WSPC03491

• File Number: 8220.106.O
• Description: Colorado River Water Projects - Animas La Plata - Project Funding
• State: CO
• Basin: Colorado Mainstem
• Water Division: 5
• Date: 11/1/2003
• Author: DOI-BOR
• Title: Animas La Plata Project - Construction Cost Estimates - Report to the Secretary - November 2003
• Water Supply Pro - Doc Type: Report/Study

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described in Section D, Reclamation used an EDF factor in developing the 2003
estimate to account for the cost of construction under the ISDEA. The EDF was
calculated as the percentage ofthe amount over the IGCE and then extrapolated
over the construction costs remaining for the Project. The EDF was estimated to
be 30 percent of future Tribal construction, or $39.2 million. It is estimated that
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$3.6 million would be used for direct Tribal involvement in ALP. This combined
total accounts for $43 million of the difference between the 1999 PCE and the
2003 PCE. The $43 million is a conservative figure and is based solely on the
small number of project contracts issued to date (see Appendix 6).5

The IGCE is a tool that is used by the contracting officer to help guide the
evaluation and negotiation of bid proposals. The IGCE does not directly relate
back to the 2003 PCE for the entire project (i.e., the component IGCEs will never
collectively add up to the 2003 construction cost estimate) and for this reason is
not an accurate measure of actual project costs versus estimated project costs.6

Another potential problem with using the difference between the IGCE and the
award amount to account for ISDEA costs is that the IGCE does not account for
any changes in the scope of project that occur as a result of negotiations. These
scope changes occur in virtually every major construction contract, regardless of
whether the contract is authorized under the ISDEA or under the Federal
Acquisitions Regulation (FAR). Negotiations result in a detailed mutual
understanding of the scope and approach to the work which is not ascertained in
the original IGCE.

In light of the inaccuracies of using the IGCE as the basis from which to track
project costs, the ALP Construction Office related the tentative award amount of a
contract currently under negotiation at the time of this report back to the 2003
construction cost estimate for those very same components. The results show that
the tentative award came in less than the amount allotted for this work even
without including the 30 percent EDF.7

Clearly, the application of the ISDEA will cause the project to incur additional
costs over what would normally be incurred using competitive bids. The 1999

, The ALP Construction Office structured the construction contract for the Project so that each
component part of the Project would be separately bid, as opposed to one bid for the entire Project.
The reason that the $43 million is considered to be conservative is because, as mentioned, less
than $10 million worth of contracts has been awarded and start-up costs, other one-time expenses,
and some scope changes are included in the fIrst few contracts. As more contracts are negotiated,
the award amounts could be less (see footnote 6).

6 On all the contracts issued to date the government updated its negotiation position to account for
both changes to the scope and the statutory components for an award of a construction contract
under the ISDEA. The difference between the updated negotiation position and the award has
been less than the 30 percent EDF.

7 The contract was for the foundation excavation for Ridges Basin Dam.