United States
Environmental Protection
Agency
Office of
Inspector General (2441)
Washington DC 20460
EPA-350-R-98-001
May 1998
v»EPA Office of Inspector General
Semiannual Report
to the Congress
October 1, 1997 through
March 31, 1998
<•*
y
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INSPECTOR GENERAL VISION
STATEMENT
"We are agents of positive change striving for continuous improvement in our
Agency's management and program operations, and in our own offices."
The Inspector General Act of 1978, as amended, requires the Inspector General
to: (1) conduct and supervise audits and investigations relating to programs and
operations of the Agency; (2) provide leadership and coordination, and make
recommendations designed to (A) promote economy, efficiency, and
effectiveness and (B) prevent and detect fraud and abuse in Agency programs
and operations; and (3) fully and currently inform the Administrator and the
Congress about problems and deficiencies identified by the Office of Inspector
General relating to the administration of Agency programs and operations.
GOALS
O Help EPA achieve its environmental goals by nprcwir^ the penbnrarxB
programs and operations, by safeguarding and protecting the Agency's resources, and by dearty
reporting the results of our work.
© Foster strong working relationships.
© Operate at the highest performance level.
Cover photo by Ken Kerbs
U S. Environmental Protection Agency
Region 5, Library (PL-12J)
77 West Jackson Boulevard, Utn r«W
Chicago, IL 60604-3590
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Foreword
I
am very pleased to report that EPA received an unqualified or "clean"
audit opinion on its Agency-wide financial statements. This
achievement represents a significant milestone in EPA's ongoing
initiatives to improve its financial management systems and activities. This could not
have happened without the dedication, cooperation and hard work of many individuals
from the Office of the Chief Financial Officer, other program offices throughout
Headquarters and the regions, and my office. Much still needs to be done by the
Agency in many areas, such as cost accounting and Year 2000 enhancements. Some
of the issues will present new challenges in upcoming financial statement audits. Our
sustained efforts will allow managers to better direct, monitor and report on the use of
Agency resources to achieve its environmental mission.
Concerning our impact on environmental results, we have made significant
progress in conducting program audits which have the potential to improve the
effectiveness and efficiency of environmental programs. For example, we reported that
the backlog of permits for municipal and industrial wastewater dischargers in Alaska
and Idaho are undermining the permit program which is key to an effective clean water
program. Seventy percent of these permits were over 4 years overdue, and some of
the dischargers were contributing to water quality problems in important watersheds. In
addition, we completed two more reviews of state air enforcement programs in New
Mexico and Washington. These states needed to better identify and report significant
violators so that EPA working in partnership with state and local air districts can take
the necessary actions to bring violating facilities back into compliance.
Our audits have also identified opportunities where scarce resources could have
been used more effectively. In Philadelphia, EPA spent over four times the appraised
value of houses demolished at a Superfund site to build new houses for the owners.
This decision cost EPA millions of additional dollars which could have otherwise been
spent on environmental cleanup. In an audit of lead and asbestos training grants, we
found that under one grant, the per student cost of training was $2,807 rather than the
estimated amount of $267. Funds could have been saved or put to better use if EPA
had monitored these training grants more closely.
Our investigative work continues to result in substantial fraud recovery. An EPA
contractor recently entered into a civil settlement to resolve fraud allegations under the
Federal False Claims Act. A joint investigation by the EPA OIG, the Defense Criminal
Investigative Service, the Defense Contract Audit Agency, and the U.S. Army Criminal
Investigation Command uncovered allegations that the contractor had submitted false
claims by double charging for certain labor and equipment costs utilizing a complex
accounting scheme. Consequently, the contractor agreed to pay $4.3 million to the
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United States as part of a global resolution of all claims under a landfill cleanup
contract. Of over $24 million in submitted but unpaid claims, only $14.5 million are
deemed as legitimately incurred by the contractor. Therefore, an additional $9.6 million
in cost savings has been realized from the repudiated claims.
As evidenced by the success of our efforts in these and other areas, the Office of
Inspector General remains committed to assisting the Agency in the accomplishment of
its environmental goals.
L
Nikki L. Tinsley
Acting Inspector Generar
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Profile of Activities and Results
October 1,1997 to March 31,1998
Audit Operations ($ in millions)
OIG Managed Reviews:
Reviews Performed by EPA, Independent Public
Accountants and State Auditors
Audit Operations ($ in millions)
Other Reviews:
Reviews Performed by Another Federal
Agency or Single Audit Act Auditors
Questioned Costs *
- Total
- Federal
Recommended Efficiencies*
- Federal
Costs Disallowed to be Recovered
- Federal
Costs Disallowed as Cost Efficiency
- Federal
Reports Issued - OIG Managed Reviews:
- EPA Reviews Performed By OIG:
- EPA Reviews Performed by
Independent Public Accountants:
- EPA Reviews Performed by
State Auditors:
Total
$6.9
$4.8
$0
$14.5
$0
47
5
0
52
Reports Resolved (Agreement by Agency officials to
take satisfactory corrective action.) *** 124
Questioned Costs *
- Total $ 0.1
- Federal $ 0.1
Recommended Efficiencies*
- Federal $ 0
Costs Disallowed to be Recovered
-Federal $ 0
Costs Disallowed as Cost Efficiency
- Federal $ 0
Reports Issued - Other Reviews:
- EPA Reviews Performed by
Another Federal Agency: 65
- Single Audit Act Reviews: 33
Total 98
Agency Recoveries - Recoveries from Audit $6.5
Resolutions of Current and Prior Periods
(cash collections or offsets to future payments.)**
Investigative Operations
Fraud Detection and Prevention
Operations
Fines and Recoveries (including civil)
Savings/Repudiated Claims
Investigations Opened
Investigations Closed
Indictments of Persons or Firms
Convictions of Persons or Firms
Administrative Actions Against
EPA Employees/ Firms
Civil Recoveries
$4.9
$9.6
90
42
6
5
25
3
Hotline Cases Opened 19
Hotline Cases Processed and Closed 17
Personnel Security Investigations
Adjudicated 433
Legislative and Regulatory Items Reviewed 27
* Questioned Costs and Recommended Efficiencies subject to change pending further review in the audit resolution pr ocess.
** Information on recoveries from audit resolution is provided from EPA Financial Management Division and is unaudited.
*** Reports resolved are subject to change pending further review.
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Contents
Executive Summary 1
The OIG in EPA-lts Role and Authority 4
Purpose and Reporting Requirements of the Office of Inspector General
Semiannual Report 4
Who's Who in the Office of Inspector General 5
Section 1-Office of Audit-Significant Findings
Programs 7
Financial Statements 22
Assistance Agreements 25
Contracts 34
Section 2-Office of Investigations-Significant Results
Summary of Investigative Results 39
Selected Prosecutive Actions 40
Civil and Administrative Actions to Recover EPA Funds 45
Selected Suspension and Debarment Actions 48
Section 3-Fraud Prevention and Management Improvements
Advisory and Assistance Services 50
Review of Legislation and Regulations 51
OIG Management Initiatives 53
Management Decisions with Which the Inspector General
is in Disagreement 54
Section 4-Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process
for the Semiannual Period Ending March 31, 1998 55
Status of Management Decisions on IG Reports 56
Inspector General Issued Reports With Questioned Costs 56
Inspector General Issued Reports With Recommendations that Funds Be
Put to Better Use 57
Appendices
Appendix 1-Reports Issued 58
Appendix 2-Summary of Reports Issued Without Management Decision 63
Appendix 3-Major Laws Administered by EPA 64
The complete text of selected audits is available through the EPA OIG internet home page.
http: // www.epa.gov/oigear1h
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Executive Summary
Section 1--Office of Audit-
Significant Findings
1. Region 10's NPDES Permit Program
Needs Improvement to Protect Water
Quality in Alaska and Idaho
Region 10 could more effectively regulate and
reduce point source water pollution by improving its
wastewater permit program's process for issuing
and renewing permits, monitoring compliance of
dischargers, enforcing compliance for dischargers
that violated permit conditions, and reporting on
new permit limits and conditions (page 7).
