Indian Issues: The Office of the Special Trustee Has Implemented 
Several Key Trust Reforms Required by the 1994 Act, but Important
Decisions about Its Future Remain (08-DEC-06, GAO-07-104).	 
                                                                 
The American Indian Trust Fund Management Reform Act of 1994	 
established the Office of the Special Trustee for American	 
Indians (OST), within the Department of the Interior, to oversee 
the implementation of management reforms for funds--derived	 
primarily from Interior's leasing of Indian lands--that Interior 
holds in trust for many Indian tribes and individuals.		 
Specifically, the act directs that an integrated information	 
system be developed that interfaces the trust fund accounting	 
system with the land title records and asset management systems  
maintained by Interior's Bureau of Indian Affairs (BIA). GAO	 
examined (1) OST's progress in implementing the trust fund	 
management reforms and (2) the extent to which OST has used	 
contractors in implementing these reforms. GAO reviewed OST's	 
strategic plans and contracting documents and interviewed OST and
BIA managers.							 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-104 					        
    ACCNO:   A63965						        
  TITLE:     Indian Issues: The Office of the Special Trustee Has     
Implemented Several Key Trust Reforms Required by the 1994 Act,  
but Important Decisions about Its Future Remain 		 
     DATE:   12/08/2006 
  SUBJECT:   Beneficiaries					 
	     Indian lands					 
	     Land management					 
	     Native Americans					 
	     Program evaluation 				 
	     Records						 
	     Records management 				 
	     Risk management					 
	     Special fund accounts				 
	     Strategic planning 				 
	     Trust funds					 
	     Policies and procedures				 
	     Program goals or objectives			 

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GAO-07-104

   

     * [1]Results in Brief
     * [2]Background
     * [3]OST Estimates that Almost All of Its Key Trust Reforms Will

          * [4]Almost All of OST's Key Reforms Are Scheduled for Completion
          * [5]OST Has Not Provided a Timetable for Completing Trust Reform

     * [6]OST Has Relied on Contractors to Implement Many of Its Trust

          * [7]OST Has Used Contractors to Perform Various Trust Reform Act
          * [8]OST Has Primarily Relied on NBC for Contracting Services
          * [9]An Investigation by Interior's Office of Inspector General F

     * [10]Conclusions
     * [11]Recommendations for Executive Action
     * [12]Agency Comments and Our Evaluation
     * [13]Scope and Methodology
     * [14]Retention Allowance
     * [15]Performance Awards
     * [16]GAO Contact
     * [17]Staff Acknowledgments
     * [18]GAO's Mission
     * [19]Obtaining Copies of GAO Reports and Testimony

          * [20]Order by Mail or Phone

     * [21]To Report Fraud, Waste, and Abuse in Federal Programs
     * [22]Congressional Relations
     * [23]Public Affairs

Report to Congressional Requesters

United States Government Accountability Office

GAO

December 2006

INDIAN ISSUES

The Office of the Special Trustee Has Implemented Several Key Trust
Reforms Required by the 1994 Act, but Important Decisions about Its Future
Remain

GAO-07-104

Contents

Letter 1

Results in Brief 4
Background 6
OST Estimates that Almost All of Its Key Trust Reforms Will Be Completed
by November 2007, but Has Yet to Prepare a Timetable for Completing Its
Remaining Reforms 9
OST Has Relied on Contractors to Implement Many of Its Trust Reform
Activities 17
Conclusions 23
Recommendations for Executive Action 24
Agency Comments and Our Evaluation 24
Scope and Methodology 24
Appendix I Retention Allowances and Performance Awards Provided to OST
Senior Executive Service Managers 28
Retention Allowance 28
Performance Awards 29
Appendix II OST's Task Orders Issued to Chickasaw Nation Industries for
Trust Reform Work, Fiscal Years 2004 and 2005 32
Appendix III Comments from the Department of the Interior 33
Appendix IV GAO Contact and Staff Acknowledgments 39

Tables

Table 1: OST's Appropriations, Full-Time Equivalents, and SES Positions,
Fiscal Years 1997 through 2006 8
Table 2: OST's Top 10 Contractors, by Obligations, Fiscal Years 2004 and
2005 18
Table 3: Top 10 Product or Service Types Contracted for OST, by
Obligations, Fiscal Years 2004 and 2005 20
Table 4: Comparison of the Retention Allowance Provided to the Principal
Deputy Special Trustee with the Maximum Retention Allowance Provided to an
SES Manager at All Other Federal Agencies, Calendar Years 1999 through
200529
Table 5: Comparison of the Average Performance Award Amounts Provided to
SES Managers at OST with the Average Amounts Provided to Other Bureaus and
Offices within Interior and Other Federal Agencies, Fiscal Years 2001
through 2005 31

Figure

Figure 1: OST's Current Organizational Structure and SES Positions 16

Abbreviations

BIA Bureau of Indian Affairs
CD&L Chavarria, Dunne, & Lamey
CNI Chickasaw Nation Industries
DQ&I Data Quality and Integrity
ERB Executive Resources Board
FPDS-NG Federal Procurement Data System-Next Generation
NBC National Business Center
OST Office of the Special Trustee for American Indians
SES Senior Executive Service
TAAMS Trust Asset and Accounting Management System
TFAS Trust Funds Accounting System

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separately.

United States Government Accountability Office

Washington, DC 20548

December 8, 2006

The Honorable Byron L. Dorgan
Vice-Chairman
Committee on Indian Affairs
United States Senate

The Honorable Daniel K. Inouye
United States Senate

The Honorable Tim Johnson
United States Senate

The Bureau of Indian Affairs (BIA), within the Department of the Interior
(Interior), for many years was responsible for managing the income that
Indians derived primarily from Interior's leasing of rights to minerals,
timber, and grazing on Indian lands. However, BIA experienced
long-standing problems in managing this income, which it had received and
held in trust.^1 Specifically, BIA's Office of Trust Funds Management,
which was responsible for providing accounting and investment services and
managing the accounting system that recorded the receipt and disbursement
of Indian trust funds to tribal and individual Indian account holders, did
not have adequately trained personnel or adequate accounting and
information systems to ensure that lease income was deposited in the
correct trust accounts and that trust balances were accurate. Moreover,
each of BIA's 12 regional offices has been responsible for recording land
title ownership and tracking lease revenues. Several BIA regional and
agency offices created their own automated systems for tracking this
information, while some offices performed this function manually. As a
result, these regional information systems were not integrated, and the
regional offices could not ensure that their information was regularly
updated, accurate, and complete.

In response to these problems, the Congress enacted the American Indian
Trust Fund Management Reform Act of 1994 (the 1994 Act).^2 Among other
things, the 1994 Act established the Office of the Special Trustee for
American Indians (OST) to oversee and coordinate Interior's implementation
of trust fund management reforms. To improve information systems and
accounting practices, the 1994 Act directs OST to oversee the development
of an integrated information system that interfaces the trust funds
accounting system with BIA's land title records and asset management
systems for Indian lands. These systems are to be integrated with asset
management systems that Interior's Minerals Management Service and Bureau
of Land Management are developing. The 1994 Act also requires OST to
develop a comprehensive strategic plan with a timetable for implementing
the identified reforms and a date when OST will be terminated. The 1994
Act directs that the Special Trustee provide the Secretary of the Interior
and the Congress with a 30-day notice prior to the termination date, and
authorizes the Special Trustee to recommend either the continuation or
permanent establishment of OST if necessary for the efficient discharge of
Interior's trust responsibilities. The 1994 Act states that OST will be
terminated 180 legislative days after reforms are completed, unless the
Congress extends the Special Trustee's authorities.

^1GAO, Financial Management: Focused Leadership and Comprehensive Planning
Can Improve Interior's Management of Indian Trust Funds,
[24]GAO/AIMD-94-185 (Washington, D.C.: Sept. 22, 1994).

^2Pub. L. No. 103-412, 108 Stat. 4239 (1994).

Subsequently, in response to direction in the conference report
accompanying Interior's fiscal year 1996 appropriations bill,^3 the
Secretary of the Interior directed, through Secretarial Order 3197, that
the Office of Trust Funds Management and other financial trust services be
transferred from BIA to OST. This transfer effectively expanded OST's
responsibilities from overseeing and coordinating Interior's
implementation of trust fund management reforms to also include managing
tribal and individual Indian trust fund accounts and providing financial
services. OST reports that it currently maintains about 1,450 accounts for
more than 250 tribal entities with assets of about $2.9 billion and about
300,000 individual Indian accounts with financial assets of about $400
million.

