contracts: Fiscal year: 2003: 10; 
Total number of continuing contracts: Fiscal year: 2004: 14; 
Total number of continuing contracts: Fiscal year: 2005: 10; 
Total number of continuing contracts: Total: 34; 
Full costs to the federal government: Fiscal year: 2003: 6,490,988; 
Full costs to the federal government: Fiscal year: 2004: 22,220,346; 
Full costs to the federal government: Fiscal year: 2005: 11,721,323; 
Full costs to the federal government: Total: 40,432,656. 

District: Philadelphia; 
Total number of continuing contracts: Fiscal year: 2003: 12; 
Total number of continuing contracts: Fiscal year: 2004: 19; 
Total number of continuing contracts: Fiscal year: 2005: 2; 
Total number of continuing contracts: Total: 33; 
Full costs to the federal government: Fiscal year: 2003: 22,769,997; 
Full costs to the federal government: Fiscal year: 2004: 55,937,326; 
Full costs to the federal government: Fiscal year: 2005: 6,400,394; 
Full costs to the federal government: Total: 85,107,716. 

District: Omaha; 
Total number of continuing contracts: Fiscal year: 2003: 11; 
Total number of continuing contracts: Fiscal year: 2004: 13; 
Total number of continuing contracts: Fiscal year: 2005: 6; 
Total number of continuing contracts: Total: 30; 
Full costs to the federal government: Fiscal year: 2003: 20,505,079; 
Full costs to the federal government: Fiscal year: 2004: 28,111,678; 
Full costs to the federal government: Fiscal year: 2005: 11,087,459; 
Full costs to the federal government: Total: 59,704,216. 

District: Pittsburgh; 
Total number of continuing contracts: Fiscal year: 2003: 18; 
Total number of continuing contracts: Fiscal year: 2004: 8; 
Total number of continuing contracts: Fiscal year: 2005: 5; 
Total number of continuing contracts: Total: 31; 
Full costs to the federal government: Fiscal year: 2003: 9,738,860; 
Full costs to the federal government: Fiscal year: 2004: 103,453,306; 
Full costs to the federal government: Fiscal year: 2005: 21,205,797; 
Full costs to the federal government: Total: 134,397,963. 

District: Nashville; 
Total number of continuing contracts: Fiscal year: 2003: 10; 
Total number of continuing contracts: Fiscal year: 2004: 8; 
Total number of continuing contracts: Fiscal year: 2005: 13; 
Total number of continuing contracts: Total: 31; 
Full costs to the federal government: Fiscal year: 2003: 2,735,434; 
Full costs to the federal government: Fiscal year: 2004: 10,692,771; 
Full costs to the federal government: Fiscal year: 2005: 103,378,174; 
Full costs to the federal government: Total: 116,806,379. 

District: Chicago; 
Total number of continuing contracts: Fiscal year: 2003: 9; 
Total number of continuing contracts: Fiscal year: 2004: 10; 
Total number of continuing contracts: Fiscal year: 2005: 11; 
Total number of continuing contracts: Total: 30; 
Full costs to the federal government: Fiscal year: 2003: 9,040,432; 
Full costs to the federal government: Fiscal year: 2004: 27,298,298; 
Full costs to the federal government: Fiscal year: 2005: 41,616,047; 
Full costs to the federal government: Total: 77,954,777. 

District: New England; 
Total number of continuing contracts: Fiscal year: 2003: 9; 
Total number of continuing contracts: Fiscal year: 2004: 11; 
Total number of continuing contracts: Fiscal year: 2005: 10; 
Total number of continuing contracts: Total: 30; 
Full costs to the federal government: Fiscal year: 2003: 10,387,794; 
Full costs to the federal government: Fiscal year: 2004: 4,141,081; 
Full costs to the federal government: Fiscal year: 2005: 5,202,937; 
Full costs to the federal government: Total: 19,731,812. 

District: Buffalo; 
Total number of continuing contracts: Fiscal year: 2003: 9; 
Total number of continuing contracts: Fiscal year: 2004: 11; 
Total number of continuing contracts: Fiscal year: 2005: 10; 
Total number of continuing contracts: Total: 30; 
Full costs to the federal government: Fiscal year: 2003: 3,025,180; 
Full costs to the federal government: Fiscal year: 2004: 4,469,845; 
Full costs to the federal government: Fiscal year: 2005: 9,771,066; 
Full costs to the federal government: Total: 17,266,091. 

