IMPROVEMENTS NEEDED IN THE 

EVALUATION 

BUREAU OF RECLAMATION’S 

OVERSIGHT OF TRIBAL RURAL WATER 

PROJECTS 

Report No.: 2016-WR-026 July 2017
OFFICE OF 


INSPECTOR GENERAL 


U.S.DEPARTMENT OF THE INTERIOR 

Memorandum 

JUL 3 1 2017 

To: 	 Alan Mikkelsen 

Acting Commissioner, Bureau of Reclamation 

From: 	 Mary L. Kendall 

Deputy Inspector Gener 

Subject: 	 Final Evaluation Report - Improvements Needed in the Bureau of Reclamation' s 

Oversight of Tribal Rural Water Projects 

Report No. 2016-WR-026 

This memorandum transmits our final report detailing our evaluation ofthe Bureau of 

Reclamation' s (USBR's) oversight of its construction projects for tribal rural water supply. We 

include five recommendations in our report that, if implemented, will help USBR improve its 

oversight of these construction projects. 

Based on USBR's June 2, 2017 response to our draft report, we consider one 

recommendation partially resolved but not implemented, three recommendations resolved but 

not implemented, and one recommendation resolved and implemented. We will refer these 

recommendations to the Assistant Secretary for Policy, Management and Budget to track 

implementation. 

The legislation creating the Office of Inspector General requires that we report to 

Congress semiannually on all audit, inspection, and evaluation reports issued; actions taken to 

implement our recommendations; and recommendations that have not been implemented. 

A response to this report is not required. We request, however, that USBR provide the 

Assistant Secretary for Policy, Management and Budget additional information regarding its 

specific plans to implement Recommendation 1 and support for its implementation of 

Recommendations 2 through 5. 

If you have any questions regarding this report, please contact me at 202-208-5745 . 

Office of Inspector General I Washington, DC 
Table of Contents

Results in Brief ....................................................................................................... 1

Introduction............................................................................................................. 2

Objective ............................................................................................................. 2

Background ......................................................................................................... 2

Findings................................................................................................................... 5

Physical Project Completion Not Tracked.......................................................... 5

Target Completion Dates Not Formally Established .......................................... 6

Inconsistent Oversight and Documentation ........................................................ 8

Annual Funding Agreement Submissions Not Complete ................................... 9

Conclusion and Recommendations....................................................................... 11

Conclusion......................................................................................................... 11

Recommendations Summary............................................................................. 11

Appendix 1: Scope and Methodology................................................................... 14

Scope ................................................................................................................. 14

Methodology ..................................................................................................... 14

Appendix 2: Prior Audit Coverage ....................................................................... 16

Appendix 3: Tribal Rural Water Supply Construction Projects ........................... 20

Appendix 4: Bureau Response.............................................................................. 21

Appendix 5: Status of Recommendations............................................................. 25
1

Results in Brief

We evaluated the Bureau of Reclamation’s (USBR’s) oversight of its construction 

projects to supply water to American Indian tribes in rural areas. We found that 

USBR could improve oversight of these construction projects by tracking physical 

completion percentages, establishing individual project completion dates, 

standardizing oversight and documentation, and submitting a complete annual 

funding agreement to Congress.

Because USBR does not track physical completion percentages and does not have 

target construction completion dates, it cannot ensure timely completion of its

rural water supply projects. These factors can also make it difficult for USBR to

identify when it should take over a project from a tribe. This could lead to the

initial project beneficiaries not receiving all services as intended. In addition, 

projects cost more the longer they take to complete. For example, USBR 

estimated the U.S. Government would potentially save $2.5 billion by completing 

projects by 2035 versus 2065.

Further, USBR does not have policies and procedures establishing adequate levels

of oversight and documentation. Without these policies and procedures, there is a 

risk for project delay and mismanagement. 

Finally, USBR is submitting incomplete annual funding agreements. By doing 

this, USBR is not providing a complete and accurate picture to Congress of the 

total funding needed to accomplish the construction activities listed on the annual 

funding agreement. This makes it difficult for Congress to make informed 

decisions and circumvents the congressional oversight process.

We include five recommendations to help USBR improve oversight and 

accountability of its tribal rural water supply construction projects. USBR 

concurred or partially concurred with all of our recommendations and is taking

action to address them.
2 

Introduction

Objective 

Our objective was to— 

evaluate how the Bureau of Reclamation (USBR) can improve oversight 

of its Indian Self-Determination and Education Assistance Act, Pub. L. 

No. 93-638, 88 Stat. 2203 (1975), rural water supply construction projects 

to ensure timely completion; and 

determine if USBR’s oversight is performed and consistently 

documented. 

See Appendix 1 for the scope and methodology of our review and Appendix 2 for 

prior audit coverage. 

Background

In 1975, Congress passed Pub. L. No. 93-638, which provides for maximum 

participation of American Indian tribes in Federal programs and services 

designated for American Indians. For agreements with tribes implemented under 

Pub. L. No. 93-638, USBR has substantially less oversight authority than for 

traditional contracts awarded under the Federal Acquisition Regulation. 

Pub. L. No. 93-638 allows for self-determination contracts (Title I) and selfgovernance compacts (Title IV). Monitoring for Title I contracts is limited to one 

site visit for each contract, unless the tribe agrees on additional visits, the contract 

qualifies as a construction contract, or the appropriate official has reasonable 

cause to believe that contract performance is seriously deficient. To qualify as a 

construction contract, the contract must provide the tribe direct responsibility for 

construction activities that go beyond construction planning and management 

services. Construction contract oversight is generally limited to one site visit per

month unless the tribe agrees on extra visits. Federal oversight of Title IV 

construction projects is generally limited to what the U.S. Department of the 

Interior (DOI) and the tribe negotiate in the annual funding agreement.

