welcome to PB grovers.
you say the leak is on the back of the dam. is it at the base, midway up, or near the top, in other words, where is the leak in relation to the water level on the other side?
when you describe that the contractor dug out the center, i presume you mean he dug a trench along the length of the dam, and not across the dam. did he dig (and re-fill) below the original bottom of the dam?
its a tough question you pose, but answers to the above questions may help to figure out yer problem.