2. EPA Paid Excessive Amounts to Build
Replacement Housing
At a Superfund site where EPA had to demolish
homes to clean up radiological contamination, EPA
spent over four times the average appraised value
to custom build replacement houses (page 8).
3. EPA's Air Program, While Effective in
Cleaning the Air, Could Be More Efficient
EPA data show that the Air Program has been
effective in cleaning the air and reducing the
potential for depleting the ozone layer. To increase
the Air Program's efficiency, however, EPA can
improve its relations with other parties it needs to
carry out its mission, and increase attention to
certain ongoing activities (page 10).
4. Missouri's Water Quality Standards and
Monitoring Could Be Improved
Missouri needed to improve its water quality
standards by adopting national use classifications
for its waters and criteria for acceptable pollutant
levels. Missouri also needed to comprehensively
monitor and accurately report on its water quality
(page 12).
5. Region 10 and the State of Washington
Need to Improve the Reporting of
Significant Clean Air Act Violators
Washington was under-reporting major air
stationary source significant violators to EPA.
Although Region 10 did not take planned corrective
actions, the Region did take other actions to
increase the accuracy of reporting by the State.
Washington also was not conducting the thorough
type of inspections necessary to identify significant
violators. Region 10 had not implemented an
effective oversight program to ensure that adequate
inspections were performed (page 14).
6. Region 8 Needs to Strengthen Its
Superfund Field Sampling Quality
Assurance Controls
Region 8 improved some of its field sampling
quality assurance activities since a 1995 OIG audit.
However, the Region could more effectively support
its goal for high quality environmental data by better
applying its data quality objectives process to
support environmental cleanup decisions,
documenting project plan approvals and ensuring
timeliness of plan submissions, attending training,
and performing and documenting oversight of field
sampling (page 15).
7. New Mexico and Region 6 Did Not
Identify and Ensure That Significant
Violators Were Returned to Compliance
New Mexico and Region 6 needed to better identify
and report significant violators of the Clean Air Act.
New Mexico did not establish goals to complete
inspections of major stationary air pollution
facilities, and did not establish time frames for
returning facilities to compliance. Over one-third of
New Mexico's major facilities had not been
inspected in more than seven years (page 16).
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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8. Kansas NPDES Permit Program Needs
Attention
When Kansas issued wastewater permits, it
established pollutant limits and monitoring
requirements in accordance with EPA regulations.
However, Kansas did not reissue expired permits in
a timely manner, and did not submit expired permits
to Region 7. This limited Region 7's options to
ensure the permit program controlled discharges
into Kansas waters. As a result, the permittees
were allowed to discharge pollutants at levels that
could adversely affect human health and aquatic life
(page 17).
9. EPA Accurately Reports Information on
Superfund Construction Completions
Congress and the public can rely on the accuracy of
EPA's Superfund construction completion statistics.
While it generally accurately communicates the
statistics, EPA has at times portrayed sites where
construction was complete as if all cleanup work
was done and the sites could be returned to
economic use. This was not always the case, and
such statements could lead to misunderstandings
on the status of the cleanup of Superfund sites
(page 19).
10. EPA Security Plans Vulnerable to
Threats
Some EPA organizations did not have a general
support system security plan, a disaster recovery
plan, or require contractors who manage EPA
information systems to undergo criminal and
financial background checks. These conditions
leave critical EPA systems vulnerable to natural and
internal threats (page 20).
11. EPA Receives Unqualified Opinion on
Its Consolidated Financial Statements
During fiscal 1997, EPA continued to improve its
financial reporting systems and practices. As a
result of working jointly with the OIG to improve the
accuracy and reliability of its financial statements,
EPA received an unqualified or "clean" opinion on
its fiscal 1997 Consolidated Agency-wide financial
statements (page 22).
12. The National Rural Water Association
(NRWA) Used Federal Funds to Lobby and
Awarded Contracts Noncompetitively
NRWA charged lobbying costs to the federal
government, charged costs associated with
directing state associations' lobbying to the federal
government, and used an EPA employee on an
Intergovernmental Personnel Act assignment to
NRWA to further its lobbying agenda. EPA allowed
NRWA to award federally-funded contracts
noncompetitively to state associations without
adequate justification since 1976 (page 25).
13. EPA's Brownfields Initiative Can Be
Strenghtened
EPA can strengthen the Brownsfields Initiative by
improving the focus and direction provided to pilot
cities, strengthening quality assurance at
Brownfields sites, and exploring alternatives to the
restrictions placed on the use of Brownfields
revolving loan funds (page 27).
14. Lead and Asbestos Training Costs
Were Understated and Inadequately
Monitored
EPA miscoded 21 of 34 lead and asbestos training
grants. As a result, EPA did not know how much it
had spent on training. Moreover, it was not clear
whether EPA even had the authority to award these
grants. EPA did not monitor how many students
were being trained or how much it cost to train each
student (page 28).
15. Region 2 Can Improve Closeout of
Construction Grants
Region 2 did not effectively review construction
grants to determine the viability of unexpended
grant obligations or promptly deobligate unneeded
funds. As a result, EPA accumulated idle funds of
more than $70 million for the projects reviewed
which could have been used to fund other priority
projects, or been deposited into the State Revolving
Fund (page 30).
OFFICE OF INSPECTOR GENERAL
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16. Almost $3 million Questioned on
Township of Parsippany-Troy Hills, New
Jersey Projects
The Township of Parsippany-Troy Hills, New Jersey
claimed $2,945,348 of ineligible or unsupported
construction, engineering and administrative costs
for the expansion of a secondary wastewater
treatment facility and construction of an interceptor
sewer (page 32).
17. Over $1.2 Million Questioned on
Government of District of Columbia
Projects
The District of Columbia claimed $1,208,051 of
ineligible or unsupported construction, engineering
and administrative costs for its share of a joint
project to construct wastewater treatment facilities
(page 33).
18. EPA Needs to Address Procurement
Issues Related to OSV Peter Anderson
Contract
The recompete contract for the operation and
maintenance of EPA's Ocean Survey Vessel (OSV)
Peter Anderson should be awarded as a fixed-
priced, performance-based service contract, not a
level-of-effort cost-reimbursable contract as
currently planned. Also, EPA needs to address
personal service issues, performance of work
outside the scope of the contract, and improper use
of contract employees (page 34).
Section 2-Office of Investigations-
Significant Results
During this semiannual reporting period, our
investigative efforts resulted in five convictions and
six indictments. Also, our investigative work led to
over $4.9 million in fines and recoveries and $9.6
million in savings fines repudicated claims
(page 39).
