Financial Management: Creation of Bureau of Indian Affairs' Trust Fund
Special Projects Team (Letter Report, 09/21/93, GAO/AIMD-93-74).

In November 1992, the Bureau of Indian Affairs (BIA) created a Special
Projects Team to oversee trust fund management initiatives, including
management of the ongoing trust fund account reconciliation project.
The team was intended to be temporary, lasting only until the
reconciliation project and other trust fund improvements were
completed--possibly as long as eight years.  This report examines
whether BIA, in creating the team, (1) followed Interior Department
guidelines, (2) notified Congress and received its approval before
transferring money and staff to the team, and (3) submitted
reorganization proposals to the relevant Advisory Task Force on BIA
Reorganization for consideration.  GAO also identifies the officials
responsible for creating the team and their present jobs, as well as
Interior Department and BIA efforts to investigate the circumstances
surrounding the team's creation.

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

 REPORTNUM:  AIMD-93-74
     TITLE:  Financial Management: Creation of Bureau of Indian Affairs' 
             Trust Fund Special Projects Team
      DATE:  09/21/93
   SUBJECT:  Indian affairs legislation
             Trust funds
             Internal controls
             Interagency relations
             Federal agency reorganization
             Investigations into federal agencies
             Reporting requirements
             Oversight by Congress
             Allocation (Government accounting)
             Funds management
IDENTIFIER:  Albuquerque (NM)
             District of Columbia
             Native American Trust Fund Accounting and Management Reform 
             Act of 1993
             Indian Trust Fund
             
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Cover
================================================================ COVER


Report to the Chairman, Committee on Indian Affairs, U.S.  Senate

September 1993

FINANCIAL MANAGEMENT - CREATION OF
BUREAU OF INDIAN AFFAIRS' TRUST
FUND SPECIAL PROJECTS TEAM

GAO/AIMD-93-74

BIA Trust Fund Special Projects Team


Abbreviations
=============================================================== ABBREV

  BIA - Bureau of Indian Affairs
  BIAM - Bureau of Indian Affairs Manual
  DM - Departmental Manual
  DOI - Department of the Interior
  ITMA - Inter-tribal Monitoring Association
  OMB - Office of Management and Budget
  OTFM - Office of Trust Funds Management

Letter
=============================================================== LETTER


B-254432

September 21, 1993

The Honorable Daniel K.  Inouye
Chairman, Committee on Indian Affairs
United States Senate

Dear Mr.  Chairman: 

This report responds to your request for information about the
creation of the trust fund Special Projects Team\1

within the Bureau of Indian Affairs (BIA).  You asked if BIA, in
creating the Team, followed (1) Department of the Interior (DOI)
guidelines, (2) appropriations act provisions to notify the House and
Senate Appropriations Committees and receive their concurrence before
transferring funds and staff to the Team, and (3) appropriations act
provisions to submit reorganization proposals to the Joint
Tribal/BIA/DOI Advisory Task Force on BIA Reorganization for
consideration.  You also asked if BIA was required to notify the
Inter-tribal Monitoring Association (ITMA) and obtain their views on
the Team proposal.  Further, you requested that we identify the
officials responsible for creating the Team and their present duty
stations, as well as Department and BIA actions to investigate the
circumstances surrounding the Team's creation and resolve the
situation. 


--------------------
\1 The Team was also informally referred to as the Office of Special
Projects. 


   RESULTS IN BRIEF
------------------------------------------------------------ Letter :1

In creating the Special Projects Team, BIA did not adhere to
established guidelines. 

  BIA managers did not follow established Department or BIA policies
     and procedures when they created the Team. 

  BIA managers did not follow appropriations act guidelines to notify
     the Appropriations Committees and the Reorganization Task Force
     about the reorganization.  Further, BIA's fiscal year 1994
     budget submission to the Appropriations Committees did not refer
     to the creation of the Team outside the Office of Trust Funds
     Management (OTFM) or the related reallocation of funds from
     OTFM. 

None of the established guidelines required BIA to notify ITMA in
advance about the decision to create a new organization.  However,
since ITMA was created to monitor BIA's reconciliation and trust fund
improvement efforts and the Team assumed responsibilities in these
areas, ITMA officials told us they believed they should have been
notified that the Team would be separate from OTFM. 

