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092412 1 (1972-03-13)

handle is hein.gao/gaobacwhv0001 and id is 1 raw text is: 14t 3 UNITED STATES GENERAL AccoubIlNG OFFICE WASHINGTON, D.C. 20548 CIVIL DIVISION MAR 13 1972 LM092412 Dear Mr. Armstrong: The General Accounting Office has made a limited review of the administration of the loan program administered by the Bureau of Reclamation, Department of the Interior under the Small Reclamation Projects Act of 1956 (43 U.S.C. 422a), as amended. Our examination was conducted at the Bureau of Reclamation office in Sacramento, California, and the Bureau Headquarters in Washington, D.C.; and included five small reclamation loans approved since 1968. This was a follow-up review of certain matters discussed in our prior report to the Congress entitled Savings Available by Improving Administration of the Small Reclamation Projects Loan Program dated August 27, 1968, B-114885. We believe that actions taken by the Bureau to adopt the recommendations contained in our 1968 report to establish procedures for (1) allocation of costs between interest and non-interest-bearing project purposes, (2) commencement of the repayment period, and (3) allocation of construction advances to interest-bearing project functions, has resulted in significant improvements in the admin- istration of the Small Reclamation Projects Loan Program. We found, however, that the Bureau has not adopted our recommendation to establish procedures to ensure that the loan repayment period is adjusted when the actual cost and/or scope of projects prove to differ from that on which the loan approval was based. We continue to believe that such procedures would result in lower interest costs to the Government. The Bureau's policy for small reclamation project loans has been to establish the shortest practical repayment period justified by the income to be derived from the project. The repayment schedule is based on anticipated income agreed upon by both the Bureau and the applicant. In our August 1968 report, we pointed out that three loan recipients were allowed repayment periods substantially longer than warranted when the cost and/or scope of the projects varied from original estimates. Our examination showed that the earlier return £112

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