GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

United States General Accounting Office

Washington, DC 20548

Accounting and Information

Management Division

B-285130

August 14, 2000

The Honorable Ben Nighthorse Campbell

Chairman

Committee on Indian Affairs

United States Senate

Subject: Bureau of Indian Affairs: Use of Highway Trust Fund Resources

Dear Mr. Chairman:

This letter summarizes the information we provided during a July 18, 2000, briefing to

your Committee’s staff. In your April 4, 2000, letter to the Comptroller General you

had asked us to analyze the Bureau of Indian Affairs’ (BIA) responses to Committee

inquiries regarding BIA’s use of federal Highway Trust Fund (HTF) money for Indian

reservation roads.

In your letter, you asked us to determine

• what percentage of fiscal years 1999 and 1998 HTF contract authority available to

BIA was obligated for (1) management costs directly related to specific projects

within a program for construction, repair, and improvement of roads and

(2) program management and oversight costs not directly related to specific

projects;

• whether BIA spent more than 6 percent of the contract authority allocated to its

Midwest and Western Regional Offices1 on non-project-related program

management costs for those offices;

• whether the annual 6 percent statutory limitation on the use of HTF contract

authority for road program management costs applies only to non-project-related

management costs; and

• whether the project-related costs that BIA bears for individual tribes should be

paid from HTF contract authority or from BIA’s annual appropriations for

managing Indian programs or construction.

The enclosed briefing slides highlight the results of our work and the information we

provided during the briefing.

1

In September 1999, BIA changed its field office structure. The Minneapolis Area Office became the

Midwest Regional Office and the Phoenix Area Office became the Western Regional Office.
B-285130

Page 2 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

The purpose of the Indian Reservation Roads program is to provide safe and adequate

transportation and public road access to and within Indian reservations, Indian lands,

and communities for Native Americans and others while contributing to economic

development, self-determination, and employment of Native Americans. BIA

develops and submits to the Federal Highway Administration (FHWA) a priority

listing of projects for approval, and FHWA transfers yearly HTF contract authority to

BIA for road projects. BIA’s use of HTF resources falls into four categories: project

construction, project-related management, non-project-related program management,

and tribal transportation planning. The project construction category is used for “on

the ground” activities and covers such costs as construction materials, construction

labor, and equipment usage. The project-related management category covers

nonconstruction costs for activities directly related to a specific project, such as

preliminary and construction engineering and contract administration. The nonproject-related program management category is used for costs not directly related to

any one project but necessary to the program, such as developing and approving

design standards and maintaining the bridge database. The tribal transportation

planning category is used for planning by Indian tribal governments, including

activities such as the Tribal Transportation Improvement Program and the

measurement of traffic.

Summary: BIA’s Use of HTF Resources

We found that BIA’s use of HTF contract authority was within statutory limitations.

Of the HTF contract authority available to BIA in fiscal years 1999 and 1998–

approximately $261 million and $218 million, respectively–about 5.7 percent in each

year was used for program management and oversight costs not directly related to

any one project but necessary to the program. About $43 million in fiscal year 1999

and $46 million in fiscal year 1998 was used for project management costs, which are

nonconstruction costs directly related to specific projects. These costs represented

about 17 percent and 21 percent, respectively, of the contract authority available to

BIA in those years.

While BIA as a whole used about 5.7 percent of available HTF contract authority for

nonproject program management and oversight costs in both fiscal years 1999 and

1998, cost percentages varied at its Midwest and Western Regional Offices, the two

BIA offices for which you requested information. The Midwest Regional Office’s nonproject-related program management costs did not exceed 6 percent of its allocated

contract authority in either fiscal year 1999 (4.0 percent) or 1998 (5.1 percent). While

this was also the case for the Western Regional Office for fiscal year 1999 (5.2

percent), that office used about 11.5 percent of available contract authority for nonproject-related program management costs for fiscal year 1998.

Based on applicable legislative language and the history of the 6-percent provision

limiting the use of available federal HTF contract authority for road program

management costs, we agree with BIA’s interpretation that this limitation applies only

to the total amount of the HTF contract authority BIA receives, not separately to each

regional office and its allocated contract authority. Further, we agree with BIA’s view

that the 6-percent limitation applies only to non-project-related costs of road program
B-285130

Page 3 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

administration as opposed to any other cost category for which BIA uses HTF

resources.

Finally, we agree with BIA’s position that it is proper to use HTF budget authority to

cover project-related management costs it incurs, rather than using its construction

appropriations or Indian program appropriations. We have found no indication in the

law or legislative history that the Congress intended otherwise or that the Congress

included these costs in calculating BIA’s annual appropriations.

Scope and Methodology

In order to analyze BIA’s use of HTF resources, we interviewed BIA and FHWA

officials and obtained and analyzed program, budget, accounting, and cost

information for fiscal years 1999 and 1998. As agreed with your Committee’s staff, we

relied on the information provided by BIA and FHWA and did not determine the

propriety of transactions, verify the validity or reasonableness of cost data, or

determine the appropriateness of cost categorizations.

