U.S. Insular Areas: Opportunities Exist to Improve Interior's Grant Oversight and Reduce the Potential for Mismanagement
Published: 2010-03-16T00:00:00

Fast Facts:

Highlights:
section_title: Why GAO Did This Study
paragraphs: The U.S. insular areas of American Samoa, the Commonwealth of the Northern Mariana Islands (CNMI), Guam, and the U.S. Virgin Islands (USVI) face serious economic and fiscal challenges and rely on federal funding to deliver critical services. The Department of the Interior (Interior), through its Office of Insular Affairs (OIA), provides roughly $70 million in grant funds annually to increase insular area self-sufficiency. GAO and others have raised concerns regarding insular areas' internal control weaknesses, which increase the risk of grant fund mismanagement. GAO was asked to determine (1) whether previously reported internal control weaknesses have been addressed and, if not, to what extent they are prevalent among OIA grant projects; (2) the challenges, if any, insular areas face in implementing OIA grant projects; and (3) the extent to which OIA has taken action to improve grant project implementation and management. GAO reviewed a random sample of 173 OIA grant files, conducted site visits, and interviewed OIA and insular area officials.
section_title: What GAO Found
paragraphs: Internal control weaknesses previously reported by GAO and others continue to exist, and about 40 percent of grant projects funded through OIA have these weaknesses, which may increase their susceptibility to mismanagement. These weaknesses, including insufficient reporting and record-keeping discrepancies, can be categorized into three types of activities that may increase the possibility of mismanagement: grant recipient activities, joint activity between grant recipients and OIA, and OIA's grant management activities. Weaknesses associated with grant recipient activities were the most common issues GAO found, encompassing 62 percent of the weaknesses exhibited by OIA grant projects. The joint activity--redirection of grant funds, a practice by which OIA allows insular areas to move grant funds between projects--accounts for 24 percent of the weakness present in OIA grant projects. While project redirection can be a helpful tool, it can contribute to project mismanagement if not used appropriately. Weaknesses associated with OIA grant management activities, including discrepancies in grant management data, account for 14 percent of the weaknesses in grant projects. Insular areas confront a number of challenges in implementing OIA grants, which can be categorized into project planning challenges such as frequently changing local priorities; project management challenges such as limited local capacity for project implementation; and external risk factors, including the declining economic conditions of American Samoa and the CNMI. While some of these challenges are beyond the insular areas' control, others result from decisions made by the insular area governments. These challenges can result in implementation delays for grant projects. Over the past 5 years, OIA has taken steps to improve project implementation and management. Most notably, OIA established incentives for financial management improvements and project completion by tying a portion of each insular area's annual allocation to the insular governments' efforts in these areas--such as their efforts to submit financial and status reports on time. In addition, OIA established expiration dates for grants to encourage expeditious use of the funds. Despite these and other efforts, some insular areas are still not completing their projects in a timely and effective manner, and OIA faces key obstacles in compelling them to do so. Specifically, (1) current OIA grant procedures provide few sanctions for delayed or inefficient projects, and the office is not clear on its authorities to modify its policies; (2) resource constraints impede effective project completion and proactive monitoring and oversight; (3) inconsistent and insufficiently documented project redirection policies do little to discourage insular areas from redirecting grant funds in ways that hinder project completion; and (4) OIA's current data system for tracking grants is limited and lacks specific features that could allow for more efficient grant management. Interior is currently phasing in an agencywide database that is scheduled to be implemented in OIA in 2011, but to be effective, it will require some flexibility to address OIA's needs for grants management.

section_title: Letter
paragraphs: U.S. insular areas—which include American Samoa, the Commonwealth of  the Northern Mariana Islands (CNMI), Guam, the U.S. Virgin Islands  (USVI), and three Freely Associated States (the Federated States of  Micronesia, Palau, and the Republic of the Marshall Islands)—face serious  economic and fiscal challenges. Consequently, these insular areas, some of  which are under U.S. sovereignty, and some of which are independent  nations that have signed Compacts of Free Association with the United  States, rely on federal funding to support their local governments and  deliver critical services. The Department of the Interior (Interior), through  its Office of Insular Affairs (OIA), provides approximately $400 million  annually in financial assistance to insular area governments—roughly  $70 million of which is awarded annually as grants to insular areas for  capital improvement projects, operations and maintenance improvement  projects, technical assistance, and other purposes, to increase the self- sufficiency of the insular areas. For example, capital improvement project  funds are used to build roads, schools, and medical facilities; operations  and maintenance improvement project funds support basic operations of  waste treatment facilities or maintenance of school facilities; and technical  assistance funds are used to conduct feasibility studies or train  government staff. Although OIA grants are essential in supporting insular  areas’ economies, we and others—including Interior’s Office of Inspector  General—have had long-standing concerns with insular area governments’  internal control weaknesses, which increase their risk of fraud, waste,  abuse, and mismanagement. In addition, several cases of misconduct and  mismanagement involving insular areas have raised additional concern  about the capacity of OIA to monitor grants and detect cases of  mismanagement. Two examples are (1) extensive delays in the  construction of a dialysis facility in the CNMI that was provided funds in  1997 but as of August 2009 had yet to be certified and utilized, and (2) the  2007 indictment of two high ranking American Samoa officials charged  with fraud, bribery, and obstruction pertaining to federal grants.
Internal control is an integral component of an organization’s management  that provides reasonable assurance that the following objectives are being  achieved—effectiveness and efficiency of operations, reliability of  financial reporting, and compliance with applicable laws and regulations.  Internal control also serves as the first line of defense in safeguarding  assets and preventing and detecting errors and fraud. Under the federal  standards for internal control, federal agencies are to employ internal  control activities—the policies, procedures, techniques, and mechanisms  that enforce management’s directives—that are integral to the  accountability for stewardship of government resources and achieving  effective results, and help ensure that actions are taken to address risks.  Examples of such internal control activities include accurate and timely  recording of transactions and events and controls over information  processing. If federal agencies do not use effective internal control  activities, or have weaknesses in their internal controls, they can increase  the risk of potential mismanagement or misuse and waste of grant funds.
In this context, you asked us to determine (1) whether previously reported  internal control weaknesses have been addressed and, if not, to what  extent they are prevalent among OIA grant projects; (2) the challenges, if  any, insular areas face in implementing OIA grant projects; and (3) the  extent to which OIA has taken action to improve grant project  implementation and management.
In conducting our work for our first objective, we focused on insular areas  that receive noncompact types of grants—including American Samoa, the  CNMI, Guam, the USVI, and the Freely Associated States. To identify key  internal control weaknesses that have been identified in the past as well as  key internal controls relevant to grant management, we first summarized  the weaknesses that were identified in our insular area related reports  published between 2000-2009, Interior Office of Inspector General reports  on insular areas over that period, and the three most recent Single Audit  reports—or audited financial statements—for American Samoa, the CNMI,  Guam, and the USVI. We also reviewed several documents outlining  policies and procedures applicable to OIA’s grant management and  oversight responsibilities to determine the internal control activities that  OIA has in place, including the Standards for Internal Control in the  Federal Government, OIA and Interior-specific grant management policies  and procedures, and best practices in grant management. From our review  of these documents, we determined that the following internal control  activities are particularly relevant to OIA: accurate and timely recording of  transactions and events, appropriate documentation of transactions and  internal control, proper execution of transactions and events, and controls  over information processing. We reviewed a random probability sample of  173 grant project files to determine whether and the extent to which  internal control weaknesses are still prevalent. We were able to project  our sample results to the 1,771 OIA grant projects in the grant  management database as of April 27, 2009. We ranked the projects  according to the prevalence of internal control weaknesses and selected  24 of the grant projects with the highest prevalence of internal control  weaknesses to review in more detail during our work for objectives two  and three; those grant projects were located in American Samoa, the  CNMI, Guam, and the USVI. To identify insular area challenges in  implementing OIA grants, we visited the four insular areas to follow up on  the 24 selected grant projects. During these site visits, we physically  inspected grant projects whenever possible and interviewed project  managers, insular government officials, and where applicable, OIA field  representatives. To determine the extent to which OIA has taken action to  improve grant project implementation and management, we built upon  information obtained through our file reviews and site visits by reviewing  OIA policies, procedures, and other documents and by interviewing OIA  grant managers and division directors regarding OIA’s policies and  procedures, grant management, and related challenges. A more detailed  description of our scope and methodology is presented in appendix I.
We conducted this performance audit from March 2009 to March 2010, 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 insular areas of American Samoa, the CNMI, and Guam are located in  the Pacific Ocean, some 4,100 to 6,000 miles from the U.S. mainland  (see fig. 1). The USVI is located about 1,000 miles southeast of Miami in  the Caribbean Sea.
American Samoa, which had a population of about 65,628 in 2009, lies  about 2,600 miles southwest of Hawaii and consists of seven islands  covering a land area of 76 square miles. The main island of Tutuila has  very little level land and is mostly rugged. Agricultural production on the  island is limited by the scarcity of arable land, and tourism is impaired by  the island’s remote location and lack of tourist-rated facilities. Most of  American Samoa’s economic activity—primarily tuna canning—and  government operations take place on Tutuila in the Pago Pago Bay area. In  September 2009, one of American Samoa’s two canneries closed  operations.
The CNMI—a group of 14 islands with a total land area of 183 square  miles—is located in the western Pacific Ocean, just north of Guam and  5,500 miles from the U.S. mainland. Most of the CNMI’s population— 51,484 in 2009—resides on the island of Saipan, with additional residents  on the islands of Rota and Tinian. Historically, the CNMI’s economy has  depended on garment manufacturing and tourism. Beginning in 1998,  garment industry shipments began falling, and the last garment factory  closed in early 2009.