The Office of Grants and Debarment completed
action on 7 OIG-generated suspension and
debarment cases during this reporting period,
resulting in four suspension and debarments and
two voluntary exclusions (page 48).
Section 3--Fraud Prevention and
Management Improvements
During this semiannual period, we reviewed five
legislative and 22 regulatory items. Our most
significant comments concerned the Government
Performance and Results Act Technical
Amendments of 1997; Government Waste, Fraud
and Error Reduction Act of 1998; General
Accounting Office Standards for Internal Control in
the Federal Government, Revised EPA Order on
Quality Assurance and Directive 2100: Policy on
Public Access to EPA Information (page 51).
Section 4-Report Resolution
This section, required by the IG Act, reports on the
status and results of Agency management actions
to resolve audit reports. At the beginning of the
semiannual period, there were 177 reports for
which no management decision had been made.
During the first half of fiscal 1998, the Office of
Inspector General issued 150 new reports and
closed 202. At the end of the reporting period, 125
reports remained in the Agency followup system for
which no management decision had been made.
Of the 125 reports, 82 reports remained in the
Agency followup system for which no management
decision had been made within 6 months of
issuance (page 55).
For the 124 reports closed that required agency
action, EPA management disallowed $14.5 million
of questioned costs and agreed with our
recommendations that $10,000 be put to better use
(page 55). In addition, cost recoveries in current
and prior periods included $1 million in cash
collections, and at least $5.5 million in offsets
against billings.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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The OIG in EPA--lts Role And Authority
The Inspector General Act of 1978 (Public Law 95-452), as
amended, created Offices of Inspector General to consolidate
existing investigative and audit resources in independent
organizations headed by Inspectors General.
EPA established its Office of Inspector General (OIG) in January
1980. As an agency with a massive public works budget, EPA is
vulnerable to various kinds of financial abuses. The OIG's role is
to review EPA's financial transactions, program operations,
contracts, and administrative activities; investigate allegations or
evidence of possible criminal and civil violations; and promote
economic, efficient, and effective Agency operations. The OIG is
also responsible for reviewing EPA regulations and legislation.
The EPA Inspector General reports directly to the Administrator
and the Congress and has the authority to:
• Initiate and carry out independent and objective audits and
Investigations,
Issue subpoenas for evidence and information,
Obtain access to any materials in the Agency,
Report serious or flagrant problems to Congress,
Select and appoint OIG employees,
Fill Senior Executive Service positions,
Administer oaths, and
Enter into contracts.
The Inspector General is appointed by, and can be removed only
by, the President. This independence protects the OIG from
interference by Agency management and allows it to function as
the Agency's fiscal and operational watchdog.
Organization and Resources
The Office of Inspector General functions through two major
offices, each headed by an Assistant Inspector General: Office of
Audit and Office of Investigations. Nationally, there are nine
Divisional Inspectors General for Audit and four Divisional
Inspectors General for Investigations who direct staffs of auditors
and investigators and who report to the appropriate Assistant
Inspector General in Headquarters.
For fiscal 1998, the Agency was appropriated $7.4 billion and
authorized 18,283 full time equivalent (FTE) positions to conduct
the environmental programs authorized by Congress to restore
and protect the environment. As a separate appropriation
account, the Office of Inspector General (OIG) received $40.1
million to carry out the provisions of the Inspector General Act of
1978, as amended. Of the OIG's total appropriation, $10.2 million
was derived from the Hazardous Substance Superfund trust fund.
The OIG had an authorized staffing level of 372 FTE positions.
the Administrator by each April 30 and October 31, and to
Congress 30 days later. The Administrator may transmit
comments to Congress along with the report, but may not change
any part of it.
The specific reporting requirements prescribed in the Inspector
General Act of 1978, as amended, are listed below.
Source
Section/Page
Inspector General Act, as amended.
Section 4(a)(2) Review of Legislation and Regulations 3 51
1 7
Section 5(a)(1)
Section 5(a)(2)
Section 5(a)(3)
Section 5{a)(4)
Section 5(a)(5)
Section 5(a)(6)
Section 5(a)(7)
Section 5(a)(8)
Section 5(a)(9)
Section 5(a)<10)
Section 5(a)(11)
Section 5(a)(12)
Significant Problems, Abuses, and
Deficiencies
Recommendations with Respect to
Significant Problems, Abuses, and
Deficiencies
1
Prior Significant Recommendations on
Which Corrective Action Has Not
Been Completed Appendix 2 63
Matters Referred to Prosecutive
Authorities 2 40
Summary of Instances
Where Information Was Refused
List of Audit Reports Appendix 1 58
Summary of Significant Reports 1 7
Statistical Table 1-Reports With 4 56
4 57
Statistical Table 2-Reports With
Recommendations That Funds Be Put
To Better Use
Summary of Previous Audit
Reports Without Management
Decisions
Appendix 2 63
Description and Explanation of Revised
Management Decisions Appendix 2 63
Management Decisions with Which the
Inspector General is in Disagreement
3** 54
* There wen no Instances where Information or
assistance requested by th* Inspector General was refused
during this reporting period.
"We are in disagreement with the Audit Resolution Board. See page 54 for
details.
Purpose and Reporting Requirements of the Office of
Inspector General Semiannual Report
The Inspector General Act of 1978, as amended, requires the
Inspector General to keep the Administrator and Congress fully
and currently informed of problems and deficiencies in the
Agency's operations and to recommend corrective action. The IG
Act further specifies that semiannual reports will be provided to
OFFICE OF INSPECTOR GENERAL
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Office of Inspector General-Who's Who
Headquarters
Inspector General
NikkJ L Tinsley(Acting)
Assistant inspector General for
Management
John C. Jones
IIIIIIIIIIHHIII!
Support Staff
Edward Gekosky
Director
I
Office of Audh
Kenneth A. Konz
Assistant Inspector General
James O. Rauch
Principal Deputy
HssaR. Karpf
Deputy for External Audits
Michael D. Simmons
Deputy for Internal Audits
Offico of hivestigfltions
AlenP. Fafci
Assistant Inspector General
Emmett D. DasNel, Jr.
Deputy Assistant Inspector General
Kenneth D. Hockman
Planning and Resources Mgmt
Robert F. Eagen
Engineering & Scientific Assistance
Patricia H. Hill
ADP Audits and Assistance
Divisional Inspectors General for Audit
Divisional Inspectors General for Investigations
Regions 1 & 2
Paul D McKechme
Region 3
Carl A Jannetti
Regions 4
Mary M Boyer
Region 5
Anthony C Carrollo
Regions 6, 7 & 8
Bennie S Salem
Regions 9 & 10
Truman R Beeler
Headquarters:
HQ Audit Division
Norman Roth
Financial Audit Division
Melissa M Heist
Washington Contract
Division
Gordon C Milbourn III
Regions 1,2 & 3
Thomas L Papineau
Regions 4,5,6 & 7
Ailverdes Comelious
Regions 8,9 & 10
Mark Vallerga
Washington Field Division
David Sermos
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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Section 1- Office of Audit-Significant Findings
OFFICE OF AUDIT GOALS AND ACTIVITIES
OFFICE OF AUDIT GOALS: in fiscal 1998, the Office of Audit will provide objective, timely,
independent auditing and consulting services by completing and initiating more audit
assignments, reducing the average time on assignments, and dedicating more resources to
consulting services. ^
ACTIVITIES TO MEET OUR GOALS
Program Audits - Evaluate the extent to which the desired results or benefits envisioned by
the Administration and Congress are being achieved; review the economy, efficiency and
effectiveness of operations; and determine the extent of compliance with applicable laws and
regulations.
