Army Corps of Engineers: Improved Planning and Financial Management Should Replace Reliance on Reprogramming Actions to Manage Project Funds
Published: 2005-09-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: In recent years, the Army Corps of Engineers (Corps) has had more work to accomplish than funds available. The Congress has supported the Corps' need to reprogram funds to complete projects. Reprogramming allows the Corps to move funds from projects that can not use available funds to those that can. However, concerns have been expressed about whether the Corps reprogrammed funds in accordance with applicable guidance. GAO determined for fiscal years 2003 and 2004 (1) the amount of funds reprogrammed; (2) if the Corps followed reprogramming guidance; (3) why the Corps reprogrammed funds; and (4) how effective the Corps' reprogramming strategy was in managing funds.
section_title: What GAO Found
paragraphs: In fiscal years 2003 and 2004, the Corps reprogrammed funds over 7,000 times and moved over $2.1 billion among projects within the investigations and construction appropriations. Moreover, funds were moved in and/or out of nearly two thirds of the projects within these appropriation accounts. Comparable data for the operation and maintenance appropriation could not be provided by the Corps. GAO reviewed a random sample of 271 general investigation, construction general, and operation and maintenance projects and found that the Corps generally reprogrammed funds in accordance with its guidance. However, in eight cases, the Corps' reprogramming actions did not comply with the guidance because it either exceeded established reprogramming thresholds and/or did not provide the appropriate notification to the Congress. Although in most cases the Corps reprogrammed funds according to its guidance, this guidance is written in such a way that most reprogramming actions do not count as reprogramming actions toward the congressional notification thresholds, thereby diminishing the Congress' knowledge and oversight of how the Corps spends appropriated funds. In many cases, the Corps reprogrammed funds from projects that experienced unforeseen delays to projects that could make use of additional funds. On the other hand, reprogramming actions were conducted that were inconsistent with the Corps' reprogramming guidance, such as to achieve a Corps goal that all projects carry no funds into the next fiscal year. Some of these movements were as small as 6 and 7 cents. Corps guidance states that small reprogramming actions are inconsistent with sound project management and increase its administrative burden. Funds were also moved into projects that had a reported "need" and then were subsequently removed because they were suddenly "excess"--sometimes on the same day or within a few days or weeks. Such movements appear to serve little useful purpose and create an administrative burden for the Corps because of the time and effort needed to accomplish these movements. The Corps has come to rely on reprogramming as its primary method to manage project funds. The use of reprogramming is no longer used as a tool when emergencies and unforeseen circumstances occur but instead has become the regular, recurring financial management practice. Finally, the use of numerous reprogramming actions to manage project funds, without a set of formal Corps-wide priorities, has resulted in an uncoordinated movement of funds between projects, with little consideration to pending needs or long-term planning.

section_title: Letter
paragraphs: Each year, the Congress provides funding to the U. S. Army Corps of  Engineers (Corps) for hundreds of investigations, construction, and  operation and maintenance projects for the nation’s water resources.  During fiscal year 2004, the Corps’ budget for these types of projects was  more than $3.8 billion. The conference report accompanying the bill that  appropriates the funds includes a specific amount of funding for each  project, in effect providing the Corps with direction for accomplishing  water resource projects. However, the Corps may reprogram funds among  the projects. Reprogramming is generally defined as the movement of  funds among projects within an appropriation account and is permitted to  provide agencies with the flexibility needed to manage appropriated funds.
The authority to reprogram funds in and out of projects is implicit in an  agency's responsibility to manage its funds, and it has evolved largely in the  form of informal nonstatutory agreements between agencies and their  congressional oversight committees. Although an agency’s ability to  reprogram funds may be restricted by statute, more frequently  congressional guidance on the extent and nature of an agency’s  reprogramming authority is provided in committee reports that accompany  appropriation bills. In the case of the Corps, the agency had developed  internal reprogramming guidance, based on previous congressional  direction, in 1995 that was in effect until May 2004. At that time, the Corps  received reprogramming direction from both the Senate and the House  Appropriations Committees. Starting on May 27, 2004, the Corps’  reprogramming procedures were based on direction that was subsequently  included in the House of Representatives report on the fiscal year 2005  appropriations bill. The Corps’ reprogramming guidance–both before and  after May 27, 2004–required notifying the Congress of the Corps’ intention  to move funds when reprogrammings exceeded specific thresholds. The  thresholds vary by type of project and are set as a specific dollar amount  and/or a percentage of project funding. The May 27, 2004, guidance was  somewhat more restrictive, although still permitting the Corps to have  considerable flexibility in reprogramming funds between projects.
In this context, for fiscal years 2003 and 2004, we determined (1) how much  funding the Corps moved within its Civil Works appropriations, (2) the  extent to which the Corps followed applicable guidance in moving funds  between projects, (3) the reasons for Corps’ reprogramming actions during  fiscal years 2003 and 2004, and (4) how effective the Corps’ reprogramming  strategy was in managing appropriated funds. In conducting our work, we  reviewed the Corps’ overall reprogramming activity within the  investigations, construction, and operation and maintenance  appropriations during fiscal years 2003 and 2004. We selected a random  sample of 271 investigations, construction, and operation and maintenance  projects from these 2 years and reviewed each reprogramming activity,  determined why funds were reprogrammed, and whether funds were  reprogrammed in accordance with the guidance in effect at the time. We  also held discussions with program and project managers to obtain further  details about the projects included in our sample and about the advantages  and disadvantages of the Corps’ use of reprogramming to manage project  funds. We conducted our review from December 2004 through June 2005 in  accordance with generally accepted government auditing standards, which  included an assessment of data reliability and internal controls. Appendix I  contains a more detailed discussion of our scope and methodology.
subsections: section_title: Background
paragraphs: The Corps’ Civil Works program is responsible for investigating,  developing, and maintaining the nation’s water and related environmental  resources. In addition, the Civil Works program also provides disaster  response as well as engineering and technical services. The Corps’  headquarters is located in Washington, D.C., with eight regional divisions,  and 38 districts that carry out its domestic civil works responsibilities.
Each year, the Corps’ Civil Works program receives funding through the  Energy and Water Development Appropriations Act. The act normally  specifies a total sum for several different appropriation accounts, including  investigations, construction, and operation and maintenance, to fund  projects related to the nation’s water resources. The funds appropriated to  the Corps are “no year” funds, which means that they remain available to  the Corps until spent. Table 1 shows the appropriations received in fiscal  years 2003 and 2004 for the investigations, construction, and operation and  maintenance accounts.