Guam is located about 50 miles south of the southernmost island of the  CNMI. It has long been a strategic location for the U.S. military, which  currently controls about 62 square miles of the island’s total 212 square  miles. By 2020, the Department of Defense plans to increase the U.S.  military presence on Guam by more than two-and-a-half times the island’s  current military population of 15,000. In July 2009, the total population of  the island was estimated at 178,430.
The USVI is composed of three main islands—St. Croix, St. John, and  St. Thomas—and many other surrounding islands. Most of the insular  area’s population (estimated at 109,825 in July 2009) resides in St. Thomas  and St. Croix. The USVI’s economy is more diversified than other insular  areas, with tourism as the primary activity, followed by manufacturing  including petroleum refining, rum distilling, and textile manufacturing.
While the United States exercises sovereignty over these insular areas,  each administers its local government functions through popularly elected  governors. American Samoa and the CNMI are self-governed under locally  adopted constitutions, while Guam and the USVI have not adopted local  constitutions and remain under organic acts approved by Congress.
These insular areas receive hundreds of millions of dollars in federal  grants from a variety of federal agencies, including the Departments of  Agriculture, Education, Health and Human Services, Homeland Security,  the Interior, Labor, and Transportation. The Secretary of the Interior has  administrative responsibility over the insular areas for all matters that do  not fall within the program responsibility of another federal department or  agency. OIA, established in 1995, is responsible for carrying out the  Secretary’s responsibilities for U.S. insular areas. OIA’s mission is to  promote the self-sufficiency of the insular areas by providing financial and  technical assistance, encouraging private sector economic development,  promoting sound financial management practices in the insular  governments, and increasing federal responsiveness to the unique needs of  the island communities.
Much of the assistance that OIA administers to insular areas is in the form  of what it considers mandatory assistance, including compact assistance,  permanent payments to U.S. territories, American Samoa operations  funding, and capital improvement project grants. OIA also administers  discretionary assistance through, for example, technical assistance grants  and operations and maintenance improvement program grants. The  administration and management of OIA grants is guided by OIA’s Financial  Assistance Manual. OIA grants other than compact assistance are subject  to Interior’s Grants Management Common Rule, relevant Office of  Management and Budget (OMB) circulars, and specific terms and  conditions that OIA outlines in each grant agreement, such as semiannual  narrative and financial reporting and grant expiration dates.
Within OIA, two divisions are largely responsible for grant administration  and management—the Budget and Grants Management Division and the  Technical Assistance Division. The Budget and Grants Management  Division, which covers capital improvement project and operations and  maintenance improvement program grants, has a director and three grant  managers. The Technical Assistance Division, which administers several  types of technical assistance, has a director and two grant managers. A  third OIA division—the Policy and Liaison Division—also provides some  staff for grant-related tasks, including staff that focus on OIA’s  accountability and audit responsibilities. The majority of OIA’s budget is  directed to compact assistance and permanent fiscal payments (see  table 1). About 2 percent of OIA’s budget is dedicated to administrative  costs, leaving less than 16 percent for noncompact grants and technical  assistance.
section_title: Nearly 40 Percent of OIA Grant Projects Have Internal Control Weaknesses That Could Increase Susceptibility to Mismanagement
paragraphs: On the basis of our review of grant files from a random probability sample  of grant projects, we determined that previously reported internal control  weaknesses still exist and estimate that 39 percent of the 1,771 grant  projects in OIA’s grant management database demonstrate at least one  internal control weakness that may increase the projects’ susceptibility to  mismanagement. The eight internal control weaknesses we assessed can  be grouped into three categories based on the entity responsible for the  action: grant recipient actions, OIA grant management actions, or joint  actions between grant recipients and OIA. As shown in figure 2, the  internal control weaknesses we identified were most often associated with  grant recipient activities, followed by joint activities and OIA grant  ant  management activities.  management activities.
We also determined how frequently each of the eight internal control  weaknesses was found among OIA grant projects in the database  (see table 2).
Internal control weaknesses associated with grant recipient activities were  the most common internal control weaknesses we found, accounting for  62 percent of the weaknesses exhibited by OIA grant projects. By  accepting a grant, recipients agree to a set of terms and conditions that are  part of OIA’s internal controls. We assessed grant recipients’ consistency  in meeting requirements of the grant terms and conditions by examining  project files for adherence to four key requirements that we determined  are relevant to a grant management program: semiannual financial and  narrative reporting, project close-out reporting, grant expiration dates, and  reimbursable funding. For example, grant recipients are required to submit  regular financial and status reports to OIA within a set time frame. We  found that recipients in 60 percent of grant projects with semiannual  reporting requirements did not submit these reports as required. In many  cases, reports were submitted after the deadline had passed, but in some  cases, reports were never submitted. These financial and narrative status  reports are a key monitoring tool for OIA grant managers, and incomplete  information can hinder OIA’s ability to identify and address any issues. In  addition, we found that recipients of 58 percent of grant projects failed to  submit final reports (or project close-out reports) on time. Final financial  and narrative reports are required to be submitted within 90 days of grant  expiration or project termination; failure to do so can delay the  deobligation of any unspent grant funds from the project account. We  also found that recipients of 19 percent of grant projects expect to or did  actually complete the project after the grant expiration date. Grant terms  and conditions state clearly that grant funds are only available until the  grant expiration date, and the grant recipient should not continue to spend  federal funds after they have expired. It is important to note, however, that  our assessment relied on grant expiration dates as reflected in the file or  database; project extensions may have been granted but not recorded.  Nevertheless, situations where the grant expiration date has been or will  be breached may be an indication of poor initial planning or problems with  the grant project. Finally, we compared the proportion of awarded funds  that had been disbursed to grant recipients with the progress made toward  project completion to ensure that OIA grant recipients were requesting  funds on a reimbursement basis, as required. We found that all open  projects satisfied the reimbursement requirement.
Of the joint activities between OIA and grant recipients, project  redirection, whereby grant funds may be moved between projects, can  contribute to increased susceptibility to mismanagement. This practice,  which OIA refers to as “reprogramming,” accounted for 24 percent of the  overall internal control weaknesses that we found in OIA grant projects.  However, the presence of project redirection is not, in and of itself, an  indication of weakness. As we will describe later in this report, project  redirection can be used as a tool to improve timely use of federal funds  and expedite project completion. However, if not used appropriately,  project redirection can also impede project completion and contribute to  wasted funds or prolonged holding of grant funds. Specifically, if project  redirection is approved in cases where an insular area starts a project and  expends funds, but then wants to redirect the funds to another project  without completing the initial project, those expended funds may be  wasted. In addition, frequent project redirection can result in projects that  are started but do not have sufficient funds to be completed. Based on our  review, project redirection occurred in 30 percent of applicable grant  projects. Grant recipients generally initiate project redirection through a  request to OIA. OIA policy requires that grant recipients must obtain  written approval from OIA before any funds may be moved between grant  projects and that technical assistance project funds may not be redirected.  We did not identify any cases where these requirements were not met.
For OIA grant management activities, we found that the presence of  internal control weaknesses accounted for 14 percent of the overall  internal control weaknesses that we identified for OIA grant projects. We  assessed OIA’s consistency in following its recordkeeping, monitoring,  oversight, and close-out procedures, each of which help OIA to ensure that  grant funds are being used as intended, in accordance with relevant laws  and regulations, and that the projects will achieve the planned results.  While OIA generally follows its close-out procedures, we identified a  number of concerns with OIA’s record keeping and monitoring and  oversight activities:    OIA grant managers generally use OIA’s internal grant management  database as a monitoring tool to track key information about grants they  oversee; they also use the database to create reports by insular area and  grant type to respond to inquiries from Congress and others. However, for  41 percent of OIA grants in the database, we found that the database  contains at least one piece of information that does not match  corresponding information in the grant file. For example, among  applicable grant projects, the grant expiration date was the element most  often improperly recorded in the database. We also found cases where  individual fund drawdowns were not entered into the database in a timely  manner. Such inconsistent and inaccurate data can limit the ability of  OIA grant managers to efficiently and effectively monitor whether grant  projects are being completed on time and within budget and may increase  the susceptibility of these projects to mismanagement. OIA officials  explained that procedures for entering some data elements into the  database—such as the date the grant was awarded and redirected funds— have changed over time and may have accounted for some of the  inconsistent data we found. Some OIA grant managers reported using  tools other than the database to track grant progress. For example, capital  improvement project grant managers use their own spreadsheets to track  information such as grant expiration dates, grant status, and when reports  were last received. However, reliance on such informal systems can also  introduce internal control risk because they are not subject to policies,  procedures, or internal controls to ensure the information maintained in  them is accurate.
OIA also monitors capital improvement grant projects through site visits  and related oversight activities. OIA field representatives stationed in two  insular areas—American Samoa and the CNMI—can assist grant managers  in headquarters with grant monitoring and oversight by conducting site  visits of ongoing projects and advising headquarters staff of any issues that  may arise. It is important to note that while the field representative in the  CNMI has official grant management responsibilities, the field  representative in American Samoa works for OIA’s policy division and has  no formal grant management responsibilities. However, the American  Samoa representative estimates that she spends nearly half of her time  addressing issues relating to capital improvement grant projects. Although  these resources are available for oversight, we found that 10 percent of  capital improvement grant projects in these insular areas were visited  more often by headquarters grant managers than by field representatives,  which raises some concerns about the effectiveness of having field  representatives in these areas. However, OIA field representatives told us  that they have informal interactions with project managers that are not  captured by site visit reports; and our review of grant files indicates that  field representative reports may not be submitted to headquarters or  included in the grant files. This inconsistent transmission of site visit  reports is contrary to OIA policy and has the potential to impact the  amount of information that headquarters oversight staff have about the  status of various grant projects.