Between fiscal years 1997 and 2006, OST's staff increased from 245 to 590,
and total funding grew from $34.1 million to $222.8 million. In April
2003, the Secretary of the Interior reorganized OST to create three
separate divisions that are responsible for (1) implementing trust reform
activities, (2) providing financial trust services, and (3) providing
trust fund management and beneficiary services in the field through the
creation of 6 regions that are aligned with BIA's 12 regional offices. The
reorganization also doubled the number of OST's Senior Executive Service
(SES) positions to 14.

^3H.R. Rep. No. 104-259, at 43-44 (1995).

Over the years, OST and BIA have used contractors to help implement their
trust fund management reforms. In 2003, Interior's Office of Inspector
General began investigating allegations that senior OST managers had given
Chavarria, Dunne, & Lamey (CD&L) favorable treatment in awarding contract
work. The Inspector General's May 2006 report presented facts showing that
(1) senior OST managers had created an appearance of preferential
treatment of CD&L by socializing and exchanging gifts with firm officials,
in violation of government ethical standards, and (2) OST contract
personnel felt pressured by these senior OST managers to continue to award
work to CD&L.^4 The Inspector General referred the matter to Interior to
take the appropriate administrative action and review the performance of
the contract. Independent of the Inspector General's investigation, OST
began using Interior's National Business Center (NBC), located in Denver,
Colorado, in 2003 and Fort Huachuca, Arizona, in 2004 to provide
contracting services. NBC's Fort Huachuca branch administers a contract
with an Indian small business contractor. The contract, which was awarded
noncompetitively under the Small Business Administration's 8(a) program,
allows OST and other agencies to place task orders for activities within
the contract's scope.^5 BIA also provides contracting services for OST in
addition to funding its own contracts for trust reform activities.

In recent years, representatives of several tribal organizations have
expressed concern to the Congress about the extent, duration, and cost of
OST's reforms, noting that OST has not provided the Congress with a
timetable for completing these reforms as the 1994 Act requires. These
representatives are also concerned that OST has taken an increasingly
larger role in the management of the trust, rather than limiting itself to
overseeing trust reform efforts.

^4Department of the Interior, Office of Inspector General, Transmittal of
Report of Investigation: Allegations Concerning Senior Officials of the
Office of the Special Trustee for American Indians (Washington, D.C.: May
16, 2006).

^5Under the Small Business Administration's 8(a) program, small businesses
that are socially or economically disadvantaged can be awarded contracts
without competition below certain dollar thresholds. Alaska Native
Corporations and Indian tribes, among others, are exempted from the $3.5
million threshold ($5.5 million for manufacturing contracts) above which
contracts must be competed.

In this context, we examined (1) OST's progress in implementing the
American Indian Trust Fund Management Reform Act of 1994 and (2) the
extent to which OST has used contractors in implementing these reforms. In
addition, appendix I provides information on retention allowances and
performance awards provided to OST managers in SES positions.

To examine OST's progress in implementing the 1994 Act, we reviewed laws,
regulations, and legislative history pertaining to trust reforms at
Interior. We also reviewed OST's trust reform planning documents and
interviewed OST and BIA officials to determine the status of the
implementation of trust reforms; however, we did not analyze the adequacy
of OST's and BIA's implementation of trust reforms. To identify the extent
to which OST has used contractors in implementing its trust reforms, we
obtained data from the Federal Procurement Data System-Next Generation
(FPDS-NG) for fiscal years 2004 and 2005 and tested these data for
reliability by comparing them with procurement data from NBC.^6 Where
discrepancies were found, we corrected the FPDS-NG data to ensure
completeness of the data. In addition, we interviewed contracting officers
at NBC and contracting officers' technical representatives at OST. On the
basis of our testing and correction of FPDS-NG data, we are sufficiently
confident of the reliability of the data we are reporting. We conducted
our review from February 2006 through October 2006 in accordance with
generally accepted government auditing standards.

Results in Brief

OST has implemented several key trust fund management reforms, but OST has
not prepared a timetable for completing its remaining trust reform
activities or identified a date for its termination under the 1994 Act.
OST estimates that almost all of the key trust reforms needed to develop
an integrated trust management system and to provide improved trust
services will be completed by November 2007, but OST believes some
additional improvements are important to make. Specifically, in May 2000,
OST implemented a new trust funds accounting system for processing trust
account funds. In addition, BIA has developed a centralized trust asset
and accounting management system for managing land title records and
leasing activities for Indian lands. OST and BIA are currently verifying
the accuracy of the leasing information by comparing data in BIA's trust
asset and accounting management system with BIA's local land records for
each tract of Indian land that has recurring income from leasing the
rights to natural resources. The agencies plan to finish this verification
by October 2007. However, the Special Trustee does not expect that
verification activities will be completed for land tracts without
recurring income until the end of 2009. OST's most recent strategic plan,
issued in 2003, did not include a timetable for implementing trust reforms
or a date when OST will be terminated, as the 1994 Act required. The 1994
Act also allows the Special Trustee to propose to the Congress that OST
continue operations. The Special Trustee told us that Interior will need
OST's staff to continue to perform their functions after trust reforms are
completed, whether or not OST is terminated, because the Secretary of the
Interior transferred staff and responsibilities to OST to, for example,
manage trust fund accounts and provide account holders with better trust
services after the passage of the 1994 Act. While OST plans to reduce its
appropriated funding request by phasing out contractors when trust reform
activities are complete, the Special Trustee believes that OST's current
staff is about at the right size needed for future trust fund operations.
However, OST has not developed a workforce plan that reexamines the
expenditures and staffing levels needed for trust fund operations once
reforms are completed. Opportunities may exist to realign or further
reduce expenditures and staffing levels because, for example, there are
OST staff who either are responsible for implementing trust reforms or
have responsibilities that will decrease once trust reforms are completed
and accounting functions are automated. We are making recommendations to
the Secretary of the Interior to provide the Congress with a timetable for
completing trust fund management reforms and with a plan for future trust
fund operations. Also, we are recommending that the Secretary develop a
workforce plan that identifies future staffing and funding needs as trust
reforms are completed. Interior agreed with our recommendations.

^6FPDS-NG is the central repository of statistical information on federal
contracting maintained by Global Computer Enterprises, Inc., under
contract with the General Services Administration. For our assessment of
FPDS-NG, see GAO, Improvements Needed to the Federal Procurement Data
System-Next Generation, [25]GAO-05-960R (Washington, D.C.: Sept. 27,
2005).

Since its inception, OST has used contractors to perform many of its trust
reform activities as a way to minimize the size of its permanent staff. In
fiscal years 2004 and 2005, OST obligated nearly 21 percent of its total
appropriated funds to contracting. The trust reform activities performed
and products provided by the nearly 350 firms that OST has worked with
vary and include operating and maintaining software systems to track and
manage accounts, modeling trust processes, drafting handbooks and
procedural documents, and providing records management services. About 66
percent of the fiscal years 2004 and 2005 contracting dollars went to 2
firms. Over $31 million during this period was awarded to the largest
contractor, an Indian-owned 8(a) small business, through task orders under
an existing contract. This type of contract allows for task orders to be
awarded quickly. In addition, OST has awarded about $14 million annually
to the second largest contractor to operate and maintain the trust funds
accounting system. OST awarded and managed contracts in-house for nearly 2
years before turning the contracting function over to NBC's Denver branch
in October 2003.

Background

The federal government has held funds in trust for Indian tribes since
1820. Enacted in 1887, the General Allotment Act, also known as the Dawes
Act, provided for the division of Indian tribal lands into allotments of
up to 160 acres for individual tribal members and families. Subsequently,
the Indian Reorganization Act, enacted in 1934 and also known as the
Wheeler-Howard Act, ended the allotment of tribal lands and extended
indefinitely the period that the federal government would hold allotted
lands in trust. Many of these allotments remain in trust today, now
jointly owned in common by hundreds and, in many cases, thousands of
individual Indians, each with an undivided--or fractionated--interest in
the whole parcel. As trustee for tribes and Indians, the Secretary of the
Interior is required to account for the revenue generated by each interest
(amounting, in some cases, to less than 1 cent per year), invest the trust
funds, and provide other trust services to the beneficiaries. The
Secretary also is responsible for maintaining official Indian land title
and ownership records, managing natural resource assets, and probating
estates. Much of this responsibility has been delegated to BIA, which has
12 regional offices and 85 agency offices that are located on or near
reservations.

