2000 The International Boundary and Water Commission is composed of a U.S. Total funding for the 4-year period, therefore, came to approximately $217.9 million, as shown in table 1. Section received funds totaling approximately $46.7 million in fiscal year 1997. These funds were used for U.S. Section operations, project engineering activities, operation and maintenance of existing projects, and construction activities. These projects had terms that varied from those for the other three. In present value terms, the net cost to the United States to finance Mexico’s share for the two projects is approximately $8.6 million, as shown in  table 3. Section and Department of State officials informed us that this type of arrangement was made by the United States, following negotiation with Mexico, in response to the state of the Mexican economy and the dire need to build these joint projects in the United States, which is the preferred location from technical points of view, but where costs and standards are higher than in Mexico. We found that the contract operations representative did not submit these required monthly reports on the performance of the contractors at the international wastewater treatment facilities at South Bay, California, and Nogales, Arizona, to the contract administrator. While the Department of State reviews the U.S. Section’s budget requests and provides foreign policy guidance to the section, the Department told us that it does not have the authority to routinely monitor or oversee the management of the U.S. Section because the Section is not a constituent part of the Department of State. The Commission acts as the project manager for selected EPA-funded projects along the southwest border. Although the U.S. In light of our findings regarding the finance and accounting systems, including the failure to correct previously identified weaknesses, weaknesses in contract administration, and minimal oversight of programs and activities and the significance of the U.S. Section’s activities, we believe greater oversight of the U.S. Section’s financial and program operations is needed. We are sending copies of this report to the Secretary of State; the Administrator, EPA; and the U.S. Commissioner of the International Boundary and Water Commission. Section of the International Boundary and Water Commission, (2) certain aspects of the U.S. Section’s system of accounting and internal controls, (3) the cost-sharing arrangements for joint projects between the United States and Mexico, (4) the administration of U.S. Section construction and operations and maintenance contracts, and (5) the extent of oversight over the U.S. Section’s programs and operations. Instead, we focused on key aspects of U.S. Sources and Uses of Funds

To identify the amount of the U.S. Section’s direct appropriation, we reviewed the U.S. Department of State’s appropriation data for fiscal  years 1994 to 1998 and its budget request for fiscal year 1999. Section for construction, as well as for operations and maintenance expenses from Mexico, other federal agencies (such as EPA), and state and local municipalities.
Why GAO Did This Study

Pursuant to a congressional request, GAO provided information on the U.S. Section of the International Boundary and Water Commission, focusing on: (1) the sources and uses of the U.S. Section's funds; (2) certain aspects of the U.S. Section's system of accounting and internal controls; (3) the cost-sharing arrangements for joint projects between the United States and Mexico; (4) the administration of U.S Section operations and maintenance contracts; and (5) the extent of oversight over the U.S. Section's programs and operations.

What GAO Found

GAO noted that: (1) the U.S. Section of the International Boundary and Water Commission has received total funding of approximately $217.9 million over the last 4 years; (2) the funds were from appropriations and grants or payments from other federal agencies and state and local governments; (3) it also received reimbursement from the Mexican government for costs incurred on joint projects; (4) the U.S. Section expended $46.7 million in fiscal year 1997, including $21.9 million from its appropriations and $24.8 million from grants and payments from others; (5) the funds were used for salaries and benefits, administrative costs, operation and maintenance of International Boundary and Water Commission projects, and construction activities; (6) the cost-sharing agreements between the United States and Mexico for two recently completed projects had payment terms that varied from those used on other joint developments; (7) for these two projects, the United States agreed to finance Mexico's share of costs due to Mexico's economic difficulties and in order to cover the cost of meeting environmental standards of the United States, which are higher than those in Mexico; (8) this resulted in $8.6 million worth of increased costs to the United States; (9) the total investment for those two projects--Nogales, Arizona, and South Bay, California--is $321.9 million; (10) there are weaknesses in certain aspects of the U.S. Section's finance and accounting systems; (11) regarding the administration of U.S Section operations and maintenance contracts, required monthly reports on contractor performance were not submitted; (12) oversight of the U.S. Section is minimal; (13) although the Department of State reviews the U.S. Section's budget submission and provides policy guidance to the U.S. Commissioner, the Section is not a constituent part of State and, therefore, the Department does not formally examine the Section's managerial activities because it operates administratively as an independent agency; (14) while the Environmental Protection Agency funds some projects along the southwest border, it only reviews U.S. Section contracts and monitors resulting construction projects where it is a major contributor; and (15) the U.S. Commissioner informed GAO in a July 1998 letter that actions have been taken or are in progress to correct the deficiencies discussed in this report.