Army Corps of Engineers: Better Guidance Could Improve Corps' Information on Water Resources Projects Undertaken by Nonfederal Sponsors
Published: 2016-12-06T00:00:00

Fast Facts:
States and local governments may undertake water resource projects, such as dredging ports or constructing levees, on their own—rather than waiting for federal funds. Once built, the U.S. Army Corps of Engineers may partly reimburse these nonfederal sponsors for these projects.
However, we found that the Corps doesn't know exactly how many of these projects state and local governments have undertaken. Moreover, the Corps also doesn't know how much it has reimbursed for these projects.
We recommended that the Corps develop guidance to help its district offices accurately collect this (and other relevant) information on these projects.

Highlights:
section_title: Why GAO Did This Study
paragraphs: Through its Civil Works program, the Corps designs, constructs, and maintains federal water resources projects, such as levees for flood risk management. Under certain authorities, nonfederal sponsors, such as states and local governments, may undertake studies or construct projects and may be eligible for reimbursement or credit for the federal share of costs.
GAO was asked to examine federal water resources projects undertaken by nonfederal sponsors. This report examines (1) the authorities enabling nonfederal sponsors to undertake studies or projects, (2) the extent to which such sponsors have undertaken federal projects and the information the Corps has about them, and (3) the Corps' and sponsors' views on lessons learned from projects. GAO reviewed federal laws and agency guidance; collected information about studies and projects led by nonfederal sponsors from 1986 through 2014 from all 38 Corps districts responsible for civil works; and interviewed Corps officials in 16 districts that have overseen at least one such study or project, as well as 20 nonfederal sponsors that have undertaken projects.
section_title: What GAO Found
paragraphs: Authorities that allow nonfederal sponsors to undertake federal water resources projects, including feasibility studies and construction projects, have been included in various federal statutes since 1968. Until June 2014, when Congress enacted the Water Resources Reform and Development Act, five federal statutory authorities allowed nonfederal sponsors to undertake studies or construction of federal water resources projects such as flood control projects. The 2014 act amended and consolidated prior statutory provisions authorizing water resources projects.
The number of federal water resources projects nonfederal sponsors have undertaken and the amounts they have been reimbursed for the federal share of these projects cannot be reliably determined. The U.S. Army Corps of Engineers (Corps) does not track this information at the headquarters level and has delegated the responsibility for tracking and overseeing such projects to the districts. While Corps headquarters collects information from the districts on reimbursements, the information that headquarters provided GAO did not match the information that the districts provided to GAO. For example, the number of reimbursed projects and the amount of reimbursements made to nonfederal sponsors were inconsistent in the two data sets. Corps headquarters officials could not fully explain why differences existed and could not identify any Corps policies or procedures that provide guidance to the districts on the type of information to collect and maintain on projects led by nonfederal sponsors. Federal standards for internal control call for all transactions and other significant events to be clearly documented, and for accurate and timely recording of transactions and events. Without documented guidance for districts regarding recordkeeping for projects led by nonfederal sponsors, the Corps does not have reasonable assurance that districts will consistently record information on such projects and that the information districts provide to headquarters on these projects will be accurate and reliable.
Corps district officials and nonfederal sponsors GAO interviewed identified several lessons learned from projects undertaken by nonfederal sponsors. For example, officials and nonfederal sponsors frequently cited enhanced partnerships and communication as areas that worked well on projects led by nonfederal sponsors. In contrast, both Corps district officials and nonfederal sponsors cited various challenges in existing Corps guidance. For example, officials noted that Corps guidance does not clearly establish roles and responsibilities for these projects, and nonfederal sponsors said the Corps does not have clear guidance on the project implementation process. The Corps issued implementation guidance for feasibility studies led by nonfederal sponsors in February 2016 in which it clarified that it is generally not authorized to provide assistance to nonfederal sponsors undertaking feasibility studies, except in certain circumstances in which the Corps is permitted to provide limited technical assistance to nonfederal sponsors. The Corps has also developed draft guidance for construction projects led by nonfederal sponsors, which it estimates it will issue later in 2016.
section_title: What GAO Recommends
paragraphs: GAO recommends that the Corps develop guidance for accurate recording of transactions and other relevant information about projects undertaken by nonfederal sponsors. The agency agreed with GAO's recommendation.

section_title: Letter
paragraphs: The U.S. Army Corps of Engineers (Corps) is the world’s largest public  engineering, design, and construction management agency. Located  within the Department of Defense, the Corps has both military and civilian  responsibilities. Through its Civil Works Program, in general, the Corps  plans, designs, constructs, operates, and maintains a wide range of water  resources projects. Congress typically authorizes these projects in water  resources development legislation for various purposes, including  constructing levees for flood risk management, deepening waterways for  navigational purposes, and building structures to control invasive species  for ecosystem restoration.
The Corps typically becomes involved in water resources projects when a  local community perceives a need or experiences a problem that is  beyond its ability to solve, and a nonfederal sponsor contacts the Corps  for assistance. Nonfederal sponsors can be states, tribes, counties, local  governments or agencies, or nonprofit entities. Generally, water  resources development legislation requires that the Corps and a  nonfederal sponsor share the cost of the project, with the split of financial  responsibilities varying by project purpose. The Corps usually manages  these projects, which typically include a feasibility study—an assessment  of whether a project is worth pursuing and how the problem should be  addressed—as well as construction. In managing projects, the Corps  collaborates with the nonfederal sponsor, providing opportunities for the  nonfederal sponsor to help define the scope of the feasibility study and  contribute to project design to ensure that, to the extent possible, factors  affecting sponsoring communities are addressed during the planning  process.