Beginning in April 1997, Interior has issued several strategic plans for
implementing trust reforms. Concerned that Interior had not achieved the
desired improvement in trust management, the Secretary in January 2002
initiated an effort to develop a comprehensive, departmentwide approach
for improving Indian trust management. On March 28, 2003, Interior issued
the Comprehensive Trust Management Plan, which presented a strategic plan
to guide the design and implementation of integrated trust reform efforts.
Interior's performance of fiduciary trust business practices nationwide
was documented and reported in the As-Is Trust Business Model Report.^7
The information contained in the Comprehensive Trust Management Plan and
the As-Is Report is the foundation for the recommendations for
reengineered business processes that appear in the To-Be Model--or
Fiduciary Trust Model.^8 The Fiduciary Trust Model contains implementation
strategies for major business processes, and currently serves as
Interior's guide for trust reform.

^7Department of the Interior, DOI Trust Reform: As-Is Trust Business Model
Report (Washington, D.C.: Mar. 21, 2003).

As a basis for revising the department's approach for improving Indian
trust management, Interior contracted with Electronic Data Systems in 2001
to determine how trust reforms were then being conducted and how they
could be improved. The firm's recommendations included both improvements
in trust management and a reorganization of Interior's agencies carrying
out trust management and improvement.^9 In response to these
recommendations, the Secretary of the Interior reorganized BIA and OST in
April 2003. The reorganization increased OST's SES positions from 7 to 14
by (1) creating 6 OST regional trust administrators, located at OST's
Albuquerque headquarters, who are responsible for providing account
holders with trust services and with overseeing fiduciary trust officers
and other personnel in the field and (2) adding an SES position in
realigning OST's management structure by creating three divisions.

As shown in table 1, OST's budget has grown from $34.1 million in fiscal
year 1997 to $222.8 million in fiscal year 2006. Similarly, OST's
full-time equivalent positions have increased from 245 employees in fiscal
year 1997 to 590 employees in fiscal year 2006. While the growth in budget
and staff mainly reflect OST's efforts to implement reforms and its
growing responsibility for trust fund management, OST's funding also
supports other Indian-related activities. For example, in fiscal year
2006, OST transferred (1) $54.4 million to the Office of Historical Trust
Accounting, (2) $34.0 million for implementing the Indian Land
Consolidation Act activities, (3) $7.6 million to the Office of Hearings
and Appeals, (4) $5.6 million to the Interior Solicitor's Office to cover
costs associated with the Cobell v. Kempthorne lawsuit,^10 (5) $1.3
million to BIA for tribal contract and compact appraisals, and (6)
$300,000 to Interior's Chief Information Officer. OST began funding the
Office of Historical Trust Accounting in fiscal year 2001 and activities
related to the Indian Land Consolidation Act in fiscal year 2000.
Responsibility for Indian land appraisals was transferred from BIA to OST
in 2002 and is currently managed by OST's Office of Appraisal Services.

^8Department of the Interior, Fiduciary Trust Model (Washington, D.C.:
Dec. 30, 2004).

^9Department of the Interior, DOI Trust Reform: Trust Reform Final Report
and Roadmap (Washington, D.C.: Jan. 24, 2002).

^10Cobell v. Kempthorne (formerly Cobell v. Norton) is a class action
lawsuit filed in 1996 by Elouise Cobell, a member of the Blackfeet Tribe,
and others against the federal government concerning Interior's management
of Indian trust fund accounts.

Table 1: OST's Appropriations, Full-Time Equivalents, and SES Positions,
Fiscal Years 1997 through 2006

Sources: Interior's OST and Minerals Management Service.

In addition to its trust reform activities, OST is responsible for
maintaining trust-related Indian records and developing trust investment
strategies for beneficiaries. In 1999, OST created the Office of Trust
Records to ensure that Indian records are maintained and safeguarded. In
September 2003, Interior signed a Memorandum of Understanding with the
National Archives and Records Administration to create a national
repository for American Indian records, including fiduciary trust records,
in Lenexa, Kansas. OST's Division of Trust Funds Investment is responsible
for managing and investing individual Indian and tribal assets. OST is
allowed to invest trust funds only in securities backed by the federal
government, including U.S. Treasuries and securities from
government-sponsored agencies.

OST Estimates that Almost All of Its Key Trust Reforms Will Be Completed by
November 2007, but Has Yet to Prepare a Timetable for Completing Its Remaining
Reforms

OST has implemented several key trust fund management reforms, but OST has
not prepared a timetable for completing its remaining trust reform
activities or identified a date for its termination under the 1994 Act.
OST estimates that almost all of the key reforms needed to develop an
integrated trust management system and to provide improved trust services
will be completed by November 2007, but OST believes some additional
improvements are important to make. In particular, once the validation of
BIA's new trust asset and accounting management system (TAAMS) leasing
information for Indian lands with recurring income is completed, BIA and
OST plan to validate the leasing information for Indian lands that do not
have recurring income. The Special Trustee expects these validation
activities will be completed by December 2009. Despite the 1994 Act's
requirement, OST has not proposed a termination date for the office once
trust reforms are completed. The Special Trustee noted that Interior will
need OST's staff to continue to perform their functions after trust
reforms are completed, whether or not OST is terminated, because OST was
given responsibility for managing trust fund operations and other
trust-related activities after the 1994 Act was enacted. The Special
Trustee also added that OST will reduce its expenditures once key trust
reforms are completed by terminating contracts, but he believes that OST's
current staff is about the right size needed to manage OST's operations
after trust reforms are completed. However, because OST has not developed
a workforce plan that reexamines the expenditures and staffing levels
needed for trust fund operations once trust reforms are completed,
additional opportunities may exist to further reduce expenditures and OST
staff.

Almost All of OST's Key Reforms Are Scheduled for Completion by November 2007

OST has made important progress in implementing trust fund management
reforms and plans to complete almost all of the key reforms by November
2007. Specifically, OST is responsible for trust reforms associated with
the trust funds accounting system and the overall integration of the
various trust reform automated systems. BIA and OST are responsible for
trust reforms associated with its implementation of the TAAMS system for
managing land title records and leasing activities for Indian lands. NBC
is responsible for developing a management system for Indian land
appraisals.

OST is responsible for implementing the following trust reforms:

           o Trust Funds Accounting System (TFAS). In March 1998, OST awarded
           a contract to SEI Investments to use a modified version of its
           commercial trust accounting system that provides basic collection,
           accounting, investing, disbursing, and reporting functions. TFAS
           replaced a module in BIA's Integrated Records Management System
           and two OST systems, which could not fully perform trust
           accounting functions. TFAS was deployed in August 1998 and was
           fully operational in May 2000. OST continues to contract with SEI
           Investments at a cost of about $14 million per year for operations
           and general maintenance, which includes system upgrades twice
           annually.

           TFAS is an accounting and investment system that enables the
           automated production of account statements for individual Indians
           and tribal account holders. It also allows, for example, automated
           trade settlements, automated payments of financial asset income,
           daily securities pricing, and automated reconciliation. In
           addition, landownership and leasing accounts will be included in
           TFAS as part of BIA's and OST's TAAMS conversion project to ensure
           that both systems contain accurate and complete information.

           o Trust Funds Receivable. In 2004, OST awarded a contract to Bank
           of America to centralize the collection of trust payments through
           a single remittance-processing center, also known as a lockbox, to
           minimize the risk of loss or theft. Under phase I of the new
           system, which became effective in October 2005, trust payments are
           sent to the processing center in Prescott, Arizona, for deposit
           into trust fund accounts. Previously, BIA and OST personnel in
           agencies for each of the 12 regions collected trust payments for
           trust fund account holders and then mailed or deposited the
           payments.

