Bureau of Indian Affairs: Use of Highway Trust Fund Resources
(Correspondence, 08/14/2000, GAO/AIMD-00-285R).

Pursuant to a congressional request, GAO provided information on the
Bureau of Indian Affairs' (BIA) use of federal Highway Trust Fund (HTF)
money for Indian reservation roads, focusing on: (1) what percentage of
fiscal years 1999 and 1998 HTF contract authority available to BIA was
obligated for: (a) management costs directly related to specific
projects within a program for construction, repair, and improvement of
roads; and (b) program management and oversight costs not directly
related to specific projects; (2) whether BIA spent more than 6 percent
of the contract authority allocated to its Midwest and Western Regional
Offices on non-project-related program management costs for those
offices; (3) whether the annual 6 percent statutory limitation on the
use of HTF contract authority for road program management costs applies
only to non-project-related management costs; and (4) whether the
project-related costs that BIA bears for individual tribes should be
paid from HTF contract authority or from BIA's annual appropriations for
managing Indian programs or construction.

GAO noted that: (1) BIA's use of HTF contract authority was within
statutory limitations; (2) of the HTF contract authority available to
BIA in fiscal years 1999 and 1998--approximately $261 million and $218
million, respectively--about 5.7 percent in each year was used for
program management and oversight costs not directly related to any one
project but necessary to the program; (3) about $43 million in fiscal
year 1999 and $46 million in fiscal year 1998 was used for project
management costs, which are nonconstruction costs directly related to
specific projects; (4) these costs represented about 17 percent and 21
percent, respectively, of the contract authority available to BIA in
those years; (5) while BIA as a whole used about 5.7 percent of
available HTF contract authority for nonproject program management and
oversight costs in both fiscal years 1999 and 1998, cost percentages
varied at its Midwest and Western Regional Offices; (6) the Midwest
Regional Office's non-project-related program management costs did not
exceed 6 percent of its allocated contract authority in either fiscal
year 1999 (4.0 percent) or 1998 (5.1 percent); (7) while this was also
the case for the Western Regional Office for fiscal year 1999 (5.2
percent), that office used about 11.5 percent of available contract
authority for non-project-related program management costs for fiscal
year 1998; (8) based on applicable legislative language and the history
of the 6-percent provision limiting the use of available federal HTF
contract authority for road program management costs, GAO agrees with
BIA's interpretation that this limitation applies only to the total
amount of HTF contract authority BIA receives, not separately to each
regional office and its allocated contract authority; (9) further, GAO
agrees with BIA's view that the 6-percent limitation applies only to
non-project-related costs1 of road program administration as opposed to
any other cost category for which BIA uses HTF resources; (10) finally,
GAO agrees with BIA's position that it is proper to use HTF budget
authority to cover project-related management costs it incurs, rather
than using its construction appropriations or Indian program
appropriations; and (11) GAO has found no indication in the law or
legislative history that Congress intended otherwise or that Congress
included these costs in calculating BIA's annual appropriations.

--------------------------- Indexing Terms -----------------------------

 REPORTNUM:  AIMD-00-285R
     TITLE:  Bureau of Indian Affairs: Use of Highway Trust Fund
	     Resources
      DATE:  08/14/2000
   SUBJECT:  Road construction
	     Federal aid for highways
	     Indian lands
	     Funds management
	     Trust funds
	     Budget authority
	     Cost accounting
IDENTIFIER:  Highway Trust Fund
	     BIA Indian Reservation Roads Program

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GAO/AIMD-00-285R

BIA's Use of Highway Trust Fund Resources

United States General Accounting Office Washington, DC 20548

Accounting and Information Management Division

B- 285130 August 14, 2000 The Honorable Ben Nighthorse Campbell Chairman
Committee on Indian Affairs United States Senate

Subject: Bureau of Indian Affairs: Use of Highway Trust Fund Resources Dear
Mr. Chairman: This letter summarizes the information we provided during a
July 18, 2000, briefing to your Committee's staff. In your April 4, 2000,
letter to the Comptroller General you had asked us to analyze the Bureau of
Indian Affairs' (BIA) responses to Committee inquiries regarding BIA's use
of federal Highway Trust Fund (HTF) money for Indian reservation roads.