Financial Statement Audits - Evaluate EPA's financial systems and statements to ensure
that the Agency's accounting information is accurate, reliable and useful, and complies with
applicable laws and regulations. Our objective is to assist EPA in making improvements in the
financial management processes and controls which will provide better information for decisions
promoting the greatest possible environmental results.
Assistance Agreement Audits - Evaluate EPA's Construction Grant Program, State
Revolving Funds, Performance Partnership Grants, Interagency Agreements and Cooperative
Agreements, which provide assistance to state, local and tribal governments, universities and
nonprofit recipients accounting for about half of EPA's budget. We will audit both the financial
and performance aspects, building on the Single Audit Act and focusing on resource-intensive,
high-risk programs.
Contract Audits - Evaluate EPA's indirect cost proposals, preaward, interim and final
contracts. These audits determine the eligibility, allowability, allocability, and reasonableness of
costs claimed by contractors and assure that EPA pays only for what it requests and receives.
Performance audits address systemic weaknesses. EPA has assumed audit cognizance of 15
major contractors and will continue to monitor the contract universe to identify high-risk
contractors. In addition, the Defense Contract Audit Agency provides audit services, on a
reimbursable basis, for the majority of EPA's contractors.
OFFICE OF INSPECTOR GENERAL
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Programs
Region 10-sNPDES
Pemnit Program
Needs Improvements
to Protect Water
Idaho
The Inspector General Act requires the OIG to initiate reviews and
other activities to promote economy and efficiency and to detect
and prevent fraud, waste, and mismanagement in EPA programs
and operations. Internal and performance audits and reviews are
conducted to accomplish these objectives largely by evaluating the
economy, efficiency, and effectiveness of operations. The OIG
conducted a number of major reviews of EPA programs. The
following are the most significant internal audit, performance audit,
and special review findings and recommendations resulting from
our efforts.
The Federal Water Pollution Control Act of 1972 initiated a broad federal
effort to restore and maintain the nation's waterways, including the
creation of the National Pollutant Discharge Elimination System
(NPDES) permit program to regulate and reduce point-source pollution.
Point sources are typically municipal and industrial dischargers. Under
the NPDES, it is illegal to discharge pollutants into the nation's navigable
waters without a permit. Region 10 is responsible for implementing the
NPDES program in Alaska and Idaho.
We Found That
Region 10 has not issued or renewed most of the required NPDES
permits for municipal and industrial dischargers in Alaska and Idaho.
Although the Region issued 33 permits in the past 21/2 years, there were
1,000 applications waiting to be processed; of which 70 percent were
over 4 years old. As a result, large numbers of dischargers were
operating in violation of the law or had their permits administratively
extended without being subject to more current and stringent discharge
requirements. Some of these dischargers were contributing to water
quality problems in important watersheds in Alaska and Idaho. This
occurred because of a regional decision, made with EPA Headquarters,
Office of Water's knowledge, to focus regional efforts on a few selected
permits and watershed permitting.
Region 10 could improve its monitoring of point-source dischargers. The
Region did not: (1) submit some compliance inspection reports timely
and generally did not follow-up on inspection findings; (2) investigate
some citizen complaints about point-source discharges; and (3) have a
system to track compliance for storm water dischargers
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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and seafood general permits. As a result, the Region could not be sure
that adverse impacts to water quality were prevented and/or corrected.
In addition, the Region did not regularly take formal enforcement action
against the more significant point-source violators. For the 27-month
period ended December 1996, formal action was not taken against 9 of
10 such violators. This inaction against significant violators weakens the
effectiveness of the NPDES permit program to protect public health and
the environment.
We Recommended That
The Regional Administrator, Region 10:
• Report the permit backlog as a management control deficiency in the
annual Federal Managers' Financial Integrity Act (FMFIA) assurance
letter to the Administrator.
• Strengthen monitoring of dischargers' compliance with permit
conditions and NPDES regulations.
• Take appropriate and timely enforcement actions against dischargers
in significant noncompliance.
What Action Was Taken
The final report (8100076) was issued to the Regional Administrator on
March 13, 1998. In responding to the draft report, the Regional
Administrator agreed with the recommendations, except for reporting the
permit backlog as a deficiency in the annual FMFIA assurance letter to
the Administrator. A response to the final report is due by June 15,
1998.
The Superfund program protects public health and the environment from
the release, or threat of release, of hazardous substances through
relatively short-term removal actions and more permanent long-term
remedial actions. EPA used both removal and remedial actions to
address radium and thorium contamination at the Austin Avenue
Radiation Site in the suburbs of Philadelphia, Pennsylvania, at a cost of
$55 million for 40 properties.
OFFICE OF INSPECTOR GENERAL
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We Found That
At the Austin Avenue Radiation Site, EPA Region 3 spent an average of
$651,700 each to build 10 replacements for houses which were
demolished in the cleanup process. The appraised value of the old
houses averaged only $147,000 each. The cost difference was so high
because the Region built new houses, rather than relocate the owners,
as EPA had usually done in similar situations. EPA Headquarters had
not issued guidance on building replacement houses under the
Superfund program.
Original -$161,000
Replacement - $706,010
Region 3 adopted the position that EPA was obligated to replace "like for
like" houses. The Region sought to duplicate the appearance and other
characteristics of the old houses, rather than build new houses using
today's standard building designs. Thus, the houses were custom built
in order to replace "like for like." We found no evidence to support that
EPA was mandated to replicate houses. The difficult process of
negotiating architectural and other details with homeowners lengthened
the time to complete the cleanup and increased the costs. For example,
the Region spent over $700,000 to replicate one house whose appraised
value was $161,000, and then spent more than $100,000 in moving,
storage and rental fees for the owner.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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We Recommended That
The Acting Assistant Administrator for Solid Waste and Emergency
Response:
• Establish a policy where instead of building new houses under
Super-fund, EPA gives preference to other options that consider the fair
market value of the properties. For example, EPA could give the
owners: (a) the replacement value of their property, as the insurance
industry does; or (b) the amount EPA would have paid to permanently
relocate the owners.
• Develop a policy explicitly defining equivalent housing.
What Action Was Taken
The final report (8100090) was issued to the Acting Assistant
Administrator for Solid Waste and Emergency Response on March 30,
1998. In response to the draft report, the Acting Assistant Administrator
concurred with our recommendations and established a timetable for
development of the policy. A response to the final report is due by June
30, 1998.
White Effective in
Cleaning the Air, Could
be More Efficient
The Office of Air and Radiation (OAR) is responsible for carrying out
EPA's Air Program. Its mission is to protect and enhance the quality of
the nation's air resources and protect human health and the environment
from airborne pollutants. OAR carries out this mission by implementing
the Clean Air Act, as amended in 1990, and the 1993 Climate Change
Action Plan.
We Found That
OAR data show that the Air Program has been effective in cleaning the
air and reducing the potential for depleting the ozone layer. Between
1987 and 1996, U.S. emissions of several airborne pollutants declined,
including lead by 75%, and carbon monoxide and sulfur dioxide both by
37%. Chlorofluorocarbons (CFCs) declined in 1995 for the first time.
Much of this reduction was due to emission controls placed on motor
vehicles and utilities. These reductions occurred in a time of growth.