Congress authorizes and appropriates funds for the Corps to conduct  projects, but not every authorized project receives appropriations in a  given year. The Corps includes a prioritized list of projects in the  President’s annual budget request because existing project authorizations  exceed the agency’s annual appropriations available for these projects.  As we have previously reported, as of June 2014, the Corps reported a  backlog in its Civil Works Program of more than 1,000 authorized water  resources construction projects that had not received federal funding.  According to the Congressional Research Service, to concentrate limited  resources and move ongoing projects toward completion, Corps budget  requests have focused on funding projects near completion and have  limited new studies and projects. Moreover, as the Corps’ inventory of  infrastructure ages and grows, an increasing share of the agency’s  appropriations is used for operations and maintenance. As a result, in  recent years, funding for civil works construction projects has declined.  For example, annual appropriations for the Corps’ civil works construction  projects, including new starts, have generally decreased from about $2.3  billion in fiscal year 2006 to $1.6 billion in fiscal year 2015.
When the Corps has been unable to conduct feasibility studies or to  construct authorized water resources projects because of funding  constraints and competing priorities, nonfederal sponsors have at times  initiated the work under existing water resources legislation that allows  nonfederal sponsors to undertake feasibility studies or construction  projects. Under this legislation, when a nonfederal sponsor undertakes  and completes a feasibility study, the sponsor may be eligible for credit  toward its share of the cost of the construction of the project in the  amount equal to the cost of the study had it been undertaken by the  Corps. When a nonfederal sponsor undertakes a construction project or  part of a construction project that has been authorized by Congress, it  can request and may be eligible for credit toward its share of the larger  project or reimbursement for the cost of the federal share of the project,  provided that it meets the requirements and conditions established in the  applicable water resources legislation. In general, the authorities allowing  the Corps to reimburse nonfederal sponsors for construction projects  provide that reimbursement is subject to the enactment of federal  appropriations.
You asked us to examine water resources projects undertaken by  nonfederal sponsors. This report examines (1) the authorities that enable  nonfederal sponsors to undertake a feasibility study or construct a  congressionally authorized water resources project, (2) the extent to  which nonfederal sponsors have undertaken federal water resources  projects and the information the Corps has about such projects, and (3)  Corps officials’ and nonfederal sponsors’ views on the lessons learned  from these projects.
To identify authorities that enable nonfederal sponsors to undertake  feasibility studies or construction projects, we reviewed water resources  development legislation enacted from 1968 to June 2014 and interviewed  Corps headquarters officials. We identified five statutory provisions, as  well as project-specific legislation from 1986 to 2014 under which  nonfederal sponsors were authorized to undertake specific studies or  construction projects with the assistance of Corps officials.
To determine the extent to which nonfederal sponsors have undertaken  federal water resource projects and the information the Corps has on  them, we developed and administered an online data collection  instrument to all 38 Corps districts with civil works responsibilities to  identify water resources projects that nonfederal sponsors had  undertaken from 1986 through 2014 under one or more of the statutory  provisions we identified. All 38 districts responsible for civil works  responded to our data collection request, and we obtained information on  each of the projects led by nonfederal sponsors (e.g., feasibility studies,  construction of water resources projects, or separable elements of the  projects) that the Corps districts identified through the data collection  instrument. We also compared information we collected from the Corps  districts on reimbursements to nonfederal sponsors with information  provided by Corps headquarters. In addition, we reviewed relevant  agency guidance documents, such as Corps-issued engineer regulations  and partnership agreements between the Corps and nonfederal  sponsors, federal standards for internal control, and leading practices for  collaboration.
To obtain views on lessons learned, we conducted telephone interviews  with Corps officials in the 16 districts that oversaw at least one feasibility  study or construction project undertaken by a nonfederal sponsor. We  also interviewed 20 of 28 nonfederal sponsors who agreed to participate  in our interviews about each of the projects they undertook and their  views on the process for conducting nonfederal sponsor-led feasibility  studies and construction projects. We conducted a content analysis on  selected questions related to the advantages and disadvantages of  nonfederal sponsor-led projects and lessons learned from the projects.
In June 2014, Congress enacted the Water Resources Reform and  Development Act of 2014 (WRRDA 2014), which consolidated various  authorities for nonfederal sponsors to undertake such projects, among  other things. Since our work was already under way when WRRDA  2014 became effective, and the Corps is in the process of developing  implementing regulations, our review did not include projects authorized  under this legislation. Appendix I provides further details on our scope  and methodology.
We conducted this performance audit from January 2014 to December  2016, in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
subsections: section_title: Background
paragraphs: The Corps’ Civil Works Program is organized into three tiers:  headquarters, in Washington, D.C.; eight regional divisions that were  generally established according to watershed boundaries; and 38 districts  nationwide (see fig. 1).
Corps headquarters primarily develops policies and guidance to fulfill  agency responsibilities and plans the direction of the organization. The  Assistant Secretary of the Army for Civil Works, appointed by the  President, sets the strategic direction for the agency and has principal  responsibility for the overall supervision of functions relating to the Civil  Works Program, including supervising the Chief of Engineers’ execution  of the program. The Chief of Engineers, a military officer, is responsible  for the execution of the Corps’ civil works and military missions. The  Corps’ divisions have the primary role of coordinating the districts’ civil  works projects and are commanded by military officers. The role of the  districts, also commanded by military officers, is to plan and implement  the studies and projects that Corps divisions and headquarters approve.
subsections: section_title: Process for Feasibility Studies and Construction Projects Led by the Corps
paragraphs: The Corps typically becomes involved in water resources projects when a  local community perceives a need or experiences a problem that is  beyond its ability to solve and contacts the Corps for assistance. Figure 2  illustrates the major steps in the typical process when the Corps leads a  feasibility study or construction project.
If it does not have current statutory authority to study the problem, the  Corps needs congressional authorization before proceeding. Studies are  authorized through legislation, typically a Water Resources Development  Act (WRDA), or in some circumstances, a resolution by an authorizing  committee. In addition to congressional authorization, the Corps needs  an appropriation to conduct the study.