           Phase II of this project is to have all collections and
           distributions automated in TFAS. However, implementation requires
           the completion of the validation of the land title and leasing
           data in TAAMS. According to OST officials, full automation of all
           collections and distributions is scheduled for November 2007. OST
           officials said that two agencies in BIA's Southern Plains region
           completed Phase II by the end of June 2005--the remaining agencies
           in BIA's Southern Plains region and one agency in BIA's Eastern
           Oklahoma region completed Phase II by the end of January 2006.
           Several agencies in BIA's Great Plains region completed Phase II
           by the end of June 2006--the remaining agencies in BIA's Great
           Plains region and several agencies in BIA's Northwest region
           completed Phase II by the end of August 2006. BIA's Rocky Mountain
           region completed Phase II by the end of July 2006, and BIA's
           Navajo region and several agencies in BIA's Western regions
           completed Phase II by the end of September 2006. In addition, OST
           has completed its desktop procedures for handling the receipt of
           trust funds, and BIA is completing its desktop standardization
           procedures, with some assistance from OST.

           o Trust Beneficiary Call Center. In December 2004, OST established
           the Trust Beneficiary Call Center, a centralized call center in
           its headquarters office in Albuquerque, New Mexico. Through a
           toll-free telephone number, the call center provides timely
           responses to beneficiaries' questions and allows them to access
           account information. In addition, the call center operators and
           staff have recently received training and access to TAAMS through
           OST's trust portal to enable them to better answer questions about
           beneficiaries' assets. If a beneficiary's question cannot be
           answered, the call center operator is to refer the question to an
           OST Fiduciary Trust Officer, generally colocated at the BIA field
           agencies, to research and respond accordingly. The call center was
           fully operational by December 2005.

           In establishing the call center, calls were redirected from
           preexisting toll-free telephone numbers at BIA field agencies. OST
           officials told us that the Trust Beneficiary Call Center has
           helped to relieve some of the workload from OST and BIA staff in
           the field. OST data show that, as of July 2006, the call center
           had received over 135,000 calls from beneficiaries, with a
           first-line resolution rate of about 89 percent.

           o Trust Portal. OST completed the implementation of its trust
           portal in May 2006. OST's trust portal provides employees with a
           single point of access to applications and other resources, such
           as the trust funds receivable system and the intranet. Currently,
           the trust portal is available to OST employees and some BIA
           employees. According to an OST official, various contractors
           developed the trust portal and OST staff maintain it.
           o Risk Management Program. Beginning in 1999, OST has contracted
           with CD&L to develop and refine the risk management program for
           establishing management controls to monitor and evaluate the
           effectiveness of Interior's trust operations. The risk management
           program has evolved over the past few years--the original risk
           management product was a stand-alone compact disk application that
           provided an assessment tool to evaluate OST's business operations.
           Since then, a Web-based risk management tool, the RM-Plus tool,
           has been developed to facilitate data collection and reporting for
           all Interior bureaus and offices with Indian trust
           responsibilities. OST implemented the RM-Plus in August 2004 and
           has contracted with Chickasaw Nation Industries (CNI) to operate
           and maintain the tool. BIA used the RM-Plus tool in 2006 to
           produce its financial assurance statement at the Southern Plains
           pilot location.

           OST officials said that additional revisions are being made to the
           RM-Plus tool in response to the new requirements in the Office of
           Management and Budget's Circular A-123 for ensuring the
           accountability and cost-effectiveness of agency programs. The
           RM-Plus is currently being revised to incorporate the circular's
           requirements and is scheduled to be completed by March 2007. If
           other Interior bureaus and offices with trust responsibilities
           decide to use the RM-Plus tool, OST will assist them by providing
           advice and access to the RM-Plus tool.

           BIA and OST are implementing the following trust reforms to
           develop centralized systems for managing land title records and
           leasing activities as well as managing and tracking probates for
           Indian lands:

           o TAAMS. In December 1998, Interior awarded a contract to Artesia
           to develop TAAMS, a centralized system with two components for
           managing Indian trust assets: the TAAMS land title system and the
           leasing module. Over the years, Artesia was bought out by several
           contractors. Currently, the TAAMS contract is with CGI-AMS. BIA's
           TAAMS land title system maintains both current and historical
           titles--some of these historical titles in the system date back to
           the original land grant. This system was completed in January
           2006.

           The TAAMS leasing module tracks leases of Indian assets. BIA and
           OST are currently converting leasing data from BIA's old legacy
           systems to TAAMS and integrating TAAMS with TFAS to ensure that
           both systems have accurate and complete title and leasing
           information. As a region's system is converted, OST will provide
           beneficiaries with asset statements that identify the source of
           the funds and a listing of assets owned in that region and any
           active encumbrances, as required by the 1994 Act. Prior to the
           conversion, the statements that beneficiaries receive will only
           include information on account balances and account transactions.

           Before leasing data are converted into TAAMS, BIA's Land Titles
           and Records Offices and OST--primarily through a contract with
           CNI--are implementing the data quality and integrity (DQ&I)
           project to verify the completeness and accuracy of the TAAMS title
           and leasing information for Indian lands. As part of the
           verification, the DQ&I teams compare the TAAMS information with
           the information contained in the BIA region's legacy realty system
           for land tract allotments with recurring income. For each land
           tract allotment for which the owner(s) and the interest they own
           do not match,^11 the DQ&I teams compare the TAAMS information
           against source documents to identify (1) conveyances of title
           through probate records, deeds, and gift conveyances and (2)
           active encumbrances, including lease permits, rights of way, and
           timber sale agreements. This verification is scheduled to be
           completed in all BIA regions by October 1, 2007, covering land
           tracts with recurring income for which the legacy lease and title
           systems do not match.

           OST also plans to verify the accuracy of the land and leasing
           records for which TAAMS and the legacy realty system have matching
           information by comparing the TAAMS information with source
           documents for a sample of these records. OST and BIA plan to
           verify title and leasing data for tracts of land without recurring
           income after October 2007, but a schedule for implementing and
           completing this work has not yet been developed.

           OST officials noted that the DQ&I project is labor-intensive. The
           land validation took about 1 hour per tract in BIA's Southern
           Plains region because there are about 12 owners per tract. This
           validation requires more time in BIA's Great Plains region, which
           has about 32 owners per tract, and in BIA's Rocky Mountain region,
           which has over 100 owners for some tracts.

           o Probate Case Management and Tracking System. BIA used a modified
           off-the-shelf software program to develop the probate case
           management and tracking system, also known as ProTrac, for use by
           BIA, OST, and Interior's Office of Hearings and Appeals to manage
           and track probate cases from initiation to closing. BIA
           constructed the ProTrac database from manual records,
           spreadsheets, and trust fund records and, according to a BIA
           official, has verified its accuracy. BIA is currently developing a
           paperless version of ProTrac that is scheduled to be implemented
           by June 2007.

           NBC is implementing the following trust reform to improve the
           management of Indian land appraisals:

           o Appraisal Management System. NBC is working with OST to adapt
           its appraisal request and review tracking system to develop the
           Indian trust appraisal request system. This new system will
           centralize the appraisal process and track appraisal requests
           across Indian country, including the period of time it takes to
           process a request. NBC and OST completed pilot testing the
           appraisal management system in the Western region in October 2006.
           OST estimates that the appraisal management system will be fully
           implemented by March 2007.

           OST and BIA managers have overseen the progress of each of the key
           trust reforms scheduled for implementation by November 2007. OST
           managers also plan to implement two additional trust reforms.
           First, the managers plan to verify the accuracy and completeness
           of TAAMS information for (1) a statistical sample of the tracts of
           land for which the data in TAAMS and the BIA regional legacy
           systems match and (2) tracts of Indian land without recurring
           income. The Special Trustee estimates that this work will be
           completed by the end of 2009. Second, the OST managers plan to
           work with BIA to replace the oil and gas distribution system
           within BIA's Integrated Records Management System that tracks oil
           and gas revenue from Indian lands. The new system will, among
           other things, interface with TFAS and the Minerals Management
           Service's system. This system is estimated to cost $2.5 million
           per year and to be implemented by December 2009.

           Furthermore, Interior is exploring the conversion of Land Title
           Mapper to the department's National Integrated Lands System for
           standardization purposes. The Land Title Mapper uses satellite
           imagery and geographic information systems to link the data in the
           integrated computer system with the physical site. The Special
           Trustee said the mapper could be completed by 2009 or 2010 and
           noted that, while the mapper is not a component of the 1994 Act's
           trust reforms, it would provide an important service to trust
           account beneficiaries. Additionally, as trust reforms are
           completed, OST will conduct employee training, promulgate
           trust-related regulations, prepare internal procedures, and
           prepare handbooks.
			  
