Beginning in 1993, mining fees have included an annual $100 mining maintenance fee on unpatented mining claims and sites and a $25 location fee on new claims and sites. The maintenance fees are collected in lieu of the annual $100 worth of labor or improvements required by the Mining Law of 1872. In addition, the Department of the Interior appropriations act for fiscal year 1993 and each fiscal year since established an amount of BLM’s appropriation for MLR to be used for MLAP operations. However, the appropriations acts require that the mining fees that BLM collects be credited against the MLR appropriation used for MLAP operations until all MLR funds used for MLAP are “repaid.” To the extent that fees are insufficient to fully credit the MLR appropriation, the MLR appropriation absorbs the difference and therefore partially funds MLAP. At the end of the fiscal year, BLM issues a reverse warrant to the Treasury for the amount of fees collected. MLAP operations deal with locatable minerals, which include base and precious metals (also called “hardrock minerals”), on public lands. MLAP operations do not include work on nonlocatable or common variety minerals, such as sand or gravel, or oil and gas work. MLAP operations do include: reviewing and approving plans and notices of mining operations, conducting a comprehensive program of inspections and enforcement to ensure compliance with the terms of plans and notices of operation and related state and local regulations, identifying and eliminating cases of unauthorized occupancy of mining conducting validity examinations of mining operations in order to eliminate cases of mineral trespass, completing mineral examinations and processing of the “grandfathered” mineral patent applications, collecting and processing mining fees, and collecting and processing waivers of maintenance fees. We examined how labor was charged to MLAP by BLM during the first 10 months of fiscal year 2000. We also examined BLM’s methodology for identifying contracts and services that were improperly charged to MLAP during fiscal years 1998 and 1999 and evaluated the processes and procedures developed to correct the improper charges. We also asked employees whether they were familiar with the source of MLAP funding. To accomplish our first objective, we obtained records for MLAP’s fiscal year 2000 collections and labor obligations from BLM’s accounting and payroll systems and conducted a statistically representative survey o 125 BLM employees who charged time to MLAP during the period of October 1, 1999, to July 15, 2000. Our review focused on nine of BLM’s administrative states and offices: Alaska, California, Colorado, Eastern States, Nevada, New Mexico, Oregon, Utah, and Washington Office. To accomplish our second objective, we reviewed the documentation used in BLM’s review of the contracts and services over $1,500 charged to MLAP for fiscal years 1998 and 1999, a total of 491 contracts. These 491 contracts represented over $8.0 million, or 89.3 percent, of the contracts and services charged to MLAP during this time period. For our third objective we included a question in our survey asking employees whether they were aware of the source of funding for MLAP. We did not independently verify the reliability of the accounting data provided nor did we trace the data to the systems from which they came. We conducted our work from August 2000 through December 2000 in accordance with generally accepted government auditing standards. A detailed discussion of our objectives, scope, and methodology is contained in appendix I of this report. BLM provided written comments on a draft of our report. The comments have been incorporated as appropriate and are reprinted as appendix II. We considered but did not reprint the attachment referred to in BLM’s comment letter. The results of our survey indicated that BLM employees’ hours charged to MLAP were not a reliable record of hours actually worked on that program. According to employees, hours were often charged to MLAP in excess of hours worked or for work unrelated to mining. In addition, individuals received bonuses or awards from MLAP funds although they charged no labor to the program. An accurate accounting of MLAP costs is crucial for proper program management and accountability and serves as a basis for estimating future costs when preparing and reviewing budgets. Proper tracking and recording of MLAP costs is especially important since this program is partially funded through mining fees that Congress has made available only for mining law administration program operations. “Charging work tasks, employee salaries, procurement or contract items, or equipment purchases to any subactivity other than the benefiting subactivity violates the terms of the Appropriations Act. Similarly, when procurements are charged to a given subactivity simply because “money is available there” but have no direct relationship to subactivity’s program accomplishment, is a violation of the integrity of managers’ financial management responsibility and both the specific policy decisions and the direction of proper authorities in setting those requirements. Future year program needs and