Prior to WRRDA 2014, after receiving authorization and an appropriation,  the Corps conducted studies in two phases: reconnaissance and  feasibility. Corps district offices conducted reconnaissance studies at full  federal expense to determine if the problem warranted federal  participation in a feasibility study and how the problem could be  addressed. During the reconnaissance phase, the Corps also assessed  the level of interest and support from nonfederal entities such as state,  tribal, county, or local governments or agencies that might become  sponsors. If the Corps determined that further study was warranted, the  district office sought agreement from the local sponsor to share costs for  a feasibility study. WRRDA 2014 eliminated the reconnaissance phase  to accelerate the study process and allow the Corps to proceed directly to  the feasibility study. The purpose of the feasibility study is to further  investigate the problem and make recommendations on whether a project  is worth pursuing and how the problem should be addressed. Generally,  the cost of the feasibility study is split equally between the Corps and the  nonfederal sponsor. The district office conducts the study and  documents the results in a feasibility study report that includes a total  project cost estimate based on the recommended plan. The Chief of  Engineers reviews the feasibility report and upon deciding to recommend  the project for construction, signs the final decision document—called the  Chief’s Report—and transmits it through the Assistant Secretary of the  Army for Civil Works and the Office of Management and Budget for  review. The Office of Management and Budget recommends to the  President whether to support or change the Corps’ budget request, and  the President’s budget request is transmitted to Congress. Congress may  then authorize the project’s construction in a WRDA or other legislation.
The purpose of the preconstruction engineering and design phase is to  complete any additional planning studies and all of the detailed technical  studies and designs needed to begin construction. During this time, the  Corps pursues congressional authorization for the project and  construction funding through the annual budget process. Under its budget  formulation process, the Corps prioritizes projects that it determines have  the highest expected returns for the national economy and the  environment, as well as those that reduce risk to human life. When the  Corps receives appropriations, which generally provide funding directly  for individual projects in increments over the course of several years, the  district enters into a cost-sharing agreement with a nonfederal sponsor.  The standard federal and nonfederal cost share percentages for  construction projects can vary by the purpose of the project, as shown in  table 1.
Typically, the Corps manages the construction process, contracting out  the majority of construction work to private engineering and construction  contractors. Throughout the construction phase, the Corps oversees the  contractors’ work, performing routine inspections to ensure it meets the  Corps’ design and engineering specifications. During construction, the  Corps may request and Congress may enact scope or cost changes.  When construction is complete, the Corps may operate and maintain the  constructed project (e.g., navigation projects), or it may turn over  operation and maintenance to the nonfederal sponsor (e.g., most flood  damage reduction projects).
section_title: Process for Feasibility Studies and Construction Projects Led by Nonfederal Sponsors
paragraphs: Alternatively, when a nonfederal sponsor undertakes a feasibility study or  construction project, the sponsor typically manages and funds the total  cost of the feasibility study or construction project and may later seek  reimbursement or credit for the federal share of the work it conducts.  Reimbursement refers to the Corps’ repayment to a nonfederal sponsor  for the federal share of a construction project that the nonfederal sponsor  incurs in undertaking such work. Credit is a noncash offset toward the  local share of a feasibility study or construction project and is an alternate  means for the Corps to compensate a nonfederal sponsor for the federal  share of the costs it incurs when it undertakes such work.
In the case of feasibility studies, a nonfederal sponsor may independently  undertake the study and submit a study report to the Secretary of the  Army. The Assistant Secretary of the Army for Civil Works then forwards  to Congress an assessment of whether the study report and process  complied with applicable federal laws and regulations and any  recommendation the Assistant Secretary has about the project. If  Congress later authorizes the project for construction, the nonfederal  sponsor may be eligible to receive credit for the federal share of the  feasibility study toward the nonfederal share of the construction project  costs.
When a nonfederal sponsor undertakes construction of an authorized  federal water resources project, or separable element thereof, it first  enters into a partnership agreement with the Corps. The agreements  specify how the Corps and nonfederal sponsor will collaborate, generally  stating their respective roles and responsibilities and the terms and  conditions under which both parties will execute their responsibilities. The  agreements also establish the requirements the nonfederal sponsor must  meet to be eligible for credit or reimbursement for the federal share of the  construction costs. In general, to be eligible for credit or reimbursement,  nonfederal sponsors are required to design and construct the project in  accordance with applicable federal and state laws, regulations, standards,  and policies. In addition, the nonfederal sponsor is responsible for all  public and government agency coordination and for obtaining all  necessary federal and state permits. However, the nonfederal sponsor  can contract with the Corps to undertake these efforts at the nonfederal  sponsor’s expense if such work does not delay the completion of other  Corps projects. Corps headquarters and district officials said that to be  eligible for credit or reimbursement for the federal share of the  construction of a project, nonfederal sponsors must meet the same  requirements that the Corps would adhere to if it led the construction  project, such as meeting the Corps’ engineering and design standards.  The Corps maintains an oversight role, performing inspections of the  project as constructed and validating costs that the sponsor submits for  reimbursement or credit. However, the Corps cannot guarantee  reimbursement for the federal share of the costs because such  reimbursement is subject to the enactment of appropriations, as is  generally specified in the agreement between the Corps and nonfederal  sponsor.
section_title: Nonfederal Sponsors May Conduct Feasibility Studies and Construct Water Resources Projects under Various Statutory Authorities
paragraphs: The authorities that allow nonfederal sponsors to undertake feasibility  studies and construction projects have been included in various federal  statutes since 1968. These authorities allow sponsors to take  responsibility for and fund a study or project in its entirety and, upon  completion of the project in accordance with Corps standards, request  reimbursement for the federal portion of project costs under the relevant  cost-sharing formula. We identified five federal statutory authorities that  existed prior to changes enacted in WRRDA 2014 allowing nonfederal  sponsors to undertake a feasibility study or construction of harbors or  navigational improvements, shoreline protection projects, flood control  projects, or generally authorized federal water resources projects (see  table 2). The Corps confirmed that these are the relevant statutes that  allow nonfederal sponsors to undertake federal water resources projects.  In addition to these five broader statutory authorities, Congress may  authorize projects led by nonfederal sponsors in separate, project-specific  legislation. For example, Congress authorized a flood damage reduction  project in the 1993 Defense Appropriations Act.