USBR’s Great Plains Region administers all of the ongoing USBR construction 

projects for tribal rural water supply. It has agreements with nine American Indian 

tribes (eight tribes with Title I contracts and one tribe with a Title IV compact) for 

multiple projects implemented under Pub. L. No. 93-638; one of these projects is 

complete (see Appendix 3). 

In its October 2014 rural water activities assessment report,

1 USBR estimated that 

at a funding level of $50 million annually for project construction, the remaining 

 

1 “Assessment of Reclamation’s Rural Water Activities and Other Federal Programs that Provide Support on 

Potable Water Supplies to Rural Communities in the Western United States,” USBR, October 7, 2014.
3

projects would not be completed until well after 2065 with a total Federal 

investment over the lifetime of these projects of approximately $5.8 billion.2

USBR further estimated that all remaining projects could potentially be completed 

by 2035 if funding was increased to $162 million annually with a total Federal 

investment of about $3.3 billion (see Figure 1).

USBR Rural Water Supply Funding Projections

Figure 1: The difference in overall cost and time to complete the remaining rural water 

supply projects based on funding level. USBR provided the data used to build this chart.

As indicated above, Pub. L. No. 93-638 and the Code of Federal Regulations 

(C.F.R.),

3 purposefully limit USBR’s oversight ability to further tribal selfdetermination and autonomy. The statute and regulations also provide that Title I 

contracts “shall be liberally construed for the benefit of the tribes or tribal 

organizations.” When USBR declines to enter a Title I contract with a tribe, it 

must give the tribe a detailed explanation as to why and provide technical 

assistance to help the tribe enter into the contract. 

Under both Title I and Title IV, USBR may reassume4 a contract or compact. For 

example, USBR can conduct a nonemergency reassumption under Title I based on

(1) a violation of rights or endangerment of health, safety, or welfare of any 

person or (2) gross negligence or mismanagement in the handling or use of 

 2 Includes $4 million in funding through 2065 and $1.8 million of future funding required after 2065. 3 25 C.F.R. parts 900 (Title I) and 1000 (Title IV). 4 Reassumption of a contract means the rescission, in whole or in part, of a tribe’s contract and assuming or 

reassuming control or operation of the contracted program by the Secretary of the Interior without consent of 

the Indian tribe or tribal organization. 

5,800 

3,300 

-

2,000 

4,000 

6,000 

2014 2020 2025 2030 2035 2040 2045 2050 2055 2060 2065

TOTAL FUTURE FUNDING ($ IN MILLIONS)

YEAR

$50 Million Annual Funding $162 Million Annual Funding
4

contract funds, trust funds, trust lands, or interests in trust lands under the

contract. As with declining a Title I contract, a nonemergency reassumption also 

requires DOI to provide, if requested, technical assistance and advice to help the 

tribe correct the deficiencies and re-enter into the contract.
5

Findings

USBR can improve its oversight of Pub. L. No. 93-638 construction projects for 

supplying water to rural areas by tracking physical completion percentages, 

establishing individual project completion dates, standardizing oversight and 

documentation, and submitting a complete annual funding agreement to Congress

for Title IV tribes. Currently, USBR tracks project completion by the amount of 

funds expended, does not have target completion dates for individual projects, 

does not provide adequate requirements for oversight and documentation, and 

sends an annual funding agreement with Title IV tribes to Congress without a 

budget that reflects estimated costs. 

Physical Project Completion Not Tracked

USBR does not track the physical completion of the tribal rural water projects in a 

manner that ensures reasonable progress has been made in any given period. 

According to USBR officials, instead of tracking physical completion of the 

projects, USBR relies solely on the percentage of funds expended to track 

progress toward completion. As such, USBR does not know the true, overall

status of a project, creating the risk of exhausting Federal funding prior to project 

completion and making it difficult for USBR to determine when it should 

reassume a contract.

According to 25 C.F.R. § 900.130(c)(7), tribes must provide the Secretary of the 

Interior with progress and financial status reports for Title I construction projects. 

The regulations do not specifically require the reports to include overall physical 

percentage of project completion, but this information would aid USBR in 

determining a project’s overall progress. If negotiated into the annual funding 

agreement, tribes that have Title IV construction projects must provide the 

Secretary with brief progress reports and financial status reports; 25 C.F.R. 

§ 1000.243(d) states that these brief progress reports and financial status reports 

may include the percentage of the work completed, as well as a report of funds 

expended during the reporting period and cumulatively for the project. As with 

Title I construction projects, negotiating the requirement to track overall

percentage of physical project completion into the annual funding agreement 

would aid USBR in determining a project’s progress.

The importance of having percentage of completion data is stated in 

2 C.F.R. § 200.328, which states: “for the most part, onsite technical inspections 

and certified percentages of completion data are relied on heavily by Federal 

awarding agencies and pass-through entities to monitor progress under Federal 

awards and subawards for construction.” While we recognize this section of 

2 C.F.R. does not directly apply to contracts implemented under Pub. L. No. 93-

638, it represents a best practice that would help USBR hold all parties 

accountable in a manner that appropriately relates the amount of funds expended 

to the amount of physical progress made toward completion.
6 

As discussed above, a Federal agency may reassume a Title I contract based on 

certain types of gross negligence or mismanagement of funds. USBR’s decision 

not to track a project’s physical completion results in the potential for insufficient 

documentation to exercise its reassumption rights. This in turn reduces USBR’s 

ability to ensure the protection of trust resources and appropriate delivery of the 

services covered by the contract and to hold the tribes accountable under these 

provisions. 