District: New York; 
Total number of continuing contracts: Fiscal year: 2003: 11; 
Total number of continuing contracts: Fiscal year: 2004: 13; 
Total number of continuing contracts: Fiscal year: 2005: 4; 
Total number of continuing contracts: Total: 28; 
Full costs to the federal government: Fiscal year: 2003: 28,012,322; 
Full costs to the federal government: Fiscal year: 2004: 15,557,452; 
Full costs to the federal government: Fiscal year: 2005: 77,211,076; 
Full costs to the federal government: Total: 120,780,850. 

District: Albuquerque; 
Total number of continuing contracts: Fiscal year: 2003: 10; 
Total number of continuing contracts: Fiscal year: 2004: 9; 
Total number of continuing contracts: Fiscal year: 2005: 5; 
Total number of continuing contracts: Total: 24; 
Full costs to the federal government: Fiscal year: 2003: 79,633,600; 
Full costs to the federal government: Fiscal year: 2004: 20,273,752; 
Full costs to the federal government: Fiscal year: 2005: 1,872,680; 
Full costs to the federal government: Total: 101,780,031. 

District: Savannah; 
Total number of continuing contracts: Fiscal year: 2003: 12; 
Total number of continuing contracts: Fiscal year: 2004: 5; 
Total number of continuing contracts: Fiscal year: 2005: 6; 
Total number of continuing contracts: Total: 23; 
Full costs to the federal government: Fiscal year: 2003: 13,375,225; 
Full costs to the federal government: Fiscal year: 2004: 50,182,815; 
Full costs to the federal government: Fiscal year: 2005: 14,204,840; 
Full costs to the federal government: Total: 77,762,879. 

District: Fort Worth; 
Total number of continuing contracts: Fiscal year: 2003: 10; 
Total number of continuing contracts: Fiscal year: 2004: 6; 
Total number of continuing contracts: Fiscal year: 2005: 6; 
Total number of continuing contracts: Total: 22; 
Full costs to the federal government: Fiscal year: 2003: 2,007,514; 
Full costs to the federal government: Fiscal year: 2004: 298,253; 
Full costs to the federal government: Fiscal year: 2005: 26,633,736; 
Full costs to the federal government: Total: 28,939,503. 

District: Charleston; 
Total number of continuing contracts: Fiscal year: 2003: 11; 
Total number of continuing contracts: Fiscal year: 2004: 5; 
Total number of continuing contracts: Fiscal year: 2005: 3; 
Total number of continuing contracts: Total: 19; 
Full costs to the federal government: Fiscal year: 2003: 12,958,385; 
Full costs to the federal government: Fiscal year: 2004: 31,096,602; 
Full costs to the federal government: Fiscal year: 2005: 4,907,613; 
Full costs to the federal government: Total: 48,962,599. 

District: Norfolk; 
Total number of continuing contracts: Fiscal year: 2003: 12; 
Total number of continuing contracts: Fiscal year: 2004: 2; 
Total number of continuing contracts: Fiscal year: 2005: 5; 
Total number of continuing contracts: Total: 19; 
Full costs to the federal government: Fiscal year: 2003: 16,142,922; 
Full costs to the federal government: Fiscal year: 2004: 1,200,500; 
Full costs to the federal government: Fiscal year: 2005: 1,599,499; 
Full costs to the federal government: Total: 18,942,921. 

District: Tulsa; 
Total number of continuing contracts: Fiscal year: 2003: 6; 
Total number of continuing contracts: Fiscal year: 2004: 8; 
Total number of continuing contracts: Fiscal year: 2005: 3; 
Total number of continuing contracts: Total: 17; 
Full costs to the federal government: Fiscal year: 2003: 17,599,505; 
Full costs to the federal government: Fiscal year: 2004: 9,573,926; 
Full costs to the federal government: Fiscal year: 2005: 2,040,184; 
Full costs to the federal government: Total: 29,213,616. 

District: Rock Island; 
Total number of continuing contracts: Fiscal year: 2003: 4; 
Total number of continuing contracts: Fiscal year: 2004: 4; 
Total number of continuing contracts: Fiscal year: 2005: 6; 
Total number of continuing contracts: Total: 14; 
Full costs to the federal government: Fiscal year: 2003: 696,843; 
Full costs to the federal government: Fiscal year: 2004: 4,818,950; 
Full costs to the federal government: Fiscal year: 2005: 41,128,939; 
Full costs to the federal government: Total: 46,644,733. 