In June 2014, Congress enacted WRRDA 2014, which amended or  replaced most of the authorities outlined in table 2 and consolidated them  under two new provisions. Specifically, section 1014 of WRRDA 2014  amends sections 203 and 204 of WRDA 1986 to provide authority for  nonfederal sponsors to undertake the study and construction of the full  range of water resources projects. Similar to prior authorities, WRRDA  2014 authorizes nonfederal sponsors to study, design, and construct  water resources projects using their own funding, in accordance with  Corps engineering and design standards. The act also authorizes  nonfederal sponsors to receive credit or reimbursement for nonfederal  funds expended on the federal share of the project upon determination by  the Corps that the completed project adhered to federal law, regulations,  and applicable standards and conditions, such as the Corps’ engineering  standards. A senior Corps headquarters official said that a significant  difference between WRRDA 2014 and previous water resources  development authorization acts is that WRRDA 2014 authorizes  nonfederal sponsors to undertake construction projects that have not yet  been authorized by Congress and to seek reimbursement for those  projects if they are subsequently authorized. Prior legislation provided  that Corps approval could occur and construction begin only after a  project was authorized by Congress.
section_title: The Number of Federal Water Resources Projects Undertaken by Nonfederal Sponsors and the Amounts Reimbursed to Them Cannot Be Reliably Determined
paragraphs: Corps headquarters could not provide the exact number of, or specific  information about, projects undertaken by nonfederal sponsors because it  has delegated the responsibility for overseeing such projects to the  districts. In addition, the information that Corps headquarters collected  from the districts on the number of such projects and reimbursements to  nonfederal sponsors did not match the information that districts provided  to us.
subsections: section_title: Responsibility for Overseeing Projects Undertaken by Nonfederal Sponsors Has Been Delegated to the Districts
paragraphs: Corps headquarters officials told us that they could not provide an exact  number of, or specific information about projects undertaken by  nonfederal sponsors, such as the number of each type of project  (feasibility study or construction), completion status, and project costs,  because districts are responsible for overseeing these projects. Corps  headquarters officials also said that the Corps does not have a  comprehensive source of information about these projects at the  headquarters level, but they estimated that nonfederal sponsors have  undertaken “less than a handful” of feasibility studies or construction  projects. Consequently, to identify the extent to which nonfederal  sponsors have undertaken federal water resources projects, we  requested information directly from all 38 district offices responsible for  civil works. Corps district offices maintain a variety of information on such  projects, which they provided in response to our request. The information  they provided offers examples of the range of federal water resources  projects undertaken by nonfederal sponsors. For example, Corps districts  reported that from 1986 through 2014, 28 nonfederal sponsors undertook  32 water resources projects: 11 feasibility studies and 21 construction  projects. Sixteen of the 38 Corps districts responsible for civil works  projects oversaw these projects, which varied in geographic location and  project type. According to the data Corps districts provided in response to  our request, a majority (21) of the 32 water resources projects undertaken  by nonfederal sponsors were located in California and the states along  the Gulf of Mexico: Florida, Louisiana, Mississippi, and Texas. Other  water resources projects were scattered across the United States. For  instance, Georgia, Illinois, Kansas, Nebraska, Nevada, Oklahoma,  Oregon, and Virginia each had one project led by a nonfederal sponsor,  and Alaska had two projects.
In addition to geographic variation, nonfederal sponsors undertook  projects for different project purposes and at different phases of the  project, based on responses from Corps district offices. In total,  nonfederal sponsors undertook 11 feasibility studies: 8 for navigation and  3 for flood damage reduction. They also undertook 21 construction  projects: 4 for navigation, 16 for flood damage reduction, and 1 for  ecosystem restoration. As of September 2014, the feasibility studies and  construction projects nonfederal sponsors had undertaken were at  various stages of completion, according to information provided by Corps  district offices. Specifically, nonfederal sponsors had completed more  construction projects than feasibility studies—14 of 21 construction  projects and 3 of 11 feasibility studies. The Corps district offices reported  that the total estimated costs of feasibility studies and construction  projects for each project undertaken by nonfederal sponsors ranged from  approximately $500,000 to just over $600 million and, overall, totaled  approximately $4 billion. (See app. II for detailed information provided by  the Corps districts.)
section_title: Information about Reimbursements to Nonfederal Sponsors from Corps Districts and Corps Headquarters Differed
paragraphs: As part of their response to our request, Corps districts provided  information about reimbursements to nonfederal sponsors for the federal  share of projects they undertook. In addition, Corps headquarters officials  provided us with information they collected from the districts about  reimbursements to nonfederal sponsors who undertook projects. The  headquarters officials told us that approximately twice a year Corps  headquarters collects information from the districts on planned and actual  reimbursements to nonfederal sponsors to help ensure that the agency  does not exceed annual statutory reimbursement limits. However, these  officials said they do not have a process for reviewing the information  they receive from districts to ensure its accuracy and reliability.
We compared the reimbursement data that headquarters collected from  the districts with the reimbursement data the districts provided to us and  found the following areas of inconsistency:  Information on the total number of reimbursed projects was  inconsistent. According to information provided by Corps districts in  response to our data request, the Corps reimbursed nonfederal  sponsors for all or part of the federal share of 13 construction projects  nonfederal sponsors undertook from 1986 through 2014. However,  according to Corps headquarters data, the Corps reimbursed  nonfederal sponsors for the federal share of 20 projects. When we  compared the list of 13 projects we compiled from information  provided by the districts with the list of 20 projects provided by Corps  headquarters, we found only 5 projects led by nonfederal sponsors for  which the Corps issued reimbursements that were common to both  lists.
Information on the total amount of reimbursements was  inconsistent. Corps headquarters data on the total reimbursement  amount were also inconsistent with the total reimbursement amount  provided to us by the districts. According to information provided by  Corps districts in response to our data request, the Corps reimbursed  nonfederal sponsors approximately $266 million toward the federal  share of construction projects undertaken by nonfederal sponsors  from 1986 through 2014. However, according to Corps headquarters  data, the Corps reimbursed nonfederal sponsors a total of just under  $207 million for projects undertaken during the same period.
Reimbursed amounts for specific projects did not always match.