Regarding questions on BIA’s interpretation of legal provisions governing its use of

HTF contract authority, we requested written responses from the Department of the

Interior’s Solicitor; researched and analyzed applicable laws; and compared our legal

analysis to Interior’s responses.

We conducted our work from April 2000 through July 2000 in accordance with

generally accepted government auditing standards. We requested comments on our

draft briefing slides from BIA officials. They agreed with our findings and offered

some clarifying comments that we incorporated into our slides as appropriate.

As agreed with your office, unless you announce the contents of this letter earlier, we

plan no further distribution until 10 days from the date of this letter. At that time, we

will send copies Senator Daniel K. Inouye, the Ranking Minority Member of your

Committee; the Honorable Bruce Babbitt, the Secretary of the Interior; and other

interested parties. Copies will be made available to others upon request.

If you have any questions about this letter or the earlier briefing, please contact me at

(202) 512-9508, or Mike Koury, Assistant Director, at (202) 512-3405. Key

contributors to this assignment were Charles Norfleet, Bert Berlin, and Wendy Albert.

Sincerely yours,

Linda M. Calbom

Director, Resources, Community,

and Economic Development, Accounting

and Financial Management Issues

Enclosure
Enclosure

Page 4 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

July 18, 2000, Briefing to the Senate Committee on Indian Affairs

1

Accounting and Information Management

Division and the Office of the General Counsel

Briefing for the Senate Committee on Indian Affairs

Review of the Bureau of Indian Affairs’

Use of Federal Highway Trust Fund Resources

July 18, 2000
Enclosure

Page 5 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

2

Contents

 Objectives

 Scope and Methodology

 Background

 Financial Issues

 Legal Issues
Enclosure

Page 6 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

3

Objectives

 Determine the percentage of FY1999 and FY1998 Federal

Highway Trust Fund (HTF) contract authority available to

the Bureau of Indian Affairs (BIA) that was obligated for (a)

