Indian Issues
The Office of the Special Trustee Has Implemented Several Key Trust Reforms Required by the 1994 Act, but Important Decisions about Its Future Remain Gao ID: GAO-07-104 December 8, 2006The American Indian Trust Fund Management Reform Act of 1994 established the Office of the Special Trustee for American Indians (OST), within the Department of the Interior, to oversee the implementation of management reforms for funds--derived primarily from Interior's leasing of Indian lands--that Interior holds in trust for many Indian tribes and individuals. Specifically, the act directs that an integrated information system be developed that interfaces the trust fund accounting system with the land title records and asset management systems maintained by Interior's Bureau of Indian Affairs (BIA). GAO examined (1) OST's progress in implementing the trust fund management reforms and (2) the extent to which OST has used contractors in implementing these reforms. GAO reviewed OST's strategic plans and contracting documents and interviewed OST and BIA managers.
OST has implemented several key trust fund management reforms, but has not prepared a timetable for completing its remaining trust reform activities and a date for OST's termination, as required by the 1994 Act. OST estimates that almost all key reforms needed to develop an integrated trust management system and to provide improved trust services will be completed by November 2007. Specifically, OST implemented a new trust funds accounting system for processing trust account funds, and BIA and OST are currently validating data for the trust asset and accounting management system for managing Indian land title records and leases for land with recurring income. However, the Special Trustee estimates that data verification for leasing activities will not be completed for all Indian lands until December 2009. OST's most recent strategic plan, issued in 2003, did not include a timetable for implementing trust reforms or a date for OST's termination. The Special Trustee notes that many OST functions, including trust fund operations, trust records management, and appraisal services, need to be performed after reforms are completed. If OST is terminated, these responsibilities would have to be transferred to another Interior office. OST plans to reduce expenditures primarily by terminating contracts once trust reforms are completed. However, OST has not yet developed a workforce plan that reexamines the expenditures and staffing levels needed for trust fund operations once trust reforms are completed. OST has used contractors to perform many of its trust reform activities as a way to minimize the size of its permanent staff. In fiscal years 2004 and 2005, OST allocated $89.7 million, or nearly 21 percent, of its appropriated funds to contracting. About 66 percent of contracting dollars from these 2 fiscal years went to two firms. Over $31 million during this period went to the largest contractor, an Indian-owned 8(a) small business, by adding task orders through an existing contract. OST has primarily relied on Interior's National Business Center to award and manage contracts.
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Director: Team: Phone:GAO-07-104, Indian Issues: The Office of the Special Trustee Has Implemented Several Key Trust Reforms Required by the 1994 Act, but Important Decisions about Its Future Remain
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Important Decisions about Its Future Remain' which was released on
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Report to Congressional Requesters:
United States Government Accountability Office:
GAO:
December 2006:
Indian Issues:
The Office of the Special Trustee Has Implemented Several Key Trust
Reforms Required by the 1994 Act, but Important Decisions about Its
Future Remain:
Office of the Special Trustee:
GAO-07-104:
GAO Highlights:
Highlights of GAO-07-104, a report to congressional requesters
Why GAO Did This Study:
The American Indian Trust Fund Management Reform Act of 1994
established the Office of the Special Trustee for American Indians
(OST), within the Department of the Interior, to oversee the
implementation of management reforms for funds”derived primarily from
Interior‘s leasing of Indian lands”that Interior holds in trust for
many Indian tribes and individuals. Specifically, the act directs that
an integrated information system be developed that interfaces the trust
fund accounting system with the land title records and asset management
systems maintained by Interior‘s Bureau of Indian Affairs (BIA). GAO
examined (1) OST‘s progress in implementing the trust fund management
reforms and (2) the extent to which OST has used contractors in
implementing these reforms. GAO reviewed OST‘s strategic plans and
contracting documents and interviewed OST and BIA managers.
What GAO Found:
OST has implemented several key trust fund management reforms, but has
not prepared a timetable for completing its remaining trust reform
activities and a date for OST‘s termination, as required by the 1994
Act. OST estimates that almost all key reforms needed to develop an
integrated trust management system and to provide improved trust
services will be completed by November 2007 (see table). Specifically,
OST implemented a new trust funds accounting system for processing
trust account funds, and BIA and OST are currently validating data for
the trust asset and accounting management system for managing Indian
land title records and leases for land with recurring income. However,
the Special Trustee estimates that data verification for leasing
activities will not be completed for all Indian lands until December
2009. OST‘s most recent strategic plan, issued in 2003, did not include
a timetable for implementing trust reforms or a date for OST‘s
termination. The Special Trustee notes that many OST functions,
including trust fund operations, trust records management, and
appraisal services, need to be performed after reforms are completed.
If OST is terminated, these responsibilities would have to be
transferred to another Interior office. OST plans to reduce
expenditures primarily by terminating contracts once trust reforms are
completed. However, OST has not yet developed a workforce plan that
reexamines the expenditures and staffing levels needed for trust fund
operations once trust reforms are completed.
OST has used contractors to perform many of its trust reform activities
as a way to minimize the size of its permanent staff. In fiscal years
2004 and 2005, OST allocated $89.7 million, or nearly 21 percent, of
its appropriated funds to contracting. About 66 percent of contracting
dollars from these 2 fiscal years went to two firms. Over $31 million
during this period went to the largest contractor, an Indian-owned 8(a)
small business, by adding task orders through an existing contract. OST
has primarily relied on Interior‘s National Business Center to award
and manage contracts.
Table: OST's Key Trust Fund Management Reforms;
Reform: Trust fund accounting system; Actual/Estimated completion date:
May 2000.
Reform: Trust beneficiary call center; Actual/Estimated completion
date: December 2005.
Reform: Trust portal;
Actual/Estimated completion date: May 2006.
Reform: Risk management program;
Actual/Estimated completion date: March 2007.
Reform: Trust funds receivable;
Actual/Estimated completion date: November 2007.
Reform: Trust asset and accounting management system: Land title
system; Actual/Estimated completion date: January 2006.
Reform: Trust asset and accounting management system: Leasing: Lands
with recurring income; Actual/Estimated completion date: October 2007.
Reform: Trust asset and accounting management system: Leasing: Lands
without recurring income; Actual/Estimated completion date: December
2009.
Reform: Appraisal management;
Actual/Estimated completion date: March 2007.
Reform: Probate management system;
Actual/Estimated completion date: June 2007.
Source: OST.
[End of Table]
What GAO Recommends:
GAO is recommending that Interior (1) provide the Congress with a
timetable for completing the trust reforms and a plan for future trust
fund operations once reforms are completed and (2) develop a workforce
plan that proposes staffing levels and funding needs once trust reforms
are completed. In commenting on a draft of the report, Interior agreed
with GAO‘s recommendations.
[Hyperlink, http://www.gao.gov/cgi-bin/getrpt?GAO-07-104].
To view the full product, including the scope and methodology, click on
the link above. For more information, contact Robin M. Nazzaro at (202)
512-3841 or nazzaror@gao.gov.
[End of Section]
Contents:
Letter:
Results in Brief:
Background:
OST Estimates that Almost All of Its Key Trust Reforms Will Be
Completed by November 2007, but Has Yet to Prepare a Timetable for
Completing Its Remaining Reforms:
OST Has Relied on Contractors to Implement Many of Its Trust Reform
Activities:
Conclusions:
Recommendations for Executive Action:
Agency Comments and Our Evaluation:
Scope and Methodology:
Appendix I: Retention Allowances and Performance Awards Provided to OST
Senior Executive Service Managers:
Retention Allowance:
Performance Awards:
Appendix II: OST's Task Orders Issued to Chickasaw Nation Industries
for Trust Reform Work, Fiscal Years 2004 and 2005:
Appendix III: Comments from the Department of the Interior:
Appendix IV: GAO Contact and Staff Acknowledgments:
Tables:
Table 1: OST's Appropriations, Full-Time Equivalents, and SES
Positions, Fiscal Years 1997 through 2006:
Table 2: OST's Top 10 Contractors, by Obligations, Fiscal Years 2004
and 2005:
Table 3: Top 10 Product or Service Types Contracted for OST, by
Obligations, Fiscal Years 2004 and 2005:
Table 4: Comparison of the Retention Allowance Provided to the
Principal Deputy Special Trustee with the Maximum Retention Allowance
Provided to an SES Manager at All Other Federal Agencies, Calendar
Years 1999 through 2005:
Table 5: Comparison of the Average Performance Award Amounts Provided
to SES Managers at OST with the Average Amounts Provided to Other
Bureaus and Offices within Interior and Other Federal Agencies, Fiscal
Years 2001 through 2005:
Figure:
Figure 1: OST's Current Organizational Structure and SES Positions:
Abbreviations:
BIA: Bureau of Indian Affairs:
CD&L: Chavarria, Dunne, & Lamey:
CNI: Chickasaw Nation Industries:
DQ&I: Data Quality and Integrity:
ERB: Executive Resources Board:
FPDS-NG: Federal Procurement Data System-Next Generation:
NBC: National Business Center:
OST: Office of the Special Trustee for American Indians:
SES: Senior Executive Service:
TAAMS: Trust Asset and Accounting Management System:
TFAS: Trust Funds Accounting System:
United States Government Accountability Office:
Washington, DC 20548:
December 8, 2006:
The Honorable Byron L. Dorgan:
Vice-Chairman:
Committee on Indian Affairs:
United States Senate:
The Honorable Daniel K. Inouye:
United States Senate:
The Honorable Tim Johnson:
United States Senate:
The Bureau of Indian Affairs (BIA), within the Department of the
Interior (Interior), for many years was responsible for managing the
income that Indians derived primarily from Interior's leasing of rights
to minerals, timber, and grazing on Indian lands. However, BIA
experienced long-standing problems in managing this income, which it
had received and held in trust.[Footnote 1] Specifically, BIA's Office
of Trust Funds Management, which was responsible for providing
accounting and investment services and managing the accounting system
that recorded the receipt and disbursement of Indian trust funds to
tribal and individual Indian account holders, did not have adequately
trained personnel or adequate accounting and information systems to
ensure that lease income was deposited in the correct trust accounts
and that trust balances were accurate. Moreover, each of BIA's 12
regional offices has been responsible for recording land title
ownership and tracking lease revenues. Several BIA regional and agency
offices created their own automated systems for tracking this
information, while some offices performed this function manually. As a
result, these regional information systems were not integrated, and the
regional offices could not ensure that their information was regularly
updated, accurate, and complete.