In your letter, you asked us to determine

ï¿½ what percentage of fiscal years 1999 and 1998 HTF contract authority
available to BIA was obligated for (1) management costs directly related to
specific projects within a program for construction, repair, and improvement
of roads and (2) program management and oversight costs not directly related
to specific projects;

ï¿½ whether BIA spent more than 6 percent of the contract authority allocated
to its Midwest and Western Regional Offices 1 on non- project- related
program management costs for those offices;

ï¿½ whether the annual 6 percent statutory limitation on the use of HTF
contract authority for road program management costs applies only to non-
project- related management costs; and

ï¿½ whether the project- related costs that BIA bears for individual tribes
should be paid from HTF contract authority or from BIA's annual
appropriations for managing Indian programs or construction.

The enclosed briefing slides highlight the results of our work and the
information we provided during the briefing.

1 In September 1999, BIA changed its field office structure. The Minneapolis
Area Office became the Midwest Regional Office and the Phoenix Area Office
became the Western Regional Office.

B- 285130 GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
2 The purpose of the Indian Reservation Roads program is to provide safe and
adequate

transportation and public road access to and within Indian reservations,
Indian lands, and communities for Native Americans and others while
contributing to economic development, self- determination, and employment of
Native Americans. BIA develops and submits to the Federal Highway
Administration (FHWA) a priority listing of projects for approval, and FHWA
transfers yearly HTF contract authority to BIA for road projects. BIA's use
of HTF resources falls into four categories: project construction, project-
related management, non- project- related program management, and tribal
transportation planning. The project construction category is used for
“on the ground” activities and covers such costs as construction
materials, construction labor, and equipment usage. The project- related
management category covers nonconstruction costs for activities directly
related to a specific project, such as preliminary and construction
engineering and contract administration. The nonproject- related program
management category is used for costs not directly related to any one
project but necessary to the program, such as developing and approving
design standards and maintaining the bridge database. The tribal
transportation planning category is used for planning by Indian tribal
governments, including activities such as the Tribal Transportation
Improvement Program and the measurement of traffic.

Summary: BIA's Use of HTF Resources

We found that BIA's use of HTF contract authority was within statutory
limitations. Of the HTF contract authority available to BIA in fiscal years
1999 and 1998– approximately $261 million and $218 million,
respectively– about 5.7 percent in each year was used for program
management and oversight costs not directly related to any one project but
necessary to the program. About $43 million in fiscal year 1999 and $46
million in fiscal year 1998 was used for project management costs, which are
nonconstruction costs directly related to specific projects. These costs
represented about 17 percent and 21 percent, respectively, of the contract
authority available to BIA in those years.

While BIA as a whole used about 5.7 percent of available HTF contract
authority for nonproject program management and oversight costs in both
fiscal years 1999 and 1998, cost percentages varied at its Midwest and
Western Regional Offices, the two BIA offices for which you requested
information. The Midwest Regional Office's nonproject- related program
management costs did not exceed 6 percent of its allocated contract
authority in either fiscal year 1999 (4.0 percent) or 1998 (5.1 percent).
While this was also the case for the Western Regional Office for fiscal year
1999 (5.2 percent), that office used about 11.5 percent of available
contract authority for nonproject- related program management costs for
fiscal year 1998.

Based on applicable legislative language and the history of the 6- percent
provision limiting the use of available federal HTF contract authority for
road program management costs, we agree with BIA's interpretation that this
limitation applies only to the total amount of the HTF contract authority
BIA receives, not separately to each regional office and its allocated
contract authority. Further, we agree with BIA's view that the 6- percent
limitation applies only to non- project- related costs of road program

B- 285130 GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
3 administration as opposed to any other cost category for which BIA uses
HTF

resources. Finally, we agree with BIA's position that it is proper to use
HTF budget authority to cover project- related management costs it incurs,
rather than using its construction appropriations or Indian program
appropriations. We have found no indication in the law or legislative
history that the Congress intended otherwise or that the Congress included
these costs in calculating BIA's annual appropriations.

Scope and Methodology

In order to analyze BIA's use of HTF resources, we interviewed BIA and FHWA
officials and obtained and analyzed program, budget, accounting, and cost
information for fiscal years 1999 and 1998. As agreed with your Committee's
staff, we relied on the information provided by BIA and FHWA and did not
determine the propriety of transactions, verify the validity or
reasonableness of cost data, or determine the appropriateness of cost
categorizations.