OIA follows close-out procedures once grant projects are complete. We  assessed OIA’s consistency in applying these procedures as an internal  control weakness. We found that unexpended grant funds were properly  deobligated from project accounts for all closed grant projects in the  database.
section_title: Insular Areas Face Challenges in Implementing OIA Grant Projects, as Selected Projects Illustrate
paragraphs: Insular areas confront both project planning and management challenges  in implementing OIA grant projects as a result of decisions made by the  insular area governments and external factors. Project planning challenges  include frequently changing local government decisions, natural disaster  impacts, and other factors. Project management challenges include issues  such as a limited local capacity for implementing OIA projects and poor  contractor performance. External factors include issues such as declining  economic conditions and various U.S. policies. Officials in all of the four  insular areas we visited reported facing some of these challenges. These  challenges were most often noted for capital improvement projects in  American Samoa and the CNMI that we reviewed. While some of these  challenges, which influence the insular areas’ abilities to effectively  complete OIA grant projects, are beyond their control, others can be  overcome. Figure 3 summarizes our analysis of the project planning and  project management challenges experienced by insular areas for the         24 selected grant projects.
subsections: section_title: Project Planning Challenges
paragraphs: Many of the challenges that can contribute to OIA grant project delays  stem from local government project planning decisions:  Frequently changing priorities. Some insular area governments regularly  shift priorities and frequently redirect grant project funds. While some  changes in priorities are to be expected, when these priorities change  frequently, it can lead to project delays and wasted resources. Of the four  insular areas we reviewed, only American Samoa has and adheres to a  master plan that lists planned capital improvement projects and  categorizes them into one of three priority areas. In contrast, as of  December 2009, OIA reported that the CNMI did not have a master plan for  its capital improvement projects or established priority areas. Without  established local government priorities, frequent priority shifts can more  easily occur that affect which projects are pursued, and in turn, grant  funds can be more frequently redirected between projects with widely  different goals, often leading to project delays or incomplete projects. For  example, in 2005 the CNMI government shifted OIA funds from a project  originally funded in 2004 updating a Tinian school building to a project  developing a wastewater system, and then in 2007 funds were again shifted  from this incomplete wastewater project to a project developing a Tinian  airport instrument landing system, which has since been suspended. To  this end, OIA and the CNMI government acknowledged that establishing  and enforcing a master plan would be helpful to guide priorities for capital  improvement project funding. OIA has taken steps to encourage the  development of a CNMI infrastructure master plan, and forward  movement has been made with the submittal of a budget and scope of  work by the U.S. Army Corps of Engineers; however, as of January 2010,  the CNMI had not yet fully identified funding sources for the plan’s  completion.
In contrast, OIA and American Samoa use its master plan to help guide  which projects should be funded and which project redirection requests  should be approved. As a result of the long-term planning, we found that  projects in American Samoa generally do not experience delays due to  project redirection and that funds are redirected in a way that aids project  completion. According to OIA, project redirection generally occurs within  a priority area and between projects listed in the master plan. For  example, funds were redirected from the Petesa-Happy Valley Village Road  project, where the project was facing delays in getting access to necessary  lands, to the Taputimu Village Road project, which was then able to be  completed in February 2008. In addition, American Samoa replaced the  redirected sum with an equal amount from a later fiscal year’s funding for  the Taputimu Village Road project. OIA officials attributed much of  American Samoa’s success in using project redirection effectively to the  insular area’s leadership.
Natural disaster impacts. Natural disasters are unexpected challenges  that are beyond insular area governments’ control; however, local  government project planning decisions can mitigate some of these effects.  Frequently occurring natural disasters such as typhoons, cyclones, and  hurricanes can have a significant impact on the condition of the insular  area’s economy, health, and physical infrastructure. Recovering from such  disasters can demand a considerable amount of local and federal  resources to be directed to immediate disaster recovery efforts rather than  long-term future or current economic and infrastructure development. For  example, the U.S. Department of Homeland Security Federal Emergency  Management Agency disbursed, as of January 2010, roughly $22 million for  individual and household assistance to American Samoa victims of the  September 2009 tsunami. In addition, the agency estimates damages to  American Samoa public infrastructure to cost roughly $80 million.  Similarly, Interior reported that the combined economic costs to the USVI  for damage caused by Hurricanes Hugo in 1989 and Marilyn in 1995 ranged  from $3 billion to $4 billion. The shifting of both local and federal efforts  and resources to repair these damages can contribute to challenges in  project planning and implementation.
Insular areas’ remote locations and limited natural resources can further  exacerbate the effects of natural disasters by increasing costs and the  amount of time for reconstruction. These factors can cause project delays  and contribute to OIA project budget increases because of the difficulty in  estimating fluctuating material and fuel costs.
Limited land access. Local governments’ project planning decisions  regarding how to proceed when land access issues arise can also result in  some grant project delays. Limited access to land was cited by some  insular area officials, specifically in American Samoa and the CNMI, as a  challenge they face in completing OIA capital improvement project grants.  For example, in the American Samoa Petesa Happy Valley Road capital  improvement project, land access has been a major contributor to delays  since the project was initially funded in 2003. Although both of the  insular area governments have the power of eminent domain over their  land, that authority has not always been asserted. According to some American Samoa and CNMI officials, communities sometimes resist  government land acquisition efforts, which can lead to project delays.
When land access issues affect project implementation, local governm can choose to address the issue by enforcing their authority or by  choosing to fund oth er projects.
Lack of local operations and maintenance funding. Another project  planning challenge identified by CNMI officials is a lack of local operations  and maintenance funding—which in part is a result of the local  government’s decision to not prioritize operations and maintenance  activities for local funds and to not use a portion of OIA funds for  operations and maintenance of OIA grant projects. For example, according  to the CNMI Lieutenant Governor, the CNMI government does not provide  funding specifically dedicated to operations or maintenance of its  infrastructure, including OIA capital improvement projects. However, we  believe that it is significantly more cost effective to perform preventative  maintenance rather than to perform repairs. Further, if agencies only  perform maintenance on a reactive basis, then the critical services they  provide can be disrupted. For example, the CNMI experienced intermittent  electricity blackouts from 2006 to 2008, which were in part caused by  aging power generators that had not been properly maintained. This crisis  management approach can be disruptive to ongoing projects because  critical services may not be available as planned and local government  resources and contractors may be diverted to address the crisis.
According to OIA, because capital improvement project funding awarded  to the CNMI was required to have a significant local match, it was more  challenging for the CNMI to dedicate adequate additional funds for project  operations and maintenance. However, since fiscal year 2005, this match  has not been required. In addition, according to OIA, operation costs in the  CNMI are not eligible for capital improvement funds, but in 2008 and 2009,  the office provided the CNMI with pilot grants of $350,000 for  maintenance. According to the OIA grant manager for capital improvement  projects in the CNMI, the goal of the pilot grants was to ensure that the  CNMI would spend the funds on maintenance if OIA provided them. OIA  reported that the CNMI had spent the 2008 funds on maintenance and that  if the 2009 funds were similarly spent, the next step would be to regularly  provide the CNMI with a percentage of each grant’s funding specifically  for maintenance.
In contrast, the American Samoa government sets aside 5 percent of its  OIA capital improvement project grant funds for maintenance. The  American Samoa government also provides a 100 percent match to all OIA  funds directed to maintenance. This maintenance set-aside program  requires specific plans from the local government for the use of the  money, as well as reporting procedures to account for this fund.
section_title: Project Management Challenges
paragraphs: Several project management challenges, including the following, also limit  the ability of some insular areas to manage and implement OIA grants:  Limited local capacity for OIA project implementation. Some insular  area officials reported that they face a shortage of skilled workers and  limited opportunities for training and education in disciplines such as  grant management. Insular governments have access to training funds— for example, through OIA technical assistance grants. However, as we  previously reported, because citizens of insular areas are free to migrate to  the United States, it is difficult to retain highly educated or skilled  workers.  Further, in the CNMI, several officials reported a shortage of  funding for staff, although they did not provide us with data to quantify  this issue. This concentrates key knowledge in few individuals and can  cause high staff burn-out rates, increasing the likelihood that projects will  encounter delays if these staff leave before projects are completed. In the  future, access to low-cost foreign labor in the CNMI and American Samoa  could change due to the rising minimum wages. In addition, the CNMI’s  access could also be affected by the transition to the U.S. immigration  system which began November 28, 2009, under recent legislation. The  effect of the legislation’s implementation on the CNMI’s foreign labor pool  will largely depend on various U.S. government agency decisions regarding  the provision of foreign worker temporary permits, as we reported in  March 2008.