Of the five projects led by nonfederal sponsors that were common to  both lists, the reimbursement amounts did not match for two of them.  In one case, the district office reported a reimbursement of $5 million,  and Corps headquarters reported a reimbursement of $15.6 million.  For the second case, the district office reported a reimbursement of  $142.8 million, and Corps headquarters reported a reimbursement of  $25.7 million.
To understand these differences, we asked Corps headquarters to  reconcile the list of projects and reimbursement amounts provided to us  by the districts with the data they collected from the districts. Corps  headquarters officials confirmed that the 13 projects the districts provided  to us received reimbursement. Corps headquarters officials also identified  an additional 13 projects led by nonfederal sponsors that received  reimbursements but were not provided to us by the districts—increasing  the total amount of reimbursements to nonfederal sponsors to just under  $400 million.
Corps headquarters officials could not fully explain why differences  existed between the number of projects and reimbursement amounts  provided to us by the districts and the information they collected from the  districts for the same time period. Initially, Corps headquarters officials  said the differences may have resulted because the districts provided  information to us at a different time than when they provided information  to headquarters. However, because our data requests to both the districts  and headquarters were for the same data (projects undertaken by  nonfederal sponsors under certain authorities) covering the same time  frame (1986 through 2014), the projects and reimbursement amounts  should have matched. Subsequently, Corps headquarters officials said  that a possible explanation for the differences in the data the districts  provided to us and the data Corps headquarters collected from the  districts pertained to when headquarters began collecting the information.  Specifically, Corps headquarters officials said that they began collecting  annual reimbursement data from district offices in 2006, when Congress  enacted annual reimbursement limits. Corps headquarters officials said  that, as a result, reimbursement information for projects led by nonfederal  sponsors that had agreements signed before 2006 may be less reliable  than the reimbursement information for projects with agreements signed  after 2006. In addition, headquarters officials said that districts did not  report projects authorized under a particular provision (section 206 of  WRDA 1992) as we requested but included them when reporting  reimbursement data to Corps headquarters.
Corps headquarters officials stated they were not aware of Corps policies  or procedures that provide guidance to the districts on the type of  information to collect and maintain on projects led by nonfederal  sponsors, in general, including what information to record; how, when,  and where to record it; and how long to maintain it. Federal standards for  internal control call for internal controls and all transactions and other  significant events to be clearly documented in management directives,  administrative policies, or operating manuals and for accurate and timely  recording of transactions and events. Without developing documented  guidance for districts to have procedures for accurate recordkeeping for  transactions and other relevant information related to projects led by  nonfederal sponsors, the Corps does not have reasonable assurance that  districts will consistently record information on such projects and that the  information districts provide to headquarters on such projects will be  accurate and reliable.
section_title: Corps District Officials and Nonfederal Sponsors Identified Several Lessons Learned Based on Their Experiences with Projects Led by Nonfederal Sponsors
paragraphs: Corps district officials and nonfederal sponsors we interviewed identified  several lessons learned from feasibility studies and construction projects  undertaken by nonfederal sponsors. These officials provided their views  on what worked well on projects led by nonfederal sponsors and the  advantages and disadvantages of nonfederal sponsors undertaking such  projects, as well as challenges and opportunities for improvement related  to these projects. (See table 4 in app. I for the interview questions we  asked Corps districts and nonfederal sponsors to obtain this information.)
subsections: section_title: Corps District Officials and Nonfederal Sponsors Identified Partnerships and Communication As Areas That Worked Well on Projects Led by Nonfederal Sponsors
paragraphs: In discussing what worked well on projects led by nonfederal sponsors,  Corps district officials and nonfederal sponsors we interviewed identified  various factors. Corps district officials most frequently cited partnering  with experienced nonfederal sponsors, while nonfederal sponsors most  frequently cited regularly communicating with the Corps. Specifically,  Corps officials from 6 of the 16 districts we interviewed said that  nonfederal sponsors’ prior experience partnering with the Corps on  projects contributed to their success in conducting feasibility studies or  construction projects in a timely manner. For example, Corps officials in  one district said they have long been working with a particular nonfederal  sponsor who was very familiar with the Corps’ processes, which  contributed to the nonfederal sponsor’s ability to build a large, extensive  flood damage reduction project in just 3 years. Corps officials from  another district said that the key contact for a nonfederal sponsor that is  conducting three separate flood control projects has a good  understanding and knowledge of the Corps’ processes and, as a result, is  often called upon to assist other nonfederal sponsors. Similarly, three  nonfederal sponsors said that learning the Corps’ processes and  procedures has helped their organizations grow and strengthen their  relationship with the Corps and potentially benefit future collaboration.
While Corps district officials identified partnering with experienced  nonfederal sponsors as a leading factor, nonfederal sponsors we  interviewed most commonly (8 of 20) cited regular communication with  the Corps as a factor that led to successful partnerships. According to  these nonfederal sponsors, regular communication with the Corps— ranging from several times a week to quarterly—led to successful project  implementation, including helping to ensure everyone was “rowing the  boat in the same direction,” meeting Corps standards, and adhering to  project timelines. Another nonfederal sponsor said that in addition to  holding quarterly meetings with the Corps, Corps district officials also  attend the sponsor’s board meetings, which has been helpful to the  partnership because it “keeps everyone on the same page.” These  nonfederal sponsor views were also shared by officials from eight Corps  districts we interviewed, who noted that early and frequent  communication contributed to successful projects.
section_title: Corps District Officials and Nonfederal Sponsors Identified Several Advantages of Projects Led by Nonfederal Sponsors
paragraphs: Both Corps district officials and nonfederal sponsors we interviewed most  commonly identified similar advantages of nonfederal sponsors  undertaking feasibility studies or construction projects: that consistent  nonfederal sponsor funding led to expedited project implementation and  increased sponsor flexibility to address local priorities. Specifically,  officials from most of the Corps districts with projects led by nonfederal  sponsors (13 of 16) noted that consistently available funding from  nonfederal sponsors was a key advantage of nonfederal sponsors  undertaking federal water resources projects. One Corps district official  characterized the authority for nonfederal sponsors to implement projects  as “a very powerful tool to get projects done because the federal budget  continues to be tight.” According to another district official, a nonfederal  sponsor’s funding helped mitigate a delay completing a project for which  the Corps expected an appropriation in fiscal year 2003 but did not  receive until fiscal year 2007. In another district, the nonfederal sponsor’s  funding for and implementation of a construction project enabled the  sponsor and the Corps to complete a flood damage reduction project to  construct a reservoir in accordance with a court-ordered deadline.