In its October 7, 2016 response to our Notice of Potential Findings and 

Recommendations (NPFR) regarding project completion tracking, USBR stated 

that because tribes have the authority to set the priorities for construction, 

USBR’s decision to track financial completion as opposed to physical completion 

was a more predictable measure of progress. Furthermore, the awarding officer’s 

technical representatives stated that tracking physical completion would be 

difficult due to annual funding fluctuations. 

In addition, USBR reasoned that tracking financial completion makes more sense

because project component costs, for example the cost of a water treatment plant, 

could represent a small percentage of actual physical completion of a water 

system but represent a significant portion of a project’s total funding. USBR’s 

reasoning for tracking only financial completion, however, highlights the need for 

it to track both the financial and physical completion of a project. Because tribes 

establish project construction priorities and project component costs could 

substantially reduce a project’s available funding level, it is critical for USBR to 

be able to substantiate that reasonable construction progress has been made in 

relation to the funds expended. Furthermore, tracking both financial and physical 

completion would aid USBR in determining and proving the necessity of contract 

reassumption.

Recommendation

We recommend that USBR: 

1. Track both the physical and financial completion percentages for tribal 

rural water supply projects.

Target Completion Dates Not Formally Established 

USBR has not formally established completion dates for each project. In the 

October 2014 rural water activities assessment report, USBR referenced an 

overall estimate of 2035 for completion of all tribal rural water projects based on 

annual funding of $162 million but did not identify completion dates for 

individual projects. 
7

According to 25 C.F.R. §§ 900.125 and 900.127, a tribe’s Title I construction 

contract proposal must contain a contract budget and performance period. 

A budget specifies the reasonable costs of performing the contract, and the 

performance period specifies the timeframe allowed or required for performance 

to be completed. According to 25 C.F.R. § 1000.248(b), tribes with Title IV

construction projects are required to give USBR timely notice of any proposed 

changes to the project that require (1) an increase to the negotiated funding 

amount, (2) an increase in the negotiated performance period, or (3) any 

significant departure from the scope or objective of the project. We believe the 

reference to a “negotiated performance period” implies that, like Title I projects,

Title IV construction projects are also required to have a performance period.

USBR should also refer to 2 C.F.R. § 200.210, which states that a Federal award 

must include a period of performance start and end dates and a budget approved 

by the Federal awarding agency. Furthermore, it requires the Federal award to 

include “the timing and scope of expected performance by the non-Federal entity 

as related to the outcomes intended to be achieved by the program.” While this 

section of 2 C.F.R. does not directly apply to contracts and agreements

implemented under Pub. L. No. 93-638, it represents a best practice USBR can 

use to strengthen the oversight of its construction projects.

By not establishing individual project completion dates, USBR cannot account for 

deviations from expected project completion dates that are due to annual funding

fluctuations, delays or impediments to the project, or other limiting factors, and 

USBR has no expectation on when the projects will be completed. In addition, 

with USBR’s estimated completion dates ranging from 2035 to 2065—33 to 

100 years after project authorization—there is no assurance that the intended 

beneficiaries will receive all project services as intended (see Appendix 3).

Further, the longer it takes to complete a project, the more costly it becomes; as 

mentioned previously in the “Background,” USBR estimated a $2.5 billion

savings if the projects are completed by 2035 rather than 2065.

USBR’s awarding officer’s technical representatives cited uncertainty 

surrounding the amount of annual appropriations as the reason for not having 

target completion dates for individual projects, but USBR does not track and 

analyze physical construction progress to reasonably estimate when individual 

projects will be completed. Without this analysis, it may be difficult for USBR to 

hold tribes accountable for ensuring adequate construction progress is being 

made.
8 

Recommendations

We recommend that USBR: 

2. Conduct an analysis to determine appropriate project completion dates 

and the required funding to meet those completion dates for each 

tribal rural water supply project; and

3. Establish procedures to identify and track project deviations, 

impediments, or delays from the expected completion dates of tribal 

rural water supply projects and coordinate with DOI budget officials to 

ensure adequate project funding requirements are included in future 

budget requests. 

Inconsistent Oversight and Documentation 

USBR policies and procedures contained in its Reclamation Manual “Directives 

and Standards” do not provide adequate requirements for oversight and 

documentation of tribal rural water supply projects. 

The Government Accountability Office’s Green Book5 states: 

Those in key roles for the unit may further define policies through 

day-to-day procedures, depending on the rate of change in 

operating environment and complexity of the operational process. 

Procedures may include the timing of when a control activity 

occurs and any follow up corrective actions to be performed by 

competent personnel if deficiencies are identified.

Inconsistencies in oversight and documentation occur because USBR’s current 

policies are vague and leave many decisions about oversight and documentation 

to the judgment of the awarding officer’s technical representative. For example, 

the Reclamation Manual “Directives and Standards” state that the awarding 

officer’s technical representative is responsible for “conducting post-award 

monitoring,” but do not provide adequate detail about oversight or documentation 

requirements. In addition, lengthy project completion times inevitably lead to staff 

turnover midproject, and new staff do not have consistent oversight guidance or 

the institutional knowledge of a project to adequately monitor performance. 

As a result, the type and extent of oversight and documentation vary across

projects. For example, project files are inconsistent. Some include detailed 

monitoring plans—the framework for oversight—with oversight visit dates and 

project milestones, while other project files do not include any monitoring plan. In 

addition, some awarding officer’s technical representatives rely on independent 

 

5 “Standards for Internal Control in the Federal Government,” GAO-14-704G, September 2014.
9 

consultants who work for and are paid by the tribe to conduct site visits, while 

others conduct site visits or have other USBR staff conduct them. 