The conference report accompanying the Energy and Water Development  Appropriations Act specifically lists individual investigations, construction,  and operation and maintenance projects and the amount of funds  designated for each project. In effect, this provides the Corps with its  priorities for accomplishing its water resource projects. In recent years, the  Congress has appropriated fewer funds than the sum of the amount  designated to individual projects in the conference report. The difference  between the total amount designated for projects in the conference report  and the full appropriation is known as savings and slippage. As directed by  the Congress, the Corps reduces the conference report amount for each  project by a percentage to allow for savings and slippage and then releases  the entire amount of each projects’ funding to the districts’ project  managers for executing projects. However, once the Corps has allotted the  funds to specific projects, the Corps may reprogram the funds to other  projects.
subsections: section_title: Reprogramming Authority
paragraphs: Reprogramming is the shifting of funds from one project or program to  another within an appropriation or fund account for purposes other than  those contemplated at the time of appropriation. A reprogramming  transaction changes the amount of funds provided to at least two projects– the donor project and the recipient project. However, more than two  projects are often involved in a single reprogramming action. For example,  in an effort to make effective use of available funding, the Corps may move  funds from a construction project that has slipped due to inclement  weather and reprogram the funds to one or more construction projects that  are ahead of schedule or experiencing cost overruns.
The authority to reprogram funds is implicit in an agency’s responsibility to  manage its funds; no specific additional statutory authority is necessary.  While there are no governmentwide reprogramming guidelines, the  Congress exercises control over an agency’s spending flexibility by  providing guidelines or nonstatutory instructions on reprogramming in a  variety of ways. For example, some reprogramming and reporting  guidelines have evolved from informal agreements between various  agencies and their congressional oversight committees. Reprogramming  guidelines frequently involve some form of notification to the House and  Senate appropriations committees prior to the action. (In this report,  notification to the House and Senate appropriations committees will be  referred to as congressional notification or notifying the Congress.) In  addition to notification, reprogramming arrangements sometimes also  provide for committee approval prior to the movement of funds that  exceed certain thresholds.
The Corps’ reprogramming guidelines have evolved over nearly 50 years,  stemming from direction provided to the Corps through congressional  reports and informal agreements with the House and Senate  Appropriations Committees. In 1995, the Corps published revised internal  reprogramming guidance based upon previous congressional direction  (U.S. Army Corps of Engineers, Engineering Regulation ER 11-2-201).  These reprogramming guidelines set forth procedures and polices on  reprogramming actions for civil works activities under investigations,  construction, and operation and maintenance appropriations titles, among  others.
Under the 1995 guidance, the Corps was permitted to reprogram  construction funds up to 15 percent of the base amount of a project for any  fiscal year. The base amount is the amount listed in the conference report  plus any funds carried in from previous fiscal years and adjusted for funds  sequestered, deferred, rescinded, or released from deferral. Any  reprogramming action(s) that exceeded the 15 percent threshold required  the Corps to coordinate its intentions with both the House and Senate  Appropriations Committees. There were two exceptions to the 15 percent  limitation. The Corps may reprogram up to $300,000, without regard to  percentage, for projects on which the amount available for the fiscal year is  $2 million or less, and the Corps may move up to $5 million per  construction project without regard to the percentage limitation when the  increased requirement results from a settled contractor claim, increased  contractor earnings due to accelerated rate of operations, or real estate  deficiency judgments.
For investigations projects, the Corps was permitted to reprogram up to  $25,000 for projects that have a base amount of $25,000 or less. When the  base amount exceeded $25,000, the reprogramming authority was 100  percent of the base up to $50,000 and 25 percent of the increment over  $50,000, not to exceed a total reprogramming of $150,000. Any  reprogramming action(s) that exceeded these thresholds required the  Corps to coordinate with the Congress its intention to reprogram funds.  The 1995 guidance does not outline specific thresholds for congressional  notification in the operation and maintenance appropriation. According to  Corps officials, the agency interpreted the guidance as allowing unlimited  reprogramming authority without congressional notification thresholds for  operation and maintenance projects.
During the spring of 2004, the Corps received new reprogramming  direction from both the House and Senate Appropriations Committees. On  May 27, 2004, the Corps issued an internal memorandum changing the  Corps’ existing reprogramming guidance to reflect direction that was  subsequently provided in the House of Representatives Committee on  Appropriations Report accompanying the 2005 Energy and Water  Development Appropriation Bill (House Report 108-554 accompanying H.R.  4614). The new guidance required the Corps to notify the Congress for any  intended single reprogramming action on construction and operation and  maintenance projects that exceeded $300,000 plus 20 percent of the base  amount and to obtain approval on any project’s cumulative reprogramming  actions that exceeded $4 million. The base amount under House Report  108-554 was defined as the amount appropriated for the project or program  in the budget plus any amounts carried over from previous fiscal years or  reprogrammed during the budget year. For investigations, the Corps was  the required to notify the Congress for any intended single reprogramming  action that exceeded $50,000 plus 25 percent of the base and to obtain  approval on a project’s cumulative reprogramming actions that exceeded  $250,000.
The Corps followed this guidance until the end of November 2004. At that  time, the Corps again received new direction from the Congress, contained  in the conference report accompanying the 2005 Energy and Water  Development Appropriation Act. These guidelines provided cumulative  reprogramming percentage thresholds for investigations, construction, and  operation and maintenance accounts. The guidelines further required the  Corps to provide quarterly reports notifying the Congress of  reprogramming actions that fell between certain thresholds and required  congressional approval for reprogramming actions that exceeded an upper  threshold limit. The guidelines also allowed certain categories of  reprogramming actions to be excluded from counting toward  congressional notification thresholds. Appendix II shows the 1995 and 2004  Corps reprogramming guidance.
section_title: The Corps Reprogrammed Significant Amounts of Funds among Hundreds of Projects
paragraphs: In fiscal years 2003 and 2004, the Corps reprogrammed funds over 7,000  times (3,415 actions in fiscal year 2003 and 3,641 actions in fiscal year 2004)  among investigations and construction projects. Sixty-three percent (988 of  1,578) of fiscal year 2003 and 64 percent (998 of 1,533) of fiscal year 2004  investigations and construction projects had funds either moved in and/or  out. On average, of the projects that had at least one reprogramming, there  were approximately 3.6 (3.5 in fiscal year 2003 and 3.6 in fiscal year 2004)  actions per project. Corps-wide reprogramming data on operation and  maintenance projects are not available.
In terms of dollars, in fiscal years 2003 and 2004, the Corps reprogrammed  approximately $2.1 billion of the $3.7 billion available for investigations and  construction project funds. Additionally, the average amount of funds  moved per reprogramming action was approximately $298,026 ($306,133 in  fiscal year 2003 and $290,423 in fiscal year 2004) for investigations and  construction projects.