Some emissions were even reduced ahead of schedule. Use of CFCs
and other ozone-depleting chemicals were also phased out. OAR
estimates that, without the emission reductions, there would have been
more health problems, such as heart disease and respiratory illnesses.
Because of OAR's Acid Rain Program, the damage to lakes and forests
has been reduced. Finally, OAR predicts that, without the phase-out of
CFCs, the depletion of the stratospheric ozone layer would increase,
accompanied by an increase in skin cancer.
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The Air Program has generally operated efficiently. OAR officials,
however, could increase their program efficiency by:
1) improving their relations with other parties that OAR needs to carry
out its mission. These parties include the Office of Research and
Development (ORD), the Office of Communications, Education, and
Public Affairs, and outside stakeholders, such as states and tribes. For,
example, disagreements occurred between OAR and ORD on how ORD
used its resources, and which of the two would perform needed
monitoring activities. Working together to resolve disagreements,
opening lines of communication, and providing feedback to stakeholders
are all ways OAR can improve its relations and increase its efficiency.
2) directing more attention to several ongoing activities, such as leading
the state implementation plan process, developing and improving
emission factors, and issuing air toxic standards. OAR has not
considered these activities high priorities, which resulted in
implementation delays and limited funding. Consequently, these
activities have operated inefficiently and may not be achieving their
desired results.
We Recommended That
The Acting Assistant Administrator for Air and Radiation:
• Along with the Acting Assistant Administrator for Research and
Development, continue the improvements made in the fiscal 1999
research planning process, by (a) providing a consistent process for
making planning and budgeting decisions, (b) identifying cross-office
priorities, and (c) keeping managers and staff informed throughout the
process.
• Work with the Associate Administrator for Communications,
Education, and Public Affairs to establish procedures to ensure the
offices work up-front with each other when developing projects to raise
public awareness of air pollution.
• Establish a process to ensure that feedback is provided to all
stakeholders when OAR has not addressed their concerns or used their
input.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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What Action Was Taken
The final report (8100057) was issued to the Acting Assistant
Administrators for Air and Radiation, and Research and Development,
and the Associate Administrator for Communications, Education, and
Public Affairs on February 27, 1998. In responding to the position
papers, these officials agreed with our recommendations. A response to
the final report is due by May 28, 1998.
The Clean Water Act requires each state to adopt water quality
standards to help control and remedy water pollution. As a part of its
standards, the state classifies its waters according to how the water can
be used, such as for drinking, fishing, and swimming. The state is
required to review its water quality standards every three years and
obtain EPA approval for the standards. Every two years a state must
report to EPA on its water quality. EPA summarizes the state reports in
a biennial report to Congress, and uses the assessments to measure
performance in achieving its goal of clean and safe water.
We Found That
Most of Missouri's standards to protect its water quality met EPA
requirements; however, several standards were less restrictive than
national targets. The Clean Water Act goal is for all waters to be
swimmable, but Missouri did not classify 75 percent of its significant
streams and 11 percent of its lakes as swimmable and did not conduct
the required studies to justify that swimmable was not achievable. The
State adopted less restrictive criteria than EPA recommended for 14
pollutants and did not demonstrate that these criteria would protect
water quality. As a result, Missouri could not be sure that the water
pollutant levels it allows will not threaten health or aquatic life.
Missouri did not know the quality of all its waters and did not have a plan
to find out. Although it made a significant effort to monitor water quality,
Missouri needed to design its testing to comprehensively assess the
quality of its waters. Missouri assessed waters as unimpaired, or
meeting the water quality standards, even if it had not obtained
applicable testing results.
Missouri did not ensure that its water quality reports were complete and
accurate. Missouri excluded assessments of intermittent streams and
could not identify the specific waters included in its 1996 water quality
assessment report. Further, the State did not ensure that data systems
used to generate the report contained accurate information. Accurate
water quality information is important to make sure Missouri takes timely
action to identify impaired waters and develop measures to control water
quality problems.
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Tributary to UBe Blue River-EPAOIG Photo
Region 7 did not approve Missouri's 1994 and 1996 water quality
standards, and did not fulfill its responsibility to ensure Missouri's use
classifications and criteria protect water quality. Region 7 recognized its
need to approve state standards as a fiscal 1997 Federal Manager's
Financial Integrity Act area of concern, and committed in its fiscal
1998/1999 regional management agreement to complete timely approval
actions.
EPA Region 7 could have provided better technical assistance and
oversight to ensure that Missouri had an adequate basis for its water
quality programs. The Region did not require as a grant condition that
Missouri use available water quality management tools, such as a
comprehensive monitoring strategy. The Region approved Missouri's
impaired waterbody list without confirming that the list was complete.
We Recommended That
The Regional Administrator, Region 7:
• Require Missouri to adopt the swimmable use classification or conduct
the required studies to show this use cannot be achieved.
• Require Missouri to adopt EPA or scientifically defensible criteria.
• Request that Missouri develop a monitoring strategy and management
plans to ensure that Missouri comprehensively assesses the quality of
its waters.
• Request that Missouri implement procedures and controls to ensure
that its water quality reports are complete and accurate.
OCTOBER 1,1997 THROUGH MARCH 31,1998
13
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What Action Was Taken
The final report (8100080) was issued to the Regional Administrator on
March 31, 1998. In response to the draft report, the Region generally
concurred with the report findings and recommendations. The Region
had begun discussions with Missouri to address the report's
recommendations. A response to the final report is due by June 30,
1998.
Region 10 and the
Need to Improve the
Reporting of
Significant Clean Air
ActVwbtore
The Clean Air Act provided the initial authority for Federal grants to help
state and local agencies prevent and control air pollution. These grants
required each state to perform inspections at specified major facilities
and report significant violators (SVs) to EPA. EPA uses this information
to take action if a state does not enforce Federal law and to ensure that
a violator achieves compliance in a timely manner.
We Found That
In its December 1996 response to the Office of Enforcement and
Compliance Assurance's (OECA) concern about the under-reporting of
major air stationary source SVs, Region 10 made a preliminary
assessment of the State of Washington (the State). The Region
concluded that the State was under-reporting SVs to EPA, and proposed
a corrective action strategy for implementation in fiscal 1997.
During fiscal 1996, only seven of the State's 178 major air stationary
sources were reported as SVs. However, our sample of 31 major
sources at four of the State's eight Air Quality Authorities identified
another 17 (55 percent) SVs that should have been reported. As of
June 1997, Region 10 had not implemented any of the corrective actions
it proposed to OECA. The Region advised that planned
actions were delayed because it was considering more complete
evaluations, including State inspections and follow-up on reported
violations. Although the planned actions were not implemented, Region
10 did take other actions to increase the accuracy of SV reporting by the
State.
We identified a problem with the quality of inspections being performed
by two of the State's four Air Quality Authorities reviewed. The
Authorities were not always conducting thorough inspections necessary
to identify SVs. This occurred because the Region had not implemented
an effective oversight program for assuring that adequate inspections
were performed. From our sample of 20 major sources at these two
Authorities, 11 inspections (55 percent) needed improvement. As a
result, SVs might go undetected for a long time.
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We Recommended That
The Regional Administrator, Region 10:
• Implement the corrective strategy proposed to EPA Headquarters.
• Review enforcement data to identify potential SVs.