Having adequate policies and procedures in place would strengthen project 

oversight and ensure that newly assigned awarding officer’s technical 

representatives are performing their oversight duties and responsibilities in a 

consistent manner. Without adequate policies and procedures, the risk of project 

delay, mismanagement, or failure exists and it may be difficult to reassume a

contract if deemed necessary. 

Recommendation

We recommend that USBR: 

4. Develop and implement policies and procedures for awarding officer’s 

technical representatives that will ensure adequate oversight and 

documentation are standardized for all tribal rural water supply 

projects. 

Annual Funding Agreement Submissions Not 

Complete

USBR is not providing a complete and accurate picture to Congress of the total 

funding needed to accomplish the construction activities listed in Title IV annual 

funding agreements. USBR submits the annual funding agreement for its Title IV 

tribe to Congress without providing a budget that reflects the true cost of 

proposed project construction activities. Without an actual budget amount, it is 

impossible for Congress to make informed decisions regarding the funding for a 

project; 25 U.S.C. § 5363(f) requires Federal agencies to submit annual funding 

agreements for Title IV tribes to Congress for review “not later than 90 days 

before the proposed effective date of an agreement.” 

USBR currently submits an annual funding agreement with a $5,000 

“placeholder” budget amount instead of an actual budget amount needed to 

complete the work listed on the agreement. Officials from USBR stated that the 

placeholder budget amount is later modified (after congressional review) to the 

actual budget. For example, in 2015, the $5,000 “placeholder” budget was 

modified to over $6.6 million. It can be difficult for Congress to make informed 

budget decisions with such sizeable modifications. 

In the October 2016 NPFR response, the USBR Regional Director stated that 

USBR frequently did not have knowledge of appropriation levels until after the 

beginning of the fiscal year. The placeholder budget is submitted to expedite the 

congressional review process and allows for construction to begin sooner. This 
10 

practice, however, circumvents the congressional review process and can hinder 

the ability of Congress to make informed decisions regarding the project. 

Pub. L. No. 93-638 limits oversight of contracts and agreements with Title IV 

tribes to what DOI can negotiate in the annual funding agreement. Because 

oversight may be more restricted, congressional review could represent one of the 

few opportunities the U.S. Government can provide oversight of the project. 

Therefore, it is critical that USBR submits a budget that properly reflects the costs 

of the proposed construction activities listed to preserve the oversight functions of 

the congressional review process. 

Recommendation

We recommend that USBR: 

5. Submit a complete annual funding agreement for Title IV tribes, 

including a budget that reflects an accurate estimate of costs of 

activities listed, to Congress. 
11

Conclusion and Recommendations

Conclusion

Although Pub. L. No. 93-638 and relevant regulations were written to give tribes 

more autonomy and limit Federal oversight of agreements and contracts with the 

tribes, there are steps USBR can take to improve oversight of its agreements with 

tribes for construction of rural water supply projects. By tracking physical project 

completion, establishing individual project completion dates, and establishing 

adequate oversight and documentation standards, USBR could help improve tribal 

accountability and increase the likelihood that these projects are completed for the

intended beneficiaries. USBR estimated that by increasing its annual funding to

$162 million, it could complete all projects 30 years sooner and for $2.5 billion 

less than at the current annual funding level of $50 million. In addition, by 

submitting an annual funding agreement with a budget reflecting the costs of 

activities listed, USBR would ensure that Congress is fully informed when it

decides on the level of funding for projects. 

Recommendations Summary

USBR responded to our draft report on June 2, 2017 (see Appendix 4). According 

to its response, USBR concurred with four of our five recommendations and 

partially concurred with one recommendation. We consider Recommendation 1 

partially resolved but not implemented; Recommendations 2, 3, and 4 resolved 

but not implemented; and Recommendation 5 resolved and implemented (see 

Appendix 5). We are referring the recommendations to the Assistant Secretary for 

Policy, Management and Budget (PMB) for tracking.

We recommend that USBR:

1. Track both the physical and financial completion percentages for tribal 

rural water supply projects.

USBR Response: USBR partially concurred with the recommendation. 

USBR stated in its response that it will develop a methodology to track the 

physical as well as the financial completion of tribal rural water projects. 

USBR, however, plans to track physical completion using a methodology 

that incorporates data on when project features are substantially complete

“as defined by their transfer from construction status to operational or 

occupied status” rather than tracking actual physical completion as a 

percentage. USBR contends there is no feasible way to track physical 

completion as a percentage because of important differences in the various 

components that make up a rural water project.

OIG Reply: We consider this recommendation partially resolved but not 

implemented because USBR’s proposed alternative to using the 

percentage of project completion method may not ensure that reasonable 
12

construction progress has been made in relation to funds expended.

Accordingly, we request that USBR provide to PMB additional 

information that describes how USBR plans to track physical completion 

so that construction progress may be measured against tribal rural water 

project expenditures from start (or from its current status) to finish. We 

will refer this recommendation to PMB to track implementation. 

2. Conduct an analysis to determine appropriate project completion dates and 

the required funding to meet those completion dates for each tribal rural 

water supply project.

USBR Response: USBR concurred with the recommendation. USBR

stated that it has already conducted the recommended analysis, and the 

results were published in USBR’s October 2014 rural water activities 

assessment report. USBR further stated that because Congress controls the 

appropriations process, the analysis was based on assumptions about 

future appropriations, and showed projected completion dates vary 

considerably as appropriation levels change.