Contractor issues. Some insular area officials also attributed project  delays to poor performing contractors. In several of the American Samoa  and CNMI projects we reviewed, insular officials identified poor  contractor performance as a significant cause of project delays and cost  increases. In some cases, contracts had to be canceled and, in other cases,  insular area project managers had to either redesign or expand the project.  Poor contractor performance is a particular concern when insular area  governors declare a state of emergency. In the CNMI in particular, along  with an emergency declaration, a governor may waive local standard  procurement regulations. In bypassing the standard procurement  regulations, the government increases the likelihood that poor performing  contractors are hired. For example, during the implementation of the  CNMI’s power plant rehabilitation project, the Governor declared a state  of emergency to address the plant engines’ inability to provide necessary  power to the island, which was caused by wear and inadequate  maintenance. During the state of emergency, the Commonwealth Utilities  Corporation hired a contractor that performed poorly, causing the agency  to cancel the contract and delay the project, which was approved in 2007  and was not yet completed at the time of our visit in September 2009  (see app. II for more information). To address the issue of contractor  performance, CNMI regulations require contractors to carry payment and  performance bonds—whereby payment is ensured for all employees,  subcontractors, and suppliers involved in a project, and monetary  reparations will be made in the event of contractor nonperformance—for  construction projects in excess of $25,000. For example, the CNMI  recently imposed a $17,000 damage claim and initiated debarment  proceedings against a delinquent contractor in an OIA Commonwealth  Health Center project, according to the CNMI Capital Improvement  Project Administrator. According to the OIA grant manager responsible for  capital improvement project grants in American Samoa, American Samoa  regulations require performance bonds for contracts over $100,000, USVI  regulations allow but do not mandate the government to require  performance bonds, and Guam generally requires 100 percent Surety  Performance Bonds, but some exceptions have been made to allow only  50 percent.
Varying effectiveness of central grant management offices. American  Samoa, the CNMI, and the USVI have central grant management agencies  that are similarly structured and act as a liaison between OIA and the local  government agencies receiving grants. However, the effectiveness of the  central grant management agencies varies, in part based on the capacity of  their staff.
In the CNMI, OIA capital improvement project grants are largely  administered through the Governor’s Capital Improvement Project office.  OIA officials noted that the CNMI central management office is more  effective, particularly in comparison to American Samoa’s central grant  management agencies. The OIA grant manager that works with the CNMI  office said that the staff are essential to her efforts to monitor ongoing  projects; however, a CNMI office representative reported concerns about  limited resources. A key position, the Capital Improvement Project  Administrator, is appointed by the CNMI Governor, which makes the  position subject to change when local government administrations change.  Another key position, the Capital Improvement Project Contracting  Officer, is an OIA-funded contract employee, which means the position  could be eliminated if funding is not continued. To this end, OIA has taken  action, including awarding funds specifically for capital improvement  project administration, to ensure that the office is adequately staffed to  manage projects.
In American Samoa, the Territorial Office of Fiscal Reform and the Capital  Improvement Project Committee are primarily responsible for OIA grant  administration. OIA and American Samoa officials reported that this  central grant management arrangement has contributed to project delays.  For example, the Director of the Territorial Office of Fiscal Reform, who is  also the Chairman of the Capital Improvement Project Committee, is  responsible for overseeing efforts to adhere to American Samoa’s fiscal  reform plan. In addition, he reviews and approves all of the projects that  go through the Capital Improvement Project Committee, such as OIA grant  project plans and approvals. During the last 3 years, however, this official  has been absent from the island but has retained his responsibilities and  has not delegated them to anyone else, according to OIA and American  Samoa officials. As a result of his absence and the lack of delegation,  implementation of capital improvement projects has been delayed and the  committee has become ineffective, according to the officials we spoke  with.
In the USVI, the local Office of Management and Budget is primarily  responsible for OIA grant administration. OIA officials told us that the  agency can be effective but can also delay the project administration  process, including financial and status report submissions, because they  do not always expeditiously provide reports submitted by the agencies  receiving grants to OIA. A local government official told us that the USVI  Office of Management and Budget has become more effective in its  administration of OIA grants over the past few years.
Limited local auditing agency resources. Insular area governments have  not prioritized oversight of OIA grant projects through local auditing  agencies, which may contribute to the potential for project fraud, waste,  abuse and mismanagement by both the agencies receiving the grants and  contractors. For example, the CNMI’s local audit agency has not reviewed  any federal grants for several years and the position of the Territorial  Auditor in American Samoa was vacant from 2005 until the fall of 2009.
section_title: External Factors Likely to Affect OIA Grant Project Implementation
paragraphs: The following external factors, some of which we have previously  reported on, can also contribute to project delays and inefficiencies:  Declining economic conditions. Although all insular areas we reviewed  face serious economic challenges, the CNMI and American Samoa face  particularly difficult obstacles as a result of their dependence on a few key  industries. If economic conditions further destabilize, the CNMI and  American Samoa could face difficulties in funding local government  agencies and the administrative costs required for OIA grant project  implementation, as can be seen in the following examples:    The CNMI relied mainly on two industries for its economic prosperity— garment manufacturing and tourism—until early 2009 when the last of its  garment factories closed. Together both industries had accounted for  85 percent of the CNMI’s economic activity. The CNMI now relies largely  on its tourism industry to support its economy, which is a volatile industry  and is susceptible to both local and global crises.
American Samoa’s economy depends primarily on the tuna canning  industry, which recently endured two major setbacks—the closure of one  tuna cannery and a significant reduction in workforce at the other  cannery. American Samoa also experienced a tsunami in the fall of 2009,  which caused considerable damage.
U.S. government policies. Several recent changes in U.S. government  policies may also likely contribute to OIA project implementation  challenges.
First, as mentioned previously, the federal minimum wage in American  Samoa and the CNMI began rising in 2007 and will continue to do so until  they equal the U.S. minimum wage. This may increase the cost of  OIA-funded projects. Additionally, if the economies falter and local  revenues fall, OIA grants still requiring a local government match may face  delays or noncompletion as they become increasingly expensive for the  local government agencies to fund.
Second, in response to U.S. legislation, the CNMI’s immigration system  was federalized on November 28, 2009. Accordingly, some of the foreign  workers that made up a majority of the workforce, as of 2005, may not be  able to reside in the CNMI in the future. For those OIA grant implementing  agencies that employ foreign workers, it is possible that the departure of  these workers could disrupt project progress and basic service provision.
Third, the planned U.S. military buildup on Guam is expected to challenge  the island’s infrastructure. According to a recent GAO report, the U.S.  Department of Defense is expected to relocate 8,000 Marines and their  estimated 9,000 dependents from Okinawa, Japan, to Guam by 2014, and  also plans to expand the capabilities and presence of Navy, Air Force, and  Army forces on Guam. As a result, the military population, including  dependents, on Guam is expected to grow by over 160 percent, from its  current population of about 15,000 to over 39,000 by 2020. The Guam  government has not yet identified a strategy to expand the roads, power,  water, wastewater and solid waste systems to accommodate this  population increase. Furthermore, according to the OIA Budget and  Grants Management Division Director, the infrastructure development will  require significant labor, thus contractor availability may be affected for  many other U.S. insular areas.
section_title: OIA Has Taken Actions to Improve Grant Project Implementation and Management but Faces Several Obstacles
paragraphs: OIA has taken several important steps to improve grant project  implementation and management but faces several obstacles in its efforts  to compel insular areas to complete their projects in a timely and effective  manner.
subsections: section_title: OIA Has Taken Steps to Improve the Implementation and Management of Grant Projects
paragraphs: Over the past 5 years, OIA has taken steps to improve project  implementation and management, including implementing a competitive  allocation system that establishes incentives for insular areas to make  financial management improvements and complete projects; establishing  grant expiration dates; and taking steps to improve administrative  continuity in insular areas. Specifically, OIA has taken steps in the  following areas:  Competitive allocation system. In fiscal year 2005, OIA implemented a  new competitive allocation system for the $27.7 million in capital  improvement project grants that it administers to the insular areas. This  system provides incentives for financial management improvements and  project completion by tying a portion of each insular area’s annual  allocation to the insular governments’ efforts in these areas—such as their  efforts to submit financial and status reports on time. Through this system,  OIA scores each insular area against a set of performance-based criteria  and increases allocations to those insular areas with higher scores,  thereby lowering allocations to insular areas with lower scores.
To date, the competitive allocation criteria have measured the insular  governments’ abilities to exercise prudent financial management practices  and to meet certain federal grant requirements. As described in OIA’s  Budget Justification for fiscal year 2010, there are 10 competitive criteria,  which include the extent to which the applicant is in general compliance  with deadlines established under the Single Audit Act, has complied with  all grant reporting requirements, and has properly functioning internal  controls—including the presence of a qualified independent auditor, an  adequately funded office, and strong safeguards to ensure the office’s  independence. (See table 3 for a list of the 10 criteria and the insular areas’  scores for fiscal year 2010.)
The criteria have had a positive impact on insular governments’ financial  management practices. For example, although the four insular areas  initially had trouble submitting their Single Audits in a timely manner,  according to Interior’s fiscal year 2008 Annual Performance and  Accountability Report, as of fiscal year 2006, each of the insular areas has  been in compliance with the requirement for annual Single Audits.
In September 2009, OIA announced it will add another criterion to the  competitive allocation criteria for fiscal year 2011 allocations to encourage  more efficient project completion and use of unspent funds. The new  criterion will measure the rate at which territories expend funds over a  5-year period. According to OIA officials, this measure was largely added  to address the roughly $52 million unspent capital improvement project  fund balance that the CNMI currently carries, as well as the smaller but  proportionally higher balance carried by the USVI (approximately  $18 million) in comparison to American Samoa (approximately  $20 million) and Guam (approximately $10 million).
Grant expiration dates. Beginning in 2005, to encourage expeditious use  of funds, OIA established 5-year expiration dates in the terms and  conditions of new capital improvement project grants. Beginning in 2008,  OIA also notified insular area officials of expiration dates for grant  projects that had been ongoing for more than 5 years with no or limited  progress. OIA officials explained that while the expiration dates have not  yet pushed all of the insular areas to complete projects, they have  encouraged some areas to do so. The officials also stated that the  expiration dates have helped OIA grant managers administer and manage  grants—which they believe has improved accountability—and have been  useful for insular area grantees whose agencies have high staff turnover  and were unaware of the status of older grants.