Similarly, most nonfederal sponsors we interviewed (14 of 20) indicated  that, in general, providing consistent funding has led to less costly or  faster project implementation than when the Corps leads feasibility  studies or construction projects. For example, a nonfederal sponsor  estimated that sponsors can implement design and construction phases  that are 25 to 30 percent less costly than Corps-led design and  construction phases. Another nonfederal sponsor said that it completed  the remaining 6 miles of an 8-mile channel improvement project in the  time it took the Corps to complete the first 2 miles, at a cost of  approximately $25 million less than it would have cost if the Corps had  continued to build the project. In addition to cost savings, another  nonfederal sponsor said that it chose to lead a harbor deepening  feasibility study and construction project for its port because it thought it  could complete the work faster than if the Corps led the project. One  nonfederal sponsor explained that expediting project completion is  important because, in the case of flood control projects, a completed  project can help save lives and reduce property damage. For navigation  projects, expedited project completion may result in economic benefits,  such as increased commerce and tourism from deeper-draft ships having  the ability to enter ports that have been deepened, according to one  nonfederal sponsor. In 2013, we reported that, among other factors,  less than optimal federal funding contributes to cost increases on Corps- led projects, which result from the need to break work into smaller  segments and modify contracts to extend completion schedules.  Consistent with those findings and the views of nonfederal sponsors,  officials from 15 of the 16 Corps districts we interviewed discussed the  advantages of nonfederal sponsors’ ability to act sooner and expedite  project timelines, such as that the nonfederal sponsors’ more consistent  funding streams may help mitigate project delays and associated cost  escalations and enable communities to realize the benefits of projects  sooner.
section_title: Corps District Officials and Nonfederal Sponsors Identified Concerns about Reimbursement as the Main Disadvantage of Projects Led by Nonfederal Sponsors
paragraphs: Corps district officials and nonfederal sponsors identified nonfederal  sponsors not receiving reimbursement for the federal share of water  resources projects as a primary disadvantage of undertaking such  projects. Specifically, Corps officials in 6 of the 16 districts we interviewed  noted that construction projects may be authorized in legislation but may  not receive appropriated funds, which may result in nonfederal sponsors  not getting reimbursed for projects they undertook. Ten of the 20  nonfederal sponsors we interviewed cited the risk of not being  reimbursed, especially given constrained federal budgets and the Corps’  funding priorities, as a primary disadvantage of and potential deterrent to  undertaking projects. Nonfederal sponsors said they understood that  reimbursement from the Corps is subject to appropriated funds. However,  one nonfederal sponsor said that others have been deterred from  undertaking projects because of reimbursement concerns. That sponsor  also said that it could be difficult in the longer term to maintain a  collaborative partnership with the Corps if the likelihood of reimbursement  remains low.
Relatedly, one nonfederal sponsor said that in addition to providing full  financial support for the project it undertook, it also spent time and  resources—estimated at nearly $600,000—to obtain its reimbursement  from the Corps. In three other cases, nonfederal sponsors said the Corps  did not conduct its final accounting and reimbursement in a timely  manner, placing additional burdens on nonfederal sponsors. For example,  in two cases, the Corps is conducting in 2016 the financial closeout for  projects that the nonfederal sponsors completed in 2006. One of these  nonfederal sponsors had to incur additional public debt to maintain the  Corps’ escrow requirements while the Corps completed its final  accounting process. In another case, a nonfederal sponsor said it took  the Corps 6 years to reimburse them and 11 years to close out the project  after the nonfederal sponsor completed it. Corps headquarters officials  agreed that taking 10 years to perform the financial closeout for these  projects was a long time. However, the officials said that outstanding  reimbursement claims, contract modifications, and delays in validating  documentation to support nonfederal sponsor credits were some of the  reasons for the protracted time frame.
section_title: Corps District Officials and Nonfederal Sponsors Identified Challenges and Opportunities for Improvement
paragraphs: Corps officials and nonfederal sponsors we interviewed identified several  challenges, as well as opportunities for improvement related to guidance  and information sharing. Specifically, both cited challenges with the  agency’s guidance for nonfederal sponsors undertaking feasibility studies  or construction projects related to the clarity of roles and responsibilities,  as well as the project implementation process and necessary  documentation.
Corps officials from three districts we interviewed said that it was  challenging not to have guidance clearly defining each party’s roles and  responsibilities. Specifically, a district official said that in one case the  district worked with an experienced nonfederal sponsor that paid the  Corps $100,000 for oversight to help ensure that its project would be  eligible for reimbursement. However, the nonfederal sponsor also hired its  own contractors to manage quality control and assurance. The Corps  district official and nonfederal sponsor said this created some tension  between the Corps and nonfederal sponsor regarding what constituted a  reasonable level of oversight for reimbursable projects. The Corps district  official indicated that guidance clarifying roles and responsibilities and  level of oversight may help avoid duplication of efforts and cost. Another  district official stated that guidance on roles and responsibilities, as well  as the range of work products expected—such as cost estimates—may  help ensure a common understanding of expectations from the onset of a  study. The official said that the district worked independently with the  nonfederal sponsor to provide supplemental direction—specifying the  type of reviews required and work products expected—to more clearly  communicate the expectations involved in each step in the Corps’ review  process. In another district, the official said that the nonfederal sponsor  became frustrated with delays in the Corps’ review process and a lack of  clarity regarding who within the Corps was responsible for communicating  decisions to the nonfederal sponsor. According to officials from that  district, the result was that the nonfederal sponsor bypassed them and  communicated directly with the Assistant Secretary of the Army for Civil  Works for action and information on its project.