			  OST Has Not Provided a Timetable for Completing Trust Reforms or
			  Identified a Termination Date

           The 1994 Act directed the Special Trustee, within 1 year of
           appointment, to provide the Congress with a comprehensive
           strategic plan that, among other things, identifies a timetable
           for implementing the plan's trust reforms and a date for OST's
           termination once reforms have been implemented. However, the
           Special Trustee has yet to provide the Congress with a timetable
           for completing the remaining trust reform activities and a date
           for OST's termination, even though OST's most recent strategic
           plan--the Comprehensive Trust Management Plan--issued in March
           2003, stated that OST would be able to forecast a date for
           termination within the next 14 months. The lack of a timetable for
           completing the remaining trust reforms has hindered the ability of
           the Congress, tribal organizations, and the public to fully assess
           the status of OST's trust reforms or to plan for trust fund
           operations once reforms are completed.

           The 1994 Act includes a sunset provision for OST but allows the
           Special Trustee to recommend to the Congress that OST continue
           operations if it is needed for the efficient discharge of
           Interior's trust responsibilities. The Special Trustee told us
           that Interior will need OST's staff to continue to perform their
           functions after trust reforms are completed, whether or not OST is
           terminated, because the Secretary of the Interior transferred
           additional staff and responsibilities to OST for managing tribal
           and individual Indian trust fund accounts and providing other
           trust services after the passage of the 1994 Act. Specifically, in
           response to direction in the conference report accompanying
           Interior's fiscal year 1996 appropriations bill, Secretarial Order
           3197 transferred the Office of Trust Funds Management and other
           financial trust services from BIA to OST. Subsequently, the
           Secretary transferred BIA's land appraisal staff to OST. If OST is
           terminated, it is unclear where OST responsibilities--including
           trust fund management and accounting operations, beneficiary
           services, trust records management, and land appraisals--will be
           transferred.

           The Special Trustee told us that OST had decided to use
           contractors, rather than hire additional OST staff, to implement
           many of the trust reforms as a way to minimize the size of its
           permanent staff--the contracts will end once key trust reforms are
           completed. The Special Trustee also said OST's SES positions will
           be reduced from 14 to 13 in the near future, and he noted that
           Interior is studying whether efficiencies might exist by combining
           the Chief Information Officer positions in BIA and OST (see fig. 1
           for OST's current organizational chart and SES positions).
           However, the Special Trustee believes the size of OST's staff,
           including the number of SES positions, is about the right size
           needed to manage OST's future operations.

^11OST and BIA use the most current of either the last certified Title
Status Report or the information going back 15 years for title validation.

Figure 1: OST's Current Organizational Structure and SES Positions

OST has not developed a workforce plan that reexamines the expenditures
and staffing levels needed for trust fund operations--including managing
and accounting for trust funds, providing trust services, maintaining
trust records, and conducting land appraisals--once trust reforms are
completed. The following opportunities may exist to realign or further
reduce expenditures and staffing levels:

           o The Trust Program Management Center, which is responsible for
           implementing trust reforms, currently has 23 staff whose work will
           be completed when trust reforms are implemented. However, one OST
           manager noted that, in some cases, the staff members responsible
           for implementing a given reform were then reassigned to the OST
           office with operational responsibilities to ensure continuous
           improvements are made.
           o OST currently has 131 accounting technicians located in many of
           BIA's field agencies whose responsibilities for processing the
           collections and disbursements of account funds will decrease once
           trust reforms are completed and accounting functions are
           automated. However, OST managers noted that it is important to
           have the accounting technicians in the field to perform account
           maintenance and research accounts. In addition, a BIA manager
           noted that many account technicians may still be needed to handle
           checks that might be given to a local BIA office instead of being
           mailed to OST's lockbox facility in Prescott, Arizona. Regardless,
           no plans have been developed to determine either the appropriate
           number of the accounting technicians needed to carry out future
           operations or their roles and responsibilities.
           o The Deputy Special Trustee for Field Operations, the six
           Regional Trust Administrators, and the Fiduciary Trust Officers
           have been actively involved in implementing trust reforms by
           coordinating DQ&I and other activities. It is unclear whether
           seven SES positions will continue to be needed to provide tribal
           and individual Indian account holders with trust services and to
           oversee field operations once trust reforms are completed;
           especially with OST's 52 Fiduciary Trust Officers generally
           colocated in BIA's field agencies and with the Trust Beneficiary
           Call Center now in place. However, the Special Trustee noted that
           each of the Regional Trust Administrators has trust banking or
           legal expertise for providing tribal and individual Indian account
           holders with important services, and the administrators will
           expand their outreach to trust account holders as the reforms are
           completed.
			  
			  OST Has Relied on Contractors to Implement Many of Its Trust Reform
			  Activities

           Since its inception, OST has relied on contractors to perform many
           of its trust reform activities as a way to minimize the size of
           its permanent staff. In fiscal years 2004 and 2005, OST obligated
           nearly 21 percent of its appropriated funds to contracting. The
           trust reform activities performed and products provided by the
           nearly 350 firms with which OST has contracted vary widely. About
           66 percent of contracting dollars from fiscal years 2004 and 2005
           went to 2 firms. Since 2003, OST has relied primarily on NBC to
           award and manage contracts. In a May 2006 report, Interior's
           Office of Inspector General found that senior OST managers had
           created an appearance of preferential treatment of a contractor in
           violation of the standards of ethical conduct. In response, the
           Special Trustee required that all OST employees in grades GS-12
           and above complete a special 2-hour ethics training course, in
           addition to the annual mandatory ethics training.
			  
			  OST Has Used Contractors to Perform Various Trust Reform Activities

           OST has relied extensively on contractors to perform many of its
           trust reform activities. During fiscal years 2004 and 2005, OST
           spent about $89.7 million, or nearly 21 percent, of its total
           appropriated funds on contracts.^12 Because 48 percent of these
           appropriated funds was transferred to other offices, such as the
           Office of Historical Trust Accounting, the amount OST spent on
           contracting comprised nearly 40 percent of its available funding
           for these 2 years. During this period, OST paid about $58.8
           million, or 66 percent, of these funds to 2 of the nearly 350
           firms it used--CNI received $31.1 million and SEI Investments
           received $27.7 million. (See table 2 for OST's obligations to its
           10 leading contractors.)

Table 2: OST's Top 10 Contractors, by Obligations, Fiscal Years 2004 and
2005

Source: General Services Administration's FPDS-NG database.

Note: This table excludes, among other things, expenditures though grants
and cooperative agreements and micropurchases using a government purchase
card.

aAmount includes obligations for contract work performed by DataCom
Sciences, which CNI acquired in 2003.

bAmount includes obligations for contract work performed by Neff & Ricci,
which Moss Adams acquired in 2005.

^12These totals for contracting exclude, among other things, expenditures
through grants and cooperative agreements and micropurchases using a
government purchase card.

CNI provides a variety of trust reform work for OST, including risk
management, trust data cleanup and encoding, and the development of policy
and procedures manuals. Most of the contracting with CNI, an Indian-owned
8(a) small business, was based on an indefinite delivery, indefinite
quantity contract.^13 (See app. II for a description of the work that CNI
performed under each task order.) An advantage of using this type of
contract is that contract task orders can be awarded quickly because there
is no requirement for competition. OST also pays SEI Investments about $14
million a year to operate and maintain a version of its commercial trust
fund accounting system adapted to meet OST's needs.

Table 3 shows the 10 leading product or service types for which OST used
contractors. Most of OST's obligations to contractors, about $30.3
million, were for data processing and telecommunications services. For
example, the DQ&I project for ensuring the accuracy and completeness of
the TAAMS database focuses on (1) assisting BIA with document encoding
into the trust systems, (2) validating and correcting critical data
elements to their respective source documents, and (3) implementing
postquality assurance processes. Other major data processing and
telecommunications services include developing OST's Trust Beneficiary
Call Center, identifying the owners of whereabouts unknown accounts, and
developing risk management processes. Another major service or product
type for which contracting funds were allocated was for financial
services, at about $28 million. About 99 percent of these funds went to
SEI Investments to operate and maintain TFAS. Contractors also provided
products and services to OST that were not directly related to trust
reform, such as supplying office furniture or providing guard and security
services.

^13The CNI contract provides for an indefinite quantity, within stated
limits, of supplies or services during a fixed period. A federal agency
can then contract with CNI by placing noncompetitive task or delivery
orders for individual requirements.