Actions to improve insular area continuity. OIA has also taken steps to  help with the continuity of grant administration at the insular level. For  example, in March 2008, OIA awarded a $770,000 grant for capital  improvement project administration in the CNMI, which provided funding  for positions in the local central grant management office in that insular  area. According to the grant manager for CNMI capital improvement  projects, the grant was given to help ensure that the central grant  management office had the staff necessary to help move implementation  of projects forward. Among other positions, the grant funded three project  manager positions; these managers have worked on three of the projects  we discuss in appendix II—the Jose T. Villagomez Center for Public Health  and Dialysis (Commonwealth Health Center dialysis facility), the Rota  Health Center, and the Tinian Landfill Projects. Although the continuity of  the office itself is vulnerable to changes in the CNMI’s administration, the  grant manager stated that OIA is hopeful that in the long term, even if the  insular area’s central grant management office does dissolve, OIA will  have helped develop the capacity—in terms of knowledge and resources— that could go back to the local agencies for continued progress.
section_title: Several Obstacles to Timely and Effective Project Completion Remain
paragraphs: Despite these efforts, some insular areas are still not completing their  projects in a timely and effective manner, and OIA faces the following key  obstacles in compelling them to do so:  Lack of sanctions for delayed or inefficient projects. Current OIA grant  procedures provide few sanctions for delayed or inefficient projects. For  example, although OIA established grant expiration dates, they have little  practical effect. In theory, a grant expiration date encourages timely  completion of a project because if a project is not completed on time, the  funds are taken away from the recipient. However, if an insular area’s OIA  grant funds expire, while the funds do not remain immediately available  for the project, the insular area does not lose the funds because OIA treats  its capital improvement project grants as mandatory funding with “no-year  funds,” based on the agency’s interpretation of relevant laws. Thus, after  a grant expires, OIA deobligates the funds and they are returned to the  insular area’s capital improvement project account to be reobligated for  the same or other projects. Along the same lines, OIA’s application of the  competitive allocation criteria can reduce an insular area’s capital  improvement project allocation if the insular area is not performing well,  but reductions must stay within a range of $2 million below or above the  baseline funding that has been established for each insular area. As  indicated in OIA’s fiscal year 2010 budget justification, the office’s  intention for the competitive allocation process is to allow the  governments an opportunity to compete each year for a greater portion of  the guaranteed funding rather than to signal declining performance.
Recently, OIA has taken steps to identify possible solutions and actions  that could help provide effective sanctions for insular areas that do not  efficiently complete projects and expend funds. In doing so, OIA has faced  uncertainty regarding the authorities it has to change its current policies  and practices, which are guided by many special agreements, laws, and  regulations. Accordingly, OIA has sought an Interior Solicitor’s opinion on  a few discrete issues regarding its authority to take different actions when  projects are not completed, grant funds expire, or insular areas sustain  large balances of unexpended funds. In response, an attorney with the  Solicitor’s office orally advised OIA that it did not have the authority to  reallocate funds away from the insular areas whose funds expire.  However, the attorney acknowledged to us that this advice was not based  on a comprehensive review of all potentially relevant sources of law and  that there are still some unresolved questions. For example, recent  appropriations acts have appropriated funds to OIA for capital  improvement project funding for American Samoa, the CNMI, Guam, and  the USVI on the condition that these funds are provided according to the  Agreement of the Special Representatives on Future United States  Financial Assistance for the Northern Mariana Islands approved by Public  Law 104-134; however, this 1992 agreement is now expired. The new  agreement, entered in 2004, has a different title—Section 702 Funding  Agreement—and has not been approved in any law. Unless the reference  to the now-expired 1992 agreement is read to mean the 2004 agreement,  then OIA may have more discretion with respect to reallocation than it  currently exercises. The Interior Solicitor indicated this legal discrepancy  has not been resolved and that some documents, such as appendices to  the 2004 agreement and legislative history of recent appropriations acts,  were not consulted. In addition, OIA is considering using a provision of the  2004 agreement that allows OIA to deviate from the baseline allocations  under certain circumstances, including a substantial backlog of prior  years’ unspent funds. Any such deviations under this provision, however,  require the approval of Congress. The Interior Solicitor has not yet  determined or advised OIA on how this approval requirement may be met.
OIA Resource Constraints. OIA officials report that resource constraints  impede effective project completion and proactive monitoring and  oversight. Although they could not provide us with data, numerous  officials in OIA asserted that heavy workloads are a key challenge in  managing grants. The effects of insufficient resources vary across grant  type but include impacts on the ability to maintain files, adopt a proactive  oversight approach that could aid project completion, conduct more  detailed financial reviews of projects, and conduct site visits to more  projects to better ensure that mismanagement is detected. Importantly,  although grant managers for capital improvement projects noted that the  most effective action they can take to move projects along is to conduct  site visits, they also asserted that their current workloads only afford one  visit per year. Furthermore, the grant managers explained that the  duration of the visits, and therefore the number of projects visited, is  limited to ensure that they are able to meet their requirements and  responsibilities at headquarters. In addition, the grant managers reported  that their heavy workloads make it harder for them to take a proactive  approach, including looking ahead to grants with impending expiration  dates, reaching out to determine causes for delays, and taking earlier  action to help insular areas move projects forward.
Two of the insular areas—American Samoa and the CNMI—have OIA field  representatives whose broad job descriptions include regular site visits to  projects to monitor progress. These positions are intended to help ease the  workload burden of headquarters grant managers. According to OIA  officials, the field representative in American Samoa is effective and a  critical contributor to OIA’s efforts to monitor projects. However, OIA  officials noted that the American Samoa field representative formally  works for OIA’s policy division and has many other roles and  responsibilities to fulfill—including acting as a liaison between the  American Samoa government and federal agencies, including, but not  limited to, Interior—resulting in more work than they believe should be  assigned to one person. In contrast, the CNMI has two field  representatives, one of whom is specifically assigned to grants  management; however, OIA officials believe that the field representative  has not been as effective as the American Samoa representative.
Resource constraints also limit OIA’s efforts to assist insular areas in  responding to Single Audit report findings, which can help address issues  that may lead to mismanagement or ineffective project implementation.  Currently, only one OIA auditor works with insular areas to ensure they  respond to Single Audit report findings and has numerous other  responsibilities, including responding to other external audits and  conducting reviews of grant managers’ project files. The auditor explained  that when the insular areas were delinquent in complying with Single  Audit reporting requirements, the workload was manageable. Now that  OIA has taken steps to help improve the timeliness of these reports and  each of the insular areas is complying and providing a timely report to  meet the Single Audit requirements, OIA officials believe that the  workload associated with assisting insular areas in responding to the  findings is significantly larger than one auditor can handle.
The support that Interior’s Office of Inspector General provides generally  does not reduce OIA’s oversight workloads. According to the OIA officials  we spoke with, currently, Interior’s Office of Inspector General does not  typically provide much oversight support on individual grant concerns;  rather, the Inspector General’s Office of Audits, Inspections, and  Evaluations and its Office of Investigations focus their efforts on higher- priority issues that cover a broader spectrum and pertain to more  significant instances of misconduct. Historically, the predecessor to OIA— the Office of Territorial and International Affairs—received oversight  support from federal comptrollers located in American Samoa, the CNMI,  Guam, and the USVI. For example, in fiscal year 1982, 44 full-time  positions in the federal comptroller offices—36 of which were  professional audit staff—were responsible for auditing the territorial  governments. Then, in 1982, legislation transferred responsibility for  audits from the federal comptrollers to Interior’s Office of Inspector  General in an effort to improve independence in the audit oversight of the  insular governments. Staff in the Office of Inspector General’s regional  offices became responsible for performing the functions of the insular area  comptrollers by conducting audits of property, receipts, revenues, and  expenditures. The Office of Inspector General initially had insular field  offices in American Samoa, the CNMI, Guam, and the USVI. However, by  2002, all but the USVI office was closed, despite concerns that the move  away from the territories might make it more difficult to provide a  satisfactory level of oversight. When the last of the Pacific insular area  offices closed, the Office of Inspector General opened its Honolulu field  office. According to the Office of Inspector General’s Semiannual Report  to the Congress in April 2003, the Guam office was moved to Honolulu in  an effort to expand the audit and investigation coverage of the department  and to address the long-standing challenges facing insular area  governments as a whole, while still maintaining an effective presence.  Over time, these changes, and the need for the Office of Inspector General  to prioritize its resources on broader management issues and more  significant cases of misconduct, have reduced some of the oversight  support available to OIA on individual grants. According to OIA officials,  the responsibility for detailed audits of OIA grants currently falls primarily  upon the external auditors conducting Single Audits and the one OIA  auditor responsible for following up on the results of those audits.  Moreover, because Single Audits are by design risk-based and sample from  all federal grants—not just Interior’s OIA grants—to a given insular area,  they cannot provide comprehensive coverage for every program or  transaction.
Despite their concurrence that additional resources are needed, OIA  division directors confirmed that they have not formally communicated  these needs to decision makers, or higher levels within Interior, and have  not developed a workforce plan or other formal process that demonstrates  a need for additional resources. Moreover, OIA does not track workload  measures, such as the number of grants handled by each grant manager, to  show changes over time that would help justify the need for additional  resources. Interior’s own Workforce Planning Instruction Manual  emphasizes that workforce planning is a fundamental tool, critical to  quality performance that will contribute to the achievement of program  objectives by providing a basis for justifying budget allocation and  workload staffing levels. As we have previously reported, it is important  for agencies to determine the critical skills and competencies that will be  needed to achieve current and future programmatic results through  workforce planning, and in doing so, it is important to involve agency  managers, supervisors, and staff to ensure that the agency understands the  need for and benefits of the workforce plan.