With respect to the Department and BIA investigations of the
circumstances surrounding the Team's creation, the following actions
were taken or planned. 

  Department and BIA management reviewed the procedures followed in
     creating the Team and concluded that their policies and the
     appropriations act guidelines had not been followed. 

  On August 2, 1993, BIA's Acting Deputy Commissioner, Indian
     Affairs, signed a memorandum directing that the Team's functions
     be returned to OTFM and that the Team's Special Assistant and
     Project Assistant be detailed to OTFM. 

  BIA plans to report to the House and Senate Appropriations
     Committees on actions taken to abolish the Team. 

Appendix I lists the positions of the officials involved in creating
the Team and their current positions. 


   BACKGROUND
------------------------------------------------------------ Letter :2

On August 20, 1992, following discussions between BIA and Office of
Management and Budget (OMB) officials about BIA's limited progress in
reconciling trust fund accounts, OMB requested that BIA designate a
project manager with sole responsibility for the reconciliation
project to report directly to the Deputy Commissioner, Indian
Affairs.  On November 23, 1992, the Deputy Commissioner signed a
memorandum creating the Special Projects Team to develop, implement,
and/or oversee implementation of certain trust fund management
initiatives, including management of the ongoing trust fund account
reconciliation project.  The memorandum stated that the Team was
temporary and that its operations would continue until the
reconciliation project and certain trust fund improvement projects
were completed.  BIA staff estimated the project would last between 5
and 8 years.  In forming the Team, BIA management (1) appointed a
Special Assistant to lead the Team and assigned a Project Assistant,
5 detailees, and 10 temporary staff and (2) reallocated $6.4 million
from OTFM. 

In its April 1993 hearing on BIA's fiscal year 1994 budget
submission, the House Appropriations Committee, Subcommittee on
Interior and Related Agencies, discussed BIA's creation of the Team. 
Following the hearing, the Reorganization Task Force and ITMA stated
their objections to the Team's creation.  The Reorganization Task
Force, which consists of tribal, BIA, and Department representatives,
was established in December 1990, pursuant to provisions in the
Department's fiscal year 1991 appropriations act.  Its purpose is to
provide input to the Department, BIA, and the Appropriations
Committees on reorganizations of BIA functions.  ITMA was initially
established in September 1990 as an ad hoc advisory committee to
monitor BIA's trust fund account reconciliations.  In 1991, the ad
hoc committee was formally established as an association representing
Indian tribes, and its responsibilities were expanded to include
advising BIA on trust fund management and strategic planning.  In
late 1992, ITMA began to function as an advisory group to the
Reorganization Task Force for trust fund issues. 


   SCOPE AND METHODOLOGY
------------------------------------------------------------ Letter :3

To address the questions in your request, we reviewed pertinent
sections of Department and BIA policy manuals and BIA's fiscal year
1993 appropriations act.  We also reviewed BIA documents related to
the Team's creation.  We met with Department and BIA managers to
obtain their views on the guidelines followed when the Team was
created and to discuss the actions they were taking to address
congressional, Reorganization Task Force, and ITMA concerns about the
Team's creation.  We also talked with House and Senate Appropriations
Committee staff to obtain their views. 

We performed our work between July 16, 1993, and August 27, 1993, at
the Department of the Interior and BIA headquarters in Washington,
D.C., in accordance with generally accepted government auditing
standards.  As your office requested, we did not obtain agency
comments on a draft of this report.  However, at the end of field
work, we discussed its contents with Department officials; Acting
Deputy Commissioners, Indian Affairs; and the OTFM Director.  We have
incorporated their comments where appropriate. 


   DEPARTMENT AND BIA GUIDELINES
   NOT FOLLOWED IN CREATING THE
   TEAM
------------------------------------------------------------ Letter :4

Interior Department and BIA policy manuals contain provisions which
Department employees are to follow when implementing organizational
changes.  Part 101 of the Departmental Manual (DM) contains the
Department's (1) overall policy for organization management and
(2) guidelines for establishing organizational structures and
responsibilities and for abolishing or relocating organizational
components.  Part 101 DM also details the documentation needed to
implement organizational changes, including organization charts,
functional statements, and staffing analyses.  Once approved, this
documentation is inserted into a Part 130 DM chapter designated for
the specific BIA component organization.  Part 101 DM contains the
following provisions relating to implementation of organizational
changes. 

