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CED-82-123 1 (1982-09-07)

handle is hein.gao/gaobabmom0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE WASHINGTON, D.C. 20548 COMMUNrY AND INOMIC B-208765 SEPTEMBER 7,1982 The Honorable James G. Watt The Secretary of the Interior The Honorable John 0. Marsh, Jr. The Secretary of the Army Subject: Water Sales Contracts From Missouri River Reservoirs Need To Require Reimbursement for Operation and Maintenance Expenses (GAO/CED-82-123) During our ongoing review of water resources project opera- tion and maintenance (O&M) cost recovery systems established by the U.S. Army Corps of Engineers and the Department of the Inter- ior's Bureau of Reclamation, we identified a problem concerning the nonrecovery of O&M costs. Although we plan an overall report on our review, we are bringing this matter to your attention now so as not to delay your consideration of corrective action in ongoing contract negotiations for additional water deliveries. In existing contracts as well as contracts currently under negotiation for the sale of surplus irrigation water from the Corps' Missouri River reservoirs, the Bureau is not seeking reim- bursement of O&M expenses, as required by Bureau water marketing policy. The water, originally allocated to irrigation but in excess of projected irrigation needs to the year 2060, is being sold for municipal and industrial (M&I) purposes under interim water sales contracts. The Bureau maintains that O&M cost rqcov- ery is not being sought because (1) the Memorandum of Understand- ing between the Secretaries of the Army and the Interior did not address O&M cost recovery and (2) the Corps has never provided the Bureau with O&M cost data upon which to base O&M charges and subsequent reimbursement. The Corps is not allocating O&M costs to &I water use because it was not an original project purpose. The Corps follows a policy of allocating O&M costs in accordance with the original irrigation project purpose even though the purpose of actual water sales may differ from that originally intended. We believe the Bureau needs to include an O&K cost recovery provision in water sales contracts, notwithstanding the lack of specificity in memorandums of understanding or the lack of O&M cost data furnished by the Corps. We further believe that the Corps needs to allocate O&M costs on an actual rather than (085648)

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