[Survey Report on Utility Services Acquisitions, National Park Service]
[From the U.S. Government Printing Office, www.gpo.gov]

Report No. 98-I-690

Title: Survey Report on Utility Services Acquisitions, National
       Park Service

Date:  September 30, 1998






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file or by calling the Office of Inspector General, Division of
Acquisition and Management Operations at (202) 208-4599.

                  ******************************






U.S. Department of the Interior
Office of Inspector General






AUDIT REPORT


UTILITY ACQUISITIONS,
NATIONAL PARK SERVICE


REPORT NO. 98-I-690
OCTOBER 1998





MEMORANDUM


TO:               The Secretary

FROM:             Richard N.  Reback
                  Acting Inspector General

SUBJECT SUMMARY:  Final  Survey Report for
                  Your  Information  -  "Utility Services
                  Acquisitions, National Park Service" (No. 98-I-690)


Attached for your information is a copy of the subject final
survey report.  The objective of the survey was to determine
whether   the   National  Park  Service  complied  with  the
regulations  pertaining   to   the  acquisition  of  utility
services  and performed adequate  analyses  to  support  its
decision to  build  or  rehabilitate  utility systems rather
than  to  purchase  utility services from  existing  utility
providers.

Overall, we concluded  that  the  Park Service complied with
pertinent   regulations   in  that  it  performed   adequate
analyses to support  its  decisions to build or rehabilitate
water and wastewater treatment  systems in lieu of acquiring
utility services from utility providers.   We also concluded
that  the  Service  appropriately used value engineering  in
selecting the preferred alternative.  These conclusions were
based upon our review  of  23  of  the 41 projects that were
within the scope of our survey.

The report did not contain any recommendations.   Therefore,
a response to the report was not required.

If  you  have  any  questions concerning this matter, please
contact me  at  (202)  208-5745  or  Mr. Robert J. Williams,
Assistant Inspector General for Audits, at (202) 208-4252.



Attachment






          SURVEY REPORT                     C-IN-NPS-001-98-D


          Memorandum


To:       Assistant Secretary for Fish and Wildlife and Parks

From:     Robert J. Williams
          Assistant Inspector General for Audits

Subject:  Survey Report on Utility Services
          Acquisitions, National Park Service (No. 98-I-690)


                     INTRODUCTION

This  report  presents  the  results  of  our survey of
utility services acquired by the National Park Service.
The  objective  of the survey was to determine  whether
the  Park  Service   complied   with   the  regulations
pertaining to the acquisition of utility  services  and
performed  adequate analyses to support its decision to
build or rehabilitate  utility  systems  rather than to
purchase   utility   services   from  existing  utility
providers.

BACKGROUND

At some parks, the Park Service constructs and operates
utility  systems  that  provide  water  and  wastewater
treatment.  At other parks, the Park  Service purchases
these services from utility providers.  In general, the
Park  Service's  Denver  Service  Center,  located   in
Denver,  Colorado,  is  responsible  for the design and
construction  of  Government-owned utilities,  and  the
Field Operations Technical Support Center, also located
in Denver, is responsible  for negotiating with utility
providers for utility services.

The Park Service's Management  Policies,  Chapter  9:5,
issued in December 1988, state that the Park Service is
to  use  municipal or other utility systems outside the
parks   whenever   economically   and   environmentally
practicable   and   authorizes   the  Park  Service  to
participate  in "cost-sharing with  municipalities  and
others in meeting  new,  expanded,  or replacement park
utility  needs."   However, even though  there  may  be
municipal  utility service  providers  in  the  general
vicinity of  a  particular  park,  factors  such as the
isolation  of  the park and the size of existing  local
utility plants can  affect  the Park Service's decision
to build or to buy utility services.

The  Park  Service has incorporated  value  engineering
into its construction  program.   Office  of Management
and  Budget  Circular  No.  A-131, "Value Engineering,"
requires that Federal agencies  use  value engineering,
also  known  as  value analysis, value management,  and
value control, to reduce program and acquisition costs.
Value engineering  is  defined  by  the Circular as "an
organized effort directed at analyzing the functions of
systems, equipment, facilities, services,  and supplies
for the purpose of achieving the essential functions at
the  lowest  life-cycle  cost  consistent with required
performance,  reliability, quality,  and  safety."   As
related to the  scope  of  our survey, the Park Service
uses   value   engineering  to  develop   and   compare
alternatives, such  as  to  build  or  to  buy,  and to
validate  the  preferred  alternative.   In addition to
value   engineering,  the  Park  Service  has  recently
implemented   a  decision-making  system,  Choosing  By
Advantages, in  which  monetary and nonmonetary factors
are evaluated to determine  the  best  alternative  for
achieving desired objectives.