• Periodically review inspection reports to ensure that required thorough
inspections are conducted.
What Action Was Taken
The final report (8100000094) was issued to the Regional Administrator
on March 30, 1998. In response to the draft report, the Regional
Administrator agreed with the recommendations and described
corrective actions taken or planned during fiscal 1998. A response to
the final report is due by June 30, 1998.
Region 8 Needs to
EPA requires that each region or major organization have a quality
assurance program to ensure that activities generate data of known and
adequate quality. EPA developed a data quality objectives process as
its systematic planning tool to help ensure that it consistently collected
data at an appropriate level of quality to support technical decisions.
We Found That
Region 8 had established policy and controls to correct previous field
sampling quality assurance deficiencies but had not effectively
implemented those controls to ensure an effective quality assurance
program. Superfund project managers should have better defined,
documented, and updated data quality objectives in their project plans in
accordance with Region 8's quality management plan. Data quality
objectives were too broadly defined to ensure that sufficient and
appropriate data was gathered. Also, some project managers neglected
to ensure that project plans were appropriately reviewed and approved,
and had accepted deficient contractor-prepared plans. Thirteen of 35
staff needing quality assurance training had not completed mandatory
training. Some project managers continued to perform limited oversight,
relied too heavily on oversight contractors, did not use the regional
quality assurance group's assistance, and had not appropriately
documented their oversight activities to ensure that data collected was
reliable and defensible.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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We Recommended That
The Regional Administrator, Region 8:
• Develop regional Superfund controls to ensure that staff appropriately
develop and document data quality objectives.
• Hold Superfund supervisors accountable for ensuring that project
managers properly review and approve project plans.
• Direct Superfund supervisors to identify staff needing quality
assurance training and ensure that staff completes the training.
What Action Was Taken
The final report (8100082) was issued to the Regional Administrator on
March 25, 1998. In response to the draft report, Region 8 concurred
with the recommendations. A response to the final report is due by June
25, 1998.
New Mexico and
Identify and Ensure
That Significant
Violators Were
Returned to
Compliance
The Clean Air Act (CAA) provides EPA with authority to set and enforce
national standards to protect human health and the environment from
emissions that pollute the air. At the federal level, the air enforcement
program is carried out largely by EPA's regional offices. The Regions
delegate portions of their air enforcement responsibility to the states and
often rely on the states to conduct inspections and take enforcement
actions. New Mexico is a delegated state in EPA Region 6.
We Found That
Although required in its cooperative agreement with EPA, New Mexico
did not establish goals for inspections of all major stationary air pollution
facilities. Further, New Mexico did not complete committed inspections.
Over one-third of its major facilities had not been inspected for 7 years
or more. Without inspecting all major air pollution sources, New Mexico
could not assure adequate identification and reporting of all significant
violators. Without this data, Region 6 could not adequately perform its
oversight role to monitor the progress of New Mexico in returning
facilities to compliance. Sixteen additional facilities were added to EPA's
significant violator database as a result of this audit.
New Mexico and Region 6 enforcement needed to ensure that
significant violators were returned to compliance timely. New Mexico
averaged 155 days to issue the notices of violation, although guidance
allowed only 45 days. Between June 1996 and June 1997, the State
completed enforcement action on 8 of 14 cases, but averaged 319
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days to complete these actions. The remaining six cases had been out
of compliance an average of 433 days. New Mexico did not establish
timeframes for taking enforcement actions. When enforcement actions
are not timely, facilities may continue to emit pollution which could lead
to a higher potential for harm to the environment and local residents.
We Recommended That
The Acting Regional Administrator, Region 6, require the Compliance
Assurance and Enforcement Division to:
• Work with New Mexico to develop a comprehensive inspection plan to
address all major stationary air sources.
• Perform more effective oversight of significant violators to ensure that
New Mexico takes timely and appropriate actions that result in facilities
returning to compliance.
• Continue to work with New Mexico to develop a process to ensure the
timely and accurate identification of significant violators in EPA's
significant violator tracking system.
What Action Was Taken
The final report (8100078) was issued to the Acting Regional
Administrator on March 13, 1998. The Region and New Mexico
generally concurred with findings and recommendations and proposed
corrective actions to be taken by New Mexico and Region 6. A
response to the final report is due by June 15, 1998.
Kansas NPDES Permit
Program Needs
Attention
The Clean Water Act included the National Pollutant Discharge
Elimination System (NPDES) permit program as the centerpiece of the
water pollution control efforts. Permits limit the pollutants that a facility
may discharge through a specific point. Federal regulations require the
periodic review of permits to ensure that changed conditions and
advancements in science are considered in establishing permit limits.
We Found That
Kansas did not reissue 22 percent of its permits when they expired. As
of August 1997, Kansas had 832 permits, of which 182 were expired for
periods up to 6 years. Kansas officials said they had not reissued these
permits because of a change in their permitting approach to
issue all permits in the same location at the same time. As these
facilities continue to operate under their expired permits, they may
discharge pollutants at levels that could adversely affect aquatic life and
human health.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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Region 7 did not approve the Kansas 1994 water quality standards
which contributed to the Kansas permits backlog. The Region
recognized the need to approve state standards as a fiscal 1997 Federal
Managers' Financial Integrity Act area of concern.
Region 7 committed in its fiscal 1998/1999 regional management
agreement with the Office of Water to complete timely approval actions.
Region 7 developed a discharge monitoring data software program
which allows Kansas to more efficiently monitor discharges from major
permittees. EPA does not require states to record minor permittee data
in the Permit Compliance System, its database for NPDES reporting, as
the process is time-consuming and expensive. EPA uses the discharge
monitoring data as one environmental indicator of the success of the
permits program. However, this environmental indicator may not be
representative of the Kansas permit program since 93 percent of its
permitted facilities are minor permittee dischargers.
We Recommended That
The Regional Administrator, Region 7:
• Direct Kansas to establish an action plan for eliminating the backlog of
expired permits.
• Encourage Kansas to assess the effect of its permit backlog in
developing its water quality monitoring plan.
• Develop an action plan for the timely review of and prompt action on
State water quality standards.
What Action Was Taken
We issued the final report (8100089) to the Regional Administrator on
March 31, 1998. Region 7 generally agreed with the findings and
recommendations. Kansas agreed that the report was substantially
accurate. Both Region 7 and Kansas indicated that they had begun
taking corrective actions through discussions in the fiscal 1999 program
grant process. Further, Region 7 provided feedback to Kansas on its
water quality standards. A response to the final report is due by June
30,1998.
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EPA Accurately
Reports Infomration on
Construction
ns
The Superfund program uses construction completion as an indicator of
its progress in cleaning up sites. At construction completion EPA has
done everything technologically practicable to clean up a site. However,
at this stage, sites may still require long-term soil or groundwater
treatment. Construction completion only indicates that the remedy is
constructed, operating properly and fully protective of surrounding
residents. At times EPA overstates what the construction completion
statistic represents. Such overstatements can lead to
misunderstandings on the status of the cleanup of Superfund sites.
We Found That
The sites EPA reports as construction completion meet its established
criteria. EPA has good management controls to ensure the accuracy of
this statistic because of its high visibility as an indicator of program
progress. As a result, Congress and the public can rely upon EPA's
construction completion statistics.