  Organizational changes can only be implemented through a new or
     revised DM chapter or by a Secretary's Order establishing
     temporary authority. 

  Changes to the manual are required when an organizational change is
     of a continuing nature.  However, if the change is urgent, a
     Secretary's Order can be used on an interim basis, but must be
     followed by a Part 130 DM change. 

  Changes to the manual are required for technical and administrative
     organizational changes involving units located outside the
     headquarters city (Washington, D.C.). 

  Organizational changes which affect the DM must be approved by the
     Assistant Secretary, Policy, Management, and Budget; the
     supervising member of the Secretariat; and the Director of
     Congressional and Legislative Affairs. 

  Interim organizational changes, assignments of personnel, or
     reprogramming of funds and other resources related to
     organizational changes that affect the DM cannot be implemented
     until a change to the manual is released or a Secretary's Order
     has been approved. 

The Bureau of Indian Affairs Manual (BIAM) also contains guidelines
for implementing organizational changes.  Part 5 BIAM 2, which is
applicable to all BIA headquarters and field office organizations,
specifies the following: 

  All BIA organizational structures are to be published in the BIAM
     and are not considered official until published. 

  Special projects staffs established for more than 1 month but less
     than
     1 year must be published in a Part 5 BIAM bulletin and must
     include functional statements and the proposed organizational
     staffing charts.  In addition, staff groups in operation for 1
     year or more are considered permanent and require a change to
     the DM if the change meets Department policy outlined in Part
     101 DM. 

  Interim implementation of organizational changes is not permitted. 

In October 1992, before the Team was established, BIA's Directives
Officer determined that the organization fit the criteria listed
above for publication in the DM and BIAM.  Specifically, the Team was
(1) located in Albuquerque, New Mexico, not Washington, D.C., the
headquarters city, (2) formed by detailing staff and reprogramming
funds from OTFM, and (3) a special projects staff that was to
continue for more than 1 year.  Therefore, the Directives Officer
advised BIA and Department officials that a Part 130 DM change or
Secretary's Order was needed.  However, although the Special
Assistant who was to be in charge of the Team prepared a draft
Secretary's Order, BIA did not publish a formal change to the DM and
BIAM or request that the Secretary's Order be issued as a temporary
measure when the Team was created.  Nor did BIA request approval from
the Assistant Secretary-Policy, Management, and Budget.  The Office
of Management Improvement, the departmental organization responsible
for reviewing organizational matters and Part 130 DM changes, was
abolished on October 8, 1992.\2

Department officials said that this left a gap in the review process
at the time the Special Projects Team was being proposed. 

In mid-February 1993, the Team's Special Assistant submitted a draft
functional statement and staffing chart for the Team to the Acting
Deputy Commissioner, Indian Affairs, for review.  On March 22, 1993,
the Special Assistant prepared a memorandum for the file noting that
Department officials had determined that the Team should be
established by memorandum rather than DM procedures.  On March 29,
1993, the Acting Deputy Commissioner approved the Team's functional
statement and on April 1, 1993, the temporary Acting Deputy
Commissioner signed a memorandum transmitting the functional
statement and position chart for immediate classification of
positions and administrative action.  Thus, the Team lacked the
authorization and documentation that BIA and Department guidance
required. 


--------------------
\2 At the time of our review, this departmental review function was
assigned to three staff members in the Department's Office of
Information Resources Management. 


   APPROPRIATIONS COMMITTEES NOT
   NOTIFIED
------------------------------------------------------------ Letter :5

BIA's fiscal year 1993 appropriations act provides that any proposal
to reorganize BIA shall not be implemented until (1) the
Reorganization Task Force reviews it and recommends implementation to
the Secretary and (2) the proposal has been submitted to the
Appropriations Committees. 