SCOPE OF SURVEY

We  identified 41 water and wastewater treatment system
projects   that  were  within  the scope of our survey.
These  projects  included those that  were  in  various
construction stages  in  fiscal years 1997 and 1998, as
well as those planned or anticipated  to  be  funded in
fiscal years 1999 and 2000.  The Denver Service  Center
was responsible for all of the projects because regions
and  parks  generally do not design and construct large
utility projects.

Our  survey  was   conducted  in  accordance  with  the
"Government  Auditing   Standards,"   issued   by   the
Comptroller General of the United States.  Accordingly,
we  included  such  tests of records and other auditing
procedures that were  considered  necessary  under  the
circumstances.   The  survey included a review of 23 of
the 41 water and wastewater  treatment  system projects
in  the  planning or construction stages during  fiscal
years  1997   through    2000.   Electrical  generation
systems were excluded from  our survey because the Park
Service  generates  its own electrical  power  only  in
remote locations, thereby  precluding  a  build  or buy
decision.  We completed our survey work in August 1998.

We  also  reviewed  the  Department  of  the Interior's
Accountability  Report  for  fiscal  year  1997,  which
includes information required by the Federal  Managers'
Financial Integrity Act, and the Park Service's  annual
assurance statement for fiscal year 1997 and determined
that there were no reported internal control weaknesses
related to the objective and scope of our survey.

PRIOR AUDIT COVERAGE

Neither the Office of Inspector General nor the General
Accounting  Office  has issued any audit reports during
the past 5 years on utility  services  acquisitions  by
the Park Service.

RESULTS OF SURVEY

We  concluded that the National Park Service did comply
with  its Management Policies regarding the acquisition
of utility  services  and  that  it  performed adequate
analyses   to   support  its  decisions  to  build   or
rehabilitate water  and wastewater treatment systems in
lieu  of  acquiring  utility   services   from  utility
providers.   We  also  concluded that value engineering
was  used,  as required by  Office  of  Management  and
Budget Circular  No.  A-131, in selecting the preferred
available alternative.   These  conclusions  were based
upon  our  review  of  23 of the 41 projects that  were
within the scope of our survey.

Of the 23 projects reviewed,  decisions  to  build were
made for 19 of the projects, and decisions to  buy were
made  for 2 of the projects.  The remaining two utility
service requirements were to be met by a combination of
building  and  buying.   In  all  cases,  documentation
existed   in   the   project   files   that  adequately
substantiated the decisions made.
Specifically, for the 19 decisions to build,  we  found
that  2  were based on value engineering analyses which
showed that  it was more beneficial to build facilities
rather than to  buy  the services; 10 were based on the
remote locations where the utilities were needed, which
precluded the possibility  of  connecting,  in  a cost-
effective  manner, to a municipal system; 2 were repair
projects  to   existing   utilities;   3  involved  the
relocation  of  housing units within Yosemite  National
Park and the subsequent  reconnection  to  the existing
treatment facilities; and 2 were based on a  variety of
reasons, all of which supported the decision to build.

We  found  that the two decisions to buy were based  on
the urban locations  of the parks and on the absence of
existing  facilities  that   were   capable   of  being
economically   rehabilitated  to  provide  the  utility
services.  The decisions  on meeting the parks' utility
requirements by a  combination  of  building and buying
were  based  on  the  proximity  of the utility-related
facilities within the parks to the  commercial  utility
systems.  For example, at Lake Mead National Recreation
Area,  upgraded  water treatment facilities were needed
at various locations  throughout the Area to meet State
of  Nevada water quality  standards.   For  the  remote
locations,  the  necessary  water  treatment facilities
were either built or rehabilitated by the Park Service.
However,  one  location was in proximity  to  municipal
utility services,  and  the  Park  Service negotiated a
contract to connect to the municipal  system, which was
more   economical   than  building  a  water  treatment
facility at that location.

In addition, for three projects, we performed a limited
evaluation of the life-cycle cost analyses performed by
the Park Service to determine  whether  the  particular
cost items in the analyses were appropriate.   To  make
this determination, we evaluated the various cost items
included   in  the  analyses  and  discussed  the  Park
Service's procedures and use of certain cost items with
engineers from  the  Bureau of Reclamation and the U.S.
Army Corps of Engineers.   Based  on our limited review
of the three cost analyses and the information provided
by the Bureau and the Corps, we concluded that the cost
items were appropriate.

Since this report does not contain any recommendations,
a response is not required.

The  legislation, as amended, creating  the  Office  of
Inspector  General requires semiannual reporting to the
Congress on  all audit reports issued, actions taken to
implement audit  recommendations, and identification of
each  significant recommendation  on  which  corrective
action has not been taken.

We appreciate  the assistance of Park Service personnel
in the conduct of our audit.






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