[Semiannual Report to the Congress - April 1997]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 04-S-97

Title: Semiannual Report to the Congress - April 1997

Date: April 1, 1997


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Subject: Semiannual Report to the Congress - April 1997 (No. 04-S-97)  

                        MESSAGE FROM THE
                       INSPECTOR GENERAL



"Doing more with less" is a familiar refrain that has been heard with increasing frequency during the
past few years.  Daunting as this concept may seem, we are all constantly reminded of its critical
importance in these times of budgetary restraint, and of the corresponding need to devote our
creative energies to meeting the tremendous challenge that it poses.  Taking seriously this challenge,
we at the Office of Inspector General are continuing to pursue our quest for positive change within
the Department of the Interior by searching for opportunities to effectively deploy our resources and
to improve our techniques and approaches so as to maximize the beneficial effects of our operations. 

In an attempt to "do more with less" while serving as a catalyst for positive change within the
Department of the Interior, we have focused on diversifying our activities so as to employ more
innovative approaches in the accomplishment of our mission.  In this regard,  we have added to our
traditional audit and investigative activities a variety of proactive and other projects designed to:  
(1) enhance our "prevention and detection" efforts by promoting increased sensitivity to indications
of fraud among program personnel; (2) identify and address, creatively, areas of potential
vulnerability in Departmental and insular area programs and operations; (3) provide audit services
during the early stages of program development; and (4) provide technical audit-related assistance
in areas of importance to the Department.

On the investigative side, we have been working diligently to more fully develop fraud awareness,
prevention, detection, and suppression within the Department of the Interior.  One way in which we
have sought to meet this challenge is through the development of an aggressive "Fraud Awareness"
outreach program focused on informing Departmental personnel of the importance of  reporting
suspected fraudulent activity related to their specific programs and educating them on how to
recognize such activity.  In this regard, our special agents have made fraud awareness presentations
to employees in various program areas within each of the Department's eight bureaus and the Office
of the Solicitor.  These presentations have been made in some 16 different states throughout the
United States where the Department has a presence and in the District of Columbia.  The success of
this program thus far is amply demonstrated by increased referrals to the Office of Inspector General
by Departmental employees and continuous  requests from various bureaus within the Department
to expand, even further, the reach of our "Fraud Awareness" program.

 In addition to our "Fraud Awareness" program, we have enhanced our fraud awareness, prevention,
detection, and suppression activities by embarking on several initiatives designed to avail ourselves
of previously underutilized law enforcement tools and to address potentially vulnerable program
areas within our jurisdiction.  Among theses initiatives are: 
(1) the Affirmative Civil Enforcement (ACE) Program, which provides an avenue for bringing civil
charges against individuals and entities that defraud the Department and an opportunity to return a
portion of the recoveries to Departmental programs that have been victimized by fraud; (2) an
Underpayment of Royalties Initiative, through which we identify and investigate cases involving the
fraudulent underpayment of royalties on Federal mineral leases; 
(3) a Coal Reclamation Fees Initiative, through which we seek to recover delinquent coal reclamation
fees owed by surface coal operators regulated by the Office of Surface Mining Reclamation and
Enforcement; 
(4) an Environmental Initiative which targets violations of the Outer Continental Shelf Lands Act;
(5) a Government Purchase Card Initiative, which involves the identification and suppression of
fraud in the Government credit card program; and (6) a Workers' Compensation Fraud Initiative,
which targets beneficiaries who are defrauding the workers' compensation program.  Accordingly,
notwithstanding our small cadre of only 37 special agents, our sphere of influence continues to
expand, and the breadth of our investigative program continues to be enhanced as a result of our
targeted proactive efforts.



A similar diversification of our audit activities has also enabled us to make positive strides in seeking
to "do more with less" in our audit program.  In this regard, we have added proactive audits to our
portfolio, which allow us to provide advice and recommendations that can be incorporated during
the early or developmental stages of a program or activity.  Further, technical audit-related assistance
and consultative services in a variety of areas have contributed to improved efficiency and
effectiveness in Department of the Interior programs and operations.  These types of efforts, in
addition to our traditional audit activities, serve to increase the beneficial effects of our operations. 

"Doing more with less" -- not only a goal, but a reality.



          Wilma A. Lewis
          Inspector General



 


                            CONTENTS





                                                           Page

Statistical Highlights . . . . . . . . . . . . . . . . . . . . .v
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . .1
   Department Profile. . . . . . . . . . . . . . . . . . . . . .1
   OIG Organization. . . . . . . . . . . . . . . . . . . . . . .2
Audit Activity . . . . . . . . . . . . . . . . . . . . . . . . .4
Investigative Matters. . . . . . . . . . . . . . . . . . . . . .7
Legislative Review . . . . . . . . . . . . . . . . . . . . . . .9
Significant Audits and Investigations. . . . . . . . . . . . . 10
   Financial Statements Audits . . . . . . . . . . . . . . .   10
   Bureau of Indian Affairs. . . . . . . . . . . . . . . . . . 10
   Bureau of Land Management . . . . . . . . . . . . . . . . . 13
   Bureau of Reclamation . . . . . . . . . . . . . . . . . . . 13
   Insular Areas . . . . . . . . . . . . . . . . . . . . . .   14
   Minerals Management Service . . . . . . . . . . . . . . . . 19
   Multi-Office. . . . . . . . . . . . . . . . . . . . . . . . 20
   National Park Service . . . . . . . . . . . . . . . . . .   21
   Office of Surface Mining Reclamation and Enforcement. . . . 23
   U.S. Fish and Wildlife Service. . . . . . . . . . . . . . . 23
   U.S. Geological Survey. . . . . . . . . . . . . . . . . . . 24
   
Appendices

1 - Summary of Audit Activities From October 1, 1996, Through March 31, 199725
2 - Audit Reports Issued or Processed and Indirect Cost Proposals Negotiated
      During the 6-Month Period Ended March 31, 1997 . . . . . 26
      - Internal Audit Reports . . . . . . . . . . . . . . . . 26
      - Contract and Grant Audit Reports . . . . . . . . . . . 28
      - Single Audit Reports . . . . . . . . . . . . . . . . . 31
      - Indirect Cost Proposals. . . . . . . . . . . . . . . . 47
3 - Monetary Impact of Audit Activities From October 1, 1996, Through March 31, 199756
4 - Non-Federal Funding Included in Monetary Impact of Audit Activities 
     During the 6-Month Period Ended March 31, 1997. . . . . . 57
5 - Audit Resolution Activities. . . . . . . . . . . . . . . . 58
      - Table I - Inspector General Audit Reports With Questioned Costs58
      - Table II - Inspector General Audit Reports With Recommendations That    
         Funds Be Put To Better Use. . . . . . . . . . . . . . 59
      - Table III - Inspector General Audit Reports With Lost or Potential Additional Revenues60
6 - Summary of Audit Reports Over 6 Months Old Pending Management Decisions61
      - Internal Audit Reports . . . . . . . . . . . . . . . . 61
      - Contract and Grant Audit Reports . . . . . . . . . . . 63
      - Single Audit Reports . . . . . . . . . . . . . . . . . 64
7 - Summary of Internal Audit Reports Over 6 Months Old Pending Corrective Action69
8 - Cross-References to the Inspector General Act. . . . . . . 73
9 - Statutory and Administrative Responsibilities. . . . . . . 74






