OVERSIGHT HEARING ON THE BUREAU OF RECLAMATION’S AGING INFRASTRUCTURE
McGinnis, Charles I.
U.S. Army Corps of Engineers (retired), Charlottesville, Virginia
Member, Committee on Organizing to Manage Construction and Infrastructure in the 21st Century Bureau Of Reclamation
Board on Infrastructure and the Constructed Environment
Division on Engineering and Physical Sciences
The National Academies
Subcommittee on Water and Power
Committee on Energy and Natural Resources
April 17, 2008
Good afternoon, Mr. Chairman and members of the Committee. My name is Charles I. McGinnis. I am a retired Major General and former director of civil works for the U.S. Army Corps of Engineers. I served on the National Research Council Committee which authored the report, Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation. The National Research Council is the operating arm of the National Academy of Sciences, National Academy of Engineering, and the Institute of Medicine of the National Academies, and its goal is to provide elected leaders, policy makers, and the public with expert advice based on sound scientific evidence.
I appreciate the opportunity to be here to discuss our report, which was published in 2006. The report contained recommendations on a broad range of issues, including organizational structure, policy development, project management, acquisition and contracting, and stakeholder relationships. Today I will focus on those issues and recommendations that pertain to the management, operation, and maintenance of Reclamation’s aging infrastructure, and provide a brief summary of the Bureau’s response to the report. My written testimony, which has been submitted for the record, includes an appendix with additional information from the study.
The study committee was asked by the Department of the Interior to advise Reclamation and the department on the “appropriate organizational, management, and resource configurations to meet its construction, maintenance, and infrastructure requirements for its missions of the 21st century.” The committee was comprised of 12 experts from the public and private sectors and academia. We met as a whole four times from February to August 2005 and conducted small-group site visits to offices and projects in each of the five Reclamation regions. We received briefings from and had discussions with Reclamation representatives, Reclamation’s customers and other stakeholders, and representatives of organizations with missions similar to Reclamation’s, including the U.S. Army Corps of Engineers, the Tennessee Valley Authority, and the California Department of Water Resources.
Asset Management Issues
Since its establishment in 1902, Reclamation has constructed more than 500 dams and hydropower plants, and more than 300 related structures including pumping plants, fish protection facilities, and buildings. At this time, however, relatively few large new projects are planned. As a consequence, Reclamation’s focus and workload have shifted from building new facilities to operating, maintaining, repairing, and modernizing existing ones, and to evaluating dam safety, providing for dam security, and addressing environmental issues.
This transition brings with it significant changes in the workload and in the responsibilities, duties, and activities of the workforce. Reclamation’s current work is dominated by two categories of tasks: (1) the operation, maintenance and rehabilitation of existing structures and systems; and (2) the creation and brokering of agreements among a variety of groups and interests affected by the management of water resources.
Although its activities have changed, Reclamation’s mission continues to be the effective management of power and water resources in ways that protect the health, safety, and welfare of the American public and are environmentally and economically sound. Achieving these objectives will depend on Reclamation’s ability to effectively manage a number of constraints and realities. These include:
- Aging infrastructure. Many of Reclamation’s dams, power plants, and related infrastructure are more than 50 years old, and some are almost 100 years old. Most embody out-of-date design, engineering practices, and materials. Their age increases their maintenance requirements as the structures and equipment reach or pass their design lifetimes, and wear out through daily use.
- Transferred works. Some facilities are owned by Reclamation but operated and maintained by users such as water districts. These “transferred works” are generally irrigation-system-related facilities, including smaller dams, dikes, pumping plants, and canals. The resources and sophistication of the water districts that operate and maintain transferred works vary. Although some districts are willing and able to perform a larger role, others have fewer resources. Some water customers already find full payment for operation and maintenance activities difficult, and major repairs and modernization needs, if included in the operations and maintenance budget, impose an even greater financial burden that cannot be met under the current repayment requirements.