In response to these problems, the Congress enacted the American Indian
Trust Fund Management Reform Act of 1994 (the 1994 Act).[Footnote 2]
Among other things, the 1994 Act established the Office of the Special
Trustee for American Indians (OST) to oversee and coordinate Interior's
implementation of trust fund management reforms. To improve information
systems and accounting practices, the 1994 Act directs OST to oversee
the development of an integrated information system that interfaces the
trust funds accounting system with BIA's land title records and asset
management systems for Indian lands. These systems are to be integrated
with asset management systems that Interior's Minerals Management
Service and Bureau of Land Management are developing. The 1994 Act also
requires OST to develop a comprehensive strategic plan with a timetable
for implementing the identified reforms and a date when OST will be
terminated. The 1994 Act directs that the Special Trustee provide the
Secretary of the Interior and the Congress with a 30-day notice prior
to the termination date, and authorizes the Special Trustee to
recommend either the continuation or permanent establishment of OST if
necessary for the efficient discharge of Interior's trust
responsibilities. The 1994 Act states that OST will be terminated 180
legislative days after reforms are completed, unless the Congress
extends the Special Trustee's authorities.
Subsequently, in response to direction in the conference report
accompanying Interior's fiscal year 1996 appropriations bill,[Footnote
3] the Secretary of the Interior directed, through Secretarial Order
3197, that the Office of Trust Funds Management and other financial
trust services be transferred from BIA to OST. This transfer
effectively expanded OST's responsibilities from overseeing and
coordinating Interior's implementation of trust fund management reforms
to also include managing tribal and individual Indian trust fund
accounts and providing financial services. OST reports that it
currently maintains about 1,450 accounts for more than 250 tribal
entities with assets of about $2.9 billion and about 300,000 individual
Indian accounts with financial assets of about $400 million.
Between fiscal years 1997 and 2006, OST's staff increased from 245 to
590, and total funding grew from $34.1 million to $222.8 million. In
April 2003, the Secretary of the Interior reorganized OST to create
three separate divisions that are responsible for (1) implementing
trust reform activities, (2) providing financial trust services, and
(3) providing trust fund management and beneficiary services in the
field through the creation of 6 regions that are aligned with BIA's 12
regional offices. The reorganization also doubled the number of OST's
Senior Executive Service (SES) positions to 14.
Over the years, OST and BIA have used contractors to help implement
their trust fund management reforms. In 2003, Interior's Office of
Inspector General began investigating allegations that senior OST
managers had given Chavarria, Dunne, & Lamey (CD&L) favorable treatment
in awarding contract work. The Inspector General's May 2006 report
presented facts showing that (1) senior OST managers had created an
appearance of preferential treatment of CD&L by socializing and
exchanging gifts with firm officials, in violation of government
ethical standards, and (2) OST contract personnel felt pressured by
these senior OST managers to continue to award work to CD&L.[Footnote
4] The Inspector General referred the matter to Interior to take the
appropriate administrative action and review the performance of the
contract. Independent of the Inspector General's investigation, OST
began using Interior's National Business Center (NBC), located in
Denver, Colorado, in 2003 and Fort Huachuca, Arizona, in 2004 to
provide contracting services. NBC's Fort Huachuca branch administers a
contract with an Indian small business contractor. The contract, which
was awarded noncompetitively under the Small Business Administration's
8(a) program, allows OST and other agencies to place task orders for
activities within the contract's scope.[Footnote 5] BIA also provides
contracting services for OST in addition to funding its own contracts
for trust reform activities.
In recent years, representatives of several tribal organizations have
expressed concern to the Congress about the extent, duration, and cost
of OST's reforms, noting that OST has not provided the Congress with a
timetable for completing these reforms as the 1994 Act requires. These
representatives are also concerned that OST has taken an increasingly
larger role in the management of the trust, rather than limiting itself
to overseeing trust reform efforts.
In this context, we examined (1) OST's progress in implementing the
American Indian Trust Fund Management Reform Act of 1994 and (2) the
extent to which OST has used contractors in implementing these reforms.
In addition, appendix I provides information on retention allowances
and performance awards provided to OST managers in SES positions.
To examine OST's progress in implementing the 1994 Act, we reviewed
laws, regulations, and legislative history pertaining to trust reforms
at Interior. We also reviewed OST's trust reform planning documents and
interviewed OST and BIA officials to determine the status of the
implementation of trust reforms; however, we did not analyze the
adequacy of OST's and BIA's implementation of trust reforms. To
identify the extent to which OST has used contractors in implementing
its trust reforms, we obtained data from the Federal Procurement Data
System-Next Generation (FPDS-NG) for fiscal years 2004 and 2005 and
tested these data for reliability by comparing them with procurement
data from NBC.[Footnote 6] Where discrepancies were found, we corrected
the FPDS-NG data to ensure completeness of the data. In addition, we
interviewed contracting officers at NBC and contracting officers'
technical representatives at OST. On the basis of our testing and
correction of FPDS-NG data, we are sufficiently confident of the
reliability of the data we are reporting. We conducted our review from
February 2006 through October 2006 in accordance with generally
accepted government auditing standards.
Results in Brief:
OST has implemented several key trust fund management reforms, but OST
has not prepared a timetable for completing its remaining trust reform
activities or identified a date for its termination under the 1994 Act.
OST estimates that almost all of the key trust reforms needed to
develop an integrated trust management system and to provide improved
trust services will be completed by November 2007, but OST believes
some additional improvements are important to make. Specifically, in
May 2000, OST implemented a new trust funds accounting system for
processing trust account funds. In addition, BIA has developed a
centralized trust asset and accounting management system for managing
land title records and leasing activities for Indian lands. OST and BIA
are currently verifying the accuracy of the leasing information by
comparing data in BIA's trust asset and accounting management system
with BIA's local land records for each tract of Indian land that has
recurring income from leasing the rights to natural resources. The
agencies plan to finish this verification by October 2007. However, the
Special Trustee does not expect that verification activities will be
completed for land tracts without recurring income until the end of
2009. OST's most recent strategic plan, issued in 2003, did not include
a timetable for implementing trust reforms or a date when OST will be
terminated, as the 1994 Act required. The 1994 Act also allows the
Special Trustee to propose to the Congress that OST continue
operations. The Special Trustee told us that Interior will need OST's
staff to continue to perform their functions after trust reforms are
completed, whether or not OST is terminated, because the Secretary of
the Interior transferred staff and responsibilities to OST to, for
example, manage trust fund accounts and provide account holders with
better trust services after the passage of the 1994 Act. While OST
plans to reduce its appropriated funding request by phasing out
contractors when trust reform activities are complete, the Special
Trustee believes that OST's current staff is about at the right size
needed for future trust fund operations. However, OST has not developed
a workforce plan that reexamines the expenditures and staffing levels
needed for trust fund operations once reforms are completed.
Opportunities may exist to realign or further reduce expenditures and
staffing levels because, for example, there are OST staff who either
are responsible for implementing trust reforms or have responsibilities
that will decrease once trust reforms are completed and accounting
functions are automated. We are making recommendations to the Secretary
of the Interior to provide the Congress with a timetable for completing
trust fund management reforms and with a plan for future trust fund
operations. Also, we are recommending that the Secretary develop a
workforce plan that identifies future staffing and funding needs as
trust reforms are completed. Interior agreed with our recommendations.
Since its inception, OST has used contractors to perform many of its
trust reform activities as a way to minimize the size of its permanent
staff. In fiscal years 2004 and 2005, OST obligated nearly 21 percent
of its total appropriated funds to contracting. The trust reform
activities performed and products provided by the nearly 350 firms that
OST has worked with vary and include operating and maintaining software
systems to track and manage accounts, modeling trust processes,
drafting handbooks and procedural documents, and providing records
management services. About 66 percent of the fiscal years 2004 and 2005
contracting dollars went to 2 firms. Over $31 million during this
period was awarded to the largest contractor, an Indian-owned 8(a)
small business, through task orders under an existing contract. This
type of contract allows for task orders to be awarded quickly. In
addition, OST has awarded about $14 million annually to the second
largest contractor to operate and maintain the trust funds accounting
system. OST awarded and managed contracts in-house for nearly 2 years
before turning the contracting function over to NBC's Denver branch in
October 2003.
Background:
The federal government has held funds in trust for Indian tribes since
1820. Enacted in 1887, the General Allotment Act, also known as the
Dawes Act, provided for the division of Indian tribal lands into
allotments of up to 160 acres for individual tribal members and
families. Subsequently, the Indian Reorganization Act, enacted in 1934
and also known as the Wheeler-Howard Act, ended the allotment of tribal
lands and extended indefinitely the period that the federal government
would hold allotted lands in trust. Many of these allotments remain in
trust today, now jointly owned in common by hundreds and, in many
cases, thousands of individual Indians, each with an undivided--or
fractionated--interest in the whole parcel. As trustee for tribes and
Indians, the Secretary of the Interior is required to account for the
revenue generated by each interest (amounting, in some cases, to less
than 1 cent per year), invest the trust funds, and provide other trust
services to the beneficiaries. The Secretary also is responsible for
maintaining official Indian land title and ownership records, managing
natural resource assets, and probating estates. Much of this
responsibility has been delegated to BIA, which has 12 regional offices
and 85 agency offices that are located on or near reservations.
Beginning in April 1997, Interior has issued several strategic plans
for implementing trust reforms. Concerned that Interior had not
achieved the desired improvement in trust management, the Secretary in
January 2002 initiated an effort to develop a comprehensive,
departmentwide approach for improving Indian trust management. On March
28, 2003, Interior issued the Comprehensive Trust Management Plan,
which presented a strategic plan to guide the design and implementation
of integrated trust reform efforts. Interior's performance of fiduciary
trust business practices nationwide was documented and reported in the
As-Is Trust Business Model Report.[Footnote 7] The information
contained in the Comprehensive Trust Management Plan and the As-Is
Report is the foundation for the recommendations for reengineered
business processes that appear in the To-Be Model--or Fiduciary Trust
Model.[Footnote 8] The Fiduciary Trust Model contains implementation
strategies for major business processes, and currently serves as
Interior's guide for trust reform.
As a basis for revising the department's approach for improving Indian
trust management, Interior contracted with Electronic Data Systems in
2001 to determine how trust reforms were then being conducted and how
they could be improved. The firm's recommendations included both
improvements in trust management and a reorganization of Interior's
agencies carrying out trust management and improvement.[Footnote 9] In
response to these recommendations, the Secretary of the Interior
reorganized BIA and OST in April 2003. The reorganization increased
OST's SES positions from 7 to 14 by (1) creating 6 OST regional trust
administrators, located at OST's Albuquerque headquarters, who are
responsible for providing account holders with trust services and with
overseeing fiduciary trust officers and other personnel in the field
and (2) adding an SES position in realigning OST's management structure
by creating three divisions.
