In recent years, the  Congress has appropriated fewer funds than the sum of the amount  designated to individual projects in the conference report. The Corps Reprogrammed Significant Amounts of Funds among Hundreds of Projects

In fiscal years 2003 and 2004, the Corps reprogrammed funds over 7,000  times (3,415 actions in fiscal year 2003 and 3,641 actions in fiscal year 2004)  among investigations and construction projects. The Corps’  reprogramming guidance allowed most reprogrammings to be categorized  as fund movements that did not count toward the congressional  notification thresholds. The Corps Generally Followed Its Reprogramming Guidance

In our sample of 271 projects, reprogramming actions related to only 8  projects did not follow the reprogramming guidance in place at the time  when the funds were moved. The Corps’ Reprogramming Guidance Allows Numerous Movements of Funds without Congressional Notification

Although in the majority of cases we reviewed the Corps complied with its  guidance, this guidance has been developed in such a manner that it  provides the agency with maximum flexibility to move funds without  notifying the Congress. Specifically, we found that most movements of  funds that were actually reprogramming actions were categorized by the  Corps, in accordance with its guidance, as other types of fund movements,  which did not have to be reported to the Congress. However, the Corps also  reprogrammed funds for reasons that were inconsistent with the Corps’  guidance, such as to achieve the Corps’ goal of carrying zero funds into the  next fiscal year and to restore funds to donor projects without regard to  funding needs. Just over 13 percent of these movements were for amounts of $1,000 or  under, with one as small as 6 cents. The Corps’ Reprogramming Activities Resulted in Inefficient Management of Funds

As stated previously, Corps reprogramming guidance states that only funds  surplus to current year requirements should be a source for reprogramming  and that temporary borrowing or loaning is inconsistent with sound project  management practices and increases the Corps’ administrative burden. We found that funds were  moved into projects that had a reported “need,” but were subsequently  removed because they were “excess,” revoked from projects without  regard to their near-term funding requirements, reprogrammed into and out  of the same project on the same day, moved into and out of the same  project multiple times a year, and reprogrammed without a system to  evaluate the priority level of the affected projects. Many of these actions took  place only days or weeks apart from one another. During the  period of our study, the Corps lacked a set of formal, Corps-wide priorities  for use when deciding to reprogram funds from one project to another. Recommendations for Executive Action

To eliminate the burden of excessive reprogramming actions and to  provide better financial management of projects, we recommend that the  Secretary of Defense direct the Commanding General and Chief of  Engineers of the U.S. Army Corps of Engineers to take the following five  actions:  work with congressional committees to provide meaningful and  consistent guidance for the investigations, construction, and operation  and maintenance appropriations for what actions count as  reprogrammings and what reporting thresholds should apply on a  program and project basis;  develop a financial planning and management system for the  investigations, construction, and operation and maintenance  appropriations that, at a minimum,   changes the way the Corps allocates funds from an annual basis to a  more frequent basis that reflect actual schedule and project  performance;   periodically reviews project schedules and performance and revises  funding allocations as needed; and  develops and implements criteria for setting reprogramming   provide direction and training to change the culture prevalent  throughout the Corps that reprogramming is an acceptable, routine  financial management practice and instead place greater emphasis on  the use of financial planning approaches and priority-setting  mechanisms for managing project funding. However, the Corps could not provide data  about reprogramming of operation and maintenance project funds. To determine how effective the Corps’ reprogramming strategy was in  managing appropriated funds, we reviewed the results of our sample  analysis and discussed those results with program managers.
Why GAO Did This Study

In recent years, the Army Corps of Engineers (Corps) has had more work to accomplish than funds available. The Congress has supported the Corps' need to reprogram funds to complete projects. Reprogramming allows the Corps to move funds from projects that can not use available funds to those that can. However, concerns have been expressed about whether the Corps reprogrammed funds in accordance with applicable guidance. GAO determined for fiscal years 2003 and 2004 (1) the amount of funds reprogrammed; (2) if the Corps followed reprogramming guidance; (3) why the Corps reprogrammed funds; and (4) how effective the Corps' reprogramming strategy was in managing funds.

What GAO Found

In fiscal years 2003 and 2004, the Corps reprogrammed funds over 7,000 times and moved over $2.1 billion among projects within the investigations and construction appropriations. Moreover, funds were moved in and/or out of nearly two thirds of the projects within these appropriation accounts. Comparable data for the operation and maintenance appropriation could not be provided by the Corps. GAO reviewed a random sample of 271 general investigation, construction general, and operation and maintenance projects and found that the Corps generally reprogrammed funds in accordance with its guidance. However, in eight cases, the Corps' reprogramming actions did not comply with the guidance because it either exceeded established reprogramming thresholds and/or did not provide the appropriate notification to the Congress. Although in most cases the Corps reprogrammed funds according to its guidance, this guidance is written in such a way that most reprogramming actions do not count as reprogramming actions toward the congressional notification thresholds, thereby diminishing the Congress' knowledge and oversight of how the Corps spends appropriated funds. In many cases, the Corps reprogrammed funds from projects that experienced unforeseen delays to projects that could make use of additional funds. On the other hand, reprogramming actions were conducted that were inconsistent with the Corps' reprogramming guidance, such as to achieve a Corps goal that all projects carry no funds into the next fiscal year. Some of these movements were as small as 6 and 7 cents. Corps guidance states that small reprogramming actions are inconsistent with sound project management and increase its administrative burden. Funds were also moved into projects that had a reported "need" and then were subsequently removed because they were suddenly "excess"--sometimes on the same day or within a few days or weeks. Such movements appear to serve little useful purpose and create an administrative burden for the Corps because of the time and effort needed to accomplish these movements. The Corps has come to rely on reprogramming as its primary method to manage project funds. The use of reprogramming is no longer used as a tool when emergencies and unforeseen circumstances occur but instead has become the regular, recurring financial management practice. Finally, the use of numerous reprogramming actions to manage project funds, without a set of formal Corps-wide priorities, has resulted in an uncoordinated movement of funds between projects, with little consideration to pending needs or long-term planning.