- Increasing competition for declining resources. Although water availability is declining in many parts of the West, existing water users continue to demand reliable systems to provide as much water as they have used historically. Additional demands are posed by environmental requirements and by increases in population and industry.
- Increased regulatory requirements. Water rights regulations, Endangered Species Act (ESA) requirements, environmental impact assessment (EIA) requirements, and expectations for increased openness and public involvement in decision making place additional demands on Reclamation’s project managers, operators, and decision makers.
- Security. Security reviews and ongoing security management add to the workload at many of the larger facilities, including those facilities designated national critical infrastructure.
Considering these trends and changes, the study committee made recommendations for Reclamation to develop the appropriate organizational, managerial, and resource configurations to meet its construction, maintenance, and infrastructure requirements for its missions of the twenty-first century. I should point out that our recommendations were purposely general in nature as the study committee believed that the specifics could be best developed internally where more detailed knowledge resides.
Planning for Asset Sustainment
The Bureau of Reclamation has a decentralized management structure in which each of its five regions is responsible for sustaining a significant portfolio of facilities. The regions have different organizational structures, capabilities, and workloads. The regions also have ongoing but different procedures and methods for tracking the maintenance workload and backlog of needs. In power facilities, computerized maintenance management systems are used. Critical maintenance problems receive immediate attention. Less-than-critical needs are prioritized and scheduled as funds become available. At water management assets, needs beyond the scope of normal day-to-day maintenance are tracked through the dam safety information system (DSIS) and replacement, addition, and exceptional maintenance (RAX) lists. The RAX lists are also used to prioritize maintenance needs and funds through the budget formulation process. Budget proposals originate at the area offices, and are then refined and consolidated at the regional and headquarters levels.
The committee observed inconsistencies in the way these processes operate and in how the beneficiaries (primarily water districts) are engaged in decision making and review. Some beneficiaries noted that the rules seem to differ within regions and across regions with respect to who must pay, how much must be paid, and how design and construction activities are carried out. The quality and consistency of assessment and planning documents, except those associated with the larger power facilities, also vary from region to region.
As the owner of facilities, Reclamation headquarters has the responsibility to ensure that its facilities are planned, designed, constructed, and managed with a level of quality that is consistent throughout the Bureau. To demonstrate consistency, Reclamation needs clear, detailed policy directives and standards to enable each of the regions to implement a uniform, structured approach.
Effective planning is the key to the effective operation and maintenance of Reclamation facilities. The committee observed that, in general, the regions will need to evaluate their asset inventory and manage their assets more aggressively over the life cycle and engage in constructive relationships with customers and stakeholders.
In two regions, the committee observed effective processes for planning and executing facility operations and maintenance. The core of these processes consists of 5- and 10-year plans developed to identify out-year funding requirements and to ensure that stakeholders are informed well in advance of future funding requirements, especially for refurbishment.
The operations and maintenance burden for an aging infrastructure will increase, and the financial resources available to Reclamation, its customers, and contractors may not be able to keep up with the increased demand. A number of water districts pointed out to the committee the difficulties resulting from the requirement to reimburse expenditures for operation and maintenance activities within the fiscal year in which they were expended. This is a particular difficulty for some water districts that do not have enough control over cash flow and other factors to do this when operation and maintenance costs increase. Better long-term planning should allow these districts to anticipate such needs. Long-term sustainment will require more innovation and greater efficiency in order to get the job done.
The committee recommended that all regions develop and use 5- and 10-year plans as a stakeholder communications tool and as a roadmap for meeting future requirements. The comprehensive operations and maintenance plans should also serve as the basis for financial management and the development of fair and affordable repayment schedules. The committee also recommended that Reclamation should include its customers in their efforts to address economic constraints by seeking repayment procedures that ease borrowing requirements and extend repayment periods.
Benchmarking and Best Practices
The committee observed extensive efforts and success in benchmarking Reclamation’s hydropower activities; however, there appears to be little effort to benchmark the operations and maintenance of water distribution facilities. In the committee’s opinion, benchmarking can help improve the efficiency of Reclamation’s water management and distribution activities as well as those of the water contractors responsible for transferred works.