According to the staffs of the Subcommittees on Interior and Related
Agencies, Senate and House Committees on Appropriations, the
Committees were not notified in advance about the Team's creation. 
They advised us that they were concerned that (1) the Team was
created outside established Department and BIA guidelines and (2)
BIA's fiscal year 1994 budget submission did not disclose that the
Team's funding and staff would be separate from OTFM. 

The House Appropriations Committee addressed its concern in its
report, Department of the Interior and Related Agencies
Appropriations Bill, 1994 (Report 103-158).  The report states that
the Committee did not intend that funds provided for financial trust
management should be used to fund the Team unless it was incorporated
into and reported to the Director of OTFM.  The Committee noted that
it saw no convincing reason for creating a separate entity outside of
OTFM and that the appropriations act's consultation provisions had
not been met.  The Committee requested that BIA abolish the Team and
report back on the Team's status by August 13, 1993.  A Senate
Appropriations Committee staff member told us that the Senate
Committee concurred with the House request that BIA abolish the Team
and report on specific actions taken. 

The Department's Director of Budget told us that the budget staff did
not notify the Appropriations Committees about the Team because they
were not aware that a new organization had been created and they had
received no indications from BIA that the Appropriations Committees
should be notified of a reprogramming.  The Budget Director also told
us that, as a general rule, when changes in lower level organizations
such as the Team are not specifically identified as part of the
organization chart in the budget, or Departmental Manual changes are
not proposed, the Appropriations Committees are not generally
notified. 


   REORGANIZATION TASK FORCE AND
   ITMA NOT CONSULTED
------------------------------------------------------------ Letter :6

As mentioned in the previous section, BIA's fiscal year 1993
appropriations act provided that BIA should consult with and obtain
the views of the Reorganization Task Force and advise the
Appropriations Committees of this consultation before implementing a
reorganization proposal. 

In a May 12, 1993, letter to the Secretary of the Interior, the Task
Force stated that it was not consulted about the creation of the
Team.  In addition, BIA and Department officials we contacted
concurred that BIA had not followed this requirement. 

The appropriations act does not provide that BIA consult with ITMA. 
While ITMA was informed of the Team's creation, it had not been
consulted and was not aware that the Team was to be separate from
OTFM.  ITMA was concerned about the impact that this organizational
change would have on the trust fund accounts reconciliation effort,
which ITMA has monitored since at least September 1990.  ITMA wrote
the Department on May 5, 1993, regarding its concerns. 


   INVESTIGATION OF CIRCUMSTANCES
   SURROUNDING CREATION OF THE
   TEAM
------------------------------------------------------------ Letter :7

Department and BIA officials told us that they became aware of the
magnitude of the procedural problems associated with the Team's
creation when the issue was raised by the House Appropriations
Committee, Subcommittee on Interior and Related Agencies, during the
April 21, 1993, hearing on BIA's fiscal year 1994 budget request and
again at the June 22, 1993, Senate Committee on Indian Affairs
hearing on S.  925, the Native American Trust Fund Management Reform
Act of 1993.  Subsequently, Department and BIA management reviewed
the established guidelines pertaining to organizational changes
within the Department and BIA and the actions taken to create the
Team and concluded that the guidelines had not been followed when the
Team was created. 

On July 8, 1993, we met with the Acting Deputy Commissioner, Indian
Affairs, who was appointed in May 1993, and Department Solicitor's
Office attorneys.  These officials said that they believed that
Department guidelines had not been followed because the Team's
creation was considered a management initiative and not a
reorganization.  However, our analysis showed that the Department and
BIA manuals state that the guidelines apply to any organizational
change, not just reorganizations.  The Acting Deputy Commissioner
stated that he believed that these guidelines should have been
followed. 

Department officials involved in the review process for establishing
the Team told us that they believed that the Team was to have been a
small staff within, and paid for by, the Deputy Commissioner's
office.  As a result, they felt that a memorandum to establish the
small staff was sufficient.  Department officials also told us that
they were unaware of Part 5 BIAM provisions which state that special
projects staffs expected to operate for over 1 year are considered
permanent and that publication of the related organization structure
in the Departmental Manual is required. 