District: San Francisco; 
Total number of continuing contracts: Fiscal year: 2003: 6; 
Total number of continuing contracts: Fiscal year: 2004: 4; 
Total number of continuing contracts: Fiscal year: 2005: 1; 
Total number of continuing contracts: Total: 11; 
Full costs to the federal government: Fiscal year: 2003: 16,398,417; 
Full costs to the federal government: Fiscal year: 2004: 58,169,486; 
Full costs to the federal government: Fiscal year: 2005: 1,581,100; 
Full costs to the federal government: Total: 76,149,003. 

District: Alaska; 
Total number of continuing contracts: Fiscal year: 2003: 3; 
Total number of continuing contracts: Fiscal year: 2004: 3; 
Total number of continuing contracts: Fiscal year: 2005: 2; 
Total number of continuing contracts: Total: 8; 
Full costs to the federal government: Fiscal year: 2003: 40,047,170; 
Full costs to the federal government: Fiscal year: 2004: 8,836,477; 
Full costs to the federal government: Fiscal year: 2005: 26,948,350; 
Full costs to the federal government: Total: 75,831,997. 

District: Honolulu; 
Total number of continuing contracts: Fiscal year: 2003: 1; 
Total number of continuing contracts: Fiscal year: 2004: 0; 
Total number of continuing contracts: Fiscal year: 2005: 0; 
Total number of continuing contracts: Total: 1; 
Full costs to the federal government: Fiscal year: 2003: 125,496; 
Full costs to the federal government: Fiscal year: 2004: 0; 
Full costs to the federal government: Fiscal year: 2005: 0; 
Full costs to the federal government: Total: 125,496. 

District: Total; 
Total number of continuing contracts: Fiscal year: 2003: 669; 
Total number of continuing contracts: Fiscal year: 2004: 583; 
Total number of continuing contracts: Fiscal year: 2005: 340; 
Total number of continuing contracts: Total: 1,592; 
Full costs to the federal government: Fiscal year: 2003: 
$1,098,599,154; 
Full costs to the federal government: Fiscal year: 2004: 
$1,703,122,079; 
Full costs to the federal government: Fiscal year: 2005: 
$1,154,337,793; 
Full costs to the federal government: Total: $3,956,059,026. 

Source: GAO analysis of Corps contracting data. 

[End of table] 

[End of section] 

Appendix III: Comments from the Department of Defense: 

Department Of The Army: 
Office Of The Assistant Secretary: 
Civil Works: 
108 Army Pentagon: 
Washington DC 20310-0108: 

Aug 25 2006: 

Ms. Anu K. Mittal: 
Director, Defense Capabilities and Management: 
U.S. Government Accountability Office: 
441 G Street, N.W. 
Washington, D.C. 20548: 

Dear Ms. Mittal: 

This is the Department of Defense (DoD) response to the GAO draft 
report, 'Army Corps Of Engineers: Improved Monitoring and Clear 
Guidance Would Contribute to More Effective Use of Continuing 
Contracts,' dated July 28, 2006, (GAO Code 360631/GAO-06-966). 

The draft report is very constructive. DoD concurs with all three 
recommendations (see enclosure). I look forward to GAO's completion and 
transmittal of the report. 

Very truly yours, 

Signed by: 

John Paul Woodley, Jr. 
Assistant Secretary of the Army (Civil Works): 

Enclosure: 

GAO Draft Report - Dated July 28, 2006 GAO Code 360631/GAO-06-966: 

"Army Corps Of Engineers: Improved Monitoring And Clear Guidance Would 
Contribute To More Effective Use Of Continuing Contracts" 

Department Of Defense Comments To The Recommendations: 

Recommendation 1: The GAO recommended that the Secretary of Defense 
direct the Commanding General and the Chief of Engineers of the U.S. 
Army Corps of Engineers to eliminate the routine use of continuing 
contracts by adopting good planning and management practices rather 
than relying on continuing contracts. (p. 29/GAO Draft Report): 

DOD Response: Concur. 

Prior to Fiscal Year 2006, 33 U.S.C. 2331 prohibited the Corps of 
Engineers from applying a fully allocated funding policy and required 
the award of continuing contracts in certain situations. The Energy and 
Water Development Appropriations Act for Fiscal Year (FY) 2006 limited 
the applicability of 33 U.S.C. 2331. However, continuing contracts are 
still required by law for some projects funded with operation and 
maintenance appropriations. 

Furthermore, prior to FY 2006 the Appropriations Committees had 
provided guidance (see e.g. Senate Report 108-105 and House Report 108- 
212) encouraging the use of continuing contracts and reprogramming to 
obligate and expend available funds. The guidance of the Conference 
Committee for FY 2006 superseded the prior guidance and discouraged 
continuing contracts and reprogramming, and the FY 2006 Act included 
provisions establishing funding requirements for continuing contracts 
and modifications thereto, and requiring notification to the Committees 
for reprogrammings exceeding certain thresholds. 