In the case of the larger hydroelectric generating facilities, Reclamation uses an independent benchmarking process to determine how its facilities compare to others in terms of costs, reliability, efficiency, and overall maintenance. Such reviews are conducted on an annual basis, and the reports provide useful information to facility managers.
Similar efforts should be made to establish metrics and measure the performance of Reclamation’s water management assets. Reclamation regional offices reported the use of some review tools, including annual, periodic, and comprehensive facility reviews, value engineering reviews, and peer review of endangered species recovery programs. The committee was also informed that there are several forums within Reclamation to identify best practices for asset management. However, there seem to be wide differences in the application and dissemination of review tools and best practices across the bureau.
The committee recommended that benchmarking of water distribution and irrigation activities by Reclamation and its contractors should be a regular part of their ongoing activities.
Bureau of Reclamation Response
An important element in the committee’s ability to complete its assigned tasks was the support and participation of the bureau. The study committee appreciated the cooperation and support of former Commissioner John Keys III and all of the Reclamation officials who assisted the committee in the review. Before completing our work, we became aware that the commissioner had directed the development of a detailed response to its recommendations. The NRC committee applauded this rapid and enthusiastic response. We were not in a position to provide a detailed analysis at that time, but it appears that Reclamation’s response, Managing for Excellence, sets forth a plan to address all of the issues identified in the study. Many of the study committee’s recommendations will require further analysis by Reclamation personnel, and changes that implement these initiatives may take several years. As noted in the NRC report, Reclamation should seek independent reviews of its assessments and organizational changes. Nevertheless, it appeared that the Bureau had made a good start in implementing the committee’s recommendations.
The report Managing Construction and Infrastructure in the 21st Century Bureau of Reclamation contains additional observations and recommendations, as summarized below.
The study committee recognizes that organizations can and do take on a variety of forms with varying degrees of success. Some will function successfully despite their form, while others will falter even as they deploy the best of theoretical forms. The internal culture and history of an organization play a significant role in determining the appropriate structure and the ultimate outcome. We believe that the organizational structure of Reclamation is basically appropriate for its customer-driven mission to deliver power and water. Nevertheless, we also believe that there are opportunities to improve the construction and management of its facilities and infrastructure, as well as the management, development, and protection of water and related resources in an environmentally sound manner in the interest of the American public.
Centralized Policy and Decentralized Operations
To optimize the benefits of decentralization, Reclamation should promulgate policy guidance, directives, standards, and how-to documents that are consistent with the current workload. The commissioner should expedite the preparation of such documents, their distribution, and instructions for their consistent implementation. Reclamation’s operations should remain decentralized and guided and restrained by policy but empowered at each level by authority commensurate with assigned responsibility to respond to customer and stakeholder needs. Policies, procedures, and standards should be developed centrally and implemented locally. The design groups in area and project offices should be consolidated in regional offices or regional technical groups to provide a critical mass that will allow optimizing technical competencies and providing efficient service. Technical skills in the area offices should focus on data collection, facility inspection and evaluation, and routine operations and maintenance (O&M).
Technical Service Center and Reclamation Laboratory and Research Activities
The commissioner should undertake an in-depth review and analysis of the TSC to identify the needed core technical competencies, the number of technical personnel, and how the TSC should be structured for maximum efficiency to support the high-level and complex technical needs of Reclamation and its customers. The proper size and composition of the TSC are dependent on multiple factors, some interrelated:
- Forecast workload,
- Type of work anticipated,
- Definition of activities deemed to be inherently governmental,
- Situations where outsourcing may not be practical,
- Particular expertise needed to fulfill the government’s oversight and liability roles,
- Personnel turnover factors that could affect the retention of expertise, and
- Needs for maintaining institutional capability.