requirements are based in part on the record of past years’ costs and accomplishments. Therefore, records of actual costs and accomplishments must be accurate as possible.” While approximately one-half of the BLM employees stated that they worked and charged the same amount of time to MLAP, we found that 38.9 percent charged more time to MLAP than they actually worked. Of this 38.9 percent, 17.6 percent of the employees stated that they did not work on MLAP at all during the 10 months of our study period, although a portion of their labor had been charged to the program. In contrast, approximately 11.4 percent of BLM employees reported charging less time to MLAP than they actually worked. These results are summarized in table 1. Our survey results showed that there were wide variations between the hours worked and the hours charged to the program among the employees who did not work and charge the same amount of time to MLAP. For example, we found three respondents who reported working 50, 70, and 75 percent of their time on MLAP during our study period, but charged 100 percent of their time to the program. One respondent reported doing no work on MLAP and charging 60 percent of the work hours to the program. In contrast, another respondent reported working 60 percent of the time on MLAP and charging only 11 percent to the program. From our survey results, we were able to compute the total number of hours worked and charged to the program and calculate an estimated net overcharge to the program of about 10.8 percent. Based on this percentage being applied to the 10-month MLAP payroll of approximately $11.4 million for the nine administrative states and offices under review, we estimate the potential net dollar overcharge to MLAP to be about $1.2 million. The total MLAP payroll for all states and offices was approximately $24.0 million for fiscal year 2000. We asked the employees who stated that they charged more time to MLAP than they worked to explain why the additional time was charged to MLAP. During survey pretesting we had identified four possible explanations, including: (1) time was charged based on the funding allocations (in other words, charges were made to subactivities from which funds were available for obligation rather than from the subactivity related to the task), (2) time was charged based on the directions of a supervisor, (3) time was charged based on the directions of a budget officer, and (4) no other codes were available to charge (for example, the task being done may not have been anticipated in the budget allocation and therefore the proper subactivity code was not available to the office). The results of their responses are presented in table 2. Employees could provide more than one explanation for the overcharging; therefore the percentages in the table total to more than 100 percent. In addition, we asked the employees who stated that they charged more time to MLAP than they worked to specify the tasks that they had charged to MLAP. They reported charging time for such non-MLAP related tasks as processing and approving applications to drill oil and gas wells, working on environmental remediation projects, doing recreation management, and performing vehicle maintenance. BLM officials stated that work involving these tasks should not have been charged to MLAP. Employees also stated that they had charged MLAP for labor involved in preparing mineral reports for land exchanges and conducting work on common variety minerals, such as sand and gravel. BLM officials stated that charging these tasks to MLAP would be improper except for specific and unique cases—for example, preparing a mineral report on a land exchange involving a mining claim or making a validity determination on a mining claim involving sand and gravel deposits. Our survey did not address whether the tasks charged to MLAP were for any of these specific and unique cases. Some BLM employees expressed uncertainty as to which tasks were appropriate to charge to MLAP. For example, some employees stated that work on mineral reports for land exchanges or abandoned mine lands should not be charged to MLAP, while other employees told us that they believed that any mineral-related tasks, including work on sand and gravel operations, could be properly charged to MLAP. All of the employees were asked whether they alone determined which subactivity, including MLAP, would be charged for their labor. In our study population, 68.5 percent of the employees responded that they had received directions as to which subactivity to charge. Of these 68.5 percent, approximately 66.3 percent stated that they received either written or verbal direction from their supervisor and 55.7 percent stated that they received either written or verbal direction from the budget officer/official. In total, 93.7 percent of these employees received written or verbal direction from either a supervisor or budget officer. Labor obligations represent a significant portion of total MLAP obligations—about 73.6 percent in fiscal year 2000—therefore, improperly charging labor to MLAP could result in the Congress and program managers using program cost information that is significantly misstated.