STATISTICAL HIGHLIGHTS 





Audit Activities
   Audit Reports Issued or Processed . . . . . . . . . . . . .486
     - Internal Audits . . . . . . . . . . . 33                  
     - Contract Audits . . . . . . . . . . . 42                  
     - Single and Grant Audits . . . . . . .411                  
    Indirect Cost Proposals Negotiated . . . . . . . . . . . .193

Impact of Audit Activities - (Dollar Amounts in Millions)
    Total Monetary Impact. . . . . . . . . . . . . . . . . .$33.7
     - Questioned Costs. . . . . . . . . . . $13.6               
     - Recommendations That Funds Be Put To Better Use$18.4               
     - Lost or Potential Additional Revenues .$1.7               
    Internal Audit Recommendations Made. . . . . . . . . . . .204
    Internal Audit Recommendations Resolved. . . . . . . . . .154

Administrative Actions Taken by Bureaus
    Matters Referred for Administrative Action . . . . . . . . 64
    Removals/Resignations. . . . . . . . . . . . . . . . . . . .6
    Employee Suspensions (Totaling 172 days) . . . . . . . . . .7
    Reprimands/Counseling. . . . . . . . . . . . . . . . . . . .7
    Reassignments/Transfers. . . . . . . . . . . . . . . . . . .2
    General Policy Actions . . . . . . . . . . . . . . . . . . 11
   
Investigative Activities 
   Total Reports Issued. . . . . . . . . . . . . . . . . . . . 68
    Cases Closed . . . . . . . . . . . . . . . . . . . . . . . 68
    Cases Opened . . . . . . . . . . . . . . . . . . . . . . . 94
    Cases Pending. . . . . . . . . . . . . . . . . . . . . . .508
    Hotline Complaint Matters Received . . . . . . . . . . . . 60
    Hotline Complaint Matters Opened . . . . . . . . . . . . . 0 
    Hotline Complaint Matters  Closed. . . . . . . . . . . . . 30
    Hotline Complaint Matters Pending. . . . . . . . . . . . . 75
    General Information Matters Received . . . . . . . . . . .178

Impact of Investigative Activities
    Indictments/Informations . . . . . . . . . . . . . . . . . 36
    Convictions. . . . . . . . . . . . . . . . . . . . . . . . 37
    Sentencings. . . . . . . . . . . . . . . . . . . . . . . . 37
     - Jail. . . . . . . . . . . . . . . . . . . . . . 335 months
     - Probation . . . . . . . . . . . . . . . . . . 1,173 months
     - Community Service . . . . . . . . . . . . . . .1,830 hours
     - Criminal Judgments/Restitutions . . . . . . . . $2,079,895
    Cases Pending Prosecutive Action as of October 1, 1996 . .176
    Cases Referred for Prosecution This Period . . . . . . . . 51
    Cases Declined . . . . . . . . . . . . . . . . . . . . . . 17
    Cases Pending Prosecutive Action as of March 31, 1997. . .158
    Administrative Actions . . . . . . . . . . . . . . . . . . 33
    Civil Referrals. . . . . . . . . . . . . . . . . . . . . . 12
    Civil Declinations . . . . . . . . . . . . . . . . . . . . .5
    Civil Judgments (3). . . . . . . . . . . . . . . . $1,403,000
    Cases Pending Civil Action as of March 31, 1997. . . . . . 28
    Non-Civil Recoveries . . . . . . . . . . . . . . . $2,309,776 


                                
                          INTRODUCTION





Department Profile

The Congress created the Department of the Interior (DOI) on March 3, 1849, to manage the
Nation's internal affairs.  As the Nation's principal conservation agency, DOI has responsibility
for most of our nationally owned public lands and natural resources.  This includes fostering the use
of our land and water resources; protecting our fish, wildlife, and biological diversity; preserving the
environmental and cultural values of our national parks and historic places; and providing for the
enjoyment of life through outdoor recreation.  DOI assesses our mineral resources and works to
ensure that their development is in the best interests of all our people by encouraging stewardship
and citizen participation in the care of these resources.  

DOI  has  about 70,000  employees,  spends  about  $9 billion  a  year,  collects revenues of about
$6 billion a year, and is geographically dispersed to over 2,000 locations.  The jurisdiction of DOI
includes: 

Administration of over 500 million acres of Federal land and trust responsibilities for approximately
50 million acres of land, mostly Indian reservations;

Conservation and development of mineral and water resources;

Conservation, development, and utilization of fish and wildlife resources;

Coordination of Federal and state recreation programs;

Preservation and administration of the Nation's scenic and historic areas;

Operation of Job Corps Conservation Centers and Youth Conservation Corps Camps and
coordination of other manpower and youth training programs;

Reclamation of arid lands in the West through irrigation; and 

Management of hydroelectric power systems.

DOI is also concerned with the social and economic development of the insular areas and
administers programs providing services to Indians and Alaska Natives.
 OIG Organization

To cover DOI's many and varied activities, the Office of Inspector General (OIG) has a budget
of $24 million and has 251 full-time employees.  Employees are under the direction of the
Assistant Inspectors General for Audits, Investigations, and Administration and are assigned to the
headquarters office in Washington, D.C., and field offices in:

Agana, Guam; Rapid City, South Dakota; Albuquerque, New Mexico; Sacramento, California;
Arlington, Virginia; St. Paul, Minnesota; Billings, Montana; St. Thomas, U.S. Virgin Islands;
Lakewood, Colorado; Tulsa, Oklahoma; and Phoenix, Arizona.

OIG provides policy direction for and conducts, supervises, and coordinates all audits,
investigations, and other activities in DOI to promote economy and efficiency or prevent and detect
fraud, waste, and mismanagement.  The Inspector General is DOI's focal point for independent and
objective reviews of the integrity of operations; is the central authority concerned with the quality,
coverage, and coordination of the audit and investigative services between DOI and other Federal,
state, and local governmental agencies; and reports directly to the Secretary of the Interior on these
matters.  The Inspector General provides the means for keeping the Secretary and the Congress fully
and currently informed about problems and deficiencies relating to the administration of DOI
programs and operations and the necessity for corrective actions.