Table 3: Top 10 Product or Service Types Contracted for OST, by
Obligations, Fiscal Years 2004 and 2005

Source: General Services Administration's FPDS-NG database.

Note: This table excludes, among other things, expenditures though grants
and cooperative agreements and micropurchases using a government purchase
card.

aThis service includes data cleanup, statement processing, development of
the Trust Beneficiary Call Center, and the processing of whereabouts
unknown accounts.

bThis service includes records preservation, trust investment services,
and trust process modeling.

cThis service includes risk management services.

As trust reform activities are completed, OST plans to reduce funding for
contracting accordingly. For example, OST's fiscal year 2007 budget
request proposed to reduce funding by about $4.9 million as a result of
the completion of certain contract efforts, including the following
reductions:

           o $1,400,000 from the Office of Trust Accountability for contract
           costs related to defining, developing, facilitating, and
           delivering trust training programs;
           o $1,050,000 from the Office of Trust Accountability for contract
           costs related to the development of policies and procedures and
           upgrades of systems for the reengineering of trust processes;
           o $885,000 from the Office of Trust Accountability for contract
           costs related to the modeling of business practices for the
           purposes of risk management;
           o $675,000 from the Office of Trust Review and Audit for contract
           costs related to the development of the Indian Trust Examiner
           certification; and
           o $425,000 and $450,000 from the Offices of Field Operations and
           Trust Services, respectively, for contractors that were providing
           accounting services, such as data cleanup and encoding.
			  
			  OST Has Primarily Relied on NBC for Contracting Services

           Prior to 2001, OST relied on NBC to provide contracting services
           through an interagency agreement. However, at OST's request,
           Interior delegated contracting authority to OST in January 2001.
           This delegation was conditioned on (1) the retention of authority
           by Interior's Office of Acquisition and Property Management to
           oversee and approve specified actions and (2) a subsequent
           evaluation of OST's operations. In March 2002, the Office of
           Acquisition and Property Management conducted an acquisition
           management review that found several problems with OST's
           contracting operations. The review team said that many of the
           problems they found could easily be fixed, and noted that OST's
           contracting office was not fully staffed and was still
           experiencing "growing pains." The review team's draft report,
           which had three broad recommendations, was provided to OST for
           comment and OST responded in June 2002. However, the report was
           never issued in final.

           Subsequently, in July 2003, OST conducted its own study to (1)
           evaluate the functioning of OST's contracting office, (2) assess
           customer satisfaction with contracting services provided, and (3)
           determine the feasibility (including a cost/benefit and
           qualitative analysis) of outsourcing acquisition services to
           either NBC or another Interior office. The internal review found
           that, although the contracting office had made substantial
           improvements in response to the acquisition management review, the
           office still was not operating as effectively as it could. On the
           basis of proposals received from organizations that provide
           contracting services and a qualitative evaluation of these
           organizations, OST found that NBC's branch in Denver, Colorado,
           offered the best value for providing contracting services for OST.

           As a result, OST signed a 5-year interagency agreement with NBC's
           Denver branch to provide contracting services beginning on October
           1, 2003. NBC's headquarters conducted an acquisition management
           review of NBC Denver's contracting practices in April 2005 and
           found that, overall, the office was highly effective in providing
           contracting services.

           In 2004, OST also began using NBC's branch in Fort Huachuca,
           Arizona, because it is responsible for managing the indefinite
           delivery, indefinite quantity contract with CNI, as we previously
           discussed. The contract had been originally awarded to CNI on a
           sole-source basis, which is allowable under Small Business
           Administration regulations to provide special procurement
           advantages to businesses owned by Indian tribes that participate
           in the 8(a) program. OST has used the contract by placing task or
           delivery orders for implementing several of the trust reforms.

           In addition to funding contracts for their own trust reform
           activities, such as TAAMS, BIA also has administered contracts for
           OST. For example, since fiscal year 2005, BIA has served as the
           contracting office for a contract with CD&L for risk management. A
           BIA official stated that this contract is set to expire in
           December 2006. Finally, GovWorks, one of several federal
           government franchise funds designated by the Director, Office of
           Management and Budget, also has provided contracting services for
           OST.
			  
			  An Investigation by Interiorï¿½s Office of Inspector General Found
			  Evidence of an Appearance of Preferential Treatment by OST
			  Management

           In July 2003, Interior's Office of Inspector General received
           allegations that senior OST officials had given CD&L favorable
           treatment in awarding contract work. The Inspector General's May
           2006 report found that senior OST officials created an appearance
           of preferential treatment of CD&L, in violation of both the
           Standards of Ethical Conduct for Employees of the Executive
           Branch^14 and an internal OST memorandum directing "Arms Length
           Dealings with Contractors." The report documents that over several
           years, OST awarded and continued to extend, without competition, a
           contract with CD&L for trust fund accounting and risk management
           services; while at the same time, senior OST officials engaged in
           extensive outside social activity and exchanged gifts with CD&L
           executives. The report also stated that OST contract personnel
           felt pressured by these senior OST officials to continue to award
           work to CD&L.

           The Inspector General referred the matter to Interior to take
           appropriate administrative action and to review the performance of
           the CD&L contract. In response, the Special Trustee has required
           that all OST employees at grades GS-12 or above take a special
           2-hour ethics training course. The Special Trustee stated that he
           was satisfied with CD&L's trust accounting and risk management
           services.

           From January 2001 through September 2003, OST had procurement
           authority and in-house staff were servicing OST's contracts. In
           February 2004, after the contracting function was turned over to
           NBC's Denver branch, OST attempted to get a follow-on sole-source
           contract with CD&L for the risk management program. OST officials
           were anxious to get a follow-on contract to meet a court-ordered
           June 2004 deadline for implementing the risk management system for
           all agencies involved with trust records. However, due to a lack
           of documentation to support a valid justification and because of
           prior apparent improprieties, NBC officials refused to award a
           follow-on sole-source contract. Rather than wait 4 to 5 months to
           award a new contract under the competitive bidding process at
           NBC's Denver branch, OST officials went to BIA and placed an order
           under the General Services Administration's Mission Oriented
           Business Integrated Services program, which required a shorter
           time period to get a contract awarded. The order was placed with
           CNI in April 2004, and CNI subsequently hired CD&L as a
           subcontractor through September 2004 to continue the risk
           management design work. In January 2005, a competitive contract
           for additional risk management work was awarded to CNI and CD&L,
           with BIA as the contracting office.
			  
			  Conclusions

           OST is in the final stages of implementing the trust fund
           management reforms that the 1994 Act required. However, the
           Special Trustee has not provided the Congress with a timetable for
           completing these reforms, as required by the act. Without a
           timetable, the Congress cannot readily oversee OST's
           implementation of the trust reforms or plan for trust fund
           operations once reforms are completed. OST also has not developed
           a plan for future trust fund operations once reforms are
           completed. Whether or not OST is terminated, the Special Trustee
           believes that OST's staff will need to continue to perform their
           functions after trust reforms are completed because, after the
           passage of the 1994 Act, the Secretary of the Interior transferred
           to OST the Office of Trust Funds Management and other offices and
           personnel responsible for trust fund operations. In addition, OST
           has not developed a workforce plan that reexamines the
           responsibilities and needs for trust fund operations. While the
           Special Trustee plans to reduce OST's budget by terminating
           contracts as reforms are completed, he believes that OST's current
           size is about right for trust fund operations once reforms are
           completed. However, a reexamination of OST's workforce needs might
           identify opportunities for realigning or further reducing
           expenditures and staffing levels because, for example, certain job
           responsibilities may decrease once trust reforms are completed and
           accounting functions are automated.
			  
			  Recommendations for Executive Action

           To improve congressional oversight of the trust reforms and ensure
           that trust fund accounting operations, once implemented, are
           economically staffed, we recommend that the Secretary of the
           Interior direct the Special Trustee to take the following three
           actions:

           o Provide the Congress with a timetable for completing the trust
           fund management reforms.
           o In anticipation of completing the trust reforms, provide the
           Congress with a plan for future trust fund operations, including,
           if the decision is made to terminate OST, a determination of where
           these operations will reside.
           o As trust reforms are completed and contracts are terminated,
           develop a workforce plan that reexamines and proposes staffing
           levels and funding needs.
			  