Regarding questions on BIA's interpretation of legal provisions governing
its use of HTF contract authority, we requested written responses from the
Department of the Interior's Solicitor; researched and analyzed applicable
laws; and compared our legal analysis to Interior's responses.

We conducted our work from April 2000 through July 2000 in accordance with
generally accepted government auditing standards. We requested comments on
our draft briefing slides from BIA officials. They agreed with our findings
and offered some clarifying comments that we incorporated into our slides as
appropriate.

As agreed with your office, unless you announce the contents of this letter
earlier, we plan no further distribution until 10 days from the date of this
letter. At that time, we will send copies Senator Daniel K. Inouye, the
Ranking Minority Member of your Committee; the Honorable Bruce Babbitt, the
Secretary of the Interior; and other interested parties. Copies will be made
available to others upon request.

If you have any questions about this letter or the earlier briefing, please
contact me at (202) 512- 9508, or Mike Koury, Assistant Director, at (202)
512- 3405. Key contributors to this assignment were Charles Norfleet, Bert
Berlin, and Wendy Albert.

Sincerely yours, Linda M. Calbom Director, Resources, Community,

and Economic Development, Accounting and Financial Management Issues

Enclosure

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
4

July 18, 2000, Briefing to the Senate Committee on Indian Affairs

1

Accounting and Information Management Division and the Office of the General
Counsel

Briefing for the Senate Committee on Indian Affairs Review of the Bureau of
Indian Affairs' Use of Federal Highway Trust Fund Resources

July 18, 2000

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
5

2

Contents

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
6

3

Objectives

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
7

4

Objectives

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
8

5

Scope and Methodology

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
9

6

Scope and Methodology

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
10

7

Background -- BIA's Indian Reservation Roads (IRR) Program

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
11

8

Background -- BIA and FHWA Roles

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
12

9

Background -- BIA and FHWA Roles

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
13

10

Background -- BIA's Process for Using HTF Contract Authority

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
14

11

Background -- BIA's Cost Categories for Using HTF Contract Authority

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
15

12

Background -- BIA's Cost Categories for Using HTF Contract Authority

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
16

13

Financial Issues -- FY99 and FY98 HTF Contract Authority Available To and
Used by BIA

($ in 000s) Category FY99 FY98

Contract authority available $261, 261 $217, 871

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
17

14 $in 000s % Contract Authority

Project construction $192,641 73.7 % Project related management 42, 926 16.
5 Non- project related management 15, 001 5.7 Tribal transportation planning
4,203 1.6

FY99 TOTAL $254,771 97.5 % Financial Issues -- Breakdown of FY99

BIA Obligations

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
18

15

Financial Issues -- Breakdown of FY98 BIA Obligations

$in 000s % Contract Authority Project construction $153,325 70.4 %

Project related management 45, 911 21. 0 Non- project related management 12,
342 5.7 Tribal transportation planning 4,169 1.9

FY98 TOTAL $215,747 99.0 %

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
19

16

Financial Issues -- Midwest Regional (Minneapolis) Office Contract Authority
and Non- Project Related Management Costs

($ in 000s) Category FY99 FY98

Contract authority $13, 776 $9,859 Non- project related management $548 $499
(excludes project related costs of $205, 000 and $279, 000, respectively,
that had been recorded in the accounting system as non- project related
management costs)

Percentage contract authority used for non- project related management costs
4.0% 5.1%

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
20

17

Financial Issues -- Western Regional (Phoenix) Office Contract Authority and
Non- Project Related Management Costs

($ in 000s) Category FY99 FY98

Contract authority $30, 508 $8,991 Non- project related management $1, 572
$1, 037 Percentage contract authority used for non- project related
management costs 5.2% 11. 5%

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
21

18

Legal Issues -- 6 Percent Limitation

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
22

19

Legal Issues -- 6 Percent Limitation

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
23

20

Legal Issues -- 6 Percent Limitation

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
24

21

Legal Issues -- Using Contract Authority for Project- Related Costs

Enclosure GAO/ AIMD- 00- 285R BIA's Use of Highway Trust Fund Resources Page
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22

Legal Issues -- Applying the 6 Percent Limitation to BIA Regional Offices
*** End of document. ***