In addition to the Inspector General's requirement for semiannual reporting to the Secretary of the
Interior and the Congress in accordance with the Inspector General Act of 1978 (Public
Law 95-452), as amended, OIG's mission encompasses a wide array of statutory and administrative
audit and investigative responsibilities (see Appendix 8).  These responsibilities include OIG's
review of various programs and activities within DOI in accordance with numerous public laws,
Office of Management and Budget (OMB) circulars, and criminal and civil investigative authorities
(see Appendix 9).

In the insular areas of Guam, American Samoa, the U.S. Virgin Islands, and the Commonwealth of
the Northern Mariana Islands, OIG performs the functions of government comptroller through audits
of revenues, receipts, expenditures, and property in accordance with the Insular Areas Act of 1982
(48 U.S.C. 1422).  OIG has additional audit responsibilities in the Federated States of Micronesia,
the Republic of the Marshall Islands, and the Republic of Palau pursuant to the Compact of Free
Association Act of 1985 (Public Law 99-239).  OIG's organizational chart is included on the
following page.
 


                         AUDIT ACTIVITY




Summary of Audit Results

OIG auditors issued or processed 486 audit reports during the 6-month period ending March 31,
1997.  Appendix 1 summarizes audit activities, and Appendix 2 lists the audit reports issued
or processed and the 193 indirect cost proposals negotiated.  Monetary findings in the audit reports
and indirect cost proposals totaled $33.7  million, which was composed of questioned costs, funds
to be put to better use, and lost or potential additional revenues, as summarized in Appendix 3. 
Appendix 4 identifies the non-Federal funds (from audits of insular area governments) included in
the monetary impact of audit activities.  During this 6-month period, OIG resolved  $42.0 million
of monetary findings from prior and current reporting periods.  Appendix 5 provides summary
information on the resolution of the monetary impact, Appendix 6 provides a listing of audit reports
over 6 months old pending management decisions on recommendations and/or monetary impact, and
Appendix 7 provides a summary of resolved audits over 6 months old pending final action by
management on recommendations and on monetary impacts.  

Proactive and Joint Audit Efforts

OIG continues to conduct both proactive and joint audit efforts within DOI and within the
insular areas.  These efforts are conducted "in our desire to serve as a catalyst for positive
change," to "do more with less," and to "continue our efforts to accomplish the Government's
reinvention goals."

These audit efforts consist of identifying areas of potential vulnerabilities and providing technical
assistance and consulting services to DOI bureaus and offices and insular areas to improve the
efficiency and effectiveness of DOI and insular area programs and operations and to assist DOI
bureaus in correcting and preventing weaknesses and deficiencies in the bureaus' financial
accounting systems.    OIG's  proactive and joint audit efforts during this reporting period have
included the following:

 Cooperating With the Federal Emergency Management Agency's OIG

Under a cooperative agreement, OIGs of the Federal Emergency Management Agency  (FEMA)
and DOI, with participation from the U.S. Virgin Islands Bureau of Audit and Control,
conducted reviews of accounting controls, procurement practices, and grant administration
procedures of various agencies of the Virgin  Islands Government.  These proactive reviews were
conducted in anticipation of the receipt by the Virgin Islands Government of FEMA-approved
disaster grants in the aftermath of Hurricane Marilyn, which struck the Virgin Islands on September
15, 1995.  As a result of this proactive effort, 13 audit reports were issued (5 during this reporting
period) relating to improving the management, control, and expenditure of the disaster  grant funds. 


Participating in the Government of Guam's Financial Modernization Project 

At the request of the Governor of Guam, OIG's North Pacific Region auditors completed a
review of the Government's Financial Management Modernization Project.  The purpose of
the Project was to fundamentally restructure the Government's financial operations and information
processes.  OIG concluded, after the review, that the Project would  improve the Government's
financial management by providing increased control over and better understanding by
Governmental officials and the public of the Government's financial operations and financial
position.

Assisting DOI Bureaus and Offices With Their Financial Statements   

Audits of the bureaus' and offices' financial statements are required by the Chief Financial
Officers Act of 1990.  OIG issued unqualified opinions on the audits of the financial
statements of five DOI bureaus and offices during this reporting period, with the cooperation and
assistance of DOI and these  bureaus.  

 Participating in Development of an Accounting Standard

Since January 1997, an OIG senior auditor has been participating as a member of a task force
established by the Federal Accounting Standards Advisory Board to establish a new accounting
standard for Federal financial statements.  Specifically, the task force is responsible for developing
an accounting standard for recognizing on Federal financial statements the Government's inventory
of natural resources, including water, timber, hard and soft minerals, oil, and gas.  In addition to the
senior auditor, the task force comprises senior-level officials from the Bureau of Land Management
(BLM), the U.S. Forest Service, the Minerals Management Service (MMS), DOI's Office of
Financial Management, the General Accounting Office (GAO), the Federal Accounting Standards
Advisory Board, the U.S. Department of Commerce's Bureau of Economic Analysis, and academic
institutions.  

 


                     INVESTIGATIVE MATTERS




During the past 6 months, the Office of Investigations has conducted investigations that have
resulted in 36 indictments/informations, 37 convictions, and financial recoveries of $3,482,895. 
In addition, our investigations during this semiannual reporting period have led to the issuance of
bills for collection totaling $2,309,776.  

Update on Proactive Initiatives

OIG is continuing to accomplish its statutory mission by aggressively pursuing a variety of
proactive initiatives designed to:  (1) enhance our "prevention and detection" efforts by
promoting increased sensitivity to indications of fraud among program personnel and (2) creatively
identify and address areas of potential vulnerability in DOI and insular area programs and operations. 
These initiatives, reported in prior semiannual reports,  have resulted in increased referrals, criminal
convictions, and financial recoveries returned to the U.S. Treasury and DOI.  

We have recently embarked on several new initiatives in furtherance of our fraud awareness,
prevention, detection, and suppression effort.  Among these initiatives are the following:

Underpayment of Royalties Initiative

A major initiative undertaken by OIG has been the identification and investigation of fraudulent
royalty underpayments on Federal mineral leases.  OIG is vigorously pursuing such matters in
conjunction with the Fraud Section, Civil Division, U.S. Department of Justice, and various U.S.
Attorney's Offices throughout the United States.  

Coal Reclamation Fees Initiative

This initiative focuses on the recovery of delinquent fees for coal reclamation owed by surface
coal operators regulated by the Office of Surface Mining Reclamation and Enforcement (OSM). 
Specifically targeted are coal mine operators who either fail to pay reclamation fees to DOI by means
of falsifying documents used by OSM to assess reclamation fees or who attempt to conceal assets
in an attempt to avoid payment of the fees owed.

Environmental Initiative

OIG will target companies and individuals who violate the Outer Continental Shelf Lands Act. 
In pursuing this initiative, OIG will consider all available criminal, civil, and administrative
sanctions.

Government Purchase Card Initiative

This initiative involves the identification and suppression of credit card fraud in DOI's
Government credit card program.  OIG is also in the process of developing a credit card fraud
awareness presentation, which will be designed to make DOI employees aware of credit card fraud
indicators.  