Inconsistent and insufficiently documented project redirection policies.  OIA’s current project redirection approval practices do little to discourage  insular areas from redirecting project funds in ways that hinder project  completion. As previously discussed, insular areas shift priorities and  frequently redirect grant project funds, which in some cases expedites  project completion and in other cases impedes it. Currently, OIA’s policies  for granting project redirection requests vary across insular areas.  Specifically, in American Samoa, project redirection is limited to changes  within a priority category because the insular area’s grants are issued by  priority areas. In contrast, the other insular areas each receive grants as  one capital improvement grant and are able to redirect money between  projects with widely different purposes.
OIA’s policies for granting project redirection requests are also not well- documented. While the 2003 version of OIA’s Financial Assistance Manual  contained some specific criteria regarding the level of approval that was  needed for various project redirection requests, there are no thresholds or  specified levels of approval in OIA’s 2009 update to the manual. According  to OIA officials, that information was omitted because OIA’s current  practice is for grant managers to approve most project redirection  requests. The officials further stated that although they believe OIA has the  authority to deny redirection requests, the office has not done so in the  CNMI, even though there have been instances when they believed requests  should have been denied, but were instead ultimately approved. For  example, as we previously discussed, in 2007, funds that had previously  been redirected (from a project updating a Tinian school building to a  project developing a wastewater system) were again shifted from the  unfinished wastewater system project to a Tinian airport instrument  landing system, which has since been suspended. Correspondence  documented in the grant file for the wastewater project shows that some  OIA officials did not believe the request should be granted and expressed  concern that the project redirection request, if approved, would result in a  significant funding shortfall in the already underfunded Tinian wastewater  project, leading to capital improvement project funds remaining unspent  for a considerable length of time. However, this request was eventually  approved. In contrast, in American Samoa, OIA has denied project  redirection requests in cases where the insular area wanted to redirect  project funds from one priority area to another or when the new project  was not on American Samoa’s master plan.
Project redirection is a particular concern in instances where a project  starts and federal money is expended but the project is never completed,  leading to the waste of both federal resources and the local governments’  limited technical capacity to implement projects. With regard to federal  resources, OIA does sometimes recover funds by disallowing costs for  projects that are not completed or by offsetting previously obligated costs  by reducing reimbursements to insular areas for other projects. However,  according to OIA officials, costs are disallowed or offset only about  50 percent of the time such a project redirection situation arises, and the  decision as to whether to pursue the costs depends upon the particular  project and circumstances. Importantly, OIA does not currently have  established criteria to guide these decisions. In the previously discussed  example of project redirection from the Tinian wastewater system project  in the CNMI to an airport instrument landing system project, OIA  reimbursed the CNMI approximately $53,000 for costs associated with  completing an environmental assessment for the Tinian wastewater  facility, which is expected to be canceled because the remaining funds  expired on December 30, 2009. According to OIA officials, these costs  could be disallowed, but OIA opted not to pursue them. Even in cases  where the costs are recovered, the waste of limited technical capacity on  the island may contribute to the insular area’s difficulty in efficiently  completing grant projects.
Inefficient grant management system. OIA’s current data system for  tracking grants is limited in the data elements it contains, leading to  inconsistencies in the data that some grant managers rely on for  monitoring and oversight activities. Grant managers vary in the degree to  which they rely upon OIA’s database, as well as the priority they place on  keeping information in the database up to date. While grant managers for  all grant types reported relying on the database for information on the  amount of funds drawn down from grants and for responding to requests  for data from outside parties (such as Interior’s Office of Inspector  General and GAO), some told us that they do not find OIA’s database  useful and therefore maintain their own separate spreadsheets to track  some information, including expiration dates, grant status, and receipt  dates for the most recent financial and narrative reports. Because these  grant managers do not rely on OIA’s database, they do not always keep  information on their grants in OIA’s database up to date, leading to  inconsistent or incomplete information in the database. Importantly, when  grant managers do rely on the database, they may be relying on inaccurate  or unreliable data. As we previously discussed, database elements,  including grant expiration dates, were sometimes improperly recorded,  and we found cases where individual fund drawdowns were not entered  into the database in a timely manner. Such occurrences increase the  susceptibility of grant funds to mismanagement.
As reported in the Domestic Working Group’s Guide to Opportunities for  Improving Grant Accountability, consolidating information systems can  enable agencies to better manage grants. Along these lines, Interior is  currently phasing in a centralized agencywide system—the Financial and  Business Management System—that is scheduled to be implemented in  OIA in 2011. By design, Interior’s system will incorporate the majority of  the department’s financial management functions into one system and will  eliminate over 80 departmentwide and bureau-specific systems, including  OIA’s grant management system. Interior has already implemented the  system in its Bureau of Land Management, Office of Surface Mining  Reclamation and Enforcement, and Minerals Management Service.  According to the Interior officials leading this effort, the system has a  financial assistance module with a real-time interface to Interior’s  accounting system and is to be used by all of Interior’s grant-making  organizations and programs. Among other capabilities, the system can  receive applications electronically and conduct several postaward tasks.  Specifically, among other things, grantees will be able to submit financial  reports and status reports electronically, grant managers will be able to set  up electronic reminders for reports with impending due dates, and  drawdown requests and payments will have the capability to be processed  electronically. During our site visits, some insular area grantees reported  that a centralized electronic database that is accessible to them, such as  those used by other federal agencies, would make it easier to meet  reporting requirements and request fund drawdowns.
However, OIA officials expressed some concern about whether the new  system will have the flexibility needed to address OIA’s specific needs for  grants management. Specifically, the officials are concerned that because  Interior’s goal is to standardize the system used by all of Interior’s grant- making organizations and programs, the system may not provide for the  level of detail that OIA needs. For example, OIA is often called on to  generate reports for external parties, such as members of Congress and  auditors, that are sorted by specific fields, including fiscal year, grant type,  and insular area. Because Interior’s existing agencywide financial system  does not provide this capability, OIA created its current grant management  system database. Because Interior will require that all grant-making  organizations and programs stop using other databases or spreadsheets  once the Financial and Business Management System is implemented, OIA  officials want to be sure that the capabilities of the new system will be  responsive to their particular needs. In addition to flexibility concerns,  OIA officials expressed general concern about the capabilities of the  financial assistance module, noting that Interior recently changed the  software for the module in response to issues that arose during  implementation in other bureaus. Interior officials responsible for the  conversion to the new system indicated that they do plan to be responsive  to the needs of each office and bureau and have means to configure the  software to meet any individualized requirements.
section_title: Conclusions
paragraphs: OIA has made important strides in implementing grant reforms,  particularly in its efforts to establish disincentives for insular areas that do  not complete grant projects in a timely and effective manner. However, the  unique characteristics and situations facing insular area governments, and  the need to mindfully balance respect for insular governments’ self- governance and political processes with the desire to promote efficiency  in grant project implementation, limit as a practical matter some of the  actions that OIA can take to improve the implementation of grant projects.
Nonetheless, OIA has not exhausted its opportunities to better oversee  grants and reduce the potential for mismanagement. In light of OIA’s  concerns that limited authority to withhold or reallocate unexpended  grant funds impedes the imposition of sanctions on projects that are  wasteful of government resources, it is important that the office has a  clear understanding of its available authorities and any additional  authorities that are needed to ensure that insular area project personnel,  agency heads, and administrative officials more effectively and  expeditiously utilize large balances of unexpended funds. In addition,  although OIA officials are concerned that limited resources impede more  rigorous and proactive grant project monitoring, OIA has not formally  communicated its needs to key decision makers and has not developed a  workforce plan or other formal process that demonstrates a need for  additional resources.
Inconsistency among grant managers in the way they consider project  redirection requests also raises concerns about OIA’s grant management  and oversight processes. OIA lacks a uniform policy to help ensure that  insular areas are discouraged from redirecting project funds in ways that  hinder project completion. Along these lines, when federal money is  expended but projects are not completed after redirection occurs, OIA  does not have established criteria to guide decisions regarding whether to  disallow costs, leading to inconsistency in those decisions, as well.
section_title: Recommendations for Executive Action
paragraphs: We recommend that the Secretary of the Interior take the following three  actions:    To improve OIA’s ability to require insular areas to efficiently complete  projects and expend funds, we recommend that the Secretary direct  Interior’s Office of the Solicitor to prepare a detailed written evaluation of  OIA’s existing authorities that could be used to ensure the more efficient  use of funds by insular areas, and work with OIA officials to use such  authorities as appropriate and to identify the need, if any, for additional  authority. We recommend that if the evaluation identifies the need for  additional authorities, the Secretary should submit the evaluation to the  Congress.
To ensure that OIA’s staffing needs are clearly and accurately  communicated to key decision makers, we recommend that the Secretary  direct OIA to create a workforce plan and reflect in its plan the staffing  levels necessary to adopt a proactive monitoring and oversight approach.