As shown in table 1, OST's budget has grown from $34.1 million in
fiscal year 1997 to $222.8 million in fiscal year 2006. Similarly,
OST's full-time equivalent positions have increased from 245 employees
in fiscal year 1997 to 590 employees in fiscal year 2006. While the
growth in budget and staff mainly reflect OST's efforts to implement
reforms and its growing responsibility for trust fund management, OST's
funding also supports other Indian-related activities. For example, in
fiscal year 2006, OST transferred (1) $54.4 million to the Office of
Historical Trust Accounting, (2) $34.0 million for implementing the
Indian Land Consolidation Act activities, (3) $7.6 million to the
Office of Hearings and Appeals, (4) $5.6 million to the Interior
Solicitor's Office to cover costs associated with the Cobell v.
Kempthorne lawsuit,[Footnote 10] (5) $1.3 million to BIA for tribal
contract and compact appraisals, and (6) $300,000 to Interior's Chief
Information Officer. OST began funding the Office of Historical Trust
Accounting in fiscal year 2001 and activities related to the Indian
Land Consolidation Act in fiscal year 2000. Responsibility for Indian
land appraisals was transferred from BIA to OST in 2002 and is
currently managed by OST's Office of Appraisal Services.
Table 1: OST's Appropriations, Full-Time Equivalents, and SES
Positions, Fiscal Years 1997 through 2006:
Dollars in millions.
Fiscal year: 1997;
OST appropriations: Total OST funding: $34.1;
OST appropriations: Funds transferred to other offices: $0;
OST appropriations: Funds available to OST after transfers: $34.1;
Full-time equivalents: 245;
SES positions: 5.
Fiscal year: 1998;
OST appropriations: Total OST funding: 38.6;
OST appropriations: Funds transferred to other offices: 0;
OST appropriations: Funds available to OST after transfers: 38.6;
Full-time equivalents: 281;
SES positions: 5.
Fiscal year: 1999;
OST appropriations: Total OST funding: 57.0;
OST appropriations: Funds transferred to other offices: 0;
OST appropriations: Funds available to OST after transfers: 57.0;
Full-time equivalents: 312;
SES positions: 6.
Fiscal year: 2000;
OST appropriations: Total OST funding: 95.0;
OST appropriations: Funds transferred to other offices: 5.0;
OST appropriations: Funds available to OST after transfers: 90.0;
Full-time equivalents: 357;
SES positions: 5.
Fiscal year: 2001;
OST appropriations: Total OST funding: 119.0;
OST appropriations: Funds transferred to other offices: 47.7;
OST appropriations: Funds available to OST after transfers: 71.3;
Full-time equivalents: 362;
SES positions: 7.
Fiscal year: 2002;
OST appropriations: Total OST funding: 110.2;
OST appropriations: Funds transferred to other offices: 45.5;
OST appropriations: Funds available to OST after transfers: 64.7;
Full-time equivalents: 415;
SES positions: 7.
Fiscal year: 2003;
OST appropriations: Total OST funding: 148.3;
OST appropriations: Funds transferred to other offices: 46.4;
OST appropriations: Funds available to OST after transfers: 101.9;
Full-time equivalents: 437;
SES positions: 7.
Fiscal year: 2004;
OST appropriations: Total OST funding: 209.0;
OST appropriations: Funds transferred to other offices: 106.9;
OST appropriations: Funds available to OST after transfers: 102.1;
Full-time equivalents: 507;
SES positions: 14.
Fiscal year: 2005;
OST appropriations: Total OST funding: 228.1;
OST appropriations: Funds transferred to other offices: 104.7;
OST appropriations: Funds available to OST after transfers: 123.3;
Full-time equivalents: 565;
SES positions: 14.
Fiscal year: 2006;
OST appropriations: Total OST funding: 222.8;
OST appropriations: Funds transferred to other offices: 103.2;
OST appropriations: Funds available to OST after transfers: 119.6;
Full-time equivalents: 590;
SES positions: 14.
Sources: Interior's OST and Minerals Management Service.
[End of table]
In addition to its trust reform activities, OST is responsible for
maintaining trust-related Indian records and developing trust
investment strategies for beneficiaries. In 1999, OST created the
Office of Trust Records to ensure that Indian records are maintained
and safeguarded. In September 2003, Interior signed a Memorandum of
Understanding with the National Archives and Records Administration to
create a national repository for American Indian records, including
fiduciary trust records, in Lenexa, Kansas. OST's Division of Trust
Funds Investment is responsible for managing and investing individual
Indian and tribal assets. OST is allowed to invest trust funds only in
securities backed by the federal government, including U.S. Treasuries
and securities from government-sponsored agencies.
OST Estimates that Almost All of Its Key Trust Reforms Will Be
Completed by November 2007, but Has Yet to Prepare a Timetable for
Completing Its Remaining Reforms:
OST has implemented several key trust fund management reforms, but OST
has not prepared a timetable for completing its remaining trust reform
activities or identified a date for its termination under the 1994 Act.
OST estimates that almost all of the key reforms needed to develop an
integrated trust management system and to provide improved trust
services will be completed by November 2007, but OST believes some
additional improvements are important to make. In particular, once the
validation of BIA's new trust asset and accounting management system
(TAAMS) leasing information for Indian lands with recurring income is
completed, BIA and OST plan to validate the leasing information for
Indian lands that do not have recurring income. The Special Trustee
expects these validation activities will be completed by December 2009.
Despite the 1994 Act's requirement, OST has not proposed a termination
date for the office once trust reforms are completed. The Special
Trustee noted that Interior will need OST's staff to continue to
perform their functions after trust reforms are completed, whether or
not OST is terminated, because OST was given responsibility for
managing trust fund operations and other trust-related activities after
the 1994 Act was enacted. The Special Trustee also added that OST will
reduce its expenditures once key trust reforms are completed by
terminating contracts, but he believes that OST's current staff is
about the right size needed to manage OST's operations after trust
reforms are completed. However, because OST has not developed a
workforce plan that reexamines the expenditures and staffing levels
needed for trust fund operations once trust reforms are completed,
additional opportunities may exist to further reduce expenditures and
OST staff.
Almost All of OST's Key Reforms Are Scheduled for Completion by
November 2007:
OST has made important progress in implementing trust fund management
reforms and plans to complete almost all of the key reforms by November
2007. Specifically, OST is responsible for trust reforms associated
with the trust funds accounting system and the overall integration of
the various trust reform automated systems. BIA and OST are responsible
for trust reforms associated with its implementation of the TAAMS
system for managing land title records and leasing activities for
Indian lands. NBC is responsible for developing a management system for
Indian land appraisals.
OST is responsible for implementing the following trust reforms:
* Trust Funds Accounting System (TFAS). In March 1998, OST awarded a
contract to SEI Investments to use a modified version of its commercial
trust accounting system that provides basic collection, accounting,
investing, disbursing, and reporting functions. TFAS replaced a module
in BIA's Integrated Records Management System and two OST systems,
which could not fully perform trust accounting functions. TFAS was
deployed in August 1998 and was fully operational in May 2000. OST
continues to contract with SEI Investments at a cost of about $14
million per year for operations and general maintenance, which includes
system upgrades twice annually.
TFAS is an accounting and investment system that enables the automated
production of account statements for individual Indians and tribal
account holders. It also allows, for example, automated trade
settlements, automated payments of financial asset income, daily
securities pricing, and automated reconciliation. In addition,
landownership and leasing accounts will be included in TFAS as part of
BIA's and OST's TAAMS conversion project to ensure that both systems
contain accurate and complete information.
* Trust Funds Receivable. In 2004, OST awarded a contract to Bank of
America to centralize the collection of trust payments through a single
remittance-processing center, also known as a lockbox, to minimize the
risk of loss or theft. Under phase I of the new system, which became
effective in October 2005, trust payments are sent to the processing
center in Prescott, Arizona, for deposit into trust fund accounts.
Previously, BIA and OST personnel in agencies for each of the 12
regions collected trust payments for trust fund account holders and
then mailed or deposited the payments.
Phase II of this project is to have all collections and distributions
automated in TFAS. However, implementation requires the completion of
the validation of the land title and leasing data in TAAMS. According
to OST officials, full automation of all collections and distributions
is scheduled for November 2007. OST officials said that two agencies in
BIA's Southern Plains region completed Phase II by the end of June
2005--the remaining agencies in BIA's Southern Plains region and one
agency in BIA's Eastern Oklahoma region completed Phase II by the end
of January 2006. Several agencies in BIA's Great Plains region
completed Phase II by the end of June 2006--the remaining agencies in
BIA's Great Plains region and several agencies in BIA's Northwest
region completed Phase II by the end of August 2006. BIA's Rocky
Mountain region completed Phase II by the end of July 2006, and BIA's
Navajo region and several agencies in BIA's Western regions completed
Phase II by the end of September 2006. In addition, OST has completed
its desktop procedures for handling the receipt of trust funds, and BIA
is completing its desktop standardization procedures, with some
assistance from OST.
* Trust Beneficiary Call Center. In December 2004, OST established the
Trust Beneficiary Call Center, a centralized call center in its
headquarters office in Albuquerque, New Mexico. Through a toll-free
telephone number, the call center provides timely responses to
beneficiaries' questions and allows them to access account information.
In addition, the call center operators and staff have recently received
training and access to TAAMS through OST's trust portal to enable them
to better answer questions about beneficiaries' assets. If a
beneficiary's question cannot be answered, the call center operator is
to refer the question to an OST Fiduciary Trust Officer, generally
colocated at the BIA field agencies, to research and respond
accordingly. The call center was fully operational by December 2005.
In establishing the call center, calls were redirected from preexisting
toll-free telephone numbers at BIA field agencies. OST officials told
us that the Trust Beneficiary Call Center has helped to relieve some of
the workload from OST and BIA staff in the field. OST data show that,
as of July 2006, the call center had received over 135,000 calls from
beneficiaries, with a first-line resolution rate of about 89 percent.
* Trust Portal. OST completed the implementation of its trust portal in
May 2006. OST's trust portal provides employees with a single point of
access to applications and other resources, such as the trust funds
receivable system and the intranet. Currently, the trust portal is
available to OST employees and some BIA employees. According to an OST
official, various contractors developed the trust portal and OST staff
maintain it.
* Risk Management Program. Beginning in 1999, OST has contracted with
CD&L to develop and refine the risk management program for establishing
management controls to monitor and evaluate the effectiveness of
Interior's trust operations. The risk management program has evolved
over the past few years--the original risk management product was a
stand-alone compact disk application that provided an assessment tool
to evaluate OST's business operations. Since then, a Web-based risk
management tool, the RM-Plus tool, has been developed to facilitate
data collection and reporting for all Interior bureaus and offices with
Indian trust responsibilities. OST implemented the RM-Plus in August
2004 and has contracted with Chickasaw Nation Industries (CNI) to
operate and maintain the tool. BIA used the RM-Plus tool in 2006 to
produce its financial assurance statement at the Southern Plains pilot
location.
