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WASHINGTON – U.S. Senator Kevin Cramer (R-ND) invited and introduced Metro Flood Diversion Authority Executive Director Joel Paulsen at an Environment and Public Works (EPW) hearing. In his role, Mr. Paulsen oversees the delivery, operations, and maintenance of the non-federal portions of the Fargo-Moorhead Area Flood Diversion Project, the Army Corps of Engineer’s (Corps) first public-private partnership (P3) project in the agency’s history.
This includes managing the construction of a $1 billion, 30-mile diversion channel to carry Red River floodwaters around the Fargo-Moorhead metro during severe floods. After its expected completion in 2027, the project will provide flood protection for nearly 250,000 residents and help prevent an estimated $194 million in annual flood damages throughout the metropolitan area.
Senator Cramer began by questioning Mr. Paulsen on the inflexibilities, challenges, and “stovepiping” within the Corps.
“You [Mr. Paulsen] have a really big stovepipe situation where you do have some of the value of the P3s where some things are not so Corps or other things have to be, particularly the river itself and how all that gets built. Give us an example of where the Corps’ inflexibility, perhaps especially timing, didn't sync up with the other part of the project and what the consequence of that is,” asked Senator Cramer.
“During procurement it’s imperative you define the project with performance-based specifications, such that the private industry can bid the project appropriately and they can price the risk. We have two aqueduct structures where we're taking a river over the top of the diversion channel. Prior to the procurement of the private developer, we were not able to get criteria from the Corps. It wasn't until after procurement that the Corps provided us with guidance on velocities for the aqueduct structures. What that resulted in was a $3.5M compensation payment to our developer, because they had to go back and retool their designs…that change was bore by the nonfederal sponsors. That was not federal dollars,” said Mr. Paulsen.
Senator Cramer sought answers on how policymakers might encourage and incentivize the Corps to innovate. He also highlighted working with General Todd T. Semonite to identify these infrastructure problems.
“One of the challenges with the Corps is they’re sort of an agency without an agency. On a different Corps project I worked on with General Semonite, I tried to identify what the problem was in the bidding process for major infrastructure. I asked the Corps of Engineer, ‘It seems to me you’re anti-innovation. When a contractor responds to [a request for proposal], and provides a different way to do something, you reject it.’ They looked right at me and said, “We believe innovation is risk.” It’s something that could be done twice as fast, half the price, but they won't do because they still have to use those other machines that do it slower.
“We need to do more things with the same amount of money or less to build in those incentives in the public sector that aren't natural. They’re natural in the private sector and P3 is our way to do that. Do you have any thoughts on how we could encourage or inspire the Corps, incentivize them the right way?” asked Senator Cramer.
“We have seen an immense amount of innovation come from the private contractor, which reduces costs, reduces schedule, and provides the level of quality that we're looking for. It’s really the best of all worlds. If we want innovation, we have to have performance-based specifications, not prescriptive specifications, which the Corps is generally accustomed to,” said Mr. Paulsen.