Bureau of Reclamation

This report examines how the Bureau of Reclamation allocates construction costs for the Central Valley Project. Located in California's Central Valley Basin, the project is the Bureau's largest water resource project, with authorized construction costs totaling more than $6.5 billion as of September 1990. While primarily devoted to irrigation, the project also provides flood control, hydroelectric power, and recreation uses. GAO (1) discusses the status of the Bureau's effort to reallocate project costs in accordance with a 1986 congressional mandate, (2) describes the Bureau's current cost allocation method, and (3) discusses alternative cost allocation methods.

GAO found that: (1) the Bureau gave limited attention to the congressional mandate to implement an updated cost allocation study by January 1988, mainly because of funding and staffing constraints; (2) the Bureau included inappropriate costs and made questionable estimates of project benefits and alternative costs in its 1988 draft study, and public comments on the study cited similar concerns; (3) the Bureau charges rates to its CVP water users that are based on the cost allocation percentages it developed in 1970 and updated in 1975; (4) delays in properly allocating CVP costs could result in the government recouping less of its capital investment, because the value of the dollar received years later will be less than if those dollars were timely received; and (5) although the Bureau has agreed to explore alternate allocation approaches it continues to rely on its methodologies, which could cause additional delay in developing an acceptable cost allocation.

Recommendations

Our recommendations from this work are listed below with a Contact for more information. Status will change from "In process" to "Open," "Closed - implemented," or "Closed - not implemented" based on our follow up work.

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