Workers' Compensation Fraud Initiative

This initiative  targets beneficiaries of workers' compensation who fail to report other earned
income as required by the Office of Workers' Compensation Programs, as well as those
employees who have apparently recovered from their work- related disabilities but who continue to
receive benefits of the Programs.  


                       LEGISLATIVE REVIEW




OIG provided comments to BLM on 
S. 94 and H.R. 449, The Southern Nevada Public Land Management Act of 1977,  regarding
land disposal in the Las Vegas Valley.  Specifically, OIG said that the legislation as written
contained "a potential shortcoming" that could have provided "the means for a . . .  significant
windfall" to Clark County, Nevada, "totaling in the hundreds of millions of dollars." The potential
shortcoming related to the subsequent exchange of land conveyed in the Act to the County.  As a 
result of OIG's comments, BLM modified its testimony to the bill to advise the Congress of the
potential shortcoming in the legislation.  

                     SIGNIFICANT AUDITS AND
                         INVESTIGATIONS



Financial Statements Audits

The financial statements audits  are required by the Chief Financial Officers Act of 1990.  During
this semiannual period, OIG audited and issued audit reports on the financial statements of 5
of  DOI's 10 bureaus and offices through the coordinated efforts of OIG, DOI, and the 5 bureaus and
offices.  Because the remaining bureaus did not close  their financial records and did not prepare, in
a timely manner,  financial statements that were accurate and complete, OIG was unable to complete
the audits and issue the remaining related reports by the March 1, 1997, target date.

OIG was able to issue unqualified opinions on the financial statements of OSM, MMS, the Office
of Insular Affairs, and the Departmental Offices (formerly Office of the Secretary financial
statements).  We also reported that these bureaus' and offices' internal accounting controls met the
required internal control objectives and that there were no material instances of noncompliance with
provisions of laws and regulations that we tested.  

An unqualified opinion was also issued on the financial statements of  BLM.  However, we reported
a condition that affected BLM's control structure, which had been identified in previous reports.
Specifically, we found a control weakness regarding the reporting and documenting of  real property
values and the reconciling of  real property general ledger accounts with the related subsidiary
accounts.  To address this weakness, BLM developed a plan that redefined the types of  buildings
and structures to be reported, established reasonable values for the redefined buildings and
structures, and adjusted the subsidiary accounts and the financial statements for fiscal year 1995
accordingly.  

Bureau of Indian Affairs

Accountability Over Trust Funds Inadequate 

OIG issued an audit report prepared by an independent public accountant on the statement of
assets and trust fund balances for tribal and  individual Indian monies and other special
appropriation funds as of September 30, 1995.  The statement, prepared by the Office of Trust Funds
Management, Bureau of Indian Affairs (BIA), reported a trust fund balance of approximately $2.7
billion.


The independent public accountant rendered a qualified opinion on the statements of assets and trust
fund balances at 
September 30, 1995, because of deficiencies in the accounting policies, practices, data, and
automated systems and because cash and overnight investments could not be independently verified. 
These conditions prevented certain material accounts from being audited.  In addition, the report
stated that various tribal organizations and individual Indians for whom the Office held assets did
not agree with certain balances reported by the Office and have filed claims against the Office over
its fiduciary responsibilities.  The public accountant's report on the internal accounting control
structure contained 16 recommendations to address 4 material weaknesses, 6 reportable conditions,
and 6 advisory comments.  Further, the report stated that the Office had complied with material
applicable laws and regulations in its management of the trust funds.  Based on the response to the
public accountant's report from the Office of Trust Funds Management, we considered all 16 of the
report's recommendations resolved but not implemented. 

Direct and Guaranteed Loans Not Adequately Managed

BIA's Eastern Area Office did not adequately manage and control its loan program.  Specifically,
the Area Office did not:  (1) always screen loan applications for reasonable assurance of the
borrower's ability to repay; (2) adequately monitor outstanding loans; (3) initiate debt collection 
activities when appropriate; and (4) sufficiently justify loan write-offs.  According to Area Office
officials, these deficiencies occurred because of the lack of administrative support staff to maintain
complete files, the lack of Area Office internal procedures on debt collection and loan write-offs, and
the belief that the Division of Accounting Management was performing the debt collection activities
and that lenders were performing the required analyses of guaranteed loan proposals.  These
deficiencies directly contributed to the write-off of about $2.9 million of loans in 1993 and to the risk
that an additional 
$14.8 million of loans that are over 1 year past due may not be collected. Based on BIA's response
to our draft report,  we considered two of the report's six recommendations resolved and
implemented and four recommendations resolved but not implemented.

Judgment Award Funds Administered Properly

BIA distributed judgment award funds of approximately $4.6 million to the Seminole  Nation 
of Oklahoma in accordance with applicable laws for fiscal years 1994 and 1995.  The Indian
Claims Commission awarded the funds to the Nation as compensation for aboriginal lands taken by
the United States under provisions of the Treaty of Camp Moultrie. We also determined that the
Nation fully complied with the plan for the use and distribution of the funds.  Specifically, the Nation
established a separate Judgment Fund Office to administer the program, passed tribal ordinances that
established seven individual programs and eligibility criteria for each program, prepared annual
budgets for the individual programs and distributed the funds in accordance with those budgets, and
deposited funds into a separate interest-bearing account for each program.  The individual programs
established were school clothing assistance, burial assistance, elderly assistance, household
economic assistance, higher education, cultural and recreational enhancement, and economic and
business development.  Our report did not contain any recommendations.

Lengthy Embezzlement Uncovered

A joint investigation with the Federal Bureau of Investigation (FBI) revealed that the finance
director of a Nevada Indian tribe embezzled approximately $393,000 in tribal funds between
June 1992 and March 1996.  The finance director, a tribal member, had administrative responsibility
for various tribal bank accounts, including monies for education and health services for tribal
members.  The finance director obtained cash directly from the education account and covered these
thefts by transferring monies into the account from other accounts.  The finance director claimed that
the stolen monies were lost through gambling at local casinos.  The finance director pled guilty to
an indictment charging theft of tribal funds and was sentenced to 25 months of imprisonment and
3 years of probation and was ordered to pay $50 in fines and $393,000 in restitution to the tribe.

Former Police Officer Convicted

A joint investigation by OIG and BIA of activities of a former Chief of Police for a New Mexico
Indian tribe revealed that between December 1993 and June 1994, the former law enforcement
officer sold or pawned at least 13 firearms belonging to the tribe's police department.   In addition
to converting the proceeds of these sales, the former law enforcement officer  took possession of four
vehicles that had been provided to the police department through a forfeiture program, sold some
of the vehicles, and kept others for his personal use.  After indictment by a Federal grand jury in
Albuquerque, New Mexico, and subsequent arrest by special agents from OIG and the FBI, the
former law enforcement officer pled guilty to theft from an Indian tribal organization and was
sentenced to 1 year and 1 day of imprisonment and 3 years of probation and was ordered to pay $50
in fines and $4,073 in restitution to the tribe.