Because the Corps could not provide us with Corps-wide reprogramming  data for operations and maintenance projects, we reviewed the 107  operations and maintenance projects in our sample and found that the  Corps reprogrammed funds 459 times for this sample, which averaged to  4.29 reprogramming actions per project. These 459 reprogramming actions  totaled approximately $31 million, and the average amount of funds moved  per operation and maintenance reprogramming action was $67,592.
section_title: The Corps Followed Internal Guidance That Allowed Extensive Reprogrammings Without Congressional Notification
paragraphs: For the majority of the reprogrammings that we reviewed as part of our  sample of 271 projects, the Corps followed the reprogramming guidance it  had in place at the time (under both the Corps’ 1995 guidance and the May  2004 guidance). In the few instances where the guidance was not followed,  most involved the Corps failing to notify the Congress when it intended to  reprogram funds that would exceed certain limits. The Corps’  reprogramming guidance allowed most reprogrammings to be categorized  as fund movements that did not count toward the congressional  notification thresholds. As a result, the Corps was able to follow its  reprogramming guidance, but still conduct a large number of fund  movements (that represented a major deviation from the funding direction  the Congress provided for the projects in its conference report) and not  have to inform the Congress of the changes and the reason for the changes.
subsections: section_title: The Corps Generally Followed Its Reprogramming Guidance
paragraphs: In our sample of 271 projects, reprogramming actions related to only 8  projects did not follow the reprogramming guidance in place at the time  when the funds were moved. For these 8 projects, there were a total of 12  movements of funds that did not conform to the reprogramming guidance.  One of these movements occurred during the period from October 1, 2003,  to May 26, 2004, when the Corps’ reprogramming guidance was contained  in the 1995 guidance. The remaining 11 movements occurred after May 26,  2004, when the Corps’ guidance was revised in accordance with the  direction provided in House Report 108-554. Table 2 lists the projects and  the reprogramming actions, and describes how the Corps failed to follow  its guidance.
In general, in cases where the Corps failed to notify the Congress of its  intention to move funds in excess of the notification threshold, Corps  officials said that the actions were conducted at the district and that the  district personnel were confused about the guidance. Additional  information on the eight projects and 12 movements are provided in  appendix III.
section_title: The Corps’ Reprogramming Guidance Allows Numerous Movements of Funds without Congressional Notification
paragraphs: Although in the majority of cases we reviewed the Corps complied with its  guidance, this guidance has been developed in such a manner that it  provides the agency with maximum flexibility to move funds without  notifying the Congress. Specifically, we found that most movements of  funds that were actually reprogramming actions were categorized by the  Corps, in accordance with its guidance, as other types of fund movements,  which did not have to be reported to the Congress. For example, the Corps  guidance allowed reprogrammings to be categorized under one of the  following categories, which did not count toward congressional  notification.
Revocations, which are movements of funds out of a project.
Restorations of current year savings and slippage, which are  movements of funds into a project to restore that projects’ current year  savings and slippage reduction.
Restorations of prior year savings and slippage/revocation, which are  movements of funds into a project to restore savings and slippage  reductions and/or funds reprogrammed out of a project in prior fiscal  years.
Restorations of current year revocations, which are movements of  funds into a project to restore funds previously reprogrammed out of  that project in the same fiscal year.   $5 million accelerated contractor earnings, which are movements of  funds into a project to cover increased project requirements due to  settled contractor claims, increased contractor earnings due to  accelerated rate of operations, or a real estate deficiency judgment.
The Corps used another category—“reprogram”—to categorize some  movements of funds into a project. However, this category was seldom  used and, according to Corps officials, when it was used, in most cases was  generally limited to amounts under the congressional notification  threshold. Figure 1 shows the reprogramming categories that were most  commonly used for the investigations, construction, and operation and  maintenance appropriations and which categories counted and did not  count towards the congressional notification thresholds under the Corps’  1995 and 2004 guidance.
The following three examples illustrate how the Corps can move large  amounts of funds into or out of a project without notifying the  Appropriations Committees and still be in compliance with its guidance.  For the first project, the New York and New Jersey Harbor construction  project in fiscal year 2003, the Corps moved over $65 million in and out of  the project in the following 10 separate actions.
April 15, 2003; $28,052,000 revoked (funds needed for other projects);  April 23, 2003; $2,685,000 restoration of current year revocation (funds  needed to continue project);  May 7, 2003; $400,000 restoration of current year revocation (no  explanation in file);  June 4, 2003; $13,200,000 restoration of current year revocation (no  explanation in file);  June 9, 2003; $5,758, 000 revoked (funds needed for other projects);  July 18, 2003; $8,782,000 restoration of current year revocation (no  explanation in file);  August 22, 2003; $1,600,000 restoration of current year revocation (funds  needed to continue project);  September 4, 2003; $1,700,000 restoration of current year revocation  (funds needed to continue project);  September 4, 2003; $2,500,000 restoration of current year revocation (no  explanation in file); and  September 26, 2003; $460,000 restoration of current year revocation  (funds needed to continue project).
The amount moved was more than 4 times the cumulative threshold  amount of $15,665,850 for this project, and the April 15, 2003, movement of  $28,052,000, by itself, exceeded the threshold. Yet under the 1995 Corps  guidance, none of these 10 actions were categorized as actions that  counted toward the notification threshold and therefore the Corps did not  have to notify the Congress of these movements.
Similarly, in fiscal year 2003, the Corps moved a total of over $3.1 million in  and out of the Ohio River Greenway Public Access construction project in  Indiana in the following seven separate actions.
April 22, 2003; $1,011,000 revoked (excess funds);  April 23, 2003; $313,000 revoked (no explanation in file);  May 14, 2003; $1,112,000 restoration of current year revocation (no  explanation in file);  June 17, 2003; $150, 000 revoked (no explanation in file);  September 5, 2003; $342,000 revoked (excess funds);  September 9, 2003; $146,000 revoked (no explanation in file); and  September 29, 2003; $27,000 revoked (excess funds).
The amount moved was more than 10 times the cumulative threshold  amount of $300,000 for this project, yet under the 1995 Corps guidance,  none of these seven actions were categorized as actions that counted  toward the notification threshold and the Congress was not notified of the  movements.
In the third project, in fiscal year 2003, the Corps moved a total of over  $10.1 million into the Columbia River Fish Mitigation construction project  in Oregon in the following seven separate actions.
May 9, 2003; $4,700,000 restoration of current year savings and slippage  (needed for contract payments);  July 16, 2003; $200,000 restoration of current year savings and slippage  (needed for continuation of programmed activities);  July 22, 2003; $500,000 restoration of current year savings and slippage  (needed for critical research items);  September 8, 2003; $456,000 restoration of current year savings and  slippage (needed for contractor earnings);  September 12, 2003; $87,000 restoration of current year savings and  slippage (needed to pay contractor);  September 22, 2003; $408,300 restoration of current year savings and  slippage (no explanation provided); and  September 24, 2003; $3,772,000 restoration of current year savings and  slippage (no explanation provided).
The amount moved exceeded the cumulative threshold amount of  $9,256,350 for this project, yet under the 1995 Corps guidance, none of  these seven actions were categorized as actions that counted toward the  notification threshold and the Congress was not notified of these  movements. In all of these examples, if all the movements of funds had  been categorized as “reprogrammings” and therefore had counted toward  the notification threshold, the Corps would have had to notify the Congress  that it intended to reprogram funds for these projects.