The Corps of Engineers execution guidance for FY 2006 is contained in 
Engineer Circular 11-2-189. This guidance implements the direction in 
law and Committee reports for FY 2006, and, accordingly, represents a 
substantial change from previous practice. With respect to continuing 
contracts, it establishes a policy that (except where a continuing 
contract is required by law) continuing contracts are to be used only 
where there is a strong business case, as where other types of 
contracting mechanisms are impractical, funding for the contractor's 
future earnings under such a contract is relatively certain, and there 
would be significant adverse consequences should the funded work not 
proceed with the available funds. (It should be noted that in some 
cases a good business case can be made for continuing contracts under 
$10 million or of short duration.) In addition, it establishes planning 
and management mechanisms for the review and approval of each proposed 
continuing contract, in addition to other funds management mechanisms. 

As a consequence of these actions, the number and dollar volume of new 
continuing contracts has fallen substantially in FY 2006 compared to 
previous years. 

Once Congress has acted on FY 2007 appropriations, the Corps will 
develop its implementing guidance for FY 2007. The guidance will 
reflect any new direction in law or Committee reports, as well as 
lessons learned from FY 2006. 

Recommendation 2: The GAO recommended that the Secretary of Defense 
direct the Commanding General and the Chief of Engineers of the U.S. 
Army Corps of Engineers to establish meaningful criteria for the use of 
continuing contracts, including an assessment of dollar value and 
length of time needed to complete contracted work so that districts 
have clear guidance on when it inappropriate to use a continuing 
contract. (p. 29/GAO Draft Report). 

DOD Response: Concur. The implementing guidance for FY 2006 established 
criteria for the use of continuing contracts. Once Congress has acted 
on FY 2007 appropriations, the Corps will develop its implementing 
guidance for FY 2007 appropriations. The guidance will reflect lesson 
learned from FY 2006, including establishing clearer criteria on when 
it is appropriate to use continuing contracts. The criteria will 
include explicit consideration of dollar value and length of time. The 
guidance, however, must continue to ensure that Corps awards continuing 
contracts when required by 33 U.S.C. 2331. 

Recommendation 3: The GAO recommended that the Secretary of Defense 
direct the Commanding General and the Chief of Engineers of the U.S. 
Army Corps of Engineers to develop a tracking system to monitor the use 
of continuing contracts. (p. 29/GAO Draft Report): 

DOD Response: Concur. As an interim measure, the Corps performed a 
review of its data on continuing contracts awarded through the second- 
quarter of FY 2006, and corrections are being included in the third 
quarter report to the Appropriations Committees. For the longer term, 
an automated tracking system will be established through the 
implementing guidance for FY 2007 appropriations, and will be retained 
indefinitely. 

[End of section] 

Appendix IV: GAO Contact and Staff Acknowledgments: 

GAO Contact: 

Anu K. Mittal (202) 512-3841: 

Staff Acknowledgments: 

In addition to the individual named above, Edward Zadjura, Assistant 
Director; Lisa Berardi; Brandon Booth; Diana Cheng Goody; Joel 
Grossman; Ken Lightner; John Mingus; Alison O'Neill; and Barbara 
Timmerman made key contributions to this report. Also contributing to 
this report were Thomas Armstrong, Christine Bonham, Molly Boyle, 
Doreen Feldman, Cynthia Norris, and Amelia Shachoy. 

FOOTNOTES 

[1] The Antideficiency Act prohibits agencies from entering into 
contracts which exceed currently available appropriations or which 
obligate appropriations not yet made. 

[2] 33 U.S.C. � 2331. The law applies to projects funded from the 
construction; 
operation and maintenance; 
and flood control, Mississippi River and tributaries appropriations 
accounts. A provision of the Energy and Water Development 
Appropriations Act of 2006 limited this requirement to projects funded 
from the operation and maintenance account and the operation and 
maintenance subaccount of the Mississippi River and tributaries 
account. 

[3] The committee did not define what it meant by large contracts. For 
the purposes of our review, we defined large contracts as those that 
cost more than $10 million. 

[4] Notwithstanding how the Corps views their continuing contracts, 
these contracts are also incrementally funded. Incremental funding is 
the practice of providing budget authority for only a portion of a 
capital acquisition or project. 

[5] Nonfederal sponsors (state, tribal, county, and local agencies) 
generally share the costs for a project with the Corps and provide, 
among other things, financial contributions, to complete the work. 