OST officials said that additional revisions are being made to the RM-
Plus tool in response to the new requirements in the Office of
Management and Budget's Circular A-123 for ensuring the accountability
and cost-effectiveness of agency programs. The RM-Plus is currently
being revised to incorporate the circular's requirements and is
scheduled to be completed by March 2007. If other Interior bureaus and
offices with trust responsibilities decide to use the RM-Plus tool, OST
will assist them by providing advice and access to the RM-Plus tool.
BIA and OST are implementing the following trust reforms to develop
centralized systems for managing land title records and leasing
activities as well as managing and tracking probates for Indian lands:
* TAAMS. In December 1998, Interior awarded a contract to Artesia to
develop TAAMS, a centralized system with two components for managing
Indian trust assets: the TAAMS land title system and the leasing
module. Over the years, Artesia was bought out by several contractors.
Currently, the TAAMS contract is with CGI-AMS. BIA's TAAMS land title
system maintains both current and historical titles--some of these
historical titles in the system date back to the original land grant.
This system was completed in January 2006.
The TAAMS leasing module tracks leases of Indian assets. BIA and OST
are currently converting leasing data from BIA's old legacy systems to
TAAMS and integrating TAAMS with TFAS to ensure that both systems have
accurate and complete title and leasing information. As a region's
system is converted, OST will provide beneficiaries with asset
statements that identify the source of the funds and a listing of
assets owned in that region and any active encumbrances, as required by
the 1994 Act. Prior to the conversion, the statements that
beneficiaries receive will only include information on account balances
and account transactions.
Before leasing data are converted into TAAMS, BIA's Land Titles and
Records Offices and OST--primarily through a contract with CNI--are
implementing the data quality and integrity (DQ&I) project to verify
the completeness and accuracy of the TAAMS title and leasing
information for Indian lands. As part of the verification, the DQ&I
teams compare the TAAMS information with the information contained in
the BIA region's legacy realty system for land tract allotments with
recurring income. For each land tract allotment for which the owner(s)
and the interest they own do not match,[Footnote 11] the DQ&I teams
compare the TAAMS information against source documents to identify (1)
conveyances of title through probate records, deeds, and gift
conveyances and (2) active encumbrances, including lease permits,
rights of way, and timber sale agreements. This verification is
scheduled to be completed in all BIA regions by October 1, 2007,
covering land tracts with recurring income for which the legacy lease
and title systems do not match.
OST also plans to verify the accuracy of the land and leasing records
for which TAAMS and the legacy realty system have matching information
by comparing the TAAMS information with source documents for a sample
of these records. OST and BIA plan to verify title and leasing data for
tracts of land without recurring income after October 2007, but a
schedule for implementing and completing this work has not yet been
developed.
OST officials noted that the DQ&I project is labor-intensive. The land
validation took about 1 hour per tract in BIA's Southern Plains region
because there are about 12 owners per tract. This validation requires
more time in BIA's Great Plains region, which has about 32 owners per
tract, and in BIA's Rocky Mountain region, which has over 100 owners
for some tracts.
* Probate Case Management and Tracking System. BIA used a modified off-
the-shelf software program to develop the probate case management and
tracking system, also known as ProTrac, for use by BIA, OST, and
Interior's Office of Hearings and Appeals to manage and track probate
cases from initiation to closing. BIA constructed the ProTrac database
from manual records, spreadsheets, and trust fund records and,
according to a BIA official, has verified its accuracy. BIA is
currently developing a paperless version of ProTrac that is scheduled
to be implemented by June 2007.
NBC is implementing the following trust reform to improve the
management of Indian land appraisals:
* Appraisal Management System. NBC is working with OST to adapt its
appraisal request and review tracking system to develop the Indian
trust appraisal request system. This new system will centralize the
appraisal process and track appraisal requests across Indian country,
including the period of time it takes to process a request. NBC and OST
completed pilot testing the appraisal management system in the Western
region in October 2006. OST estimates that the appraisal management
system will be fully implemented by March 2007.
OST and BIA managers have overseen the progress of each of the key
trust reforms scheduled for implementation by November 2007. OST
managers also plan to implement two additional trust reforms. First,
the managers plan to verify the accuracy and completeness of TAAMS
information for (1) a statistical sample of the tracts of land for
which the data in TAAMS and the BIA regional legacy systems match and
(2) tracts of Indian land without recurring income. The Special Trustee
estimates that this work will be completed by the end of 2009. Second,
the OST managers plan to work with BIA to replace the oil and gas
distribution system within BIA's Integrated Records Management System
that tracks oil and gas revenue from Indian lands. The new system will,
among other things, interface with TFAS and the Minerals Management
Service's system. This system is estimated to cost $2.5 million per
year and to be implemented by December 2009.
Furthermore, Interior is exploring the conversion of Land Title Mapper
to the department's National Integrated Lands System for
standardization purposes. The Land Title Mapper uses satellite imagery
and geographic information systems to link the data in the integrated
computer system with the physical site. The Special Trustee said the
mapper could be completed by 2009 or 2010 and noted that, while the
mapper is not a component of the 1994 Act's trust reforms, it would
provide an important service to trust account beneficiaries.
Additionally, as trust reforms are completed, OST will conduct employee
training, promulgate trust-related regulations, prepare internal
procedures, and prepare handbooks.
OST Has Not Provided a Timetable for Completing Trust Reforms or
Identified a Termination Date:
The 1994 Act directed the Special Trustee, within 1 year of
appointment, to provide the Congress with a comprehensive strategic
plan that, among other things, identifies a timetable for implementing
the plan's trust reforms and a date for OST's termination once reforms
have been implemented. However, the Special Trustee has yet to provide
the Congress with a timetable for completing the remaining trust reform
activities and a date for OST's termination, even though OST's most
recent strategic plan--the Comprehensive Trust Management Plan--issued
in March 2003, stated that OST would be able to forecast a date for
termination within the next 14 months. The lack of a timetable for
completing the remaining trust reforms has hindered the ability of the
Congress, tribal organizations, and the public to fully assess the
status of OST's trust reforms or to plan for trust fund operations once
reforms are completed.
The 1994 Act includes a sunset provision for OST but allows the Special
Trustee to recommend to the Congress that OST continue operations if it
is needed for the efficient discharge of Interior's trust
responsibilities. The Special Trustee told us that Interior will need
OST's staff to continue to perform their functions after trust reforms
are completed, whether or not OST is terminated, because the Secretary
of the Interior transferred additional staff and responsibilities to
OST for managing tribal and individual Indian trust fund accounts and
providing other trust services after the passage of the 1994 Act.
Specifically, in response to direction in the conference report
accompanying Interior's fiscal year 1996 appropriations bill,
Secretarial Order 3197 transferred the Office of Trust Funds Management
and other financial trust services from BIA to OST. Subsequently, the
Secretary transferred BIA's land appraisal staff to OST. If OST is
terminated, it is unclear where OST responsibilities--including trust
fund management and accounting operations, beneficiary services, trust
records management, and land appraisals--will be transferred.
The Special Trustee told us that OST had decided to use contractors,
rather than hire additional OST staff, to implement many of the trust
reforms as a way to minimize the size of its permanent staff--the
contracts will end once key trust reforms are completed. The Special
Trustee also said OST's SES positions will be reduced from 14 to 13 in
the near future, and he noted that Interior is studying whether
efficiencies might exist by combining the Chief Information Officer
positions in BIA and OST (see fig. 1 for OST's current organizational
chart and SES positions). However, the Special Trustee believes the
size of OST's staff, including the number of SES positions, is about
the right size needed to manage OST's future operations.
Figure 1: OST's Current Organizational Structure and SES Positions:
[See PDF for image]
Source: OST.
[End of figure]
OST has not developed a workforce plan that reexamines the expenditures
and staffing levels needed for trust fund operations--including
managing and accounting for trust funds, providing trust services,
maintaining trust records, and conducting land appraisals--once trust
reforms are completed. The following opportunities may exist to realign
or further reduce expenditures and staffing levels:
* The Trust Program Management Center, which is responsible for
implementing trust reforms, currently has 23 staff whose work will be
completed when trust reforms are implemented. However, one OST manager
noted that, in some cases, the staff members responsible for
implementing a given reform were then reassigned to the OST office with
operational responsibilities to ensure continuous improvements are
made.
* OST currently has 131 accounting technicians located in many of BIA's
field agencies whose responsibilities for processing the collections
and disbursements of account funds will decrease once trust reforms are
completed and accounting functions are automated. However, OST managers
noted that it is important to have the accounting technicians in the
field to perform account maintenance and research accounts. In
addition, a BIA manager noted that many account technicians may still
be needed to handle checks that might be given to a local BIA office
instead of being mailed to OST's lockbox facility in Prescott, Arizona.
Regardless, no plans have been developed to determine either the
appropriate number of the accounting technicians needed to carry out
future operations or their roles and responsibilities.
* The Deputy Special Trustee for Field Operations, the six Regional
Trust Administrators, and the Fiduciary Trust Officers have been
actively involved in implementing trust reforms by coordinating DQ&I
and other activities. It is unclear whether seven SES positions will
continue to be needed to provide tribal and individual Indian account
holders with trust services and to oversee field operations once trust
reforms are completed; especially with OST's 52 Fiduciary Trust
Officers generally colocated in BIA's field agencies and with the Trust
Beneficiary Call Center now in place. However, the Special Trustee
noted that each of the Regional Trust Administrators has trust banking
or legal expertise for providing tribal and individual Indian account
holders with important services, and the administrators will expand
their outreach to trust account holders as the reforms are completed.
OST Has Relied on Contractors to Implement Many of Its Trust Reform
Activities:
Since its inception, OST has relied on contractors to perform many of
its trust reform activities as a way to minimize the size of its
permanent staff. In fiscal years 2004 and 2005, OST obligated nearly 21
percent of its appropriated funds to contracting. The trust reform
activities performed and products provided by the nearly 350 firms with
which OST has contracted vary widely. About 66 percent of contracting
dollars from fiscal years 2004 and 2005 went to 2 firms. Since 2003,
OST has relied primarily on NBC to award and manage contracts. In a May
2006 report, Interior's Office of Inspector General found that senior
OST managers had created an appearance of preferential treatment of a
contractor in violation of the standards of ethical conduct. In
response, the Special Trustee required that all OST employees in grades
GS-12 and above complete a special 2-hour ethics training course, in
addition to the annual mandatory ethics training.