			  Agency Comments and Our Evaluation

           We provided Interior with a draft of this report for its review
           and comment. In its written response, Interior agreed with our
           recommendations, stating that it expects to have a timetable by
           late-June 2007 for implementing the remaining trust reforms,
           including a date for the proposed termination or eventual
           disposition of OST. (See app. III.) However, Interior disagreed
           with the number of key reforms we identified and attached to its
           letter a list of 47 additional reforms that OST has completed. We
           reviewed the 47 reform efforts on Interior's list and, while they
           are important activities for the implementation of OST's trust
           reforms, we believe they are not key components of OST's
           integrated information system that interfaces the trust funds
           accounting system with BIA's land title records and asset
           management systems for Indian lands. Accordingly, we did not
           revise our report. In addition, Interior provided comments to
           improve the draft report's technical accuracy, which we have
           incorporated as appropriate.
			  
			  Scope and Methodology

           To examine OST's progress in implementing the American Indian
           Trust Fund Management Reform Act of 1994, we reviewed (1) the 1994
           Act and its legislative history; (2) Interior's appropriations
           legislation; and (3) relevant Interior documents, including
           secretarial orders and OST's March 2003 Comprehensive Trust
           Management Plan and prior strategic plans that provide the basis
           for OST's current reform efforts. We also reviewed various
           documents showing OST's progress in implementing trust reforms and
           interviewed OST and BIA officials regarding the status of trust
           reform efforts. However, we did not analyze the adequacy of OST's
           efforts to ensure that the reforms will result in an integrated
           computer system with complete and accurate information. In
           addition, to gain insight into the concerns that tribal
           organizations have expressed about OST's trust reform performance,
           we interviewed executives of the Intertribal Monitoring
           Association on Indian Trust Funds, the National Congress of
           American Indians, the Great Plains Tribal Chairman's Association,
           the United South and Eastern Tribes, and the Affiliated Tribes of
           Northwest Indians. Although the tribal organizations we selected
           reflect some variation in geography and their members include
           numerous individual Indian tribes, our selections were not
           intended to be representative of all tribes.

           To examine OST's use of contractors in implementing its trust
           reforms, we obtained specific data elements for fiscal years 2004
           and 2005 from the General Services Administration's FPDS-NG
           database.^15 These data elements include the amount obligated, the
           types of goods or services purchased, and various vendor
           characteristics. FPDS-NG does not include (1) assistance actions,
           such as grants and cooperative agreements; (2) imprest fund
           transactions, training authorizations, and micropurchases valued
           at $2,500 or less that were obtained through the use of a
           government purchase card; (3) interagency agreements with other
           federal agencies and organizations; or (4) actions involving
           transfer of supplies within and among agencies. Finally, total
           dollars for fiscal year 2006 are incomplete and were not included
           in this report.

           To ensure the completeness and accuracy of the FPDS-NG contracting
           data, we examined NBC contracting documents and interviewed
           contracting officers at BIA and NBC's Denver and Fort Huachuca
           branches as well as selected contracting officer's technical
           representatives at OST. We obtained data from FPDS-NG by searching
           on OST as the funding agency. However, because NBC officials told
           us this field was not always completed, we also obtained FPDS-NG
           data by searching on NBC's contracting office and identifying, by
           the product or service description, contracts most likely
           associated with trust reform efforts. In addition, we compared
           these data with NBC's procurement tracking system and made
           adjustments to the FPDS-NG data as necessary. Where discrepancies
           were found, we corrected the FPDS-NG data to ensure completeness
           of the data. On the basis of our testing and correction of FPDS-NG
           data, we are sufficiently confident of the reliability of the data
           we are reporting. Furthermore, we reviewed the report and
           associated workpapers of Interior's Office of Inspector General
           regarding allegations that senior OST officials had given CD&L
           preferential treatment in contracting for risk management
           services.

           To assess the performance awards and retention allowances that SES
           officials at OST had received, we analyzed data for fiscal years
           2001 through 2005 from the Office of Personnel Management's
           Central Personnel Data File, which contains records for most
           federal employees and is the primary governmentwide source for
           information on federal employees. Specifically, we examined the
           number and dollar amount of performance awards and retention
           allowances provided to OST and compared them with those of other
           Interior bureaus and other federal agencies. In addition, we
           obtained documents from Interior's Minerals Management Service,
           which is responsible for providing OST with human resources
           support services--including (1) processing performance awards and
           retention allowances provided to SES officials at OST and (2)
           ensuring compliance with the appropriate procedures for
           determining such awards and allowances.

           We conducted our review from February 2006 through October 2006 in
           accordance with generally accepted government auditing standards.

           As arranged with your offices, unless you publicly announce its
           contents earlier, we plan no further distribution of this report
           until 30 days from the report date. At that time, we will send
           copies to interested congressional committees, the Secretary of
           the Interior, the Special Trustee for American Indians, the
           Director of the Office of Management and Budget, and other
           interested parties. We will also make copies available to others
           upon request. This report will also be available at no charge on
           the GAO Web site at [26]http://www.gao.gov .

           If you or your staffs have any questions about this report, please
           contact me at (202) 512-3841 or [email protected]. Contact points
           for our Offices of Congressional Relations and Public Affairs may
           be found on the last page of this report. GAO staff who made major
           contributions to this report are listed in appendix IV.

           Robin M. Nazzaro
			  Director, Natural Resources and Environment
			  
^14The report cited 5 C.F.R. pt. 2635 and Executive Order 12731
(Principles of Ethical Conduct for Government Officers and Employees).

^15FPDS-NG data for OST are incomplete before fiscal year 2004. OST had
procurement responsibility from fiscal years 2001 through 2003, but OST
could not readily update the data system because a federal court order has
directed OST and BIA to stop using the Internet until the court approves
their security procedures.

			  
			  Appendix I: Retention Allowances and Performance Awards Provided
			  to OST Senior Executive Service Managers

           The Department of the Interior (Interior) has provided a retention
           allowance to one Senior Executive Service (SES) manager at the
           Office of the Special Trustee for American Indians (OST)--the
           Principal Deputy Special Trustee. In addition, 7 of the 13 SES
           managers currently at OST received at least two major awards in 2
           years or more.^1 However, from fiscal years 2001 to 2005, the
           average performance award amounts that SES managers received were
           generally lower than the average amounts provided to other bureaus
           and offices within Interior and other federal agencies. Interior's
           Executive Resources Board (ERB), currently chaired by the
           Secretary of the Interior and comprising senior Interior managers,
           made the final determination on all performance awards and
           retention allowances provided to SES managers.
			  
			  Retention Allowance

           Each calendar year from 1999 through 2005, Interior has provided
           OST's Principal Deputy Special Trustee with a retention allowance
           because, according to agency justifications, her historical
           knowledge and managerial ability are needed to ensure Interior's
           trust oversight and reform success. Specifically, from 1999 to
           2005, Interior's ERB has reviewed and approved the justification
           for the retention allowance, which raises the Principal Deputy
           Special Trustee's total compensation to the maximum allowable for
           SES employees--excluding 1999 and 2005, when the Principal Deputy
           Special Trustee's compensation was slightly under the total
           maximum allowable. According to officials of Interior's Minerals
           Management Service,^2 retention allowances are reserved for
           special talent and have been provided to only two Interior SES
           managers--the other SES manager received a retention allowance in
           2002 and 2004. In each year, the Principal Deputy Special
           Trustee's retention allowance was lower than the maximum amount
           provided to an SES manager at all other federal agencies (see
           table 4). The Special Trustee stated that as OST's trust reforms
           are completed, the total compensation provided to the Principal
           Deputy Special Trustee will be reevaluated.

^1While OST has 14 SES positions, the position of Deputy Special Trustee
for Trust Services was vacant as of November 2006.

^2Under an interagency agreement, Interior's Minerals Management Service
provides human resources support services to OST.

Table 4: Comparison of the Retention Allowance Provided to the Principal
Deputy Special Trustee with the Maximum Retention Allowance Provided to an
SES Manager at All Other Federal Agencies, Calendar Years 1999 through
2005

Sources: Interior's Minerals Management Service and GAO analysis of the
Office of Personnel Management's Central Personnel Data File.

aThe Principal Deputy Special Trustee assumed this position in May 2003.
From 1996 through 2001, the Principal Deputy Special Trustee was the
Director of the Office of Trust Funds Management. From July 2002 through
April 2003, the Principal Deputy Special Trustee was the Acting Special
Trustee for American Indians.

bThis category includes all federal agencies, except Interior.