[6] The changes to the Corps' program execution process are in the 
Corps' December 2005 Engineering Circular 11-2-189. 

[7] Continuing Authorities Program projects, such as beach erosion, 
navigation, and flood control activities, generally do not receive 
specific congressional authorization or appropriations and are 
conducted at the Corps' discretion based on the availability of funds. 

[8] These governmentwide reports include: Budget Issues: Alternative 
Approaches to Finance Federal Capital, GAO-03-1011 (Washington, D.C.: 
Aug. 21, 2003); 
Executive Guide: Leading Practices in Capital Decision- Making, 
GAO/AIMD-99-32 (Washington, D.C.: Dec. 1998); 
and Budget Issues: Budgeting for Federal Capital, GAO/AIMD-97-5 
(Washington, D.C.: Nov. 12, 1996). 

[9] We analyzed the Corps' contracting data contained in the Army's 
Standard Procurement System database. For more information on the 
methodology for our analysis, see appendix I. 

[10] These fully funded contracts ranged from as small as $1 to as 
large as $49 million at award, with a median value of $17,894. 

[11] About half of these contracts were awarded in the first fiscal 
quarter while the Corps was under a continuing budget resolution 
authority; 
its final appropriation was not known at the time of this report. 

[12] The Corps' annual $4 billion budget includes appropriations for 
both new and on-going contracts. 

[13] The Corps may fund a continuing contract from more than one 
appropriations account. 

[14] These accounts include, among others, the investigations, flood 
control and coastal emergencies, revolving funds, and regulatory 
programs accounts. 

[15] For example, one district awarded a continuing contract for 
$14,614 in April 2003 and only obligated $6,739 to that fiscal year's 
appropriations. The district subsequently awarded 38 more continuing 
contracts in that fiscal year and obligated over $9.7 million to these 
contracts. We believe the district could likely have obligated the 
remaining $7,875 to the April 2003 contract from this $9.7 million. 

[16] For the purposes of this report low dollar value is a contract 
that is for less than $10 million. 

[17] Although not included in the 107 contracts, we found that--in 
addition to construction, and operation and maintenance work-- 
continuing contracts were also used for service contracts, such as 
archaeological work, marine benthic surveys, and a purchase order for 
the operation of a visitor's center. Generally, these additional 
contracts were valued at less than $500,000. 

[18] For additional information on the Corps' use of reprogramming, see 
GAO, Army Corps of Engineers: Improved Planning and Financial 
Management Should Replace Reliance on Reprogramming Actions to Manage 
Project Funds, GAO-05-946 (Washington, D.C.: Sept. 16, 2005). 

[19] In addition, Corps officials said that environmental windows to 
protect, among others, sea turtles, can cause continuing contracts to 
be awarded late in the year to ensure that dredging work begins at the 
start of the next fiscal year. 

[20] Continuing Authorities Program projects are conducted at the 
Corps' discretion based on the availability of funds and generally do 
not receive specific congressional authorization or appropriations. 
These projects include activities for beach erosion, navigation, and 
flood control. 

[21] The Corps issued this guidance in its Engineering Circular 11-2- 
189. 

[22] The Corps issued this guidance in Principal Assistant Responsible 
for Contracting Instruction letter 2006-05, Continuing Contracts and 
Incrementally Funded Contracts for Fiscal Year 2006. 

[23] Districts may not have proceeded with a continuing contract for 
all of the requests that were approved by headquarters because, in some 
instances, the districts chose not to. 

[24] Divisions used the following reasons for denying the requests: 
fiscal year 2005 appropriations were insufficient to cover the 
contractor's expenses, the contract could be fully funded, there were 
problems with the cost estimate, and the contract was for an 
environmental infrastructure project (which must be fully funded, 
according to Corps guidance). 

[25] Divisions withdrew these requests, primarily because the work 
could be fully funded or because there was uncertainty about 
appropriations. 

[26] The Corps also noted there could be some cases in which a 
continuing contract may be required, such as when a nonfederal sponsor, 
i.e., the local community, could not afford to match federal funds 
under the lump-sum approach. 

[27] Notwithstanding how the Corps views their continuing contracts, 
these contracts are also incrementally funded. Incremental funding is 
the practice of providing budget authority for only a portion of a 
capital acquisition or project. 

[28] The limitation of funds clause is found at the Federal Acquisition 
Regulation 52.232-22; 
the Department of Defense's incremental funding clause is found at the 
Defense Federal Acquisition Regulation Supplement 252.232-7007. 

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