OST Has Used Contractors to Perform Various Trust Reform Activities:
OST has relied extensively on contractors to perform many of its trust
reform activities. During fiscal years 2004 and 2005, OST spent about
$89.7 million, or nearly 21 percent, of its total appropriated funds on
contracts.[Footnote 12] Because 48 percent of these appropriated funds
was transferred to other offices, such as the Office of Historical
Trust Accounting, the amount OST spent on contracting comprised nearly
40 percent of its available funding for these 2 years. During this
period, OST paid about $58.8 million, or 66 percent, of these funds to
2 of the nearly 350 firms it used--CNI received $31.1 million and SEI
Investments received $27.7 million. (See table 2 for OST's obligations
to its 10 leading contractors.)
Table 2: OST's Top 10 Contractors, by Obligations, Fiscal Years 2004
and 2005:
Dollars in millions.
Contractor: CNI;
Work description: Implementation of trust reforms, including data
cleanup and risk management projects, and development of policy and
procedures manuals;
Obligations: $31.1[A].
Contractor: SEI Investments;
Work description: Operations and maintenance of trust accounting
software;
Obligations: 27.7.
Contractor: Cannon Financial;
Work description: Trust training;
Obligations: 3.0.
Contractor: Electronic Data Systems;
Work description: Trust process modeling;
Obligations: 2.0.
Contractor: KPMG;
Work description: Auditing services;
Obligations: 2.0.
Contractor: CD&L;
Work description: Risk management and accounting services;
Obligations: 1.7.
Contractor: Moss Adams;
Work description: Auditing services;
Obligations: 1.7[B].
Contractor: Dell;
Work description: Computer hardware;
Obligations: 1.5.
Contractor: Bank of America;
Work description: Accounting and banking services;
Obligations: 1.2.
Contractor: Fire King International;
Work description: Office furniture;
Obligations: 0.9.
Source: General Services Administration's FPDS-NG database.
Note: This table excludes, among other things, expenditures though
grants and cooperative agreements and micropurchases using a government
purchase card.
[A] Amount includes obligations for contract work performed by DataCom
Sciences, which CNI acquired in 2003.
[B] Amount includes obligations for contract work performed by Neff &
Ricci, which Moss Adams acquired in 2005.
[End of table]
CNI provides a variety of trust reform work for OST, including risk
management, trust data cleanup and encoding, and the development of
policy and procedures manuals. Most of the contracting with CNI, an
Indian-owned 8(a) small business, was based on an indefinite delivery,
indefinite quantity contract.[Footnote 13] (See app. II for a
description of the work that CNI performed under each task order.) An
advantage of using this type of contract is that contract task orders
can be awarded quickly because there is no requirement for competition.
OST also pays SEI Investments about $14 million a year to operate and
maintain a version of its commercial trust fund accounting system
adapted to meet OST's needs.
Table 3 shows the 10 leading product or service types for which OST
used contractors. Most of OST's obligations to contractors, about $30.3
million, were for data processing and telecommunications services. For
example, the DQ&I project for ensuring the accuracy and completeness of
the TAAMS database focuses on (1) assisting BIA with document encoding
into the trust systems, (2) validating and correcting critical data
elements to their respective source documents, and (3) implementing
postquality assurance processes. Other major data processing and
telecommunications services include developing OST's Trust Beneficiary
Call Center, identifying the owners of whereabouts unknown accounts,
and developing risk management processes. Another major service or
product type for which contracting funds were allocated was for
financial services, at about $28 million. About 99 percent of these
funds went to SEI Investments to operate and maintain TFAS. Contractors
also provided products and services to OST that were not directly
related to trust reform, such as supplying office furniture or
providing guard and security services.
Table 3: Top 10 Product or Service Types Contracted for OST, by
Obligations, Fiscal Years 2004 and 2005:
Dollars in millions.
Product or service type: Other automated data processing and
telecommunications services[A];
Obligations: $30.3.
Product or service type: Financial services;
Obligations: 28.0.
Product or service type: Other management support services[B];
Obligations: 5.5.
Product or service type: Appraisal services;
Obligations: 3.4.
Product or service type: Educational services;
Obligations: 3.0.
Product or service type: Auditing services;
Obligations: 2.5.
Product or service type: Office furniture;
Obligations: 1.7.
Product or service type: Banking services;
Obligations: 1.1.
Product or service type: Automated data processing systems analysis
services[C];
Obligations: 1.0.
Product or service type: Guard services;
Obligations: 1.0.
Source: General Services Administration's FPDS-NG database.
Note: This table excludes, among other things, expenditures though
grants and cooperative agreements and micropurchases using a government
purchase card.
[A] This service includes data cleanup, statement processing,
development of the Trust Beneficiary Call Center, and the processing of
whereabouts unknown accounts.
[B] This service includes records preservation, trust investment
services, and trust process modeling.
[C] This service includes risk management services.
[End of table]
As trust reform activities are completed, OST plans to reduce funding
for contracting accordingly. For example, OST's fiscal year 2007 budget
request proposed to reduce funding by about $4.9 million as a result of
the completion of certain contract efforts, including the following
reductions:
* $1,400,000 from the Office of Trust Accountability for contract costs
related to defining, developing, facilitating, and delivering trust
training programs;
* $1,050,000 from the Office of Trust Accountability for contract costs
related to the development of policies and procedures and upgrades of
systems for the reengineering of trust processes;
* $885,000 from the Office of Trust Accountability for contract costs
related to the modeling of business practices for the purposes of risk
management;
* $675,000 from the Office of Trust Review and Audit for contract costs
related to the development of the Indian Trust Examiner certification;
and:
* $425,000 and $450,000 from the Offices of Field Operations and Trust
Services, respectively, for contractors that were providing accounting
services, such as data cleanup and encoding.
OST Has Primarily Relied on NBC for Contracting Services:
Prior to 2001, OST relied on NBC to provide contracting services
through an interagency agreement. However, at OST's request, Interior
delegated contracting authority to OST in January 2001. This delegation
was conditioned on (1) the retention of authority by Interior's Office
of Acquisition and Property Management to oversee and approve specified
actions and (2) a subsequent evaluation of OST's operations. In March
2002, the Office of Acquisition and Property Management conducted an
acquisition management review that found several problems with OST's
contracting operations. The review team said that many of the problems
they found could easily be fixed, and noted that OST's contracting
office was not fully staffed and was still experiencing "growing
pains." The review team's draft report, which had three broad
recommendations, was provided to OST for comment and OST responded in
June 2002. However, the report was never issued in final.
Subsequently, in July 2003, OST conducted its own study to (1) evaluate
the functioning of OST's contracting office, (2) assess customer
satisfaction with contracting services provided, and (3) determine the
feasibility (including a cost/benefit and qualitative analysis) of
outsourcing acquisition services to either NBC or another Interior
office. The internal review found that, although the contracting office
had made substantial improvements in response to the acquisition
management review, the office still was not operating as effectively as
it could. On the basis of proposals received from organizations that
provide contracting services and a qualitative evaluation of these
organizations, OST found that NBC's branch in Denver, Colorado, offered
the best value for providing contracting services for OST.
As a result, OST signed a 5-year interagency agreement with NBC's
Denver branch to provide contracting services beginning on October 1,
2003. NBC's headquarters conducted an acquisition management review of
NBC Denver's contracting practices in April 2005 and found that,
overall, the office was highly effective in providing contracting
services.
In 2004, OST also began using NBC's branch in Fort Huachuca, Arizona,
because it is responsible for managing the indefinite delivery,
indefinite quantity contract with CNI, as we previously discussed. The
contract had been originally awarded to CNI on a sole-source basis,
which is allowable under Small Business Administration regulations to
provide special procurement advantages to businesses owned by Indian
tribes that participate in the 8(a) program. OST has used the contract
by placing task or delivery orders for implementing several of the
trust reforms.
In addition to funding contracts for their own trust reform activities,
such as TAAMS, BIA also has administered contracts for OST. For
example, since fiscal year 2005, BIA has served as the contracting
office for a contract with CD&L for risk management. A BIA official
stated that this contract is set to expire in December 2006. Finally,
GovWorks, one of several federal government franchise funds designated
by the Director, Office of Management and Budget, also has provided
contracting services for OST.
An Investigation by Interior's Office of Inspector General Found
Evidence of an Appearance of Preferential Treatment by OST Management:
In July 2003, Interior's Office of Inspector General received
allegations that senior OST officials had given CD&L favorable
treatment in awarding contract work. The Inspector General's May 2006
report found that senior OST officials created an appearance of
preferential treatment of CD&L, in violation of both the Standards of
Ethical Conduct for Employees of the Executive Branch[Footnote 14] and
an internal OST memorandum directing "Arms Length Dealings with
Contractors." The report documents that over several years, OST awarded
and continued to extend, without competition, a contract with CD&L for
trust fund accounting and risk management services; while at the same
time, senior OST officials engaged in extensive outside social activity
and exchanged gifts with CD&L executives. The report also stated that
OST contract personnel felt pressured by these senior OST officials to
continue to award work to CD&L.
The Inspector General referred the matter to Interior to take
appropriate administrative action and to review the performance of the
CD&L contract. In response, the Special Trustee has required that all
OST employees at grades GS-12 or above take a special 2-hour ethics
training course. The Special Trustee stated that he was satisfied with
CD&L's trust accounting and risk management services.
From January 2001 through September 2003, OST had procurement authority
and in-house staff were servicing OST's contracts. In February 2004,
after the contracting function was turned over to NBC's Denver branch,
OST attempted to get a follow-on sole-source contract with CD&L for the
risk management program. OST officials were anxious to get a follow-on
contract to meet a court-ordered June 2004 deadline for implementing
the risk management system for all agencies involved with trust
records. However, due to a lack of documentation to support a valid
justification and because of prior apparent improprieties, NBC
officials refused to award a follow-on sole-source contract. Rather
than wait 4 to 5 months to award a new contract under the competitive
bidding process at NBC's Denver branch, OST officials went to BIA and
placed an order under the General Services Administration's Mission
Oriented Business Integrated Services program, which required a shorter
time period to get a contract awarded. The order was placed with CNI in
April 2004, and CNI subsequently hired CD&L as a subcontractor through
September 2004 to continue the risk management design work. In January
2005, a competitive contract for additional risk management work was
awarded to CNI and CD&L, with BIA as the contracting office.
