Summary

During an ongoing review of water resources project operation and maintenance (OM) cost recovery systems established by the U.S. Army Corps of Engineers and the Department of the Interior's Bureau of Reclamation, GAO identified a problem concerning the nonrecovery of OM costs.

Although Bureau water marketing policy requires reimbursement of an appropriate share of municipal and industrial (MI) costs from MI users, the contracts used to sell surplus irrigation water to MI users do not include OM cost recovery provisions. Neither the original Memorandum of Understanding between Interior and the Corps nor any existing or proposed contract with an industrial user addresses OM cost recovery. Neither agency has assumed responsibility for OM cost recovery, and only limited communication has taken place regarding a decision to reallocate a portion of the OM expenses to MI use. The Corps and the Bureau need to assess, recover, and account for an appropriate share of OM costs from current and future MI water users.