To reduce the impact that frequently shifting insular area priorities have on  insular areas’ incentives to complete projects and efficiently use federal  funds, we recommend that the Secretary direct OIA to develop criteria that  establish when project redirection requests should be approved and when  they should be denied and update its financial assistance manual with these  criteria to clarify OIA policy on redirection. In developing these criteria, OIA  should adopt guidelines that minimize ineffective project redirection. In  addition, we recommend that the Secretary direct OIA to develop criteria  that establish when offset or disallowed costs should be pursued.
section_title: Agency Comments
paragraphs: We provided a draft of this report for review and comment to the  Department of the Interior as well as the Governors of American Samoa,  the CNMI, Guam, and the USVI. Interior’s Assistant Secretary for Insular  Affairs concurred with our recommendations and commented that our  report is a useful analysis. Interior’s written comments are reprinted in  appendix III. We also received written comments from the Lieutenant  Governor of the CNMI (see app. IV) and the Acting Governor of the USVI  (see app. V). Both concurred with our recommendations. The Lieutenant  Governor of the CNMI noted that the CNMI had recently adopted a new  structure to manage OIA grant funds that addresses many of the insular  area challenges we identified. We agree that this new structure, as well as  the Capital Improvement Project Office’s efforts to address issues that  have delayed ongoing grant projects, will reduce the potential for  mismanagement among OIA grant programs in the CNMI. We did not  receive comments from the Governors of American Samoa and Guam.
We are sending copies of this report to the appropriate congressional  committees; the Secretary of the Interior; the Governors of American  Samoa, the Commonwealth of the Northern Mariana Islands, Guam, and  the U.S. Virgin Islands; and other interested parties. In addition, this report  is available at no charge on the GAO Web site 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 mittala@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 major contributions to this  report are listed in appendix VI.
section_title: Appendix I: Objectives, Scope, and Methodology
paragraphs: This appendix details the methods we used to assess the Department of  the Interior’s Office of Insular Affairs’ (OIA) management of its grant  programs to insular areas. For this review, we determined (1) whether  previously reported internal control weaknesses have been addressed and,  if not, to what extent they are prevalent among OIA grant projects; (2) the  challenges, if any, insular areas face in implementing OIA grants; and  (3) the extent to which OIA has taken action to improve grant project  implementation and management.
For our first objective, our review focused on OIA grants that were  provided to all insular areas that receive noncompact types of grants— including American Samoa, the Commonwealth of the Northern Mariana  Islands (CNMI), Guam, the U.S. Virgin Islands (USVI), and three Freely  Associated States (the Federated States of Micronesia, Palau, and the  Republic of the Marshall Islands). We excluded compact funds from the  review because we are required to regularly review and report on the  effectiveness of U.S. oversight of compact funds. Instead, we focused on  grants awarded for capital improvement projects, operations and  maintenance projects, technical assistance, and other purposes. Our  review covered grant projects awarded during fiscal years 1984 through  2009 that were open or had been closed for less than 3 years as of April 27,  2009.
To identify key internal control weaknesses that have been identified in  the past, as well as key internal controls relevant to grant management, we  first summarized the weaknesses that were identified in our insular area  related reports published from 2000-2009, Interior Office of Inspector  General reports on insular areas over that period, and the three most  recent Single Audit reports for American Samoa, the CNMI, Guam, and the  USVI. We also reviewed several documents outlining policies and  procedures applicable to OIA’s grant management and oversight  responsibilities to determine the internal control activities that OIA has in  place, including (1) the Standards for Internal Control in the Federal  Government, (2) OIA’s Financial Assistance Manual and Interior’s Grants  Management Common Rule, and (3) best practices in grant management  as identified by a working group of federal and state audit agencies. From  our review of these documents, we determined that the following internal  control activities are particularly relevant to OIA: accurate and timely  recording of transactions and events, appropriate documentation of  transactions and internal control, proper execution of transactions and  events, and controls over information processing. Some of these internal  control weaknesses we identified do not apply to all projects in the sample  (i.e., focusing on open or closed grant projects), and data were analyzed  accordingly. See table 4 for a summary of the internal control weaknesses  we considered and their applicability to projects in the sample.
We reviewed a random probability sample of 173 grant project files to  determine whether and the extent to which internal control weaknesses  are prevalent. The sample of 173 projects, stratified by project status  (i.e., open or closed), was drawn from the 1,771 projects in OIA’s internal  grant management database (see table 5). This sample allowed us to  make estimates about all projects in the database. With this probability  sample, each member of the study population had a nonzero probability o being included, and that probability could be computed for any member.  Each sample element was subsequently weighted in the analysis to  account statistically for all members of the population, including those  who were not selected.
Because we followed a probability procedure based on random selections,  our sample is only one of a large number of samples that we might have  drawn. Since each sample could have provided different estimates, we  express our confidence in the precision of our particular sample’s results  as a 95 percent confidence interval (e.g., plus or minus 10 percentage  points). This is the interval that would contain the actual population value  for 95 percent of the samples we could have drawn. All percentage  estimates from the file review have margins of error at the 95 percent  confidence level of plus or minus 10 percentage points or less, unless  otherwise noted.
There are limitations to the database, including the fact that the database  does not include the full universe of closed grants. Grant files are only  retained until the project has been closed for 3 years, after which the  physical files are destroyed. In addition, the database has only been in use  for all grant types—including capital improvement project grants,  operations and maintenance improvement program grants, and technical  assistance grants—since fiscal year 2008, and only grants that were open  at that time were entered into the database. Despite these limitations, the  database is the most comprehensive source of information about OIA  grants that includes both open and closed projects.
Prior to drawing the sample of grant projects, we modified the database to  meet our needs by removing anything outside the scope of our review,  including compact funding and reimbursable agreements. To standardize  the data at our unit of analysis—individual grant projects—we identified  unique projects within the capital improvement block grants given to  insular area governments. It was also necessary to unify multiple entries  for each project, representing partial payments to the grantees, in order to  establish a single database entry for every project that reflected the full  amount paid to grantees at the time of our review. We worked with grant  managers at OIA to explain, clarify, and correct incomplete or possibly  erroneous identification and status information in the database file they  provided to us.
To assess the reliability of the data, we interviewed agency officials and  grant managers about the data system and elements, how the system is  used, and the method of data input, among other areas. We also  corroborated the data using OIA grant files. Specifically, when reviewing  grant files for each project, we compared select data elements from the  database with information in the grant files, corrected the data with any  updates that were not reflected in the database, and recorded any  inconsistencies or inaccuracies as internal control weaknesses that were  present. This allowed us to identify cases where the agency’s electronic  record keeping was not accurate while using correct information for any  analysis using the data from OIA. We did not assess the accuracy of data in  the grant files that grant recipients submitted to OIA. We determined that  the data we used were sufficiently reliable for our purposes.
For each project in the sample we reviewed the grant files maintained by  grant managers at OIA headquarters in Washington, D.C., and assessed  every project for the presence of relevant internal control weaknesses.  Based on that initial review, we ranked the projects by prevalence of the  weaknesses. To account for the fact that grant projects were assessed for  different numbers of internal control weaknesses, we ranked projects  based on the percentage of applicable weaknesses present. We selected  24 of the grant projects with the highest percentages of internal control  weaknesses to review in more detail for objectives two and three; those  grant projects were located in American Samoa, the CNMI, Guam, and the  USVI. During this step, we gathered more information from OIA  headquarters grant files on the internal control weaknesses demonstrated  by the 24 selected projects and examined the grant files for any other  phases or funding years of the same project.
Follow-up to the file review addressed objectives two and three. We  traveled to American Samoa, the CNMI, Guam, and the USVI and met with  representatives for 24 projects. During these visits we interviewed  government officials and project managers for each project to follow up  on specific issues identified during file reviews, such as late reporting or  project delays. In addition, we physically inspected sites for 10 of these  projects. We also asked officials and project managers to describe any  challenges faced while implementing OIA grant projects and their  experiences interacting with OIA officials and grant managers. In  American Samoa, we reviewed 7 projects and met with officials from the  Office of the Governor, Department of Public Works, American Samoa  Power Authority, Territorial Office of Fiscal Reform, Lyndon B. Johnson  Tropical Medical Center, Department of Education, and the OIA field  representative stationed in American Samoa. In the CNMI, we reviewed  13 projects and met with officials from the Office of the Governor and its  Capital Improvement Program Office, Department of Public Works, Public  School System, Department of Health, Commonwealth Ports Authority,  Commonwealth Utilities Corporation, Office of the Rota Mayor, Office of  the Tinian Mayor, Office of the Public Auditor, and the OIA field  representative stationed in the CNMI who is responsible for grants. In  Guam, we reviewed 1 project and met with Guam Waterworks Authority  and Office of the Public Auditor. In the USVI, we reviewed 3 projects and  met with the Virgin Islands Office of Management and Budget, Virgin  Islands’ Waste Management Authority, University of the Virgin Islands,  Bureau of Economic Research, and the Office of the Virgin Islands  Inspector General.
For the second report objective, we identified common challenges that  insular area projects confront during project implementation by  (1) analyzing records of the interviews we conducted with insular area  officials and project managers to identify common challenges that insular  area projects confront during project implementation, (2) reviewing  correspondence and other documents we received from these officials and  project managers, and (3) reviewing correspondence, project status  reports, and other documents from OIA headquarters and field office grant  files.
For the third report objective, we also reviewed relevant OIA and other  documents, including OIA’s Financial Assistance Manual (2003 and 2009  versions); official letters to grantees detailing changes to OIA grant  management policies and procedures; OIA Budget Justifications; Interior’s  Grants Management Common Rule (as codified in 43 C.F.R. §12); and OMB  Circulars A-87, A-102, A-110, and A-133, to gather information on policies  and procedures relevant to OIA grant programs. In addition, we  interviewed OIA grant managers and division directors to obtain  information about how OIA’s policies and procedures are applied across  different grant types and insular areas, any changes to the policies and  procedures, and their perspectives on any additional changes that would  improve OIA’s management of grants and their capacity to do so. We also  reviewed documents, including OIA memos detailing possible strategies to  address problematic grant situations and an intergovernmental working  group’s survey of best practices in grant management across government  agencies, to obtain information about alternate approaches to grant  management challenges. Additionally, we interviewed Interior officials  who are responsible for implementing the departmentwide Financial and  Business Management System to obtain information about how the new  system will affect OIA’s grant management.