OIG Reply: We consider this recommendation resolved based on USBR’s 

response that it has conducted the recommended analysis but not 

implemented because we found insufficient evidence to support that this 

analysis was performed. Because we could not substantiate USBR’s 

assertion that the results of its analysis of estimated project completion 

dates and required funding to meet these completion dates for each tribal 

rural water supply project were reported in the October 2014 rural water 

activities assessment report, we request that USBR provide to PMB the 

recommended analysis for each project. During our review of the 2014 

assessment report, we could only find an overall estimated completion 

date of 2035 for all tribal rural water projects based on an annual funding 

of $162 million. In addition, the awarding officer’s technical 

representatives we interviewed during our review cited uncertainty 

surrounding the amount of annual appropriations as the reason for not 

having target completion dates for individual projects. We will refer this 

recommendation to PMB to track implementation.

3. Establish procedures to identify and track project deviations, impediments, 

or delays from the expected completion dates of tribal rural water supply 

projects and coordinate with DOI budget officials to ensure adequate 

project funding requirements are included in future budget requests.

USBR Response: USBR concurred with the recommendation. USBR 

stated that it will pursue this recommendation through the work of a newly 

formed USBR Pub. L. No. 93-638 Steering Committee. The Steering 

Committee will have representation from USBR’s five regional offices 

and the Washington, DC office.
13

OIG Reply: We consider this recommendation resolved but not 

implemented. USBR’s implementation of this recommendation is 

contingent upon its analysis of estimated completion dates and required 

annual funding for each project, as described in Recommendation 2, and

the establishment and operation of USBR’s newly formed Steering 

Committee. We will refer this recommendation to PMB to track 

implementation. 

4. Develop and implement policies and procedures for awarding officer’s 

technical representatives that will ensure adequate oversight and 

documentation are standardized for all tribal rural water supply projects.

USBR Response: USBR concurred with the recommendation. USBR’s 

newly formed Steering Committee will be charged with developing 

policies and procedures for awarding officer’s technical representatives 

when conducting and documenting post-award project oversight.

OIG Reply: We consider this recommendation resolved but not 

implemented until the newly formed USBR Steering Committee develops 

and implements appropriate policies and procedures. We will refer this 

recommendation to PMB to track implementation.

5. Submit a complete annual funding agreement for Title IV tribes, including 

a budget that reflects an accurate estimate of costs of activities listed, to 

Congress.

USBR Response: USBR concurred with the recommendation. USBR 

stated that it will continue the practice begun in fiscal year 2016 of 

submitting to Congress annual funding agreements that contain funding 

amounts based on the President’s budget request, rather than using small 

placeholders.

OIG Reply: We consider this recommendation resolved and implemented

based on USBR’s response that it will discontinue its use of small 

placeholder amounts when submitting annual funding agreements to 

Congress. We request, however, that USBR provide to PMB a copy of its

fiscal year 2016 (or more recent) annual funding agreements submitted to 

Congress for Title IV tribes containing good faith estimates of project 

activity costs to substantiate USBR’s assertion of its improved practice.

We will refer this recommendation to PMB to track implementation.
14 

Appendix 1: Scope and Methodology

Scope 

We focused our review on improving the Bureau of Reclamation’s (USBR’s) 

oversight of its Pub. L. No. 93-638 rural water construction projects. Because 

USBR’s Great Plains Region (GPR) administers all of the ongoing USBR tribal 

rural water construction projects, we focused our evaluation on GPR’s agreements

with nine tribes to construct four rural water supply construction projects, one of 

which is complete.

Methodology 

We conducted our evaluation in accordance with the Quality Standards for 

Inspection and Evaluation as put forth by the Council of the Inspectors General on 

Integrity and Efficiency. We believe that the work performed provides a 

reasonable basis for our conclusions and recommendations. 

USBR provided us with tribal rural water supply project data on actual and 

estimated appropriation and expenditure amounts which is included in this report. 

We did not verify the accuracy or completeness of the dollar figures provided to 

us. 

We conducted our evaluation from March 2016 to October 2016. To accomplish 

the evaluation, we— 

reviewed pertinent laws, regulations, policies, and procedures; 

reviewed prior Office of Inspector General reports;

reviewed fiscal year (FY) 2012, 2013, and 2014 single audit reports for 

nine tribes;

obtained a list of USBR’s current Pub. L. No. 93-638 water supply 

projects; 

reviewed the rural water projects’ appropriated funds and expenditure data 

for FY 2016 and cumulatively as of September 30, 2016; 

reviewed the yearly percentage completed of the water supply projects as 

financially determined for FY 2013, FY 2014, and FY 2015; 

reviewed USBR’s October 2014 Rural Water Assessment Report, which 

contains projected completion dates using current Federal funding levels; 

reviewed USBR’s budget submission to the Office of Management and 

Budget for FY 2016 and other data related to rural water supply project 

funding; 

reviewed USBR’s tribal rural water project files;

visited USBR’s Headquarters Office and Native American International 

Affairs Office (NAIAO) in Washington, DC; regional office in Billings, 

MT; and the Federal Center Field Office in Denver, CO; 
15 

visited the U.S. Department of the Interior’s (DOI’s) Office of Acquisition 

and Property Management in Washington, DC; 

visited the Bureau of Indian Affairs’ (BIA’s) Office of Self-Governance in 

Washington, DC; 

interviewed officials at USBR Headquarters Office, NAIAO, GPR, and 

Denver Federal Center; 

interviewed field office personnel in Billings, MT, Bismarck, ND, and 

Pierre, SD;

interviewed DOI and BIA officials; and

obtained legal advice from our Office of General Counsel.
16

Appendix 2: Prior Audit Coverage

The Offices of Inspector General (OIGs) for U.S. Department of the Interior 

(DOI) and the U.S. Department of Justice (DOJ) have recently reported 

significant findings regarding the Bureau of Reclamation’s (USBR’s) rural water 

supply projects. These OIGs have identified over $16 million in questioned costs 

due, in part, to an absence of internal controls, inadequate accounting systems, 

and inaccurate financial reporting. In addition, $3.5 million in USBR funds was 

misapplied and concealed through false financial reporting. Also, DOI OIG 

previously identified the need for USBR to establish policies and procedures to 

provide consistent oversight, establish performance measures for rural water 

projects, and adopt industry best practices. 