Conclusions:
OST is in the final stages of implementing the trust fund management
reforms that the 1994 Act required. However, the Special Trustee has
not provided the Congress with a timetable for completing these
reforms, as required by the act. Without a timetable, the Congress
cannot readily oversee OST's implementation of the trust reforms or
plan for trust fund operations once reforms are completed. OST also has
not developed a plan for future trust fund operations once reforms are
completed. Whether or not OST is terminated, the Special Trustee
believes that OST's staff will need to continue to perform their
functions after trust reforms are completed because, after the passage
of the 1994 Act, the Secretary of the Interior transferred to OST the
Office of Trust Funds Management and other offices and personnel
responsible for trust fund operations. In addition, OST has not
developed a workforce plan that reexamines the responsibilities and
needs for trust fund operations. While the Special Trustee plans to
reduce OST's budget by terminating contracts as reforms are completed,
he believes that OST's current size is about right for trust fund
operations once reforms are completed. However, a reexamination of
OST's workforce needs might identify opportunities for realigning or
further reducing expenditures and staffing levels because, for example,
certain job responsibilities may decrease once trust reforms are
completed and accounting functions are automated.
Recommendations for Executive Action:
To improve congressional oversight of the trust reforms and ensure that
trust fund accounting operations, once implemented, are economically
staffed, we recommend that the Secretary of the Interior direct the
Special Trustee to take the following three actions:
* Provide the Congress with a timetable for completing the trust fund
management reforms.
* In anticipation of completing the trust reforms, provide the Congress
with a plan for future trust fund operations, including, if the
decision is made to terminate OST, a determination of where these
operations will reside.
* As trust reforms are completed and contracts are terminated, develop
a workforce plan that reexamines and proposes staffing levels and
funding needs.
Agency Comments and Our Evaluation:
We provided Interior with a draft of this report for its review and
comment. In its written response, Interior agreed with our
recommendations, stating that it expects to have a timetable by late-
June 2007 for implementing the remaining trust reforms, including a
date for the proposed termination or eventual disposition of OST. (See
app. III.) However, Interior disagreed with the number of key reforms
we identified and attached to its letter a list of 47 additional
reforms that OST has completed. We reviewed the 47 reform efforts on
Interior's list and, while they are important activities for the
implementation of OST's trust reforms, we believe they are not key
components of OST's integrated information system that interfaces the
trust funds accounting system with BIA's land title records and asset
management systems for Indian lands. Accordingly, we did not revise our
report. In addition, Interior provided comments to improve the draft
report's technical accuracy, which we have incorporated as appropriate.
Scope and Methodology:
To examine OST's progress in implementing the American Indian Trust
Fund Management Reform Act of 1994, we reviewed (1) the 1994 Act and
its legislative history; (2) Interior's appropriations legislation; and
(3) relevant Interior documents, including secretarial orders and OST's
March 2003 Comprehensive Trust Management Plan and prior strategic
plans that provide the basis for OST's current reform efforts. We also
reviewed various documents showing OST's progress in implementing trust
reforms and interviewed OST and BIA officials regarding the status of
trust reform efforts. However, we did not analyze the adequacy of OST's
efforts to ensure that the reforms will result in an integrated
computer system with complete and accurate information. In addition, to
gain insight into the concerns that tribal organizations have expressed
about OST's trust reform performance, we interviewed executives of the
Intertribal Monitoring Association on Indian Trust Funds, the National
Congress of American Indians, the Great Plains Tribal Chairman's
Association, the United South and Eastern Tribes, and the Affiliated
Tribes of Northwest Indians. Although the tribal organizations we
selected reflect some variation in geography and their members include
numerous individual Indian tribes, our selections were not intended to
be representative of all tribes.
To examine OST's use of contractors in implementing its trust reforms,
we obtained specific data elements for fiscal years 2004 and 2005 from
the General Services Administration's FPDS-NG database.[Footnote 15]
These data elements include the amount obligated, the types of goods or
services purchased, and various vendor characteristics. FPDS-NG does
not include (1) assistance actions, such as grants and cooperative
agreements; (2) imprest fund transactions, training authorizations, and
micropurchases valued at $2,500 or less that were obtained through the
use of a government purchase card; (3) interagency agreements with
other federal agencies and organizations; or (4) actions involving
transfer of supplies within and among agencies. Finally, total dollars
for fiscal year 2006 are incomplete and were not included in this
report.
To ensure the completeness and accuracy of the FPDS-NG contracting
data, we examined NBC contracting documents and interviewed contracting
officers at BIA and NBC's Denver and Fort Huachuca branches as well as
selected contracting officer's technical representatives at OST. We
obtained data from FPDS-NG by searching on OST as the funding agency.
However, because NBC officials told us this field was not always
completed, we also obtained FPDS-NG data by searching on NBC's
contracting office and identifying, by the product or service
description, contracts most likely associated with trust reform
efforts. In addition, we compared these data with NBC's procurement
tracking system and made adjustments to the FPDS-NG data as necessary.
Where discrepancies were found, we corrected the FPDS-NG data to ensure
completeness of the data. On the basis of our testing and correction of
FPDS-NG data, we are sufficiently confident of the reliability of the
data we are reporting. Furthermore, we reviewed the report and
associated workpapers of Interior's Office of Inspector General
regarding allegations that senior OST officials had given CD&L
preferential treatment in contracting for risk management services.
To assess the performance awards and retention allowances that SES
officials at OST had received, we analyzed data for fiscal years 2001
through 2005 from the Office of Personnel Management's Central
Personnel Data File, which contains records for most federal employees
and is the primary governmentwide source for information on federal
employees. Specifically, we examined the number and dollar amount of
performance awards and retention allowances provided to OST and
compared them with those of other Interior bureaus and other federal
agencies. In addition, we obtained documents from Interior's Minerals
Management Service, which is responsible for providing OST with human
resources support services--including (1) processing performance awards
and retention allowances provided to SES officials at OST and (2)
ensuring compliance with the appropriate procedures for determining
such awards and allowances.
We conducted our review from February 2006 through October 2006 in
accordance with generally accepted government auditing standards.
As arranged with your offices, unless you publicly announce its
contents earlier, we plan no further distribution of this report until
30 days from the report date. At that time, we will send copies to
interested congressional committees, the Secretary of the Interior, the
Special Trustee for American Indians, the Director of the Office of
Management and Budget, and other interested parties. We will also make
copies available to others upon request. This report will also be
available at no charge on the GAO Web site at [Hyperlink,
http://www.gao.gov].
If you or your staffs have any questions about this report, please
contact me at (202) 512-3841 or nazzaror@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 IV.
Signed by:
Robin M. Nazzaro:
Director, Natural Resources and Environment:
[End of section]
Appendix I: Retention Allowances and Performance Awards Provided to OST
Senior Executive Service Managers:
The Department of the Interior (Interior) has provided a retention
allowance to one Senior Executive Service (SES) manager at the Office
of the Special Trustee for American Indians (OST)--the Principal Deputy
Special Trustee. In addition, 7 of the 13 SES managers currently at OST
received at least two major awards in 2 years or more.[Footnote 16]
However, from fiscal years 2001 to 2005, the average performance award
amounts that SES managers received were generally lower than the
average amounts provided to other bureaus and offices within Interior
and other federal agencies. Interior's Executive Resources Board (ERB),
currently chaired by the Secretary of the Interior and comprising
senior Interior managers, made the final determination on all
performance awards and retention allowances provided to SES managers.
Retention Allowance:
Each calendar year from 1999 through 2005, Interior has provided OST's
Principal Deputy Special Trustee with a retention allowance because,
according to agency justifications, her historical knowledge and
managerial ability are needed to ensure Interior's trust oversight and
reform success. Specifically, from 1999 to 2005, Interior's ERB has
reviewed and approved the justification for the retention allowance,
which raises the Principal Deputy Special Trustee's total compensation
to the maximum allowable for SES employees--excluding 1999 and 2005,
when the Principal Deputy Special Trustee's compensation was slightly
under the total maximum allowable. According to officials of Interior's
Minerals Management Service,[Footnote 17] retention allowances are
reserved for special talent and have been provided to only two Interior
SES managers--the other SES manager received a retention allowance in
2002 and 2004. In each year, the Principal Deputy Special Trustee's
retention allowance was lower than the maximum amount provided to an
SES manager at all other federal agencies (see table 4). The Special
Trustee stated that as OST's trust reforms are completed, the total
compensation provided to the Principal Deputy Special Trustee will be
reevaluated.
Table 4: Comparison of the Retention Allowance Provided to the
Principal Deputy Special Trustee with the Maximum Retention Allowance
Provided to an SES Manager at All Other Federal Agencies, Calendar
Years 1999 through 2005:
Principal Deputy Special Trustee[A];
Calendar year: 1999: $25,370;
Calendar year: 2000: $26,800;
Calendar year: 2001: $27,500;
Calendar year: 2002: $27,500;
Calendar year: 2003: $29,400;
Calendar year: 2004: $30,100;
Calendar year: 2005: $30,861.
Other federal agencies[B];
Calendar year: 1999: 29,600;
Calendar year: 2000: 30,600;
Calendar year: 2001: 31,425;
Calendar year: 2002: 32,500;
Calendar year: 2003: 33,500;
Calendar year: 2004: 36,400;
Calendar year: 2005: 40,525.
Sources: Interior's Minerals Management Service and GAO analysis of the
Office of Personnel Management's Central Personnel Data File.
[A] The Principal Deputy Special Trustee assumed this position in May
2003. From 1996 through 2001, the Principal Deputy Special Trustee was
the Director of the Office of Trust Funds Management. From July 2002
through April 2003, the Principal Deputy Special Trustee was the Acting
Special Trustee for American Indians.
[B] This category includes all federal agencies, except Interior.
[End of table]
Performance Awards:
Seven of OST's SES managers received at least two major awards--a
performance award, a special act award, an individual cash award, or a
time-off award--in 2 years or more, as follows:[Footnote 18]
* The Principal Deputy Special Trustee, who has been in the SES since
1993, received three major awards from fiscal years 2000 to 2006.
Specifically, the Principal Deputy Special Trustee received two time-
off awards of 80 hours each in fiscal years 2000 and 2004 and a
performance award of about $9,700 in fiscal year 2006. In addition to
these major awards, the Principal Deputy Special Trustee received the
Presidential Rank Award in 2002, one of the government's most
prestigious awards. While the Principal Deputy Special Trustee received
cash with the award, the full cash amount could not be provided in 2002
because her total compensation was at the maximum allowable for a
federal employee. As a result, she received part of the award in 2002
and the rest of the award in 2003.
* A manager, who has been in the SES since 1996, received eight major
awards from fiscal years 1999 through 2006, including at least one
award in 7 of the 8 years. Specifically, in fiscal years 1999 and 2000,
this manager received three special act awards that ranged from $1,750
to $10,000. In fiscal years 2002 through 2006, this manager received
either a performance award or an individual cash award in each year,
ranging from $5,000 to $13,000.
* A manager, who has been in the SES since 2002, received six major
awards from fiscal years 2003 through 2006, including at least one
award in each year. Specifically, this manager received two special act
awards of $5,000 and $10,000, two time-off awards of 40 hours each, an
individual cash award of $5,000, and a performance award of about
$7,200.