Public Corruption Investigation Conducted

An 18-month investigation was conducted by DOI in conjunction with  a Task Force on Indian
Gaming in the U.S. Attorney's Office, District of Minnesota, of allegations of Federal program
fraud, civil rights violation related to election fraud, bribery, embezzlement of tribal funds,
conspiracy, and other corrupt activities by elected public officials of a Minnesota Indian tribe.  This
investigation resulted in the indictment and conviction of three tribal leaders: the chairman of the
tribe, a secretary/treasurer, and a councilman.  The three tribal officials were sentenced in Federal
district court in Minneapolis, Minnesota, to combined sentences of 
134 months of  imprisonment and 108 months of probation and were ordered to pay $67,000 in fines
and restitution of $844,310.  This  investigation, which focused on the tribe's construction of a
gaming casino and the award of a $2.8 million painting and drywall subcontract, revealed that the
tribal councilman owned the company which received the subcontract and gave a secret interest in
it to the tribal chairman.  The investigation also disclosed  that  the tribal chairman received more
than $400,000 in illicit gratuities from the company and that the tribe's secretary/treasurer, who
approved the subcontract award, received more than $21,000 from the company.  A fourth
individual, a tribal member charged with notarizing several hundred bogus absentee ballots, pled
guilty to lying to OIG agents investigating the bogus ballots and was awaiting sentencing.

Bureau of Land Management

Funds Generally Spent for Program Purposes

In the first of three audit reports on BLM's Wild Horse and Burro Program, OIG stated that BLM
had recorded and generally spent funds for Program purposes in accordance with its accounting
procedures.  OIG did state, however, that BLM had inaccurately classified certain indirect salaries
as direct costs in its financial records for the Program.  OIG made two recommendations to improve
BLM's accounting practices for Program funds. BLM concurred with the recommendations, stating
that it will expand the use of its program support cost methodology to all field offices or implement
alternative techniques to improve cost allocations for charging future buyouts and permanent-change-of-station costs.  Based on BLM's response to our draft report, OIG requested information
as to when these actions would be accomplished.  

Bureau of Reclamation

Management and Internal Control Improvements Needed 

Our audit of the Bureau of Reclamation's (BOR) Administrative Service Center mainframe
computer system and its processing environment identified 15 weaknesses.  Specifically, the
report identified weaknesses in computer center management and operations; local area network
protection; access to the Federal Financial System; mainframe computer system physical and logical
security; and contingency planning, backup, and disaster recovery.  Based on BOR's response to our
draft report, we considered 13 of the report's 24 recommendations resolved and implemented and
10 recommendations resolved but not implemented.  We have requested BOR to reconsider the
remaining recommendation, which is unresolved.

Subcontractors' Claims Not Substantiated

We performed audits of two resubmitted claims of  two subcontractors that were included in
a certified claim filed by the contractor for $31,040,071 for constructing a visitors center and
parking structure at Hoover Dam, Nevada.  Responses to both of these reports were not due by the
end of this reporting period.  The original claims were audited during 1995 and 1996. 

As a part of the $31,040,071 claim, the contractor proposed $1,136,120 for a subcontractor that
performed structural and ornamental iron work.  The subcontractor submitted both a certified claim
and an alternative claim.  We questioned the entire amount of each claim because the subcontractor
did not separately account for claimed costs, as required by the prime contract.  Even though we
questioned the entire claimed amounts, we provided the contracting officer with information to assist
in reaching a determination of costs.  Of the $1,136,120 proposed in the certified claim, we took
exception to costs of $340,804 and classified costs of $465,302 as unsupported.  Of the $1,070,658
proposed in the alternative claim, we took exception to costs of $490,579 and classified costs of
$190,709 as unsupported.

Of the second subcontractor's claim for $2,251,028, we questioned the entire amount because the
subcontractor did not separately account for these costs. However, we provided the contracting
officer with information to assist in reaching a determination of costs.  Of the $2,251,028, we  took
exception to costs of $479,061 because  these costs were unallowable or were duplicated and because
the overhead rate was excessive.



Insular Areas

GUAM

Legislative Expenditures Not Controlled Adequately

The Guam Legislature did not adequately control its expenditures.  Specifically, the Legislature: 
(1) expended funds for nongovernmental and questionable activities and misclassified
expenditures during fiscal years 1993, 1994, and 1995; (2) did not prepare annual financial
statements required by Guam statute; (3) purchased equipment without complying with the
Legislature's procurement rules; and (4) did not account for office equipment and other reportable
property purchased with legislative funds.  These conditions occurred because the Legislature did
not have written guidelines defining allowable and unallowable expenditures, a comprehensive
accounting system, and written procedures for implementing legislative procurement and property
management rules.  As a result, the Legislature:  (1) incurred almost $709,000 in questionable
expenditures; (2) did not have adequate accountability over legislative expenditures of $51.5 million;
(3) did not have assurance that full value was received for equipment and services totaling
approximately $241,000; and (4) did not have adequate accountability over reportable property
totaling approximately $55,000.  Based on the Legislature's response to our final report, we
considered one of the report's six recommendations resolved and implemented and two
recommendations resolved but not implemented, and we requested additional information for the
remaining three recommendations.  This information was not due by the end of this reporting period.

Costs of $5 Million Questioned

Although the Guam Mass Transit Authority had taken action to improve financial controls,
reduce operating costs, and increase revenues, it: (1) issued contracts in which contractors were
compensated on a cost plus a percentage of cost basis; (2) incurred and paid costs before contracts
were approved; (3) issued purchase orders on a noncompetitive basis; (4) issued contracts to
companies that employed immediate family members of Authority procurement officials; and (5)
did not comply with the staffing level authorized by the Guam Legislature.  In addition, the Authority
had not ensured that: (1) contractors' invoices included only supported costs which were in
compliance with contract terms; (2) contractors' costs were within their approved budgets; and (3)
the maintenance and repair contractor maintained an adequate number of buses to meet the
Authority's service needs.  These conditions occurred because the Authority had not developed and
implemented procurement and contract oversight procedures.  In addition, the former Board of
Directors had not provided adequate oversight and control over Authority management.  As a result,
during fiscal years 1993 through 1995, the Authority incurred questioned costs of about $5 million. 
Based on the Authority's response to our draft report and documents subsequently provided, we
considered all five of the report's recommendations resolved and implemented.  

Former Businessman Sentenced

A joint OIG-FBI investigation resulted in the conviction of a Guam businessman in connection
with the bribery of an undercover FBI agent posing as a U.S. Department of Labor (DOL)
official.  The Wage and Hour Division of  DOL had assessed the businessman a $300,000 fine in
connection with wage and hour violations.  The businessman paid a $26,000 bribe to obtain a
reduction of the wage and hour fine.  The businessman was sentenced to 6 months of home
confinement, 3 years of probation, and 750 hours of community service; was ordered to make
restitution in the amount of $300,000; and was fined $12,050.