Department officials also stated that they did not know that the Team
was to be staffed and funded from OTFM resources and thus had not
taken this information into consideration when advising BIA on
whether the Team should be established by memorandum.  Further, they
said they were unaware that the Reorganization Task Force had not
been notified about the Team's creation.  On August 27, 1993, the
former Deputy Assistant Secretary, Indian Affairs, told us that when
the former Deputy Commissioner created the Team, there was no
intention of it becoming a separate office.  However, he acknowledged
that after that time, the Team took on the appearance of a separate
office. 

The Department views the actions that managers took to create the
Team as a procedural misunderstanding not requiring disciplinary
action.  Also, because the departmental office charged with
responsibility for reviewing organizational changes had been
abolished prior to the Team's creation, there was no final
departmental review.  For the most part, Department and BIA officials
initially involved in the Team's creation are no longer in the same
positions of authority due to the abolishment of the Department's
Office of Management Improvement and staffing changes resulting from
the new administration. 

On August 2, 1993, the Acting Deputy Commissioner, Indian Affairs,
notified the Special Assistant for the Special Projects Team that,
effective immediately, he had returned the Team's functions to OTFM
and detailed the Special Assistant and the Project Assistant to OTFM
and that these officials were to report to the OTFM Director. 
However, this action will not be finalized until OTFM's Part 130 DM
is revised and approved.  With respect to the House Appropriations
Committee's request that BIA notify the Committee on the status of
the Team by August 13, 1993, a BIA official told us that BIA plans to
report to the House and Senate Appropriations Committees on the
status of the Team when they meet in conference on the Department's
fiscal year 1994 appropriations. 

On August 26, 1993, the OTFM Director told us that he was revising
the OTFM organization chart for the Departmental Manual to include a
Management Improvement Staff responsible for prior year trust fund
account reconciliations.  He also told us that such a staff would be
useful on a continuing basis to handle future OTFM management
initiatives in addition to the trust fund account reconciliations. 


---------------------------------------------------------- Letter :7.1

We are sending copies of this report to the Secretary of the
Interior; the Assistant Secretary for Policy, Management, and Budget;
the Assistant Secretary, Indian Affairs; the Acting Deputy
Commissioner, Indian Affairs; the Chairmen and Ranking Minority
Members of the cognizant


Appropriations and Oversight Committees; the Director of the Office
of Management and Budget; and other interested parties. 

Please contact me at (202) 512-9450 if you or your staff have any
questions concerning this report.  Major contributors to this report
are listed in appendix II. 

Sincerely yours,

Brian P.  Crowley
Director of Planning and Reporting


OFFICIALS INVOLVED IN CREATING THE
SPECIAL PROJECTS TEAM
=========================================================== Appendix I

Officials involved in the review and
approval process                         Current position
---------------------------------------  ---------------------------------------
Department

Assistant Secretary, Policy,             Left Department
Management, and Budget

Principal Deputy Assistant Secretary,    Same
Policy, Management, and Budget

Staff Assistant to the Principal Deputy  Chief, Drug Program Coordination Staff
Assistant Secretary, Policy,
Management, and Budget

Director, Office of Management           Acting Director, Office of Construction
Improvement\a                            Management

Chief, Organization and Operations       Supervisory Management Analyst, Office
Analysis, Office of Management           of Information and Resources Management
Improvement\a

Deputy Assistant Secretary, Indian       Deputy Director, Office of Policy
Affairs                                  Analysis

BIA

Deputy Commissioner, Indian Affairs      Left BIA

Acting Deputy Commissioner, Indian       Area Director, Portland Area Office
Affairs

Assistant Director, Financial            Same
Management, Office of Management and
Administration (Temporary Acting Deputy
Commissioner, Indian Affairs)
--------------------------------------------------------------------------------
\a This office was abolished on October 8, 1992. 


MAJOR CONTRIBUTORS TO THIS REPORT
========================================================== Appendix II


   ACCOUNTING AND INFORMATION
   MANAGEMENT DIVISION,
   WASHINGTON, D.C. 
-------------------------------------------------------- Appendix II:1

Gayle L.  Condon, Assistant Director
Robert W.  Wagner, Jr., Audit Manager


   OFFICE OF GENERAL COUNSEL
-------------------------------------------------------- Appendix II:2

Thomas H.  Armstrong, Assistant General Counsel