This assessment and analysis should be undertaken by Reclamation’s management and reviewed by an independent panel of experts, including stakeholders.
The workforce should be sized to maintain the critical core competencies and technical leadership, and to increase outsourcing of much of the engineering and laboratory testing work. Alternative means should be developed for funding the staff and operating costs necessary for maintaining core TSC competencies, thereby reducing the proportion of engineering service costs reimbursable by customers.
Reclamation’s Research Office and TSC laboratory facilities should be analyzed from the standpoint of which specific research and testing capabilities are required now and anticipated for the future; which of them can be found in other government organizations, academic institutions, or the private sector; which physical components should be retained; and which kinds of staffing are necessary. The assessment should also recognize that too much reliance on outside organizations can deplete an effective engineering capability that, once lost, is not likely to be regained. In making this assessment Reclamation should take into account duplication of facilities at other government agencies, opportunities for collaboration, and the possibility for broader application of numerical modeling of complex problems and systems. Considering that many of the same factors that influence the optimum size and configuration of the TSC engineering services also apply to the research activities and laboratories, Reclamation should consider coordinating the reviews of these two functions.
Reclamation should establish an agency-wide policy on the appropriate types and proportions of work to be outsourced to the private sector. O&M and other functions at Reclamation-owned facilities, including field data collection, drilling operations, routine engineering, and environmental studies, should be more aggressively outsourced where objectively determined to be feasible and economically beneficial.
Reclamation should establish a comprehensive set of directives for structured project management process for managing projects and stakeholder engagement from inception through completion and the beginning of O&M. Reclamation should also give high priority to completing and publishing cost estimating directives and resist pressures to submit projects to Congress with incomplete project planning. Cost estimates that are submitted should be supported by a design concept and planning, environmental assessment, and design development documents that are sufficiently complete to support the estimates.
Reclamation should establish a structured project review process to ensure effective review and oversight from inception through completion of construction and the beginning of O&M. The level of review should be consistent with the cost and inherent risk of the project and include the direct participation of the commissioner or his or her designated representative in oversight of large or high-risk projects. The criteria for review procedures, processes, documentation, and expectations at each phase of the project need to be developed and applied to all projects, including those approved at the regional level.
A training program that incorporates current project management and stakeholder engagement tools should be developed and required for all personnel with project management responsibilities. In addition, project managers should have professional certification and experience commensurate with their responsibilities.
Acquisition and Contracting
Reclamation should establish a procedure and a central repository for examples of contracting approaches and templates that could be applied to the wide array of contracts in use. This repository should be continually maintained and upgraded to allow staff to access lessons learned from use of these instruments.
Relationships with Sponsors and Stakeholders
Making information readily available about processes and practices, both in general and for specific projects and activities, should be a Reclamation priority. Successful practices, such as those used in the Lower Colorado Dams Office, should be analyzed and the lessons learned should be transferred, where practical, throughout the bureau.
Workforce and Human Resources
Reclamation should do an analysis of the competencies required for its personnel to oversee and provide contract administration for outsourced activities. Training programs should ensure that those undertaking the functions of the contracting officer’s technical representative are equipped to provide the appropriate oversight to ensure that Reclamation needs continue to be met as mission execution is transferred.
In light of the large number of retirements projected over the next few years and the potential loss of institutional memory inherent in these retirements, a formal review should be conducted to determine what level of core capability should be maintained to ensure that Reclamation remains an effective and informed buyer of contracted services. Reclamation should recruit, train, and nurture personnel who have the skills needed to manage processes involving technical capabilities as well as communications and collaborative processes. Collaborative competencies should be systematically related to job categories and the processes of hiring, training, evaluating the performance of, and promoting employees. Reclamation should facilitate development of the skills needed for succeeding at socially and politically complex tasks by adapting and adopting a small-wins approach to organizing employee efforts and taking advantage of the opportunities to celebrate and build on successes.
An archived webcast of the hearing can be found on the Senate Energy and Natural Resources Committee's Web site.