While EPA generally accurately communicates the construction
completion statistic, it has at times portrayed sites where construction
was complete as if (1) all cleanup work were done, and (2) sites could
be returned to economic use. However, this is not always the case. As
a result, EPA may be misinforming Congress and the public as to status
of the cleanup of Superfund sites.
We Recommended That
The Acting Assistant Administrator for Solid Waste and Emergency
Response issue a memorandum emphasizing the need to use the
construction completion statistic accurately in all documents, and not to
overstate what it represents.
What Action Was Taken
The final report (8100030) was issued to the Acting Assistant
Administrator for Solid Waste and Emergency Response on December
30, 1997. In response to the draft report, the Acting Assistant
Administrator agreed to issue the memorandum by June 30, 1998.
Based on this response, we closed the report in our tracking system.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
19
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I
The majority of EPA's employees are connected to local and Agency
applications and data through Local Area Networks (LANs). Each
individual LAN is managed locally by the program office it serves.
Currently, there are approximately 300 LANs within EPA supporting an
estimated 14,000 workstations. Within a few years, it is projected that all
22,000 Agency employees will be connected by a LAN.
We Found That
None of the five regions or a Headquarters field office we reviewed had
a formal, comprehensive LAN security plan, as required by OMB
Circular A-130 and the Computer Security Act of 1987. The few draft
security plans available for review were missing significant elements
and, therefore, did not satisfy OMB requirements. None of the six
organizations had reported incomplete security documentation as a
control weakness in its fiscal 1996 Federal Managers' Financial Integrity
Act (FMFIA) assurance letters. In addition, they did not have formal
disaster recovery plans for their information systems. The draft disaster
recovery plans which existed were either outdated or incomplete. In the
event of a disaster, critical information could be lost, and EPA system
managers would have a difficult time restoring their LANs to pre-disaster
condition.
We also found that managers do not require contractors who are
responsible for Agency information systems to undergo criminal and
financial background investigations. This condition could leave sensitive
Agency data vulnerable to unscrupulous individuals.
We Recommended That
• Each organization develop a comprehensive security plan, including
disaster recovery provisions, to cover the regional offices, and
laboratories' general support systems.
• Each organization coordinate with EPA Headquarters to ensure that
all contractors with access to EPA information systems undergo criminal
and financial background investigations.
What Action Was Taken
The final reports (8300001, 8300003, 8300004, 8300005, 8300006, and
8300007) were issued to various EPA managers from November 28,
1997 to December 31, 1997. The Chief Information Officer (CIO)
declared security plans a material weakness under FMFIA and required
all regional security plans to be completed by December 31,
1997, including disaster recovery plans. The CIO has also required that
AAs/RAs certify to him that security plans have been developed for all
major applications and general support systems. As of April 21, 1998,
the Agency stated that 80% of the Program and Regional offices have
20 OFFICE OF INSPECTOR GENERAL
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provided certifications. In addition, several Regions
stated that they will institute procedures to ensure that all contractors
with access to agency information systems undergo criminal and
financial background checks.
„>•
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
21
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Financial Statements
EPA Receives
Unqualified Opinion
On Ms Consolidated
Financial Statements
During fiscal 1997, EPA continued to improve its financial reporting
systems and practices. As a result of working jointly with the DIG to
improve the accuracy and reliability of its financial statements, EPA
received an unqualified or "clean" opinion on its Consolidated Agency-
wide financial statements. This is a significant accomplishment for EPA.
This audit was performed in accordance with the Government
Management Reform Act which requires annual audited financial
statements. The Act was enacted to help bring about improvements in
agencies' financial management practices, systems and controls so that
timely, reliable information is available for managing federal programs.
We Found That
The Fiscal 1997 Statement of Financial Position (Balance Sheet) fairly
presented the financial position of the Superfund Trust Fund, the State
and Tribal Assistance Grants Appropriation, All Other Appropriated
Funds and EPA as a whole.
The Fiscal 1997 Statement of Operations and Changes in Net Position
(Income and Expense Statement) fairly presented the results of
operations for the State and Tribal Assistance Grants Appropriation, All
Other Appropriated Funds and EPA as a whole. Material errors in one
region's accounting for its unbilled Superfund oversight costs prevented
us from being able to determine if the fiscal 1997 Superfund Trust Fund
beginning balance for unbilled oversight costs was fairly presented. The
beginning balance for unbilled oversight costs affected fiscal 1997
revenue. Therefore, except for the affects of any adjustments that might
have been necessary to correct the revenue reported, the Consolidating
Statement of Operations and Changes in Net Position fairly presented
the fiscal 1997 results of operations of the Superfund Trust Fund.
Material Internal Control Weakness
In evaluating EPA's internal controls, we identified weaknesses in its
accounting for unbilled Superfund oversight costs. EPA incurs these
costs to monitor cleanups of hazardous waste sites. The costs are
recoverable from Potentially Responsible Parties based on the terms
and conditions of Consent Decrees or Orders. Regions estimate the
amount of unbilled oversight costs that exist at the end of the fiscal year
for inclusion in the financial statements.
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Two of the six regions we audited encountered difficulties in estimating
their unbilled oversight costs. Based on our concerns, EPA performed
additional work in these two regions. Supplemental audit work still found
material errors in one of the two region's recalculated beginning balance.
The difficulties encountered by the two Regions in developing an
estimate of unbilled oversight costs were primarily related to inadequate
tracking of Superfund sites. EPA regions invested substantial resources
to manually generate an estimate since most of the necessary data was
not readily available. The obstacles encountered in estimating the
unbilled oversight costs also make billing of these costs a formidable
task. EPA estimated that as of the end of fiscal 1997 it had $162 million
of unbilled oversight costs.
Noncompliance Issues
We did not identify any instances of noncompliance with laws and
regulations that would result in material misstatements to the audited
financial statements.
The Federal Financial Management Improvement Act (FFMIA) requires
that, during our annual financial statement audits, we determine whether
EPA's financial management systems substantially comply with federal
financial management system requirements, applicable accounting
standards, and the Standard General Ledger at the transaction level. As
of September 30, 1997, EPA was not in substantial compliance with
FFMIA requirements. In addition to the material weakness on
accounting for unbilled Superfund oversight costs, we also identified the
following noncompliance issues.
- Year 2000 Activities - EPA's Core Financial Systems and the EPA
Payroll and Personnel System (EPAYS) did not have required
management controls, including approved formal decision papers and
system plans, to provide reasonable assurance that Year 2000 activities
will be completed before the systems are subject to failure.
Maintenance projects for Year 2000 fixes exceeded dollar thresholds
without obtaining required management approvals;
~ Financial Systems Security (also reported as a material weakness in
EPA's fiscal 1997 Integrity Act Report) - As of September 30, 1997,
EPA's Core Financial Systems and EPAYS did not have required
application security plans;
- Financial Systems Inventory Data - There were no assurances that
the fiscal 1996 financial systems annual inventory data, required by
OMB Circulars A-127 and A-11 was consistent, comparable and
accurate; and,
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
23
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- Annual Update of CFO Financial Management Report and Five Year
Plan - Significant system changes in the financial systems inventory
were omitted from the annual update to the CFO Financial
Management Report and Five Year Plan 1994 -1999, dated October
1996.
We Recommended That
The Acting Chief Financial Officer (CFO):
• Develop a plan with goals and milestones that will ensure all
Superfund oversight billings are current by the end of fiscal 1998 and
• Develop a remediation plan which includes resources,
remedies and intermediate target dates to bring EPA into substantial
compliance with FFMIA requirements.