* A manager, who has been in the SES since 2002, received three major
awards--one award per year from fiscal years 2004 through 2006. This
manager received a performance award of $6,900 and two time-off awards
of 40 hours and 80 hours.
* A manager, who has been in the SES since 2004, received two major
awards--performance awards of about $12,000 in fiscal year 2005 and
about $11,500 in fiscal year 2006.
* A manager, who has been in the SES since 2004, received two major
awards--individual cash awards of $4,300 in fiscal year 2005 and $5,000
in fiscal year 2006.
* A manager, who has been in the SES since 2004, received two major
awards--a performance award of about $8,900 in fiscal year 2005 and an
individual cash award of $5,000 in fiscal year 2006.
OST's six other current SES managers have received, at most, one major
award. In fiscal year 2005, about 54 percent of OST's SES managers
received at least one major award. In fiscal year 2006, about 69
percent of OST's SES managers received at least one major award.
Table 5 compares the average performance award amounts for SES managers
at OST with the average amounts at other bureaus and offices within
Interior and other federal agencies. The average performance award
amount of OST's SES performance awards was higher than the average
amounts of other bureaus and offices within Interior and other federal
agencies in fiscal year 2001--according to the Special Trustee, the
performance awards recognized these managers' many hours of efforts to
validate data for the implementation of the trust funds accounting
system in 2000. However, the average amounts of OST's performance
awards for fiscal years 2002 through 2005 were generally lower than the
average amounts provided to other bureaus and offices within Interior
and other federal agencies--excluding fiscal year 2003, when the
average amount of OST's performance awards was slightly higher than the
average amount provided to other bureaus and offices within Interior.
Table 5: Comparison of the Average Performance Award Amounts Provided
to SES Managers at OST with the Average Amounts Provided to Other
Bureaus and Offices within Interior and Other Federal Agencies, Fiscal
Years 2001 through 2005:
Agency: OST;
Average performance award amounts, by fiscal year: 2001: $13,447;
Average performance award amounts, by fiscal year: 2002: $7,542;
Average performance award amounts, by fiscal year: 2003: $10,400;
Average performance award amounts, by fiscal year: 2004: $8,040;
Average performance award amounts, by fiscal year: 2005: $11,360.
Agency: Interior[A];
Average performance award amounts, by fiscal year: 2001: 10,760;
Average performance award amounts, by fiscal year: 2002: 9,515;
Average performance award amounts, by fiscal year: 2003: 10,242;
Average performance award amounts, by fiscal year: 2004: 9,351;
Average performance award amounts, by fiscal year: 2005: 13,710.
Agency: Other federal agencies[B];
Average performance award amounts, by fiscal year: 2001: 11,291;
Average performance award amounts, by fiscal year: 2002: 11,923;
Average performance award amounts, by fiscal year: 2003: 12,440;
Average performance award amounts, by fiscal year: 2004: 12,955;
Average performance award amounts, by fiscal year: 2005: 13,591.
Sources: Interior's Minerals Management Service and GAO analysis of the
Office of Personnel Management's Central Personnel Data File.
[A] Category includes all of Interior's bureaus and offices, excluding
OST.
[B] Category includes all federal agencies, except Interior.
[End of table]
Interior's ERB approved each of the major awards provided to OST's SES
managers. Minerals Management Service officials told us that ERB
considers supporting documentation and recommendations provided by the
Performance Review Board, which is an Interior board that reviews only
performance awards, in making its final determination.
[End of section]
Appendix II: OST's Task Orders Issued to Chickasaw Nation Industries
for Trust Reform Work, Fiscal Years 2004 and 2005:
Dollars in millions.
Task order: 0001;
Description of order: Titles to Youpee interests--updated in BIA's Land
Titles and Records Offices;
Obligations: $0.9.
Task order: 0002;
Description of order: Quality service survey processing project;
Obligations: 0.3.
Task order: 0003;
Description of order: Updating and maintaining individual Indian money
account information contained in the trust funds accounting system;
Obligations: 1.9.
Task order: 0004;
Description of order: Funds receivable project;
Obligations: 0.5.
Task order: 0005;
Description of order: Office of Chief Information Officer continuing
operations plan;
Obligations: 0.05.
Task order: 0006; Description of order: Audit log consolidation tool
research; Obligations: 0.7.
Task order: 0007;
Description of order: Trust call center prototype;
Obligations: 2.3.
Task order: 0008;
Description of order: Oversight of reforms to bring the operation of
the Indian trust into full compliance with fiduciary, statutory, and
regulatory requirements;
Obligations: 19.2.
Task order: 0009;
Description of order: Deploy virtual private network and OST active
directory to all locations;
Obligations: 0.4.
Task order: 0010;
Description of order: Automate data gathering, transaction
clarification data recording, and calculations to generate Treasury's
Financial Management Service;
Obligations: 0.2.
Task order: 0011;
Description of order: Review and preparation of documentation to enable
the proper posting and processing of probate distributions from estate
accounts of heirs;
Obligations: 0.6.
Task order: 0012;
Description of order: Indian Land Consolidation Act processes;
Obligations: 0.04.
Task order: 0013;
Description of order: Fiduciary trust funds receipt project;
Obligations: 0.8.
Task order: 0014;
Description of order: Preparation of the status report to the court;
Obligations: 0.1.
Task order: 0015;
Description of order: Screening and scheduling project;
Obligations: 0.04.
Task order: 0017;
Description of order: Historical query modification;
Obligations: 0.03.
Task order: 0018;
Description of order: Automate routine file maintenance audit report;
Obligations: 0.03.
Task order: 0019;
Description of order: Personnel security system reinvestigation
process;
Obligations: 0.05.
Task order: 0020;
Description of order: Plans of action and milestones project;
Obligations: 0.04.
Task order: 0025;
Description of order: Data cleanup project for BIA's trust asset and
accounting management system;
Obligations: 1.7.
Task order: 0030;
Description of order: Statement processing and mailing software;
Obligations: 0.06.
Sources: General Services Administration's FPDS-NG database and GAO
analysis of documents obtained from the National Business Center's Fort
Huachuca branch.
[End of table]
[End of section]
Appendix III: Comments from the Department of the Interior:
United States Department of the Interior:
Office Of The Assistant Secretary Policy, Management And Budget:
Washington, DC 20240:
Nov 21 2006:
Ms. Robin Nazzaro:
Director, Natural Resources and Environment:
U.S. Government Accountability Office:
441 G Street, NW:
Washington, DC 20548:
Dear Ms. Nazzaro:
This letter is in response to GAO's draft report entitled "Office of
the Special Trustee Has Implemented Several Key Trust Reforms Required
by the 1994 Act but Important Decisions about Its Future Remain". In
addition to the more technical comments previously submitted we have
the following comments on the draft report.
The significant items within the draft report are: 1) a timetable for
implementing the remaining reforms, including a date for the proposed
termination or eventual disposition of the Office, 2) the trust reform
accomplishments of OST and 3) the growth of OST's staff and budget and
absence of a workforce plan and timetable for ultimate disposition of
the office.
The potential timetable for implementing the remaining reforms
identified in the plan, including a date for the proposed termination
or eventual disposition of the Office, was repetitively cited in the
draft report.
1) It is important to realize that the American Indian Trust Fund
Management Reform Act of 1994, while requiring "A timetable for
implementing the reforms identified in the plan, including a date for
the proposed termination of the Office" (Section 4043(a)(2)(C)), first
requires that the Special Trustee "ensure that reform of such practices
in the Department is carried out in a unified manner and that reforms
of the policies, practices, procedures and systems of the Bureau,
Minerals Management Service, and Bureau of Land Management, which carry
out such trust responsibilities, are effective, consistent, and
integrated;" and "ensure the implementation of all reforms necessary
for the proper discharge of the Secretary's trust responsibilities to
Indian tribes and individual Indians." (Section 4041(2) and (3)). In
addition, Section 4042 (C)(1) entitled "Conditioned upon implementation
of reforms" states "The Special Trustee, in proposing a termination
date under Section 4043(a)(2)(C) of this title, shall ensure
continuation of the Office until all reforms identified in the
strategic plan have been implemented to the satisfaction of the Special
Trustee."
When the 2003 Comprehensive Trust Management Plan (CTM) was developed
it was impossible to know the integrity of the data and how much work
would be involved in making the transition to a completely new set of
systems to replace systems that dated back to the 1960's. At that time,
it was not possible to list the remaining trust reforms needed or
establish the timetable for termination or ultimate disposition of the
office.
New systems are now being implemented as a result of OST funding and
support to the BIA to validate and encode tens of thousands of
documents that must be included in the new systems. A plan to have all
remaining reform efforts completed, including data validated, encoded
and fully operational will be determined during FY 2007. This is just
one of the initial steps in developing the type of information
necessary to create a realistic timetable for Department-wide trust
reform efforts. We now expect to have a timetable by late June 2007 for
implementing the remaining trust reforms including a date for the
proposed termination or eventual disposition of the Office.
2) GAO's draft report suggests that "implementation of all reforms
necessary for the proper discharge of the Secretary's trust
responsibilities to Indian tribes and individual Indians" within the
Department involve only five trust reforms (page 10 of the Draft
Report). Attachment 1 provides a non-exhaustive list of 47 additional
completed significant trust reforms. We estimate that over 50
significant or "key" reforms have taken place and estimate that at the
very least there are many more "key" reforms to accomplish.
3) OST has a current workforce plan in place. This and many other plans
(see Appendix 2) have detailed the extent and robustness of the
required reforms necessary to transform the current status of Indian
Affairs. Obtaining the estimated staffing levels and budget necessary
to reform Indian Affairs has always been considered a monumental
undertaking. By the end of FY 2007, OST expects to have a comprehensive
list of trust reforms that still need to be accomplished and a
timetable to complete them. At that time OST will develop a workforce
plan that identifies future staffing and funding needs for both OST and
BIA.
OST's budget and staffing have increased for many reasons. Congress has
chosen to establish OST as the Department's office to coordinate and
implement Departmental trust reform. Congress has routinely added
programs and funding to OST due to it's ability to accomplish important
reform goals.
OST has been tasked with implementing significant trust reforms
including bringing on new accounting systems and reforming Indian trust
business processes throughout Interior. As such Departmental Offices
dealing with Indian trust reform are funded through OST appropriations.
Several programs, such as BIA's Office of Trust Funds Management (OTFM)
and Office of Appraisal Services (OAS) have been transferred to OST to
maintain independence. These services will continue after trust reform
is completed. Other Interior offices dealing with trust reform such as
the Office of Historic Trust Accounting (OHTA), the Indian Lands
Consolidation Office (ILCO), and the Office of Hearings and Appeals
(OHA) are included in the OST budget. In addition, the Office of Trust
Records (OTR) was created in OST to serve all Interior trust records
management needs as well as all BIA records management needs, both
trust and non-trust.