The consequence of the Corps’ guidance is that it allowed the Corps to  categorize reprogrammings in fiscal years 2003 and 2004 so that few  reprogramming actions counted toward notification thresholds. We found  that from October 1, 2002, through May 26, 2004, when the Corps’ 1995  guidance was in effect, because of the way the Corps categorized  movements of funds, only 18.2 percent of investigations movements and  14.5 percent of construction movements counted toward the notification  thresholds. (There was no notification threshold for operation and  maintenance projects.) From May 27 to October 30, 2004, when the  guidance was revised and made more restrictive, 79 percent of  investigations movements and 74 percent of construction movements  counted toward the notification thresholds.
On the basis of our review of 271 projects, if all movements of funds  counted toward the notification threshold, the Corps would have had to  notify the Congress about its intention to reprogram in 47 percent of the  projects in fiscal year 2003 and 10 percent of the projects in fiscal year  2004. (This assumes that the amount of each movement counts toward the  threshold whether the funds are moved into or out of the project. The  results are similar, however, if the cumulative impact of the movements are  totaled (netted). For example, if the movements are netted, a movement  into a project for $100,000 would offset another $100,000 movement out of  that same project for a total of $0 counting toward the threshold. If  movements were netted, the Corps would have had to notify the Congress  about its intention to reprogram in 36 percent of the projects in fiscal year  2003 and 6 percent of the projects in fiscal year 2004.) Instead, for the  projects included in our sample, the Congress received notifications of  intended reprogrammings for less than 1 percent of the projects in fiscal  year 2003 and about 2 percent of the projects in fiscal year 2004.
In discussing the manner in which the Corps conducted reprogrammings  during fiscal years 2003 and 2004, Corps officials said that the number of  reprogrammings and the manner in which they were categorized was  necessary to fund projects during a period of restricted budgets. We  believe, however, the movements of funds previously discussed are  reprogrammings that should be counted toward congressional notification  thresholds. The number of reprogrammings and the amount of the  reprogrammings conducted by the Corps can result in a significant  deviation from the funding profile the Congress provided for the projects in  its conference report, yet the Congress was seldom informed of the  changes and the reason for the changes. Such notification would provide  the Congress with information concerning where the Corps was spending  its funds and would allow the Congress to provide oversight of Corps  activities.
section_title: The Corps Reprogrammed Funds for Various Reasons
paragraphs: Because the Corps typically allocates all its appropriations to authorized  projects and does not keep any centralized funds available for unexpected  project contingencies, reprogramming provides the flexibility to shift funds  to respond to project changes and unforeseen events. Some of the reasons  why the Corps reprogrammed funds in fiscal years 2003 and 2004 include  weather factors, contract disputes, infrastructure malfunctions, new policy  requirements, delays in securing cost-sharing agreements, unanticipated  project starts, and savings and slippage. However, the Corps also  reprogrammed funds for reasons that were inconsistent with the Corps’  guidance, such as to achieve the Corps’ goal of carrying zero funds into the  next fiscal year and to restore funds to donor projects without regard to  funding needs.
subsections: section_title: The Corps Reprogrammed Funds to Respond to Project and Funding Changes
paragraphs: Project and program managers at the Corps typically estimate project  needs 1 to 2 years prior to receiving appropriated funds. As with all  agencies that are funded through the annual budget process, by the time  the Corps obtains its funding, factors upon which such estimates were  based may have changed and unforeseen events may have occurred.  Responding to circumstances such as unexpected weather patterns,  infrastructure emergencies, and hurdles in obtaining cost-share funding  may require the use of reprogramming actions.
For example, weather may have significant impacts on project costs and  schedules. Unusually good weather may impact the execution of a project  by extending the construction season and allowing more work to be  completed; whereas unexpected weather may cause work delays. Weather  may also impact project costs by causing damage that must be repaired.  The Corps has often used reprogramming actions to adjust funding to  accommodate unanticipated weather impacts. For example, in fiscal year  2004, mud slides, caused by heavy rains, which breached the top of the dam  embankment at the Joe Pool Lake operations and maintenance project in  Texas, required emergency maintenance to stabilize the banks of the lake.
The Corps reprogrammed $43,000 into the project to ensure the stability  and safety of the dam.
The Corps has also used reprogramming to fund repairs required as the  result of unexpected infrastructure malfunctions, such as a lock failure on  a waterway. In November 2002, an upstream lock gate malfunctioned at the  John Day Lock and Dam on the Columbia River in Oregon. It took the  Corps several months to repair the gate. While repairs were being made,  the Corps found additional structural damage and had to award a new  contract to fix these problems. In fiscal years 2003 and 2004, the Corps  reprogrammed nearly $21 million dollars into the project to cover the cost  of the repairs.
Similarly, for investigations projects, one-half of the funds for most  feasibility studies must be provided by a cost share partner, such as a local  or state government. Delays in securing this second-party funding may  sometimes slow or halt a project’s schedule and allow the funds to be  reprogrammed to other projects that could use the funds. For example, in  the Metropolitan Louisville Mill Creek Basin investigations project in  Kentucky, the project’s local cost-share sponsor decided not to fund the  project and the land needed to begin the study could not be acquired. As a  result, most of the project’s funds could not be used by the Corps and about  90 percent of project’s fiscal year 2004 funds were reprogrammed to  projects that could use the funds.
section_title: The Corps Also Reprogrammed Funds for Reasons That Were Inconsistent with the Corps’ Guidance
paragraphs: In managing its national program, the Corps also conducted some  reprogramming actions for reasons that were inconsistent with the Corps’  internal reprogramming guidance. The Corps’ Civil Works training manual  on reprogramming advises program managers to round reprogramming  requests to the thousands or tens of thousands of dollars and states that  minor reprogramming to close out accounts is not permitted. The Corps’  internal reprogramming guidance also advises that staff should not engage  in small reprogrammings actions, but instead round transactions to the  nearest $1,000. The guidance cites the negative administrative impact of  such actions by stating that “minor reprogrammings cause additional  accounting and paperwork efforts at all levels and increase the risk of  errors.” However, the Corps conducted reprogramming actions simply to  achieve an internal goal of a zero carry-over balance for each project at the  end of the fiscal year. Such reprogramming actions resulted in numerous  shifts of funds of small dollar amounts, thereby increasing the  administrative burden on managers.
Achieving 100 percent execution of project funds and zero carry-over  balances was a management goal of the Corps’ Civil Works program during  the time frame covered by our review. Realization of this goal was one of  the primary performance metrics for project managers, who were rated on  their ability to reach this target. In regard to achieving this goal, the Chief of  the Civil Works Programs Integration Division noted that he had verbalized  to Corps managers that “nothing else was acceptable.” Several Corps  program managers commented that this internal performance measure  resulted in large numbers of reprogramming actions. If project managers  felt that they could not execute all of their project’s funds, they had an  incentive to reprogram funds out of their project’s account, since their  performance was measured by their ability to execute only funds remaining  for the project. Such reprogramming actions make it easier for a manager  to reach the 100 percent execution target and, therefore, receive a higher  performance rating.