“Audit of Contract Nos. A13AV00621 and A12AV00769/A15AV00265 

Between the Bureau of Indian Affairs and the Lower Brule Sioux Tribe” 

Report No. 2015-ER-069-A

In 2016, DOI OIG completed an audit of costs incurred by the Lower Brule Sioux 

Tribe in Lower Brule, SD, on Contract Nos. A13AV00621 and 

A12AV00769/A15AV00265 with the Bureau of Indian Affairs (BIA). 

OIG identified $385,127 in unallowable and questioned costs. The questioned 

costs that were identified included unsupported payments to related parties and 

vendors, unsupported internal transactions in the tribe’s accounting system, and 

unallowable payments to vendors. In addition, OIG found that BIA did not 

adequately oversee the contracts in accordance with Federal laws and regulations 

and BIA guidelines, resulting in the tribe claiming costs that were unsupportable 

and unallowable. 

“Audit of Cooperative Agreement No. R95AV60020 Between the Bureau of 

Reclamation and the Lower Brule Sioux Tribe”

Report No. 2015-ER-069 

In 2016, DOI OIG completed an audit of costs incurred by Lower Brule Sioux 

Tribe on Cooperative Agreement No. R95AV60020 with USBR. USBR issued 

the agreement for operation, maintenance, and administrative activities associated 

with the Lower Brule Rural Water System, which serves tribal and nontribal 

customers in southwestern South Dakota. 

OIG identified a total of $1,440,748 in questioned costs, as well as the need for 

increased USBR oversight of the agreement. Overall, inadequate internal controls 

and inadequate oversight by USBR resulted in the tribe claiming costs that were 

unsupported, unallowable, and unreasonable.
17 

“Audit of the Office of Justice Programs Multi-Purpose Grants Awarded to 

the Lower Brule Sioux Tribe Lower Brule, South Dakota” 

Report No. GR-60-16-005 

In 2016, DOJ OIG completed an audit of grants awarded to the Lower Brule 

Sioux Tribe. The audit found that the tribe did not comply with essential award 

conditions related to grant expenditures, award special conditions, budget 

management, and program performance. Specifically, the tribe: (1) expended 

funds without prior approval, (2) paid for unbudgeted positions with Federal 

funds, (3) did not maintain adequate documentation related to performance, 

(4) exceeded the allowable indirect cost rates, (5) exceeded the 10 percent rule for 

movement of funds between approved budget categories without the required 

approval, and (6) used Federal funds to pay for unallowable and unsupported 

transactions totaling $1,398,387. OIG made seven recommendations to improve 

the tribe’s management. 

“Audit of Crow Tribe Accounting System and Interim Costs Claimed Under 

Agreement Nos. R11AV60120 and R12AV60002 with the Bureau of 

Reclamation” 

Report No. ER-CX-BOR-0010-2014 

In 2015, DOI OIG completed an audit of the Crow Tribe’s accounting system and 

associated interim costs under Agreement Nos. R11AV60120 and R12AV60002 

with USBR. OIG identified $400,542 in unsupported costs and $75,857 in 

ineligible costs, for a total of $476,399 in questioned costs, and made 12 

recommendations to USBR to assist the tribe in improving its accounting system, 

including— 

work with the tribe to develop a system for identifying all program income 

and reporting it on an SF-425 Quarterly Financial Report; 

implement internal controls and hire qualified individuals in order to 

complete and submit required reports on time; 

develop consistent and accurate budgets that can be used to monitor costs 

throughout the life of the projects; and 

update the policies and procedures manual. 

“Memorandum – Insufficiency of Chippewa Cree Construction Corporation 

Audited Financial Statements, September 30, 2013” 

In 2015, DOI OIG issued a memorandum notifying USBR’s Great Plains Region 

that the Chippewa Cree Construction Corporation was not in compliance with the 

requirements set forth in Office of Management and Budget (OMB) Circular A133. Specifically, the corporation’s audited financial statements for the period 

ending September 30, 2013, failed to note that $3.5 million in USBR funds were 

misapplied and subsequently repaid or that the tribe filed false SF-425s to conceal 

the misapplication. 
"Audit of Bureau of Reclamation Funding Agreements with Chippewa Cree 

Construction Corporation: RlOA V60025 and 06NA602127" 

Report No. C-CX-BOR-0010-2013 

ill 2013, DOI OIG completed an audit of costs claimed by the Chippewa Cree 

Construction Cmporation for Annual Funding Agreement RlOAV60025 and 

Conti·act No. 06NA602127. Of the $52,729,482 in claimed costs, OIG identified 

$11 ,739,744 in unsupported costs and $1,174,801 in ineligible costs, totaling 

$12,914,545 in questioned costs with a recommendation to resolve the questioned 

costs. 