We conducted this performance audit from March 2009 to March 2010 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 Examples of OIA Grant Projects That Face Implementation Challenges
paragraphs: Some examples of OIA grant projects that clearly illustrate how the  previously discussed implementation challenges can contribute to delays  are discussed below.
subsections: section_title: Jose T. Villagomez Center for Public Health and Dialysis (Commonwealth Health Center Dialysis Facility); Saipan, CNMI
paragraphs: According to OIA, a capital improvement project grant was provided in  1997 for the addition of a dialysis clinic to the Commonwealth Health  Center, a public health facility on the main island of Saipan, CNMI. The  dialysis facility was scheduled to be constructed by August 2004 but was  not completed until December 2007, according to OIA officials. As of  September 2009, the dialysis facility still lacked Medicare and Medicaid  certification and was not yet in use (see fig. 4). The main challenges  contributing to the delay of this project’s completion include limited local  capacity for design and construction, changing local government  priorities, and contractor issues. For example, according to CNMI officials,  the project implementers lacked the technical expertise to identify a  critical structural design flaw in its early stages. When the flaw was  discovered, OIA decided to disallow, or not reimburse the CNMI for,  roughly $85,000 in project funds. The CNMI then filed a lawsuit against the  contractor responsible for the design. The project was halted while it was  redesigned, which contributed to the project’s delay and cost overruns.  Changing local government priorities contributed to the increase in scope  from a dialysis clinic to a full-scale dialysis hospital, which, according to  CNMI officials, entailed important legal and engineering distinctions. In  addition, according to CNMI officials, the Department of Public Works was  without the capacity it needed to manage the project scope expansion—all  of which contributed to a delay in implementation and a budget increase.  To supplement the increased budget, the CNMI and OIA redirected  $2.9 million away from a wastewater project in 2005, which had not been  completed at the time of our review. In addition, a contractor damaged a  crucial piece of equipment that was, according to a CNMI official, then  fraudulently certified by another.
section_title: Commonwealth Utilities Corporation Power Plant Rehabilitation; Saipan, CNMI
paragraphs: In May 2007, OIA approved a capital improvement project grant for the  CNMI Commonwealth Utilities Corporation’s rehabilitation of its power  plant on the main island of Saipan. As of January 2010, the project was  substantially complete. The main challenges contributing to the delay of  this project’s completion included contractor issues, lack of maintenance  funding, and limited local capacity. In 2006, the CNMI Governor declared a  state of emergency in response to a power crisis, which was also when the  Commonwealth Utilities Corporation hired a contractor to address the  problem. This allowed for standard procurement regulations to be lifted.  The contractor performed poorly, as did its replacement, which resulted in  project delay and cost overruns. According to the Commonwealth Utilities  Corporation’s officials, during the summer 2008, the CNMI experienced  over 1,300 hours of unscheduled power outages. In the fall of 2008, the  CNMI Governor declared another state of emergency to divert resources  to repairing engines damaged by wear and lack of maintenance (see fig. 5).  In addition, according to CNMI officials, the Commonwealth Utilities  Corporation’s operating capacity was diminished by a CNMI immigration  policy change in 2007, when 22 nonresident workers were forced to resign  their jobs at the agency. Further, the Commonwealth Utilities Corporation  reported that because roughly 70 percent of the agency’s budget is spent  on fuel, it is vulnerable to rising fuel prices. This can add to the challenge  of estimating project budgets. The Commonwealth Utilities Corporation  has responded to fuel cost fluctuations in the past by diverting funds away  from its periodic maintenance and required engine overhauls, which  s, which  increases the risk for future engine failures.  increases the risk for future engine failures.
section_title: Rota Health Center; Rota, CNMI
paragraphs: According to OIA, it provided a capital improvement project grant in 1989  for the construction of the Rota Health Center on the island of Rota in the  CNMI; however, construction began in 1999, then stopped and did not  resume until 2005. As of January 2010, only one of the facility’s two  buildings was complete. The other is substantially complete. At the time of  our site visit in August 2009, the dental facility was not yet open because  there was no dentist to staff it, and additional construction on the dental  clinic had not been approved. Further, the Rota Health Center has not  received Medicare and Medicaid certification due to an inadequate number  of medical staff. According to CNMI officials, several challenges  contributed to delays in the project, including contractor issues, limited  technical expertise, inadequate maintenance funding, and natural disaster  impacts.
First, the contractor the Rota Health Center initially hired quit before the  project was complete, and the contractor it hired to replace it went out of  business and abandoned the project, which caused further delay.
Second, the project suffered due to lack of technical expertise. This  contributed to project delay and a budget increase. For example, the  project was delayed and the budget increased in part to redesign the  project and address issues identified by both an Interior Office of  Inspector General investigation into contractor problems and a U.S. Army  Corps of Engineers review of project costs. The latter review resulted in a  U.S. Army Corps of Engineers recommendation that OIA disallow  $400,000 in material costs. However, OIA chose not to pursue those costs  because agency officials did not believe they could identify the  appropriate amount to disallow.
Third, at the time of our site visit in August 2009, they faced maintenance  challenges including flooding, X-ray machines that only occasionally worked,  an elevator—the only one in the building––that had been broken for roughly 3  to 4 months, and significant mold present in the loading area (see fig. 6).  There is inadequate maintenance funding and local capacity to address these  problems, according to project stakeholders. The Rota Health Center staff  had not communicated these problems to project administrators in the  Department of Public Works or to the Governor’s Capital Improvement  Project office. Despite ongoing delays, project administrators had not visited  the site in several months to check the project status.
Fourth, the Rota Health Center project budget increased as a result of  damage caused by Typhoons Pongsona, Tingting, and Chaba.
As of January 2010, the CNMI Capital Improvement Project Administrator  reported that the CNMI took steps to address some of the Rota Health  Center project challenges, such as correcting the elevator outage and  humidity causing mold in the loading area.
section_title: Tinian Landfill Project; Tinian, CNMI
paragraphs: In 2003, OIA approved a $1.7 million capital improvement project grant for  the CNMI’s Department of Public Works to close a dump on the island of  Tinian that, according to CNMI officials, does not comply with  environmental regulations and build a landfill in another location. An  environmental assessment was completed in 2008, but construction had  not begun as of August 2009. The CNMI encountered multiple challenges  during this grant’s implementation, including frequently changing  priorities, limited land access, and limited local capacity. For example,  project administrators experienced confusion over whether permission  was needed to develop the landfill at the proposed site—on land leased to  the U.S. military, which contributed to the delay. Nonetheless, the  Department of Public Works moved forward and completed the  environmental assessment in August 2008 that, according to an OIA  official, cost roughly $500,000 and was almost complete before OIA  realized that the selected site had not actually been secured. In 2007,  roughly $190,000 was redirected into the landfill project from the Tinian  Wastewater project. As of the time of our review in February 2010, no  funds had been withdrawn since the redirection—leaving $1.6 million in  the project account. In January 2010, the CNMI Capital Improvement  Project Administrator reported that the project’s design is ready for  solicitation.
section_title: Tinian Wastewater System Project; Tinian, CNMI
paragraphs: In fiscal year 2003, OIA approved capital improvement project funding for  the CNMI to construct a wastewater system on the island of Tinian. The  environmental assessment was completed in June 2008, but as of January  2010, OIA officials reported that the project had not moved into the design  phase and is expected to be canceled. OIA’s grant project file indicated  that there has been no account activity since November 2007. Fluctuating  Tinian Delegation priorities and corresponding project redirection have  contributed to the project’s delay. For example, the CNMI redirected funds  from a school modernization project into the wastewater system project,  then redirected them again into a landfill, an airport instrument landing  system, and other projects. In 2007, OIA officials initially denied the  CNMI’s request to redirect funds for the airport instrument landing system.  However, the request was eventually approved to accommodate the Tinian  Delegation’s priorities. Of the roughly $8.3 million that was originally  awarded and $34,000 that was redirected into the wastewater system  project, roughly $6.6 million has since been redirected away from the  wastewater system project. After a total of roughly $5.6 million was  redirected from the wastewater system project into the airport instrument  landing system project, the Tinian Delegation suspended the airport  landing system. Although subsequently about $2.2 million was redirected  from the airport instrument landing system to a Tinian airport terminals  project, in December 2009, the CNMI Capital Improvement Project  Administrator reported that the recently elected Tinian Delegation would  like to restart the airport instrument landing project. However, that official  reported in January 2010 that the CNMI’s current priority, pursuant to the  Governor’s October 2009 Declaration of Emergency, is to redirect these  funds to repair the Tinian Harbor and its deteriorating seawall.
section_title: Appendix III: Comments from the Department of the Interior
section_title: Appendix IV: Comments from the Commonwealth of the Northern Mariana Islands
section_title: Appendix V: Comments from the U.S. Virgin Islands
section_title: Appendix VI: GAO Contact and Staff Acknowledgments
subsections: section_title: Staff Acknowledgments
paragraphs: In addition to the contact named above, Jeffery D. Malcolm, Assistant  Director; Elizabeth Beardsley; Keesha Egebrecht; Justin Fisher; Laura  Gatz; and Isabella Johnson made key contributions to this report. Also  contributing to the report were Mark Braza, Emil Friberg, and Alison  O’Neill.