Many of these actions occurred at the end of the fiscal year as project  managers scrutinized their budgets for any funds that could not be  expended within the fiscal year. Some of these reprogrammings were  beneficial because the funds were moved to projects with year-end funding  needs. However, some program managers told us that they felt the need to  locate even excess “pennies” at the end of the fiscal year in order to achieve  the target of zero carry over. As a result, in fiscal years 2003 and 2004, more  reprogrammings occurred during the last month of the fiscal year than any  other. For all investigations and construction projects in fiscal years 2003  and 2004, approximately 23 percent of the reprogrammings conducted by  the Corps occurred in the last month of the fiscal year, resulting in 1,617  actions moving over $235 million. Just over 6 percent of these movements  were for amounts of $1,000 or under. We found similar results for our  sample of 271 projects. About 35 percent of the reprogrammings occurred  in the last month of the fiscal year (343 actions moving over $31 million).  Just over 13 percent of these movements were for amounts of $1,000 or  under, with one as small as 6 cents. We found other projects, not included  in our sample, with year-end reprogramming actions of $0.07, $13.42,  $13.84, $14.00, $23.36, and $25.00. Reprogramming such small amounts of  funds may unnecessarily strain administrative resources.
Removing most of a project’s funding at the end of the fiscal year may also  result in the Corps overlooking short-term project needs, particularly those  at the beginning of the next fiscal year, and ends up resulting in additional  unnecessary reprogramming actions. For example, in the Grand Isle and  Vicinity construction project in Louisiana, the Corps revoked $28,000 on  the last day of fiscal year 2003, based on the rationale that it was surplus to  the project’s needs. However, just over 1 week later, in fiscal year 2004,  $17,000 was restored to the project, according to the Corps, to pay labor  costs.
Reprogramming actions to restore funds to donor projects from projects  that did not have a surplus also appears to be inconsistent with the Corps’  reprogramming guidance. Corps reprogramming guidance states that only  funds surplus to current year requirements should be a source for  reprogramming and that temporary borrowing or loaning is inconsistent  with sound project management practices. Despite this guidance, in fiscal  years 2003 and 2004, we found several instances where the Corps returned  funds to a donor project from projects that had funding needs and did not  have surplus funds. In some instances, separate reprogramming actions to  transfer funds out of a project to repay a donor, and to transfer funds into  that same project in order to complete work schedules, occurred on the  same day or within a few days or weeks. For example, on May 1, 2003, the  Corps reprogrammed $425,000 out of the Johnson Creek Upper Trinity  River construction project in Texas to repay a donor project. On the same  day, the Corps reprogrammed $1.5 million into the Johnson Creek project  to provide funds for property acquisition necessary to keep the project on  schedule.
section_title: The Corps’ Reprogramming Activities Resulted in Inefficient Management of Funds
paragraphs: As stated previously, Corps reprogramming guidance states that only funds  surplus to current year requirements should be a source for reprogramming  and that temporary borrowing or loaning is inconsistent with sound project  management practices and increases the Corps’ administrative burden. In  fiscal year 2003 and fiscal year 2004, the Corps managed its civil works  project funds using a “just-in-time” reprogramming strategy. The basis for  this strategy was to allow for the movement of funds from projects that do  not have urgent funding needs to projects that need funds immediately.  While the just-in-time approach may have moved funds rapidly, its  implementation sometimes resulted in uncoordinated and unnecessary  movements of funds from project to project. We found that funds were  moved into projects that had a reported “need,” but were subsequently  removed because they were “excess,” revoked from projects without  regard to their near-term funding requirements, reprogrammed into and out  of the same project on the same day, moved into and out of the same  project multiple times a year, and reprogrammed without a system to  evaluate the priority level of the affected projects. This strategy has  resulted in numerous reprogrammings that may otherwise have been  unnecessary if the Corps had employed a financial planning and  management process in which funding priorities had been clearly  established. In addition, the relative convenience and ease of  reprogramming within Corps districts may have resulted in increased  numbers of reprogrammings and reprogrammings from projects with  funding needs.
In our review of projects from fiscal years 2003 and 2004, we found that  funds were moved into projects, only to be subsequently revoked because  they were excess to the project’s funding needs. For example, in fiscal year  2004, 7 percent of the funds (totaling almost $154.6 million) from every  nonearmarked construction project were revoked in order to provide  funding to projects designated as “national requirements” by the Corps.  The national requirements projects were a group of projects to which  Corps headquarters management had promised to restore funding that had  been revoked in previous years. These projects included the Houston- Galveston navigation channel construction project in Texas, New York and  New Jersey Harbor, Comite River diversion channel in Louisiana,  Guadalupe River channel improvement in California, Lackawanna River at  Scranton levee project in Pennsylvania, three navigation projects in Alaska  (Saint Paul Harbor, Nome Harbor, and Wrangell Harbor), and various  projects under the Continuing Authorities Program.
After the Corps moved the $154.6 million into the national requirements  projects, the Corps revoked over a quarter of those funds, $38.8 million,  from these projects because they actually did not need the funds. For  example, one national requirements construction project, New York and  New Jersey Harbor, received $24.9 million. All of these funds, plus an  additional $10.3 million, were excess to the needs of the project at the time  and were subsequently reprogrammed to other projects. Corps officials in  the New York District told us that, prior to receiving the national  requirements funds, they had informed Corps headquarters that they could  not use the additional funds. Corps headquarters officials said that the  district had requested the funds based on need. Other national  requirements projects that received funds that were subsequently  reprogrammed include:  The Comite River construction project received almost $3 million. Later  in fiscal year 2004, the Corps revoked nearly $1.5 million (about 50  percent) of that funding.
The Lackawanna River at Scranton construction project received $15  million. Later in fiscal year 2004, the Corps revoked $5 million (about 33  percent) of that funding.
The Houston-Galveston construction project received nearly $28  million. Later in fiscal year 2004, the Corps revoked about $7.25 million  (about 26 percent) of that funding.
The use of the just-in-time strategy also resulted in funds being removed  from projects without considering their near-term funding requirements,  such as projects with impending studies. For example, on August 1, 2003,  the Corps revoked $85,000 from the Saw Mill River and Tributaries  investigation project in New York with the explanation that the funds were  excess to the project’s needs in the current year. Six weeks later, however,  on September 15, 2003, $60,000 of funding was reprogrammed back into the  project in order to initiate a feasibility study. Corps documents explaining  the revocation of funds from the Saw Mill River and Tributaries project  indicate the Corps' awareness of the project’s impending needs,  acknowledging that funds for the project would be needed again in  September 2003 to execute a feasibility study.