"Management Advisory of Investigative Results for 

Case No. OI-SD-09-0537-1" 

ill 2012, DOI OIG issued a management advisory concerning the embezzlement 

of USBR and Environmental Protection Agency (EPA) funds awarded to the Mni 

Sose illte1t ribal Water Rights Coalition, Rapid City, SD. The investigation 

identified a roximatel $156,000 in USBR and EPA funds that coalition 

officer 

The investigation identified significant operating deficiencies within USBR 

relating to its internal conh'ols over financial repo1ting. ill addition, while USBR 

staff were aware of the coalition's poor perfo1mance, absence of technical 

expe1tise, and prior misuse of Federal funds, USBR continued to award 

significant funding to them without increased monitoring. Concerns were also 

expressed over USBR' s failure to refer infonnation ofpossible waste, fraud, or 

abuse for official investigation pursuant to depaitmental regulations. 

"Recovery Oversight Advisory - U.S. Bureau of Reclamation Rural Water 

Projects" 

Report No. RO-B-USBR-0109-2010 

ill 2011, DOI OIG issued an adviso1y highlighting several significant issues with 

USBR oversight of American Recovery and Reinvestinent Act of 2009 rnral 

water projects, including an absence of policy and noncompliance with 

procedures and engineering costs, inadequate project monitoring, and serious 

acquisition issues on specific projects. OIG provided USBR with seven 

recommendations to help address these issues, including to18 
19 

develop and implement consistent policies and procedures among regions 

for oversight of Pub. L. No. 93-638 (Indian Self-Determination and 

Education Assistance Act) rural water contracts; 

direct its Great Plains Region to ensure tribal rural water contracts reflect 

the most current project scopes of work; and 

develop and implement consistent processes for regions to negotiate with 

tribes having rural water projects to ensure project fees are reasonable and 

appropriate. 

“Program Assessment Rating Tool Progress Evaluation – Bureau of 

Reclamation Rural Water Supply Projects” 

Report No. ER-RR-BOR-0002-2008 

In 2009, DOI OIG evaluated USBR’s progress in addressing recommendations 

from the Program Assessment Rating Tool review that was completed by OMB in 

2002. Based on its review, OIG noted that continued efforts were needed and 

provided eight suggestions designed to help establish appropriate performance 

measures and improve management of the rural water projects, including— 

establish performance measures and baseline data for old and new 

projects;

establish a structured review process that ensures effective cost oversight 

mechanisms are in place from project inception through construction; and

become familiar with similar rural water supply programs from the public 

or private to measure, understand, and adopt the industries’ best practices. 
20 

Appendix 3: Tribal Rural Water Supply Construction Projects

Tribal Rural Water Supply (RWS) Construction Project Funds*

RWS Project and

Supported Tribe

Year 

Authorized

Performance 

Period - $162

Million in 

Annual 

Funding

Performance 

Period - $50

Million in 

Annual 

Funding**

Total 

Estimated 

Cost

Appropriated 

Costs as of 

09/30/2016

Balance to 

Complete† 

Garrison (Indian) Project

1. Spirit Lake Tribe

2. Standing Rock Sioux

3. Three Affiliated Tribes

4. Turtle Mountain

1965 70 years 100+ years $363 $228 $135

Mni Wiconi Project‡

5. Oglala Sioux

6. Rosebud Sioux

7. Lower Brule Sioux

1988 N/A N/A 488 488 0

Fort Peck Reservation/Dry 

Prairie Project

8. Assiniboine Sioux

2000 35 years 65+ years 301 194 107

Rocky Boys/North Central 

Montana Project

9. Chippewa Cree Tribe

2002 33 years 63+ years 332 90 242

Total $1,484 $1,000 $484

* Table values were provided by USBR, are recent as of November 9, 2016, and costs are computed through fiscal year 2016. The estimated costs are 

based on October 1, 2017 pricing levels. The dollars are in millions (rounded). ** At a funding level of $50 million annually for construction, USBR estimates that the remaining projects would not be completed until well after 2065.

† Dollar figures represent total Federal construction costs including both tribal and nontribal.

‡ The Mni Wiconi Project construction is complete.
21

Appendix 4: Bureau Response

The Bureau of Reclamation’s response to our draft report follows on page 22.
lns ector 

Mikkels n . rt\ AY Actmg Comm1s er-

V v '-

  

United States Department of the Interior 

BUREAU OF RECLAMATION 

Washington, DC 20240 

LN REPLY REFER TO: 

84-27410 

3.1.3 

VIA ELECTRONIC MAIL ONLY 

MEMORANDUM 

To: Office of Inspector General 

Attn: Assistant G neral for Audits Inspections, and Evaluations 

Throughcott Cameron JUN 0 2 2017 

Acting Assistant Secretary or Water and Science 

From: Ala 31 2017 

Subject: The Bureau of Reclamation's Response to the Office oflnspector General (OIG) 

Draft Report, Improvements Needed in the Bureau of Reclamation's Oversight of 

Tribal Rural Water Projects, Report No. 2016-WR-026 

The OIG in its April 4, 2017, draft report, Improvements Needed in the Bureau of Reclamation's 

Oversight of Tribal Rural Water Projects, requested that Reclamation inform the OIG of the 

planned course of action to address and implement the recommendations in the subject report. 

The requested information is attached. 

If you have any questions or require additional information, please contact Elizabeth 

Cordova-Harrison, Director, Mission Support Organization, at 303-445-2783. 

Attachment 

22
Attachment

The Bureau of Reclamation’s Response to the 

Office of Inspector General (OIG) Draft Evaluation Report

Improvements Needed in the Bureau of Reclamation's Oversight of Tribal Rural Water Projects

Report No. 2016-WR-026 

May 2017 

General Comments: None. 

