Posted on October 9, 2023
A new report commissioned by Dredging Contractors of America reveals the strength and competitiveness of the U.S. dredging industry, with a record $2.5 billion in newbuilds and capital expenditures.
This competitive market has not only bolstered the industry but has also resulted in significant cost savings for taxpayers amounting to hundreds of millions of dollars in 2022 alone.
The report, titled “The Mike Hooks Report: Analysis of the FY22 U.S. Federal Dredging Market”, reveals some interesting insights about the industry vital to American supply chains as of September 2023.
In FY2022, a total of 52 Jones Act dredging companies were awarded federal dredging contracts, with an average of three bidders per project. Surprisingly, on 20 projects, there were five or more bidders, indicating the high level of competition in the industry.
Even more impressive is that 72% of the time, the winning bid from the private sector was lower than the Independent Government Estimate (IGE), according to the report. Additionally, 95% of the time, the winning bid was lower than the Government Estimated Awardable Range (GEAR), which is IGE plus 25%.
This means that the private sector is delivering services at a significantly lower cost compared to the government’s estimates. And the cost savings are substantial. When compared to the IGE, 59 projects had bids that were lower by more than 10%, 27 projects had bids that were lower by more than 25%, and 15 projects had bids that were lower by more than 40%.
In FY22 alone, these savings amounted to a staggering $670 million.
The positive momentum in the industry is further exemplified by the new construction of Jones Act dredges. Over the past five years, there has been a continuous roll-out of U.S.-owned, built, and crewed vessels, and this trend is expected to continue in the foreseeable future.
The report follows a 2020 report funded by the EU, which claimed that the U.S. dredging industry was not competitive. The report also comes at a time when the Mississippi water levels are at a record low, which could translate into even more dredging projects to ensure the continued flow of commerce.