We also determined that under the just-in-time reprogramming strategy,  funds were moved into and out of the same project on the same day.  Overall, we found that 3 percent of investigations and construction projects  in fiscal year 2003 and 2 percent of investigations and construction projects  in fiscal year 2004 moved funds into and out of the same project on the  same day. Some specific examples include, on February 6, 2004, the Corps  reprogrammed just over $2 million into the Mill Creek construction project  in Ohio from the Olmsted ($1,500,000) and Pond Creek ($550,000) projects  and reprogrammed out $272,000 the same day. The Corps explained that  they initiated the $272,000 revocation in order to balance the books from  previous reprogrammings. Also, in fiscal year 2003, the Corps used 18  separate actions to reprogram approximately $25 million into and about  $10.5 million out of the Central and Southern Florida construction project,  including three separate occasions when funds were both moved into and  out of the project on the same day.
Furthermore, the Corps reprogrammed funds in and out of some projects  numerous times during a single fiscal year. For instance, in 12 separate  actions in fiscal year 2004, the Corps reprogrammed a total of $166,000 into  the Dalles Lock and Dam operation and maintenance project in Washington  and Oregon and revoked a total of $817,000. Many of these actions took  place only days or weeks apart from one another.
March 9, 2004; $76,000 revoked;   March, 23, 2004; $261,000 revoked;   May 27, 2004; $31,000 revoked;   June 29, 2004; $200,000 revoked;   July 6, 2004; $38,000 revoked;   July 28, 2004; $40,000 reprogrammed;  August 4, 2004; $18,000 reprogrammed;   August 12, 2004; $125,000 revoked;   August 24, 2004; $105,000 reprogrammed;   August 31, 2004; $3,000 reprogrammed;   September 17, 2004; $8,000 revoked; and   September 29, 2004; $78,000 revoked.
Similarly, in the San Antonio Channel Improvements construction project  in Texas, the Corps reprogrammed slightly over $1.9 million into and  $81,000 out of the project in 15 separate actions in fiscal year 2004. Forty  percent of the actions took place in the final weeks of the fiscal year, with  six separate transactions recorded between September 13 and September  30.
The just-in-time reprogramming strategy also moved money into and out of  projects without regard to the relative priorities of the projects. During the  period of our study, the Corps lacked a set of formal, Corps-wide priorities  for use when deciding to reprogram funds from one project to another.
Instead, according to the Chief of the Civil Works Programs Integration  Division, during fiscal years 2003 and 2004, reprogramming decisions were  left up to the intuition of program and project managers at the district level.  While this decentralized system might have allowed for prioritized decision  making at the district level, when reprogramming actions occurred across  districts or across divisions, the Corps lacked any formal system of  evaluation as to whether funds were moving into or out of high priority  projects. The lack of a Corps-wide priority system limits its ability to  effectively manage its appropriations, especially in an era of scarce funding  resources when choices have to be made between competing needs of  donor and recipient projects.
Finally, the Corps’ practice of allocating all funds to projects as soon as the  funds are allotted to the Corps, coupled with the reprogramming flexibility  provided to the districts, may result in an elevated number of  reprogramming actions. Typically, once the Corps receives appropriated  funds from the Congress, the Corps disperses all of these funds directly  into project accounts at the district level. Allocating funding in this manner,  according to Corps officials, is done to remain consistent with  congressional direction. However, projects that have experienced delays in  the time period between the Corps initial budget submittal and the agency’s  receipt of its appropriation may receive more money than they are able to  spend. In some cases we reviewed, the Corps dispersed an entire fiscal  year’s worth of funding to a project even though they knew that the project  manager could not spend all of the funding. This type of allotment system  may result in an elevated number of reprogramming actions. For instance,  within 2 weeks after the Corps dispersed its fiscal year 2003 appropriation  to specific projects, it made 369 reprogramming actions to realign funding  in its investigations and construction appropriations; within 2 weeks after  dispensing fiscal year 2004 dollars, the Corps made 64 such actions.
The flexibility provided to district managers once they receive their funding  may also increase the number of reprogramming transactions. Corps  reprogramming guidance allows the districts to reprogram funds up to a  certain amount without notifying division or headquarters staff. According  to some Corps program managers, the relative ease of conducting  reprogramming actions at the district level, without the need to obtain  division or headquarters approval, creates incentives for project managers  to transfer funds among projects within the district even if it creates a  greater number of reprogramming actions. For example, when project  managers have an immediate need for funds, they may be more likely to  reprogram funds between projects within their own district, even if the  donor project has a need for funds in a few weeks or months, because the  guidance allows them to do so.
The Corps’ reprogramming practices place a large demand on the  administrative resources of the agency. In fiscal year 2003, after receiving  their appropriated funds from the Congress, the Corps conducted at least  one reprogramming action every business day of the fiscal year except for  4; after receiving their funds in fiscal year 2004, the Corps conducted at  least one reprogramming action on every business day of the fiscal year  except for 14. Each reprogramming action conducted requires the Corps to  expend time and personnel resources to locate donor projects, file  necessary paperwork, and in some cases obtain the approval of  appropriate Corps staff and, possibly, the Congress. In particular, locating  sources of donor funding is often a time-consuming process, as the project  manager seeking funding must wait for other project managers to  acknowledge excess funds and offer them for use on other projects.
section_title: Conclusions
paragraphs: The ability to move funds among projects is a useful and necessary  management tool to adjust project funding to reflect changing conditions  and needs over the life of a civil works project. For an agency like the  Corps, which has responsibility for hundreds of projects, the ability to  reprogram funds, if used effectively, provides the flexibility to take funds  from a project that cannot spend allotted funds because of delays due to  factors such as bad weather or labor problems and move those funds to a  project that has a need for additional funding to accelerate or complete  ongoing work. However, the Corps’ reprogramming guidance allows  movements of funds by categorizing reprogrammings as fund movements  that do not count toward notifying the Congress. As a result, following its  guidance, the Corps is able to effect major deviations from the funding  direction the Congress provided for projects in its conference report and  does not have to inform the Congress of the changes and the reason for the  changes. Because the Corps’ reprogramming reflects the direction and  guidance provided by the appropriations committees and this guidance has  changed over time, we believe that the Corps needs to reach agreement  with the Congress on what types and levels of reprogramming actions are  appropriate for the Corps to conduct without congressional notification.