Performance Awards

Seven of OST's SES managers received at least two major awards--a
performance award, a special act award, an individual cash award, or a
time-off award--in 2 years or more, as follows:^3

           o The Principal Deputy Special Trustee, who has been in the SES
           since 1993, received three major awards from fiscal years 2000 to
           2006. Specifically, the Principal Deputy Special Trustee received
           two time-off awards of 80 hours each in fiscal years 2000 and 2004
           and a performance award of about $9,700 in fiscal year 2006. In
           addition to these major awards, the Principal Deputy Special
           Trustee received the Presidential Rank Award in 2002, one of the
           government's most prestigious awards. While the Principal Deputy
           Special Trustee received cash with the award, the full cash amount
           could not be provided in 2002 because her total compensation was
           at the maximum allowable for a federal employee. As a result, she
           received part of the award in 2002 and the rest of the award in
           2003.
           o A manager, who has been in the SES since 1996, received eight
           major awards from fiscal years 1999 through 2006, including at
           least one award in 7 of the 8 years. Specifically, in fiscal years
           1999 and 2000, this manager received three special act awards that
           ranged from $1,750 to $10,000. In fiscal years 2002 through 2006,
           this manager received either a performance award or an individual
           cash award in each year, ranging from $5,000 to $13,000.
           o A manager, who has been in the SES since 2002, received six
           major awards from fiscal years 2003 through 2006, including at
           least one award in each year. Specifically, this manager received
           two special act awards of $5,000 and $10,000, two time-off awards
           of 40 hours each, an individual cash award of $5,000, and a
           performance award of about $7,200.
           o A manager, who has been in the SES since 2002, received three
           major awards--one award per year from fiscal years 2004 through
           2006. This manager received a performance award of $6,900 and two
           time-off awards of 40 hours and 80 hours.
           o A manager, who has been in the SES since 2004, received two
           major awards--performance awards of about $12,000 in fiscal year
           2005 and about $11,500 in fiscal year 2006.
           o A manager, who has been in the SES since 2004, received two
           major awards--individual cash awards of $4,300 in fiscal year 2005
           and $5,000 in fiscal year 2006.
           o A manager, who has been in the SES since 2004, received two
           major awards--a performance award of about $8,900 in fiscal year
           2005 and an individual cash award of $5,000 in fiscal year 2006.

           OST's six other current SES managers have received, at most, one
           major award. In fiscal year 2005, about 54 percent of OST's SES
           managers received at least one major award. In fiscal year 2006,
           about 69 percent of OST's SES managers received at least one major
           award.

           Table 5 compares the average performance award amounts for SES
           managers at OST with the average amounts at other bureaus and
           offices within Interior and other federal agencies. The average
           performance award amount of OST's SES performance awards was
           higher than the average amounts of other bureaus and offices
           within Interior and other federal agencies in fiscal year
           2001--according to the Special Trustee, the performance awards
           recognized these managers' many hours of efforts to validate data
           for the implementation of the trust funds accounting system in
           2000. However, the average amounts of OST's performance awards for
           fiscal years 2002 through 2005 were generally lower than the
           average amounts provided to other bureaus and offices within
           Interior and other federal agencies--excluding fiscal year 2003,
           when the average amount of OST's performance awards was slightly
           higher than the average amount provided to other bureaus and
           offices within Interior.

           Table 5: Comparison of the Average Performance Award Amounts
           Provided to SES Managers at OST with the Average Amounts Provided
           to Other Bureaus and Offices within Interior and Other Federal
           Agencies, Fiscal Years 2001 through 2005

           Sources: Interior's Minerals Management Service and GAO analysis
           of the Office of Personnel Management's Central Personnel Data
           File.

           aCategory includes all of Interior's bureaus and offices,
           excluding OST.

           bCategory includes all federal agencies, except Interior.

           Interior's ERB approved each of the major awards provided to OST's
           SES managers. Minerals Management Service officials told us that
           ERB considers supporting documentation and recommendations
           provided by the Performance Review Board, which is an Interior
           board that reviews only performance awards, in making its final
           determination.
			  
^3For the purposes of this report, major awards include time-off awards of
at least 40 hours and individual cash and special act awards of at least
$1,000.
			  
			  Appendix II: OSTï¿½s Task Orders Issued to Chickasaw Nation
			  Industries for Trust Reform Work, Fiscal Years 2004 and 2005

           Sources: General Services Administration's FPDS-NG database and
           GAO analysis of documents obtained from the National Business
           Center's Fort Huachuca branch.
			  
			  Appendix III: Comments from the Department of the Interior
			  
			  Appendix IV: GAO Contact and Staff Acknowledgments
			  
			  GAO Contact

           Robin Nazzaro, (202) 512-3841 or [email protected]
			  
			  Staff Acknowledgments

           In addition to the individual named above, Richard Cheston,
           Assistant Director; Nathan A. Morris; Ashanta Williams; and Nancy
           Crothers made key contributions to this report. Also contributing
           to this report were Doreen Feldman, Kevin Jackson, Julia Kennon,
           Greg Wilmoth, and Bill Woods.
			  
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Highlights of [34]GAO-07-104 , a report to congressional requesters

December 2006

INDIAN ISSUES

The Office of the Special Trustee Has Implemented Several Key Trust
Reforms Required by the 1994 Act, but Important Decisions about Its Future
Remain

The American Indian Trust Fund Management Reform Act of 1994 established
the Office of the Special Trustee for American Indians (OST), within the
Department of the Interior, to oversee the implementation of management
reforms for funds--derived primarily from Interior's leasing of Indian
lands--that Interior holds in trust for many Indian tribes and
individuals. Specifically, the act directs that an integrated information
system be developed that interfaces the trust fund accounting system with
the land title records and asset management systems maintained by
Interior's Bureau of Indian Affairs (BIA). GAO examined (1) OST's progress
in implementing the trust fund management reforms and (2) the extent to
which OST has used contractors in implementing these reforms. GAO reviewed
OST's strategic plans and contracting documents and interviewed OST and
BIA managers.

[35]What GAO Recommends

GAO is recommending that Interior (1) provide the Congress with a
timetable for completing the trust reforms and a plan for future trust
fund operations once reforms are completed and (2) develop a workforce
plan that proposes staffing levels and funding needs once trust reforms
are completed. In commenting on a draft of the report, Interior agreed
with GAO's recommendations.

OST has implemented several key trust fund management reforms, but has not
prepared a timetable for completing its remaining trust reform activities
and a date for OST's termination, as required by the 1994 Act. OST
estimates that almost all key reforms needed to develop an integrated
trust management system and to provide improved trust services will be
completed by November 2007 (see table). Specifically, OST implemented a
new trust funds accounting system for processing trust account funds, and
BIA and OST are currently validating data for the trust asset and
accounting management system for managing Indian land title records and
leases for land with recurring income. However, the Special Trustee
estimates that data verification for leasing activities will not be
completed for all Indian lands until December 2009. OST's most recent
strategic plan, issued in 2003, did not include a timetable for
implementing trust reforms or a date for OST's termination. The Special
Trustee notes that many OST functions, including trust fund operations,
trust records management, and appraisal services, need to be performed
after reforms are completed. If OST is terminated, these responsibilities
would have to be transferred to another Interior office. OST plans to
reduce expenditures primarily by terminating contracts once trust reforms
are completed. However, OST has not yet developed a workforce plan that
reexamines the expenditures and staffing levels needed for trust fund
operations once trust reforms are completed.

OST has used contractors to perform many of its trust reform activities as
a way to minimize the size of its permanent staff. In fiscal years 2004
and 2005, OST allocated $89.7 million, or nearly 21 percent, of its
appropriated funds to contracting. About 66 percent of contracting dollars
from these 2 fiscal years went to two firms. Over $31 million during this
period went to the largest contractor, an Indian-owned 8(a) small
business, by adding task orders through an existing contract. OST has
primarily relied on Interior's National Business Center to award and
manage contracts.

OST's Key Trust Fund Management Reforms

Source: OST.

References

Visible links

  24. http://www.gao.gov/cgi-bin/getrpt?GAO/AIMD-94-185
  25. http://www.gao.gov/cgi-bin/getrpt?GAO-05-960R
  34. http://www.gao.gov/cgi-bin/getrpt?GAO-07-104
*** End of document. ***