management costs directly related to specific projects

within a program for construction, improvement, and repair

of roads, and (b) program management and oversight costs

not directly related to specific projects

 Determine if BIA spent more than 6 percent of the contract

authority allocated to its Midwest (Minneapolis) and

Western (Phoenix) regional (area) offices on non-project

related program management costs for those offices
Enclosure

Page 7 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

4

Objectives

 Determine whether the annual 6 percent statutory limitation

on the use of HTF contract authority for road program

management costs applies only to non-project related

management costs

 Determine if the project-related costs that BIA bears for

individual tribes should be paid from HTF contract authority

or from BIA’s annual appropriations for managing Indian

programs or construction
Enclosure

Page 8 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

5

Scope and Methodology

 Conducted our review in accordance with generally

accepted government auditing standards

 Researched and analyzed applicable laws

 Requested written responses from the Department of the

Interior’s Solicitor, which we received July 12, 2000

 Interviewed BIA and Federal Highway Administration

(FHWA) officials
Enclosure

Page 9 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

6

Scope and Methodology

 Obtained and analyzed FY99 and FY98 program, budget

and accounting information

 Obtained and analyzed BIA and FHWA FY99 and FY98

cost information

 Did not determine the propriety of transactions

 Did not verify the validity or reasonableness of cost data

 Did not determine the appropriateness of cost categorizations
Enclosure

Page 10 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

7

Background -- BIA’s Indian

Reservation Roads (IRR) Program

 The purpose of the IRR program is to provide safe and

adequate transportation and public road access to and

within Indian reservations, Indian lands and communities for

Native Americans and others while contributing to economic

development, self-determination, and employment of Native

Americans

 IRR system consists of over 25,000 miles of BIA and tribal-owned

roads and over 25,000 miles of state, county and local government

public roads
Enclosure

Page 11 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

8

Background -- BIA and FHWA Roles

 BIA and FHWA jointly develop highway design,

construction, maintenance, and safety standards for Indian

reservation roads

 BIA develops and submits to FHWA a priority listing of

projects for approval

 FHWA transfers yearly HTF obligational (contract) authority

to BIA for projects for which BIA has program responsibility
Enclosure

Page 12 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

9

Background -- BIA and FHWA Roles

 On projects that BIA undertakes, it furnishes FHWA reports

such as

 Number of projects and miles worked on

 Funds obligated and expended
Enclosure

Page 13 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

10

Background -- BIA’s Process for

Using HTF Contract Authority

 To distribute contract authority for construction activities to

its 12 regional offices, BIA applies a Relative Need formula

that considers

 population of the reservation being served

 vehicle miles traveled on an existing road to be repaired or expected

to be traveled on a proposed road

 cost to build a new road or improve an existing road to adequate

design standards established by FHWA and BIA

 At the start of each fiscal year, BIA allocates to its 12 regional offices

portions of the offices’ available contract authority for annual

management costs and transportation planning
Enclosure

Page 14 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

11

Background -- BIA’s Cost Categories

for Using HTF Contract Authority

 Project construction: actual “on the ground” costs for

 Construction materials

 Construction labor and equipment usage

 Project related management: non-construction costs for activities

directly related to a specific project such as

 Preliminary engineering and contract administration

 Construction engineering and contract administration

 Non-project related program management: costs not directly

related to any one project but necessary to the program, such as

 Developing and approving design standards

 Maintaining the bridge database

 Funding BIA’s Division of Transportation Central Office operations
Enclosure

Page 15 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

12

Background -- BIA’s Cost Categories

for Using HTF Contract Authority

 Tribal transportation planning: planning by Indian tribal

governments including activities such as

 Tribal Transportation Improvement Program

 Measurement of traffic

 Transit planning

 Public involvement
Enclosure

Page 16 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

13

Financial Issues -- FY99 and FY98 HTF Contract

Authority Available To and Used by BIA

($ in 000s)

Category FY99 FY98

Contract authority available $261,261 $217,871

 Includes current year Advice of

Allotments and prior year amounts

carried forward

Total BIA obligations $254,771 $215,747

 Obligated during fiscal year

Percentage contract authority used 97.5% 99.0%

 Unused portions can be carried forward

for up to three years
Enclosure

Page 17 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

14

$ in 000s % Contract Authority

Project construction $192,641 73.7 %

Project related management 42,926 16.5

Non-project related management 15,001 5.7

Tribal transportation planning 4,203 1.6

FY99 TOTAL $254,771 97.5 %

Financial Issues -- Breakdown of FY99

BIA Obligations
Enclosure

Page 18 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

15

Financial Issues -- Breakdown of FY98

BIA Obligations

$ in 000s % Contract Authority

Project construction $153,325 70.4 %

Project related management 45,911 21.0

Non-project related management 12,342 5.7

Tribal transportation planning 4,169 1.9

FY98 TOTAL $215,747 99.0 %
Enclosure

Page 19 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

16

Financial Issues -- Midwest Regional (Minneapolis) Office

Contract Authority and Non-Project Related Management

Costs

($ in 000s)

Category FY99 FY98

Contract authority $13,776 $9,859

Non-project related management $548 $499

(excludes project related costs of $205,000 and $279,000,

respectively, that had been recorded in the accounting

system as non-project related management costs)

Percentage contract authority used for

non-project related management costs 4.0% 5.1%
Enclosure

Page 20 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

17

Financial Issues -- Western Regional (Phoenix) Office

Contract Authority and Non-Project Related Management

Costs

($ in 000s)

Category FY99 FY98

Contract authority $30,508 $8,991

Non-project related management $1,572 $1,037

Percentage contract authority used

for non-project related management

costs 5.2% 11.5%
Enclosure

Page 21 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

18

Legal Issues -- 6 Percent Limitation

 BIA interprets the 6 percent limitation as applying only to

non-project related program management costs

 FY99 and FY98 appropriations acts’ provisions say

 “Provided further, That not to exceed six percent of contract

authority available to the Bureau of Indian Affairs from the Federal

Highway Trust Fund may be used to cover the road program

management costs of the Bureau.”
Enclosure

Page 22 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

19

Legal Issues -- 6 Percent Limitation

 History of the 6 percent limitation

 Surface Transportation Assistance Act of 1982 funds IRR program out of

HTF

 FY84 road construction appropriation reduced to $4,000,000 representing

only administrative costs

 FY85 BIA road construction appropriation: 5 percent limitation of contract

authority for roads management costs and construction supervision

 FY90 BIA construction appropriation: 6 percent limitation of contract

authority for roads management costs, thus removing construction

supervision costs from the limitation
Enclosure

Page 23 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

20

Legal Issues -- 6 Percent Limitation

 GAO agrees with BIA’s interpretation based on applicable

legislative language and the history of the 6 percent

provision
Enclosure

Page 24 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

21

Legal Issues -- Using Contract

Authority for Project-Related Costs

 BIA has taken the position that it is proper to use HTF

contract authority to cover project-related management

costs it incurs rather than using its construction

appropriations or Indian program appropriations

 GAO agrees with BIA’s position

 GAO found no indication in the law or in the legislative history that

the Congress intended otherwise

 GAO found no indication that the Congress included these costs in

calculating BIA’s annual appropriations
Enclosure

Page 25 GAO/AIMD-00-285R BIA’s Use of Highway Trust Fund Resources

22

Legal Issues -- Applying the 6 Percent

Limitation to BIA Regional Offices

 BIA interprets the legislative language to mean that the 6

percent limitation applies only on a BIA-wide basis to the

total amount of the HTF contract authority it receives, and

that the limitation does not apply separately to each

regional office and that regional office’s contract authority

 GAO agrees that the 6 percent limitation applies BIA-wide

only, not on a region-by-region basis

(913896)