Reprogramming has become the Corps’ routine way of managing project  funds, and the Corps has used reprogramming as a substitute for an  effective and fiscally prudent financial planning, management, and priority- setting system for its Civil Works program. The Corps allocates all funding  to the projects, on an annual basis, at the beginning of the year and has no  available means, other than reprogramming, to adjust project funding as  circumstances change during the year. As a result, reprogramming has been  used extensively for moving funds among projects in an environment  where most projects have unmet funding needs and very few have excess  funding. In addition, there is no formal system to prioritize potential donor  or recipient projects and no financial planning occurs to monitor project  schedules and progress. Instead, decisions are made instantly to meet  immediate funding needs. Consequently, funds are frequently moved from  projects that have or will have the need for those funds in the not too  distant future and are shifted to other projects, some which have funding  needs and some that do not.
section_title: Recommendations for Executive Action
paragraphs: To eliminate the burden of excessive reprogramming actions and to  provide better financial management of projects, we recommend that the  Secretary of Defense direct the Commanding General and Chief of  Engineers of the U.S. Army Corps of Engineers to take the following five  actions:  work with congressional committees to provide meaningful and  consistent guidance for the investigations, construction, and operation  and maintenance appropriations for what actions count as  reprogrammings and what reporting thresholds should apply on a  program and project basis;  develop a financial planning and management system for the  investigations, construction, and operation and maintenance  appropriations that, at a minimum,   changes the way the Corps allocates funds from an annual basis to a  more frequent basis that reflect actual schedule and project  performance;   periodically reviews project schedules and performance and revises  funding allocations as needed; and  develops and implements criteria for setting reprogramming   provide direction and training to change the culture prevalent  throughout the Corps that reprogramming is an acceptable, routine  financial management practice and instead place greater emphasis on  the use of financial planning approaches and priority-setting  mechanisms for managing project funding.
section_title: Agency Comments and Our Evaluation
paragraphs: We provided a draft of this report to the Department of Defense for its  review and comment. The Department stated that the report was very  constructive and concurred with four of the five recommendations.  Specifically, the Department concurred with the recommendation that the  Corps work with congressional committees to provide meaningful and  consistent guidance for the investigations, construction, and operation and  maintenance appropriations as to which actions count as reprogrammings  and what reporting thresholds should apply on a program and project  basis. The Department said the Corps is preparing an Engineer Circular  that will address the reprogramming direction provided in the House report  accompanying the fiscal year 2005 appropriations for energy and water  development. The Department also said that the Corps is coordinating with  the appropriate House and Senate subcommittees and the Engineer  Circular is scheduled to be issued in the first quarter of fiscal year 2006.
The Department concurred with our recommendation that the Corps  develop a financial planning and management system for the  investigations, construction, and operation and maintenance  appropriations that periodically reviews project schedules and  performance and revises funding allocations as needed. The Department  said that during the first quarter of fiscal year 2006, the Corps intends to  institute improvements in project scheduling to provide more reliable  estimates of funding capabilities and to emphasize periodic reviews of  project schedules, performance, and funding allocations.
The Department concurred with our recommendation that the Corps  develop a financial planning and management system for the  investigations, construction, and operation and maintenance  appropriations that develops and implements criteria for setting  reprogramming priorities. The Department said that the Engineer Circular  to be issued in the first quarter of fiscal year 2006 will include criteria to  prioritize reprogramming actions.
The Department concurred with our recommendation that the Corps  provide direction and training to change the culture prevalent throughout  the Corps that reprogramming is an acceptable, routine financial  management practice and instead place greater emphasis on the use of  financial planning approaches and priority-setting mechanisms for  managing project funding. The Department said that the forthcoming  Engineer Circular and subsequent training of project managers will  strengthen limits on reprogramming and ensure understanding of those  limits.
Regarding our recommendation that the Corps develop a financial planning  and management system for the investigations, construction, and operation  and maintenance appropriations that changes the way the Corps allocates  funds from an annual basis to a more frequent basis that reflects actual  schedule and project performance, the Department did not concur. The  Department said that it is important that the Corps continue to allocate all  funds provided by the Congress for each project and that any deviation  from that amount would be regarded as a reprogramming and would not  reflect the intent of the Congress. The Department also said that  withholding funds from the initial allocation would add administrative  burden, increase uncertainty in execution, and would not aid in scheduling  and schedule review.
We disagree with the Department’s views on the effects of changing the  Corps allocation of funds from an annual basis to a more frequent basis  during the fiscal year. While the conference report includes amounts for  each project and that amount does reflect the intent of the Congress,  changes often occur in the funding needs and project expenditure  capabilities from the time the Corps submits its budget estimates until the  appropriation is received 18 or more months later. As a result, when the  appropriation is received, projects may not need the amount of funds  included in the conference report or may need additional funds. Our  recommendation would allow the Corps to make these known needed  changes before allocating all funds to a project. This would serve to  streamline the process and eliminate the administrative burden of making  project funding allocations that the Corps knows it is going to reallocate  through reprogramming actions almost immediately after the initial  allocations are made. Providing periodic allocations of funds during the  year, especially when coupled with reviews of project schedules,  performance, and fund allocations and the development and  implementation of criteria for setting reprogramming priorities –which the  Department said the Corps will implement – should allow the Corps to  better spend its limited funds in accordance with the intent of the  Congress. Use of these tools will allow the Corps to allocate funds based on  the most recent project information to those projects with the highest  priority and the most immediate need. We also disagree that the use of  periodic allotments would result in uncertainty in execution. Instead,  periodic allocation of funds would provide increased certainty in execution  of projects that needed funds and would not affect the execution of  projects that did not have a current need for funds.
In addition to the Department of Defense’s overall comments on our draft  report (see app. IV for the full text of the Department’s comments), the  Corps provided a number of technical comments and clarifications, which  we incorporated in this report as appropriate.
As arranged with your offices, unless you publicly announce its contents  earlier, we plan no further distribution of this report until 30 days after the  date of this report. At that time, we will send copies of the report to  interested congressional committees, the Commanding General and Chief  of Engineers of the U.S. Army Corps of Engineers, and the Director of the  Office of Management and Budget. We will make copies available to others  on request. In addition, this report will be available at no charge on the  GAO Web site at www.gao.gov.
If you or your staff have questions about this report, please call me at (202)  512-3841 or contact me at mittala@gao.gov. Contact points for our Offices  of Congressional Relations and Public Affairs may be found on the last  page of this report. Key contributors to this report are listed in appendix V.
section_title: Scope and Methodology
paragraphs: To determine the extent to which the Corps reprogrammed appropriated  funds among investigations, construction, and operation and maintenance  projects in fiscal years 2003 and 2004, we obtained relevant funding and  project data from the Corps. However, the Corps could not provide data  about reprogramming of operation and maintenance project funds. We  determined, based on written documentation, interviews with Corps  officials, and electronic data testing, that the data were sufficiently reliable  for our purposes.
To determine if the Corps followed internal guidance and congressional  direction when reprogramming funds and why the Corps conducted  reprogramming funds, we obtained the Corps’ internal guidance for  reprogramming and congressional reports and correspondence that  contained direction for conducting reprogramming. We selected four Corps  divisions randomly with probabilities proportional to the number of  projects and judgmentally selected one district from each of those divisions  for review. The divisions and districts selected were Great Lakes & Ohio  River (Louisville District), North Atlantic (New York District),  Northwestern (Portland District), and Southwestern (Fort Worth District).  Within the four districts, we randomly selected a total of 271 projects from  the population of investigations, construction, and operation and  maintenance projects that had funds reprogrammed during fiscal years  2003 and 2004. For the selected projects, we reviewed project files and held  discussions with managers to obtain background information on the  project and information on the amount, date, and reason for each  reprogramming. File information was entered into a data collection  instrument to ensure uniformity. This information was entered into a  spreadsheet for analysis. The spreadsheet was independently verified with  the data collection instruments. We compared the Corps’ reprogramming  activities for each selected project to the internal guidance and  congressional direction that was in effect at the time the reprogramming  was conducted.