Former Company Official Sentenced

A former official of a Guam golf course company pled guilty in Federal Court, Agana, Guam, to
one charge each of wire fraud and money laundering in connection with a scheme that involved
bribery of a Government of Guam official to lower the appraised value of public land. The golf
course company then leased the land under favorable terms from the Government of Guam to
construct a golf course.  The official also solicited and received kickbacks from contractors who
were awarded contracts to construct various aspects of the golf course.   The official was sentenced
to 27 months of imprisonment, 3 years of probation on each charge, and 500 hours of community
service. The official was also required to surrender 69,500 shares of personally owned golf course
stock to a business that was victimized by the scheme.

U.S. VIRGIN ISLANDS

Hurricane-Related Audits Conducted in Cooperation With FEMA's OIG

On September 15, 1995, Hurricane Marilyn struck the U.S. Virgin Islands, causing major damage
to public and private structures and prompting the President to issue a major disaster
declaration.  As a result, as of July 2, 1996, FEMA approved disaster grants of $109.6 million 
($98.8 million as the Federal share and $10.8 million as the local share) for the Virgin Islands Office
of Management and Budget.  Reviews were conducted under a cooperative agreement between OIGs
of  FEMA and DOI, with participation from the Virgin Islands Bureau of Audit and Control.  These
reviews covered four functional areas: grant administration, accounting controls, hurricane-related
contracting, and community disaster loans.  As of March 31, 1997, all 13 of the final reports on the
hurricane-related audits had been issued.  The five reports issued since our October 1996 semiannual
report (eight reports were issued prior to that date) are summarized as follows:

  - Grant Administration.  The Virgin Islands Office of Management and Budget established
procedures to oversee financial and program operations of the Public Assistance Program, which
comprises disaster-related projects involving public facilities owned by local governments and
nonprofit organizations.  However, the information required by the Office to monitor the results of
disaster-related activities, such as drawdown and disbursement of funds data, was not  processed by
the Virgin Islands Department of Finance in a timely manner because of insufficient numbers of
personnel at the Department to post the data timely to the Financial Management System.  As a
result, six drawdowns of funds, totaling 
$18.6 million, received through 
December 31, 1995, were not recorded as of February 1996, and expenditures of $14.5 million that
were recorded for Program projects as of December 31, 1995, did not represent the total expenditures
through that date.  We made seven recommendations that addressed financial management, project
administration, and the potential for funding duplicative disaster recovery efforts.  Based on the
Governor's response to the final report, we considered four of the report's seven  recommendations
resolved and implemented, one recommendation resolved but not implemented, and two
recommendations unresolved.  The unimplemented and unresolved recommendations were referred
to the Assistant Secretary for Policy, Management and Budget for tracking of implementation and/or
for resolution.

  - Accounting Controls.  The Virgin Islands Department of Health had not established
procedures and controls that, in our opinion, would address the specific record-keeping requirements
for FEMA or the Virgin Islands Government.  We recommended that the Director of the Virgin
Islands Office of Management and Budget, in his capacity as the Governor's Authorized
Representative, direct the Department to implement procedures and controls to ensure that:  (1) costs
are properly allocated among Damage Survey Reports; (2) adequate documentation is maintained
for hurricane-related expenditures; and (3) competitive procedures are used for procurements.  Based
on the Office's  response to the draft report, we considered the report's recommendation  resolved
and implemented.

The Virgin Islands Department of Public Works designed a system of accounting controls and
procedures that should be adequate to address FEMA's record-keeping requirements, but it did not
fully implement those controls and procedures.  Based on the response to the final report from the
Office of Management and Budget, which responded for the Department, we considered all of the
report's three recommendations resolved but not implemented and requested additional information
on the recommendations.

The Virgin Islands Water and Power Authority implemented a system of accounting controls and
procedures that should be adequate to address FEMA's record-keeping requirements, but Authority
personnel did not comply with those established controls  and procedures.  Specifically, the
Authority did not always identify expenditures to specific Damage Survey Reports; it issued at least
two "cost plus percentage of cost" contracts, which are prohibited by FEMA's requirements; and it
did not have adequate control over materials and supplies used during the recovery process.  Based
on the Authority's response to the draft report, we considered four of the report's seven
recommendations resolved and implemented and requested that the Authority reconsider the
remaining three recommendations, which are unresolved.  The response to the final report was not
due by the end of this reporting period. 

  - Contracting Practices.  The Virgin Islands Department of Public Works made reasonable
efforts to obtain competitive prices for debris removal services, but it did not process procurement
actions through the Virgin Islands Department of Property and Procurement, as required by the
Virgin Islands Code.  As a result, the Government's interests were not safeguarded through formal
contracts for debris removal services acquired at a total cost of approximately $1.8 million.  We
recommended that the Department of Property and Procurement, in coordination with the
Department of Public Works, establish contingency plans  for procuring emergency debris removal
and other emergency services in case of another hurricane or natural disaster.  Based on the
Governor's response to our draft report, we considered all three of the report's recommendations
resolved but not implemented.  

Improvements Over Land Rentals and Cash Collections Needed

The Division of Agriculture (now the Virgin Islands Department of Agriculture) did not:  (1)
ensure that farmers complied with the terms and conditions of formal rental agreements for the
use of Government-owned land; (2) develop and maintain complete and accurate information on the
status of leases and vacant parcels of farmland under its jurisdiction; (3) collect all revenues due the
Government for agricultural programs; (4) purchase agricultural products in accordance with existing
procurement laws and regulations; (5) improve inventory control over agricultural products held for
resale; and 
(6) repair its office facilities on St. Thomas to make them safe for Division employees.  As a result
of these deficiencies, the Division lost at least $90,000 in potential land rental revenues  and did not
adequately control annual cash collections of about $200,000 and inventories of agricultural products
valued at about $207,000.  The Governor of the Virgin Islands did not respond to the report's eight
recommendations, which were referred to the Assistant Secretary for Policy, Management and
Budget for resolution.

Workmen's Compensation Deficiencies Cited

Based on our review of the Government of the Virgin Islands Workmen's Compensation
Program, we concluded that the Division of Workmen's Compensation and the Office of the
Government Insurance Fund needed to make improvements in the areas of collecting insurance
premiums, disbursing compensation, and safeguarding Government Insurance Fund resources. 
Specifically, the Office of the Government Insurance Fund was not effectively enforcing the
collection of workmen's compensation premiums because of limited coordination, collection efforts,
and communication between the respective offices;  the Division of Workmen's Compensation took
as long as 5 months to process employee claims and did not periodically reevaluate the status of
claimants receiving disability payments because of insufficient priority on these issues, inadequate
followup, insufficient dissemination of information to employers and employees, and inefficient
organization; and  the Office of the Government Insurance Fund did not ensure that revenues and
expenditures were authorized and properly recorded in the Fund's accounting records because of
insufficient review of Fund transactions  and inadequate reconciliation of accounts.  We made 15
recommendations to the Governor of the Virgin Islands to address these issues.  The Virgin Islands
Department of Labor agreed to take action to address seven of the recommendations, for which we
requested documentation evidencing completion of the planned actions.  However, the eight
recommendations relating to insurance premium collections and Fund administration are considered
unresolved because the Governor of the Virgin Islands did not respond to these recommendations.