Response to OIG Recommendations 

Recommendation 1: Track both the physical and financial completion percentages for tribal 

rural water supply projects. 

Reclamation’s Response: Partially Concur. 

Reclamation will develop a methodology to track physical as well as financial completion 

of tribal rural water projects. However, because of important differences in the various 

components that make up a rural water project, there is no feasible way to track physical 

completion as a percentage. Instead, Reclamation will track physical completion using a 

methodology that incorporates data on when project features are substantially complete, 

as defined by their transfer from construction status to operational or occupied status.

 

Responsible Official: Deputy Commissioner - Operations

Target Implementation Date: July 31, 2018 

Recommendation 2: Conduct an analysis to determine appropriate project completion dates and 

the required funding to meet those completion dates for each tribal rural water supply project. 

Reclamation’s Response: Concur. 

Reclamation has already conducted the recommended analysis, the results of which 

Reclamation published in a 2014 Rural Water Assessment Report1. Because Congress 

controls the appropriations process, the analysis was based on assumptions about future 

appropriations, and showed projected completion dates vary considerably as 

appropriation levels change.

Responsible Official: Deputy Commissioner - Operations

Target Implementation Date: Actions Completed. 

 

1 https://www.usbr.gov/ruralwater/docs/Rural-Water-Assessment-Report.pdf

23
2 

Recommendation 3: Establish procedures to identify and track project deviations, impediments 

or delays from the expected completion dates of tribal rural water supply projects, and coordinate 

with Departmental budget officials to ensure adequate project funding requirements are included 

in future budget requests. 

Reclamation’s Response: Concur. 

Reclamation will be pursing this recommendation through the work of its newly formed 

PL 93-638 Steering Committee. The Steering Committee is being formed now with 

representation from across Reclamation’s five regions and the Washington Office. 

Responsible Official: Deputy Commissioner - Operations 

Target Implementation Date: July 31, 2018 

Recommendation 4: Develop and implement policies and procedures for awarding officer’s 

technical representatives that will ensure adequate oversight and documentation are standardized 

for all tribal rural water supply projects.

Reclamation’s Response: Concur. 

Reclamation will develop policies and procedures for Awarding Officials Technical 

Representatives (AOTRs) to use in conducting and documenting post-award project 

oversight This task will be performed by the newly created P.L. 93-638 Steering 

Committee, which will be charged with developing Reclamation-wide standards that 

include an appropriate level of flexibility reflecting differences among regions and 

projects, as well as limitations on Reclamation's ability to implement contract terms 

without the concurrence of the relevant tribe.

Responsible Official: Deputy Commissioner – Operations 

Target Implementation Date: July 31, 2018. 

Recommendation 5: Submit a complete annual funding agreement for Title IV tribes, including a 

budget that reflects an accurate estimate of costs of activities listed, to Congress.

Reclamation’s Response: Concur. 

Reclamation will continue the practice begun in Fiscal Year 2016 of submitting to 

Congress annual funding agreements that contain funding amounts based on the 

President's budget request, rather than using de minimus placeholders. Once final 

appropriations and funding allocations are made, Reclamation amends the annual 

funding agreement to reflect actual funding amounts, which it then reports to 

Congress in the next year's budget request. 

Responsible Official: Deputy Commissioner – Operations 

Target Implementation Date: Actions Completed. 

24
25

Appendix 5: Status of 

Recommendations

Recommendation Status Action Required

1 Partially resolved; 

not implemented

We will refer this 

recommendation to the 

Assistant Secretary for Policy, 

Management and Budget (PMB) 

to track implementation. We 

request that the Bureau of 

Reclamation (USBR) provide 

PMB with additional information 

describing how USBR plans to 

track physical completion so that 

construction progress may be 

measured against tribal rural 

water project expenditures from 

start to finish.

2 Resolved; not 

implemented

We will refer this 

recommendation to PMB to 

track implementation. We 

request that USBR provide PMB 

with the results of its analysis of 

estimated project completion 

dates and required funding to 

meet these completion dates for 

each tribal rural water supply 

project.

3 Resolved; not 

implemented

We will refer this 

recommendation to PMB to 

track implementation. USBR’s 

implementation of this 

recommendation is contingent 

upon its implementation of 

Recommendation 2 and the 

establishment and operation of 

USBR’s newly formed Steering 

Committee.

4 Resolved; not 

implemented

We will refer this 

recommendation to PMB to 

track implementation.
26

Recommendation Status Action Required

5 Resolved; 

implemented

We will refer this 

recommendation to PMB to 

track implementation. We 

request that USBR provide PMB 

with a copy of its most recent 

annual funding agreements 

submitted to Congress for 

Title IV tribes containing good

faith estimates of project activity 

costs to substantiate USBR’s 

assertion of its improved 

practice.
Report Fraud, Waste,

and Mismanagement

Fraud, waste, and mismanagement in

Government concern everyone: Office 

of Inspector General staff, departmental 

employees, and the general public. We 

actively solicit allegations of any 

inefficient and wasteful practices, fraud, 

and mismanagement related to 

departmental or Insular Area programs 

and operations. You can report 

allegations to us in several ways.

 By Internet: www.doioig.gov

 By Phone: 24-Hour Toll Free: 800-424-5081

Washington Metro Area: 202-208-5300

 By Fax: 703-487-5402

 By Mail: U.S. Department of the Interior

Office of Inspector General

Mail Stop 4428 MIB

1849 C Street, NW.

Washington, DC 20240