Together, these items make up over half of OST's budget. For example in
FY 2006 OST's budget was $222.8 million. Of this amount approximately
$112.8 million was transferred to Indian Affairs trust programs. The
only programs developed and added by OST as part of trust reform, have
been the beneficiary call center (which handles beneficiary inquiries
in a timely manner) and the hiring and deployment of trust officers
with fiduciary experience to be primary points of contact for
beneficiaries and to be Ombudsmen for the beneficiaries.
In addition, funding is provided to support other Indian Affairs
programs by OST, periodically. For example, in FY 2006 an additional
$1.3 million was provided to BIA for trust reform and in FY 2005 over
$2.4 million was provided to BIA. During the same fiscal years, over $1
million was provided to BLM.
Other items for clarification to the draft report:
1) It was mentioned in the draft report that there was an Office of the
Inspector General (OIG), report completed in May 2006 which made
allegations of an appearance of preferential treatment toward a
contractor by a few senior managers. The OIG did not report a finding
of any preferential treatment, however.
2) The draft report often implies that re-engineering of trust business
processes is simply a one-time process. Ongoing reform is not a one-
time re-engineering and implementation process but requires continuous
re-engineering to keep pace with new business processes, systems and
technology. If there is not dedicated staff to continually review and
update processes, policies, procedures and systems, business practices
will become outdated and systems will not keep pace with business
needs.
3) TFAS is a state-of-the-art accounting/investment system that enables
scheduled, automated production of account statements and disbursements
for individual Indians and tribal account holders. It also allows for
automated trade settlements, automated payments of financial asset
income on due dates, daily securities pricing and automated
reconciliation. In addition, land ownership and leasing accounts will
be included in TFAS as part of BIA's and OST's TAAMS conversion project
to ensure that both systems contain accurate and complete information.
In general we agree with GAO's recommendations. (1) A timetable for
completing trust reforms should be completed by the end of FY 2007. (2)
A plan for future trust fund operations once reforms are completed will
also be completed by the end of FY 2007. (3) A workforce plan that re-
examines and proposes staffing levels and funding needs once trust
reforms are completed incorporating items (1) and (2) will be completed
by the end of FY 2008.
We disagree however that there are only 5 key trust reforms required by
the 1994 Act. In fact as Attachment 1 shows we have already completed
at least 47 other major reforms and many more reforms are yet to be
completed.
Thank you for this opportunity to comment on the draft report. If you
have any questions please feel free to contact Ross Swimmer, Special
Trustee for American Indians at (202) 208-4866.
Sincerely,
Signed by:
R. Thomas Weimer:
Assistant Secretary:
Attachments:
Attachment 1:
Additional (non-exhaustive) list of OST's reform efforts:
1. Implemented an automated sweeping and investment of daily cash.
2. Converted to a commercial off-the-shelf trust funds accounting
system (TFAS) in 1995 for tribal accounts and all investments. In
FY2000 completed conversion of IIM accounts.
3. Implemented system that provides for automated scheduling of
statements and disbursements.
4. Implemented annual independent audits of trust funds.
5. Initiated daily, weekly and monthly reconciliations.
6. Established the first investment policy.
7. Established the Federal/Tribal/Allottee team to prioritize IIM
issues after meetings that were held across Indian country with IIM
account holders to help establish priorities.
8. Eliminated Certificates of Deposits (CDs) as investments.
9. Established internal controls to mitigate risks.
10. Completed the Strategic Plan, consulted with Tribes and submitted
the plan to Congress as required by the Reform Act.
11. Created high level implementation based on secretary's decision
paper for implementation of specific parts of the strategic plan.
12. Developed process and completed clean-up of administrative files
for IIM accounts.
13. Awarded contract and implemented a centralized custodian for
financial assets.
14. Piloted and implemented Automated Clearing House (direct deposit
for beneficiaries).
15. Centralized encoding of financial transactions.
16. Initiated Customer Strata Station (CSS); an electronic work-ticket
application initiated at field locations.
17. Piloted and implemented the Treasury system to enable electronic
check retrieval and cancellation.
18. Implemented automated Treasury system for reporting of daily
Treasury activity.
19. Developed and implemented the BIA/OST Interagency Procedures
Handbook.
20. Contracted for a review of TAAMS to provide a comprehensive
independent assessment of the efficacy of the Department's trust reform
efforts to date in accordance with the Secretary's July 10, 2001
directive.
21. Created and implemented financial statement preparation currently
prepared monthly.
22. Established the Office of Trust Review and Audit to perform
internal reviews of the Department's fiduciary trust operations and
activities.
23. Developed and published the Comprehensive Trust Management Plan
(CTM).
24. Developed and published the "As-Is" and "To-Be" studies.
25. Developed and implemented new policies and procedures for all OST
business processes.
26. Implemented the Box Index Search System (BISS) records database to
provide automated index of records.
27. Entered into an agreement between the Secretary of the Interior and
National Archives and Records Administration (NARA) for the development
and construction of the American Indian Records Repository (AIRR) the
State-of-the-Art records storage and retrieval system in Lenexa,
Kansas.
28. Established a records management and archival certification program
at Haskell Indian Nations University.
29. Developed automated special deposit account tracking and reporting.
30. Hired dedicated records management staff at Headquarters and placed
records management program specialists in the BIA regions to provide
assistance to BIA and OST personnel.
31. Hired staff of Regional Trust Administrators and Fiduciary Trust
Officers with fiduciary experience to be primary point of contact for
beneficiaries and to be Ombudsman for the beneficiary.
32. Developed and implemented a beneficiary Out-Reach program
throughout Indian country.
33. Completed A-130 Certification and Accreditation for TFAS and OST's
General Support System (OSTNET).
34. Developed and published the Fiduciary Trust Model (FTM).
35. Developed metrics for workforce planning and measurement.
36. Coordinated the re-engineering of Indian Affairs business
processes.
37. Contracted with Cannon Financial Institute for the development a
professional certification program for:
* Certified Indian Fiduciary Trust Analyst:
* Certified Indian Fiduciary Trust Specialist:
* Certified Indian Trust Examiner:
38. Implemented BIA/OST commercial lockbox for trust resource
remittances.
39. Developed and implemented an automated risk management system (RM-
Plus).
40. Collaborated with DOI University and BIA to create the National
Indian Program Training Center (NIPTC).
41. Performed Data Quality & Integrity process prior to conversion to
leasing module.
42. In collaboration with BIA, implemented single ownership data system
and initiated conversions to leasing module.
43. Implemented assets statements that provide beneficiaries with a
listing of land and subsurface interests owned and encumbrances on the
land.
44. Developed and distributed computer based training for BIA and OST
employees in records management and the Privacy Act and published the
Privacy Act notice for the Box Index Search System (BISS).
45. Developed and implemented a Trust Funds Receivable (TFR) module.
46. Implemented the requirements of the revised OMB Circular A-123.
47. Eliminated use of Special Deposit Accounts (SDAs) as each agency
converts to TAAMS leasing module.
[End of section]
Appendix IV: GAO Contact and Staff Acknowledgments:
GAO Contact:
Robin Nazzaro, (202) 512-3841 or nazzaror@gao.gov:
Staff Acknowledgments:
In addition to the individual named above, Richard Cheston, Assistant
Director; Nathan A. Morris; Ashanta Williams; and Nancy Crothers made
key contributions to this report. Also contributing to this report were
Doreen Feldman, Kevin Jackson, Julia Kennon, Greg Wilmoth, and Bill
Woods.
FOOTNOTES
[1] GAO, Financial Management: Focused Leadership and Comprehensive
Planning Can Improve Interior's Management of Indian Trust Funds, GAO/
AIMD-94-185 (Washington, D.C.: Sept. 22, 1994).
[2] Pub. L. No. 103-412, 108 Stat. 4239 (1994).
[3] H.R. Rep. No. 104-259, at 43-44 (1995).
[4] Department of the Interior, Office of Inspector General,
Transmittal of Report of Investigation: Allegations Concerning Senior
Officials of the Office of the Special Trustee for American Indians
(Washington, D.C.: May 16, 2006).
[5] Under the Small Business Administration's 8(a) program, small
businesses that are socially or economically disadvantaged can be
awarded contracts without competition below certain dollar thresholds.
Alaska Native Corporations and Indian tribes, among others, are
exempted from the $3.5 million threshold ($5.5 million for
manufacturing contracts) above which contracts must be competed.
[6] FPDS-NG is the central repository of statistical information on
federal contracting maintained by Global Computer Enterprises, Inc.,
under contract with the General Services Administration. For our
assessment of FPDS-NG, see GAO, Improvements Needed to the Federal
Procurement Data System-Next Generation, GAO-05-960R (Washington, D.C.:
Sept. 27, 2005).
[7] Department of the Interior, DOI Trust Reform: As-Is Trust Business
Model Report (Washington, D.C.: Mar. 21, 2003).
[8] Department of the Interior, Fiduciary Trust Model (Washington,
D.C.: Dec. 30, 2004).
[9] Department of the Interior, DOI Trust Reform: Trust Reform Final
Report and Roadmap (Washington, D.C.: Jan. 24, 2002).
[10] Cobell v. Kempthorne (formerly Cobell v. Norton) is a class action
lawsuit filed in 1996 by Elouise Cobell, a member of the Blackfeet
Tribe, and others against the federal government concerning Interior's
management of Indian trust fund accounts.
[11] OST and BIA use the most current of either the last certified
Title Status Report or the information going back 15 years for title
validation.
[12] These totals for contracting exclude, among other things,
expenditures through grants and cooperative agreements and
micropurchases using a government purchase card.
[13] The CNI contract provides for an indefinite quantity, within
stated limits, of supplies or services during a fixed period. A federal
agency can then contract with CNI by placing noncompetitive task or
delivery orders for individual requirements.
[14] The report cited 5 C.F.R. pt. 2635 and Executive Order 12731
(Principles of Ethical Conduct for Government Officers and Employees).
[15] FPDS-NG data for OST are incomplete before fiscal year 2004. OST
had procurement responsibility from fiscal years 2001 through 2003, but
OST could not readily update the data system because a federal court
order has directed OST and BIA to stop using the Internet until the
court approves their security procedures.
[16] While OST has 14 SES positions, the position of Deputy Special
Trustee for Trust Services was vacant as of November 2006.
[17] Under an interagency agreement, Interior's Minerals Management
Service provides human resources support services to OST.
[18] For the purposes of this report, major awards include time-off
awards of at least 40 hours and individual cash and special act awards
of at least $1,000.
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