To determine how effective the Corps’ reprogramming strategy was in  managing appropriated funds, we reviewed the results of our sample  analysis and discussed those results with program managers. We also  discussed the Corps’ financial management strategy with program  managers at Corps headquarters, division offices, and district offices and  with individual project managers.
section_title: Reprogramming Guidance Used by the Corps
paragraphs: Must receive  approval from the  Appropriations  committees.
Reprogrammings  beyond these  thresholds must be  coordinated with the  Appropriations  committees.
Reprogrammings  beyond this  threshold require  notification of the  Appropriations  committees.
Reprogrammings  beyond these  thresholds must be  coordinated with the  Appropriations  committees.
Reprogrammings  beyond this  threshold require  notification of the  Appropriations  committees.
Must receive  approval from the  Appropriations  committees.
Reprogrammings  beyond this  threshold require  notification of the  Appropriations  committees.
Must receive  approval from the  Appropriations  committees.
section_title: Projects with Reprogrammings That Did Not Follow Corps Guidance
subsections: section_title: Fund Movements Conducted under ER 11-2-201 (October 1, 2002, to May 26, 2004)
subsections: section_title: Green and Barren Rivers Navigation Disposition in Kentucky
paragraphs: The cumulative threshold amount for notifying the Congress was $25,000  for this investigations project.  On April 22, 2003, $25,000 was  reprogrammed into the project.  On April 28, 2003, another $25,000 was  reprogrammed into the project, exceeding the cumulative threshold.  The  Corps did not notify the Congress of its intention to reprogram the funds in  excess of the threshold.  Corps officials explained that they made a mistake  and did not initially realize that the threshold had been exceeded.  When  the error was realized, the Corps revoked $25,000 on May 29, 2003, to undo  the previous error.
section_title: Fund Movements Conducted under Guidance Based on the Direction Provided in the House Report 108- 554 (May 27 to September 30, 2004)
subsections: section_title: New York City Watershed in New York
paragraphs: The single action threshold was $300,000 for this construction project.  On  September 20, 2004, the Corps revoked $800,000 exceeding the single  action threshold of $300,000.  The Corps notified the Congress of its  intention to reprogram the $800,000, on September 24, 2004, 4 days after  the funds had been moved.
section_title: McAlpine Locks and Dam in Kentucky and Indiana
paragraphs: The single action threshold for this construction project was $7,301,200 and  the cumulative threshold was $4 million.  (In this case, because of the size  of the project, the threshold calculations resulted in a higher single action  threshold than a cumulative threshold.)  On August 6, 2004, the Corps  moved $5.3 million into the project using its accelerated contractor  earnings authority.  However, the accelerated contractor earnings authority  only allows the Corps to move up to $5 million and it must be used for  settling a contractor’s claim, increased contractor earnings due to  accelerated rate of operations, or real estate deficiency judgment.  In  addition to exceeding their authority to move funds under this provision,  Corps officials told us that the funds were not moved for any of the  authorized purposes.  Rather, the funds were used to continue funding a  contract.  The Corps had awarded a contract for about $80 million for fiscal  year 2004, but received only about $27 million for the project.  To avoid a  work stoppage, possible contractor claims, and/or possible interest  payments, the Corps moved a large amount of funds into the project,  including the $5.3 million.
section_title: Ramapo River at Oakland in New Jersey
paragraphs: The single action threshold for this construction project was $311,800 and  the cumulative threshold was $4 million.  On September 1, 2004, the Corps  revoked $600,000; on September 20, 2004, the Corps revoked $1,700,000;  and on September 29, 2004, the Corps revoked $600,000.  All these actions  exceeded the single action threshold.  The Corps did not notify the  Congress of their intention to reprogram the funds in excess of the  thresholds on September 1 and 24.  A letter was sent to the Congress for the  September 20, 2004, action; however, the letter was sent on September 24,  2004, after the funds had been moved.
section_title: Ohio River Flood Protection in Indiana
paragraphs: The single action threshold for this construction project was $430,000 and  the cumulative threshold was $4 million.  On June 28, 2004, the Corps  revoked $500,000, exceeding the single action threshold of $430,000.  The  Corps did not notify the Congress of its intention to reprogram the funds in  excess of the threshold.  Corps officials told us that the action was  processed at the district and they were confused about the procedure.
section_title: New York and New Jersey Harbor
paragraphs: The single action threshold for this construction project was $22,303,000  and the cumulative threshold was $4 million. (In this case, because of the  size of the project, the threshold calculations result in a higher single action  threshold than a cumulative threshold.)  In 2004, in 10 different actions, the  Corps moved a total of $82,559,000 in and out of the project.  Specific  actions that exceeded the $4 million threshold occurred on June 17, 2004,  ($6,900,000 revoked), June 22, 2004, ($8,587,000 revoked), June 24, 2004,  ($10,000,000 revoked) and on August 6, 2004, ($8,500,000 revoked).  The  Corps sent notification to the Congress for the June 24, 2004, action on May  13, 2004.  Letters were also sent for the other actions; however, these letters  were sent after the funds had been moved.  The letter for the June 22, 2004,  action was sent on June 29, 2004.  The letters for the June 17, 2004, and the  August 6, 2004, actions were sent on September 24, 2004.
section_title: Bonneville Powerhouse Phase 1 in Oregon and Washington
paragraphs: The single action threshold for this construction project was $302,000 and  the cumulative threshold was $4 million.  On May 28, 2004, the Corps  restored $332,000 prior year savings and slippage, exceeding the single  action threshold of $302,000.  The Corps did not notify Congress of their  intention to reprogram the funds in excess of the threshold.  Corps  headquarters officials told us that the action was processed at the district  and they were confused about the procedure while district officials said  that headquarters approved the action.
section_title: Plattsburgh Harbor in New York
paragraphs: The single action threshold for this operation and maintenance project was  $438,240 and the cumulative threshold was $4 million.  On August 16, 2004,  the Corps revoked $625,000, exceeding the single action threshold of  $438,240.  The Corps did not notify the Congress of their intention to  reprogram the funds in excess of the threshold.  Corps officials told us that  the action was processed at the district and they were confused about the  procedure.
section_title: Comments from the Department of Defense
section_title: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the individual named above, Edward Zadjura, James D.  Ashley, Kenneth E. Lightner Jr., John Mingus, Matthew Reinhart, Elizabeth  Repko, Carol Herrnstadt Shulman, and Barbara R. Timmerman made  contributions to this report.