In addition, both Corps district officials and nonfederal sponsors we  interviewed experienced challenges with the Corps’ project  implementation process. Corps district officials from 7 of the 16 districts  we interviewed said that it can be challenging to work with nonfederal  sponsors undertaking water resources projects who have limited  experience partnering with the Corps since they tend to underestimate  what it takes to implement projects. One Corps district official said it can  be “very painful” and take a lot of effort to help less experienced sponsors  understand the complexities of undertaking water resources projects  because the detailed information they need is not available in guidance  documents. In addition, officials from another district said that it is  challenging to convey to nonfederal sponsors the Corps’ standards and  criteria for reimbursement eligibility.
Nonfederal sponsors also shared similar views on challenges related to  the Corps’ project implementation process. Eight of the 20 nonfederal  sponsors we interviewed said the Corps does not have clear guidance on  the project implementation process, which in some cases hindered the  nonfederal sponsors’ ability to efficiently implement projects. As one  nonfederal sponsor stated, “the Corps has no clear-cut guidance for  nonfederal sponsors on how to navigate the process.” The sponsor also  said that often projects were hampered by the Corps’ identification of  requirements after the fact, or as a result of policy changes that occurred  during the process, which affected both project time frames and cost. In  addition, nonfederal sponsors said that the multiple, lengthy reviews  within the Corps—at the district, division, and headquarters levels— contributed to confusion and delays and added costs during project  implementation. For example, one nonfederal sponsor said it took nearly  a year and a half, after submitting a letter indicating its interest in  undertaking a project, to sign an agreement with the Corps enabling the  sponsor to initiate the project. Two other sponsors noted that the process  of making changes to a project’s design was cumbersome because of the  number and levels of review required before reaching the Chief of  Engineers in Corps headquarters.
Officials from more than half of the Corps districts we interviewed (10 of  16) said they do not rely on the agency’s guidance when collaborating  with nonfederal sponsors conducting feasibility studies and construction  projects. Instead, these officials indicated that they provide verbal  direction to nonfederal sponsors as needed throughout the feasibility  study or construction project for various reasons, including that the  guidance is outdated, does not clearly establish the roles and  responsibilities related to projects led by nonfederal sponsors, and does  not provide the level of specificity that nonfederal sponsors need. For  example, when we examined the guidance, we found that the Corps’  primary guidance—the Planning Guidance Notebook—has not been  updated to reflect policy and process changes that the Corps has made  since its publication in 2000, such as information related to the Corps’  planning process for feasibility studies. In addition, the guidance does  not delineate the specific roles and responsibilities of the Corps or  nonfederal sponsors for projects led by nonfederal sponsors.
In February 2016, the Corps issued implementation guidance for  feasibility studies led by nonfederal sponsors under WRRDA 2014. In  this guidance, the Corps clarified that it is generally not authorized to  provide assistance to nonfederal sponsors undertaking feasibility studies,  except in certain circumstances in which the Corps is permitted to provide  limited technical assistance under the Intergovernmental Cooperation Act.  In addition, the Corps has developed draft guidance for construction  projects led by nonfederal sponsors, which a Corps headquarters official  said is being reviewed and is estimated to be issued in 2016.
section_title: Conclusions
paragraphs: Nonfederal sponsors have played an important role in undertaking federal  water resources projects when the Corps has been unable to do so  because of funding constraints and competing priorities. However, the  number of federal water resources projects undertaken by nonfederal  sponsors and the amounts reimbursed to them cannot be reliably  determined because the Corps does not have guidance for districts— which are responsible for overseeing such projects—on how to collect,  record, and maintain accurate information about these projects. Without  documented guidance for districts that result in consistent procedures for  accurate recordkeeping for transactions and other relevant information  related to projects led by nonfederal sponsors, the Corps does not have  reasonable assurance that districts will consistently record information on  such projects and that the information provided to headquarters on such  projects will be accurate and reliable.
section_title: Recommendation for Executive Action
paragraphs: To ensure that the U.S. Army Corps of Engineers has accurate  information about federal water resources feasibility studies and  construction projects led by nonfederal sponsors, we recommend that the  Secretary of Defense direct the Secretary of the Army to direct the Chief  of Engineers and Commanding General of the U.S. Army Corps of  Engineers to establish documented guidance for accurate recording of  transactions and other relevant information related to these projects.
section_title: Agency Comments
paragraphs: We provided a draft of this report for review and comment to the  Department of Defense. In its written comments, reprinted in appendix III,  the department concurred with our recommendation and stated that the  Corps will establish documented guidance for accurate recording of  transactions and other relevant information related to federal water  resources studies and projects led by nonfederal sponsors within 18  months and distribute to the districts.
We are sending copies of this report to the appropriate congressional  committees, the Secretary of Defense, and other interested parties. In  addition, the report is available at no charge on the GAO website at  http://www.gao.gov.
If you or your staff members have any questions about this report, please  contact me at (202) 512-3841 or fennella@gao.gov. Contact points for  our Offices of Congressional Relations and Public Affairs may be found  on the last page of this report. GAO staff who made key contributions to  this report are listed in appendix IV.
section_title: Appendix I: Objectives, Scope and Methodology
paragraphs: This report examines (1) the authorities that enable nonfederal sponsors  to undertake a feasibility study or construct an authorized water resources  project, (2) the extent to which nonfederal sponsors have undertaken  federal water resources projects and the information the Corps has about  them, and (3) Corps officials’ and nonfederal sponsors’ views on the  lessons learned from these projects.
To identify authorities that enable nonfederal sponsors to undertake  feasibility studies or construction projects, we reviewed water resources  development legislation enacted from 1968 to June 2014 and identified  five statutory provisions. In addition, we identified project-specific  legislation that authorized nonfederal sponsors to undertake specific  water resources projects. We shared our list with Corps headquarters  officials to ensure that we had identified all relevant statutes.