Loan Application Process and Collection Enforcement Improvements Needed

The Virgin Islands Small Business Development Agency needed to improve its loan application
process and the level of collection enforcement for delinquent loans.  Specifically, we found that
the Agency:  (1) did not always adequately verify and analyze data in loan application packages to
determine the applicants' credit worthiness, financial stability, and ability to repay the loans; 
(2) did not always secure adequate collateral to protect the Government's interests; 
(3) did not maintain an up-to-date record of outstanding loans; (4) did not  refer loans in default  to
a private collection agency or to the Virgin Islands Attorney General in a timely manner; and (5) did
not provide technical assistance to borrowers to help them better manage their business finances. 
These deficiencies occurred because Agency personnel did not supplement basic guidelines by
establishing comprehensive policies and procedures for analyzing loan applications and for
determining the type of collateral that would be considered adequate.  As a result of these
deficiencies, the Agency had an overall delinquency rate of 70 percent, which represented 295 active
loans, totaling about $6.1 million, that had become delinquent since May 1971.  In addition, the
Agency was required to pay off  at least 15 guaranteed loans, totaling more than $600,000, that were
defaulted on by the original borrowers.  Based on the Governor's  response to our draft report, we
considered all four of the report's recommendations resolved but not implemented.

Program Administration Could Be More Effective

The Virgin Islands Department of Health administered the Women, Infants and Children (WIC)
Program in an effective manner and in compliance with grant terms and applicable laws and
regulations.  However, we believe that administration of the WIC Program could be even more
effective if the Department took the following actions:  (1) ensured that administrative funds were
expended in accordance with established criteria and used exclusively for WIC Program activities;
(2) required Program personnel to query applicants and document the results for income
contributions from persons outside the household; (3) required a competent professional authority
(as defined in 7 CFR 246.2) to review and approve nutritional risk assessments and food package
determinations at the time of certification of applicants; and (4) updated the drawdown process for
the food portion of the grant funds.  Based on the response to the draft report from the Governor of
the Virgin Islands, we considered four of the report's six recommendations resolved but not
implemented and two recommendations unresolved.  Although we requested additional information
for the unresolved recommendations, this information was not due by the end of this reporting
period. 

Minerals Management Service

Contractor's Costs Questioned

During 1985 and 1986,  MMS issued four cost-plus-fixed-fee contracts to study California
coastal commercial and sport fisheries, monitor gray whales, and administer technical
conferences on the Alaska and Pacific Outer Continental Shelves.  After modifications, the contracts
totaled $1,681,539.  During 1995, we audited the contractor's claim for $1,665,636 and classified 
$720,169 as unsupported.  In response to that report, the contractor reconstructed its accounting
system and located documentation that was not available during the initial audit.  This resulted in
the costs claimed being increased by $237, to $1,665,873.  We questioned $180,134 of the
$1,665,873 because the costs were in excess of costs incurred, were duplicated, were unsupported,
or were for the purchase of unallowable  beverages at a conference.  A response to this report was
not due by the end of this reporting period.

Record Penalty Imposed for Unsafe Operation of Offshore Oil Well

An oil company  agreed to pay a record $1,165,000 penalty in settlement of  a lawsuit for alleged
violations of critical safety regulations on its offshore drilling platform in the Pacific Ocean
near Ventura, California.  The investigation revealed that the oil company had been operating an oil
well from May through September 1994 with nonfunctioning safety valves.  These critical valves
are designed to prevent blowouts, the uncontrolled dangerous flow of oil and natural gas, and are
considered to be the most important safety feature on an offshore oil well.  This is the largest penalty
ever assessed for violation of the Outer Continental Shelf Lands Act and reflects rigorous
enforcement of safety regulations to protect against catastrophic consequences of oil spills.  

Multi-Office

Royalty Collections To Be Enhanced

In accordance with Section 302(b) of the Federal Oil and Gas Royalty Management Act of 1982,
OIG issued its Biennial Report on the Federal Royalty Management System for fiscal years 1994
and 1995, which was the sixth Biennial Report issued.  The report was prepared based on the results
of 11 audit reports that were issued by OIG and 1 audit report issued by GAO on the operations of
the System by BLM and MMS.  The 12 audit reports summarized in the Biennial Report had
monetary impacts totaling over $92 million on various aspects of the System.  OIG concluded that
MMS had made significant progress in implementing the recommendations from the Task Force on
Royalty Compliance and that BLM had discontinued the rental rate reduction for oil and gas leases
issued before 1987. GAO concluded that MMS needed to encourage the development of
nonexplosive technologies for removing well structures so that environmental damage would be
eliminated or minimized and to develop an overall strategy for properly plugging and abandoning
wells and for clearing lease sites when oil and gas production ended.  The Biennial Report stated that
further improvements were needed to enhance oil and gas royalty collections, but the Biennial Report
did not make any new recommendations, stating that "the Department has generally been responsive
to the [28] audit recommendations (made in the 12 audit reports) and has made the suggested
improvements to the Program."

Improvements in Overtime Controls Needed

DOI did not have adequate guidance on the use of administratively uncontrollable overtime. 
Specifically, four of the five bureaus that used this form of premium pay had not issued
sufficient procedures for documenting overtime work, computing the overtime pay rates, or 
establishing employee eligibility for the pay.  In some instances, bureaus did not comply with
bureau-issued guidance on the use of administratively uncontrollable overtime.  As such, we
concluded that DOI did not have assurance that administratively uncontrollable overtime payments
were appropriate or were computed properly.  Although we found that the methods used by two
bureaus to compute overtime rates resulted in excess payments totaling as much as $70,000, we
found no evidence that the bureaus or their employees systematically abused this form of premium
pay.  To address the deficiencies, we recommended that  DOI issue policies and procedures for the
use of administratively uncontrollable overtime, the bureaus issue policies to implement DOI
guidelines and ensure compliance with these guidelines, and one bureau discontinue the use of
administratively uncontrollable overtime by employees who do not meet Federal and DOI eligibility
requirements.  Based on DOI's response to our draft report, we considered one of the report's three
recommendations resolved and implemented and two recommendations resolved but not
implemented. Accordingly, the unimplemented recommendations were referred to the Assistant
Secretary for Policy, Management and Budget for tracking of implementation.












