Alabama Bulletin No. AL300-8-1

In 2004, the administrative responsibilities for the Environmental Quality Incentives Program (EQIP) were transferred from the Farm Service Agency (FSA) to the Natural Resources Conservation Service (NRCS). NRCS has made great strides in streamlining contracting and making payments in the past four years for this and other cost-share programs.

The amount of cost-share dollars allocated to Alabama has risen from $4 million in 2004 to over $12 million a year for the past three years. A significant amount of conservation practices have been carried out with these funds. Over $49 million has been obligated to EQIP contracts and over $2 million obligated to Wildlife Habitat Incentive Program (WHIP) contracts in the past four years. Approximately $20 million in EQIP payments and $630,000 in WHIP payments have been disbursed during this same time frame. This means we are carrying approximately half the contracted dollars as open obligations, meaning funds not yet used.

Because of the significant increase in the amount of cost-share we have obligated to cost-share program contracts over the past few years, and because our business tools now allow for more transparency at the national level, NRCS is being scrutinized more closely regarding the amount of obligations versus payments being made.

Another issue that has taken on more importance is the number of contract terminations, cancellations, and modifications that have occurred during this time frame. During fiscal year 2006, our agency underwent a comprehensive audit conducted by governmental oversight agencies. As a result of this initial audit, our agency is now required to certify each year that obligated funds/open obligations are needed to carry out conservation practices.

These oversight agencies are expressing concern regarding the number of contracts in which no practices have been completed within the first 12 months after the obligation has occurred. They are also concerned that almost 20 percent of the obligated cost-share dollars are de-obligated each year because of contract modifications and cancellations. Many of these contracts are considered to be out-of-compliance and they are subject to the adverse action of termination with associated cost recoveries. These cost recoveries can be assessed up to 20 percent of the amount of contract obligation.

We as an agency are being measured as to how well we are managing contracts. Future allocations to Alabama and thus, to individual counties, depend upon how well we are performing in this arena. This is a very high priority for our agency. Therefore, we are requiring each District Conservationist to review all active contracts and send letters to contract holders who have had no activity on their contracts within the past 12 months. Letters include options and information regarding possible contract termination and cost recoveries, if there is no response.

District Conservationists please share this message with our partners, especially Soil and Water Conservation District Supervisors, as we need their leadership, support, and staff to accomplish these tasks in a timely manner.