To determine the extent to which nonfederal sponsors have conducted  federal water resources projects and the information the Corps has on  them, we developed an online data collection instrument. We discussed  the types of information available and terminology with Corps  headquarters, division, and district officials. We used water resources  development legislation from 1986 as the starting point for our data  request because this legislation fundamentally changed the way the  Corps planned and financed federal water resources projects. We  pretested the data collection instrument with one district and made  adjustments to the instrument on the basis of this pretest. We  administered the data collection instrument to all 38 Corps districts  responsible for civil works projects. Using this instrument, we asked each  district to identify feasibility studies or construction projects from the  enactment of the Water Resources Development Act of 1986 that  nonfederal sponsors undertook in their districts under one or more of the  statutory provisions we identified, or under a project-specific  authorization. The data collection period was approximately May to  September 2014. We achieved a 100-percent response rate. Using the  data obtained with the instrument, we totaled the number of projects led  by nonfederal sponsors that were reported by districts. We also produced  descriptive information about these projects, including a summary of  project locations, project purposes, project phases, completion status,  and total estimated project costs using the answers to the following  questions from the online data collection instrument shown in table 3.
We clarified and confirmed data we obtained through the data collection  instrument through follow-up interviews with Corps district officials. We  also compared information we collected from the Corps districts on  reimbursements to nonfederal sponsors with information provided by  Corps headquarters on reimbursements to nonfederal sponsors. Through  this process, we identified a number of discrepancies between the  reimbursement information on projects led by nonfederal sponsors  reported to us by Corps districts and the information provided by Corps  headquarters. We interviewed Corps headquarters officials to understand  the potential reasons for the discrepancies and asked them to reconcile  the differences. They added 13 projects to the list we collected directly  from the districts and modified some of the reimbursement amounts, but  they did not provide satisfactory explanations for all of the changes.  Therefore, the reimbursement data are reliable for reporting an estimated  aggregate reimbursement amount to give a sense of magnitude, but they  may not be accurate at the individual project level, as discussed in the  report. We also reviewed relevant agency guidance documents, such as  Corps-issued engineer regulations and policy documents that provide  implementation guidance, as well as partnership agreements between the  Corps and nonfederal sponsors, federal standards for internal control,  and leading practices for collaboration.
To obtain views on lessons learned from projects led by nonfederal  sponsors, we conducted semistructured telephone interviews with Corps  officials from 16 districts that reported overseeing at least one feasibility  study or construction project undertaken by a nonfederal sponsor. We  conducted similar semistructured telephone interviews with several of the  nonfederal sponsors that undertook feasibility studies or construction  projects to get their perspectives on the lessons learned from these  projects. Specifically, we interviewed 20 of the 28 sponsors undertaking  32 projects. The remaining nonfederal sponsors either did not respond to  our request for an interview or did not have a representative with direct  knowledge of the project with whom we could speak. We analyzed the  information from the interviews we conducted with district officials and  nonfederal sponsors qualitatively, including conducting a content analysis  on selected questions related to the advantages and disadvantages of  projects led by nonfederal sponsors and lessons learned from these  projects. Table 4 shows the questions we asked the Corps district officials  and nonfederal sponsors to obtain their views on lessons learned.
We conducted this performance audit from January 2014 to December  2016 in accordance with generally accepted government auditing  standards. Those standards require that we plan and perform the audit to  obtain sufficient, appropriate evidence to provide a reasonable basis for  our findings and conclusions based on our audit objectives. We believe  that the evidence obtained provides a reasonable basis for our findings  and conclusions based on our audit objectives.
section_title: Appendix II: Selected Information U.S. Army Corps of Engineers Districts Reported on Feasibility Studies and Construction Projects Led by Nonfederal Sponsors, 1986 Through 2014
paragraphs: In response to our data collection request, Corps districts provided a  variety of information on federal water resources projects undertaken by  nonfederal sponsors—specifically, feasibility studies and construction  projects. Table 5 lists the project names, responsible districts, and project  locations of federal water resources projects undertaken by nonfederal  sponsors, 1986 through 2014, as reported by Corps district offices.
Corps districts reported that from 1986 through 2014, 28 nonfederal  sponsors undertook 32 water resources projects: 11 feasibility studies  and 21 construction projects. Sixteen of the 38 Corps districts responsible  for civil works projects oversaw these projects, which varied in geographic  location and project type. According to the data Corps districts provided in  response to our request, a majority (21) of the 32 water resources  projects undertaken by nonfederal sponsors were located in California  and the states along the Gulf of Mexico: Florida, Louisiana, Mississippi,  and Texas. Other water resources projects were scattered across the  United States. For example, Georgia, Illinois, Kansas, Nebraska, Nevada,  Oklahoma, Oregon, and Virginia each had one project led by a nonfederal  sponsor, and Alaska had two projects (see fig. 3).
In addition to geographic variation, nonfederal sponsors undertook  projects for different project purposes and for different phases of the  project, based on responses from Corps district offices. In total,  nonfederal sponsors undertook 11 feasibility studies: 8 for navigation and  3 for flood damage reduction. They also undertook 21 construction  projects: 4 for navigation, 16 for flood damage reduction, and 1 for  ecosystem restoration. As of September 2014, the feasibility studies and  construction projects nonfederal sponsors had undertaken were at  various stages of completion, according to information provided by Corps  district offices. Specifically, nonfederal sponsors had completed more  construction projects than feasibility studies—14 of 21 construction  projects and 3 of 11 feasibility studies. The Corps district offices reported  that the total estimated costs of feasibility studies and construction  projects for each project undertaken by nonfederal sponsors ranged from  approximately $500,000 to just over $600 million, and overall, totaled  approximately $4 billion. (See table 3 in app. I for the data collection  instrument questions we asked Corps districts to obtain this information.)
section_title: Appendix III: Comments from the U.S. Army Corps of Engineers
section_title: Appendix IV: GAO Contact and Staff Acknowledgments
subsections: section_title: GAO Contact
section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Vondalee R. Hunt (Assistant  Director), Richard Burkard, Joanna Chan, John Delicath, Juli Digate,  Mitchell Karpman, Stuart Kaufman, Jamie Meuwissen, John Mingus, Carl  Ramirez, Anne Rhodes-Kline, and John Scott made key contributions to  this report.