Louisiana contractors affected by federal budget cuts

When HDR Inc., an architectural and engineering firm out of Omaha, Neb., opened an office in New Orleans last year, company officials expected 60 percent of the work to come from the U.S. Army Corps of Engineers.

But today, Corps work makes up only 10 percent of HDR's workload, which leaves the firm facing a problem affecting many other metro area companies: Cutbacks in the Corps budget are forcing the private sector to find other sources of work.

My business model has had to change to bid smaller and more competitive jobs, said M.J. Wolfe, president of Belle Chasse-based construction company Circle Inc., which cut its work force from 90 employees last year to 44 today.

The federal funding squeeze choking off work for construction companies and design firms shows no sign of easing.

The federal budget for New Orleans Corps district will be cut a record $71.2 million in fiscal year 2006 unless Congress increases funding before the budget receives final approval later this year.

The cuts mean a long list of backlogged drainage and hurricane protection projects totaling $150 million would continue to sit on the shelf because the Corps has no money to award new contracts.

We have 14 contracts that are ready for award, said Stan Green, Corps project manager for the Southeast Louisiana Urban Flood Control Project, which consists of projects to improve drainage in Jefferson, Orleans and St. Tammany parishes.

SELA's $36.5 million budget this year will be reduced to $10.5 million by the House of Representatives in 2006. If Congress does not increase SELA's budget, it will be the least funding SELA has ever received, he said.

The bottom line is we have very little work going into (fiscal year 2006), Green said. He does not expect the Corps to award any new contracts in 2006.

If SELA is funded at $10.5 million, Green would first have to pay off an expected $5.5 million or more in bills to contractors as part of debt that will carry into 2006.

SELA has the capability for $62.5 million in work in 2006.

The top priority SELA project is an $18.5 million contract to build a Dwyer Road intake culvert in eastern New Orleans, Green said.

In Jefferson Parish, where the majority of backlogged SELA projects are stalled, many canals need water flow enhancements.

SELA funding in 2006 is adequate to maintain only two projects - improvements to the Two Mile Canal on the West Bank and work at the Dwyer Road pump station, Green said.

Wolfe's company has the $12 million Two Mile Canal contract, which consists of lining the canal with concrete to improve flow.

SELA's slashed budget is bad news for Wolfe and his company, which receives 80 percent of its work from the Corps by building levees and improving canals.

In 45 years of working with the Corps, Wolfe's company has handled about $100 million in projects, he said. But he has come to rely less on the Corps as a source of revenue in recent years.

Last year, of $17 million in gross revenue, approximately $14 million was in Corps work, he said. This year, he expects $6 million of the projected gross revenue of $12 million will come from the Corps.

At one point, Wolfe worked on three or four Corps jobs at once. Now, Two Mile Canal is the only Corps work he has. He is struggling to round up enough small jobs to replace the gaping hole.

Robert S. Boh, president of Boh Bros. Construction Co. LLC of New Orleans, said the prospect of the Corps running out of money while his company is still working on a project is his biggest concern.

Universities and private architectural and engineering firms also face funding cuts the House proposed for 2006 for the Louisiana Coastal Area Feasibility study, which is designed to identify ways to stop coastal erosion.

If (we) got the zero dollar amounts that we're seeing here, we're going to continue to lose land, which is going to continually expose us to hurricane surges with some of the other projects that we have deficiencies on, said Kevin Wagner, a senior project manager with the Corps.

HDR came to New Orleans to work with the Corps on the LCA study, said Kevin De Lange, vice president of HDR.

De Lange said his company is committed to New Orleans but it will be difficult to increase employment from seven people to 15 as planned due to Corps budget cuts.

Corps fund cuts also affect the community by reducing its flood protection.

On the West Bank, makeshift levees of scrap metal and piles of dirt protect an area east of the Harvey Canal. The Corps does not expect to have the funds to begin building a floodwall to protect the area in 2006, said Carol Burdine, a project manager with the Corps.

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