National Park Service

High Cost of Employee Housing Noted

OIG concluded that the decision of the National Park Service (NPS)  to build high quality, energy
efficient single-family homes resulted in high-cost  employee housing at Grand Canyon and
Yosemite National Parks.  Specifically, NPS spent $29.2 million to plan, design, develop
infrastructure for, and construct 23 single-family houses at Grand Canyon National Park and 34
apartments and 19 single-family houses at Yosemite National Park.  On a per house basis, the
average costs of the single-family homes were $390,0000 at Grand Canyon and $584,000 at
Yosemite National Parks.  In contrast, single-family housing costs in the private sector ranged from
an estimated $102,000 to $250,000 near Yosemite National Park and from an estimated $115,000
to $232,000 near Grand Canyon National Park.  NPS attributed the higher housing costs to expenses
for designing the homes  and acquiring materials that provided greater energy efficiency, lower
maintenance costs, and greater durability.  We recommended that NPS focus its efforts on meeting
its housing needs in a cost-effective manner.  Based on NPS's response to our final report, we
considered the report's recommendation resolved and implemented.
 Improvements in Oversight of Concessioners Needed 

NPS's National Capital Area (Washington, D.C.) was generally providing adequate management
and oversight of two of its concessioners.  However,  improvements were needed in preparing
operating and maintenance plans, scheduling and monitoring operating hours and seasons, approving
rates and prices, modifying a contract to reflect changes in the number of facilities operated, ensuring
that  one concessioner rendered services in compliance with its concessions contract, ensuring that
concessioners paid the proper amounts of utility costs and building use and franchise fees, and
ensuring  that the concessioners maintained adequate controls over revenues on which franchise fees
are based.  These improvements were needed  because NPS had not implemented measures to ensure
that concessioners:  (1) complied with NPS regulations and concessions contract provisions and (2)
maintained adequate records of concessions revenues.  Also, NPS had not ensured that one
concessioner provided services in accordance with the terms of its concessions contract.  Based on
NPS's response to the draft report, we considered two of the report's eight recommendations
resolved and implemented and six recommendations resolved but not implemented.

Equitable Adjustment Proposal Filed

NPS entered into a contract with a construction company to provide building, parking, and
roadway improvements to a beach facility.  The contractor filed an equitable adjustment
proposal of  $1,143,635 for extended overhead, financial damages, and extra work related to
construction delays.  At our request, the Defense Contract Audit Agency audited the proposal and
questioned the entire $1,143,635.  The cost exceptions identified were for payments made to
subcontractors that exceeded the subcontract price, extended overhead costs for delays that were
caused by the contractor, unsupported charges for financial damages caused by purported
Government delays, and disallowed liquidated damages not assessed by NPS.  A response to this
report was not due by the end of this reporting period.

Small Business Set-Aside Contract Obtained Illegally

NPS awarded a $71,688 contract in 1994 to a Seattle, Washington, corporation to furnish,
deliver, and set up a double-wide manufactured housing unit to be used as office space for a
national park in Idaho.   The contract was set aside for small businesses and required a certification
from the bidder that it was a small business concern.  The company specifically represented to NPS
that it was a small business concern and that it therefore qualified for bidding under the contract. 
In June 1995, the company successfully completed the contract,  and the work was accepted by NPS. 
However, in April 1996, NPS learned that the company was, in fact, a large business and had
misrepresented its size.  NPS referred these findings to OIG, which opened an investigation and
reported its findings to the Department of Justice's U.S. Attorney's Office in Seattle.  Although the
U.S. Attorney's Office declined criminal prosecution, it decided to pursue civil remedies against the
corporation under the False Claims Act, which provides up to triple damage awards against
companies making false claims to the Government.  Based on this civil pursuit, the corporation paid
a $5,000 fine in settlement of its false claims.
 
Office of Surface Mining Reclamation and
Enforcement

Additional Controls Over Technical Assistance Agreement Needed

OSM needs to strengthen controls over a technical assistance agreement with the Republic of
Indonesia.  In that regard, we found that financial information related to the technical assistance
project was not reported consistently or documented adequately.  Specifically, costs recorded in
billing statements did not agree with costs recorded in quarterly  reports, and insufficient
documentation was maintained to support the costs on which a fixed administrative overhead rate
was applied.  We also found that OSM needs to improve coordination between the assistance
program director and OSM staff to ensure compliance with the agreement's financial management,
accounting, and reporting requirements.  Based on OSM's response to the draft report, we considered
all three of the report's recommendations resolved but not implemented.  

U.S. Fish and Wildlife Service

Costs of Wildlife and Sport Fish Restoration Grants Questioned

OIG issued three audit reports prepared by the Defense Contract Audit Agency on the costs
claimed for reimbursement under grants awarded  to the States of Connecticut, Wyoming, and
California for the period of  July 1993 through June 1995 for sport fish and wildlife restoration  The
audits were requested by the U.S. Fish and Wildlife Service (FWS).   Responses to these reports
were not due by the end of this  reporting period.

In the first audit, the Audit Agency reviewed costs of $8,146,877 spent by the State of Connecticut. 
Of this amount, the Audit Agency questioned costs of $1,750,514, which consisted of $1,606,605
for labor and fringe benefits for State employees who were not working directly on the grant and
$143,909 for travel, supplies, and other expenses because the State could not provide documentation
that the expenses were chargeable to the grant.

In the second audit, the Audit Agency reviewed costs of $14,961,502 spent by the State of Wyoming. 
Of  this amount, the Audit Agency questioned costs of $190,417, which consisted of $168,417 for
excessive vehicle usage costs and $22,000 for construction of a restroom and changing facility,
which were not allocable to the grant project.

In the third audit, the Audit Agency questioned costs of $3,351,268 of the $36,425,434 spent by the
State of California.  These costs consisted of $3,238,665, which were allocable to another Federally
funded program, and $112,603, which represented FWS's share of Hunter Safety Instruction
Validation Stamp fees that were not deducted from program costs, as required by regulations. 

U.S. Geological Survey

Purchase Card Fraud Discovered 

An employee with the U.S. Geological Survey's  (USGS) Water Resources Division in Atlanta,
Georgia, made charges of $25,575 to a Government purchase card for personal goods and
services not related to  USGS's mission.  The purchase card is a credit card used throughout DOI for
official small purchase activities.  The investigation revealed that from  December 1995 through
August 1996, the employee charged goods and services for personal benefit and concealed the
purchasing activity from her supervisor's attention by falsely reporting  no purchasing activity
against the purchase card.  During the investigation, the employee  resigned from USGS and moved
from the Atlanta area.  The employee pled guilty to wire fraud in connection with the theft and was
sentenced to 6 months of imprisonment, 3 months of home confinement, 3 years of supervised
release, and 200 hours of community service.  The employee also was ordered to make restitution
in the amount of $25,575.