What Action Was Taken
The final report (8100058) was issued to the Acting CFO on March 2,
1998. In responding to our draft report, the Acting CFO agreed that EPA
needs to improve the timeliness of its oversight cost billings. Regarding
FFMIA compliance, the Acting CFO believes EPA is substantially
complying with the requirements of the Act. We recognize that EPA has
taken a number of significant steps to address the noncompliance issues
after the end of fiscal 1997, and scheduled additional actions for
completion later. We will evaluate the adequacy of these corrective
actions and report on EPA's progress in the next Semiannual Report to
the Congress. EPA's response to our final report is due by June 1,
1998.
24 OFFICE OF INSPECTOR GENERAL
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Assistance Agreements
Federal Funds to
Lobby and Awarded
Contracts
NorKxxnpetitivety
Over the past several years, the OIG has identified problems in the
Agency's award and administration of interagency agreements and
assistance agreements at various offices and facilities. The
following section summarizes the most significant findings and
recommendations reported during this semiannual reporting
period.
The National Rural Water Association (NRWA) was established in 1976
as a nonprofit trade association made up of rural and small municipal
water and wastewater utilities, and was organized as a federation of
state associations. Its initial focus was on obtaining federal assistance
and contracts to provide training and technical support to rural and small
community water and wastewater utilities. NRWA's annual federal
funding grew from $798,900 in 1976 to around $16 million in 1996 for
grants, cooperative agreements, and contracts awarded by EPA and the
U.S. Department of Agriculture (USDA). Federal funds comprised
approximately 80% of NRWA's 1996 revenue.
We Found That
NRWA improperly used federal assistance agreements and contracts to
support an aggressive lobbying agenda. NRWA did not establish
adequate controls to ensure that both direct and indirect lobbying costs
were systematically identified and excluded from charges to federal
assistance agreements and contracts. From March 1991 through June
1996, we estimated that NRWA claimed approximately $2.3 million
under federal assistance agreements and contracts for services that
either directly or indirectly supported its lobbying activities. A portion of
the $2.3 million also related to influencing or attempting to influence
federal officials and Congress in connection with the award of federal
assistance agreements and contracts. Because NRWA improperly
commingled unallowable lobbying costs with allowable program
expenses, we could not determine the actual dollar value of federal
funds spent for lobbying. Nevertheless, we determined that NRWA
charged lobbying costs to EPA and USDA and charged costs associated
with directing state associations' lobbying to the federal government.
NRWA also improperly used an EPA employee who was on an
Intergovernmental Personnel Act assignment to support its lobbying
activities.
For over 20 years, EPA and USDA allowed NRWA to award
noncompetitive contracts to state associations contrary to federal
regulations. Federal regulations require assistance recipients to
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
25
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conduct all procurements in a manner that provides maximum open and
free competition. NRWA's use of noncompetitive contracting may have
resulted in additional costs to the federal government by systematically
excluding other qualified providers, such as state agencies, universities,
and commercial organizations.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management:
• Obtain written assurance from NRWA that it has developed and
implemented adequate internal controls that systematically identify and
exclude from federal participation all direct and indirect costs associated
with NRWA's and the state associations' lobbying activities, as required
by OMB Circular A-122.
• Require NRWA to quantify the dollar amount of all unallowable costs
of lobbying activities that were improperly charged directly or indirectly to
federal assistance agreements and contracts.
• Formally notify all EPA managers responsible for monitoring IPA
assignments that any direct or indirect activity of an IPA which supports
lobbying activities is unallowable for federal funding. Include a caution
that 31 U.S.C. 1352(a)(1) specifically prohibits the use of federal funds
for certain lobbying activities and that EPA's regulations mandate a
minimum civil penalty of $10,000 for any violation.
• Require NRWA, as the recipient of EPA assistance agreements, to
award all contracts, to the maximum extent practical, on a competitive
basis to responsible entities that have the financial resources to perform
work required under the contract.
What Action was Taken
The final report (8400017) was issued to the Acting Assistant
Administrator for Administration and Resources Management on March
31, 1998. In responding to the draft report, the Acting Assistant
Administrator generally agreed with our recommendations, but
suggested we modify one recommendation relating to the award of
contracts to state associations. He also proposed actions to enhance
EPA's oversight of assistance agreements. NRWA disagreed with the
findings. NRWA denied that it used Federal funds to support lobbying
activities and stated that it was impractical to implement uniform
program regulations that required competitive contracting. A response
to the final report is due by June 30, 1998.
26 OFFICE OF INSPECTOR GENERAL
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EPA's BrownfieWs
InitativeCanBe
Strengthened
To help the nation address environmental concerns associated with
idled, underutilized or abandoned urban industrial and commercial
properties, EPA announced the Brownfields Economic Redevelopment
Initiative. The overall objective of the Initiative is to return Brownfields
properties to sustainable and beneficial reuse. To help accomplish this
objective, EPA has awarded 121 site assessment grants, primarily to
cities, to assist with environmental activities preliminary to cleanup, such
as site identification, site assessment, and site characterization.
We Found That
Pilot cities that we visited were using EPA funds to conduct site
assessments, develop inventories, conduct community involvement
activities, and develop Brownfields work groups and forums. While
these activities are authorized, we found that some have had relatively
little impact on actual redevelopment. We believe the Agency needs to
both improve the focus of future grants and assist cities in developing
technical expertise to continue the Brownfields program after EPA funds
have been expended. Maintaining the Brownfields momentum and
leveraging private Brownfields investments require successful
redevelopments. EPA should encourage cities to focus their efforts on
those activities which have the greatest potential for promoting rapid site
redevelopment.
Because the goal of the Brownfields Initiative is to return properties to
sustainable and beneficial reuse, cleanup must be sufficient to protect
the health and safety of those who will be occupying the former industrial
property. To ensure that environmental data collected as
part of a site assessment is of a known quality and that decisions made
as a result of the data collected are defensible, EPA developed a
planning tool known as the Quality Assurance Project Plan (QAPP).
Two cities we reviewed did not develop site-specific QAPPs as required
by the National Contingency Plan and Agency policy. Uncertainties as
to the amount of quality assurance needed for Brownfields sites led the
Agency to form a work group which has drafted a quality assurance
guidance document for Brownfields site assessments and plans on
finalizing it during fiscal 1998.
EPA also awards grants to provide cities with funds to make low interest
loans for actual cleanup of urban sites. However, city officials indicated
that many of the sites that have the greatest potential for redevelopment
may not be redeveloped due to the restrictions placed on the use of
cleanup funds by CERCLA and the requirements of the National
Contingency Plan. Most notably, CERCLA limits using
funds to clean up asbestos, lead-based paint, and petroleum. These
limitations may limit the usefulness of the Revolving Loan Fund pilot
projects.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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We Recommended That
The Acting Assistant Administrator for Solid Waste and Emergency
Response:
• Revise the proposal evaluation and ranking criteria to give credit and
higher ranking to those cities whose work plan: identifies sites; proposes
to conduct site assessments; contains the largest number of
components of a successful redevelopment effort; contains specific
objectives and milestones; and contains in-house technical expertise or
a commitment from the city to obtain or develop technical expertise.
• Issue the Brownfields quality assurance guidance to the EPA regional
offices as well as pilot recipients and remind project officers and
recipients of the need for EPA-approved QAPPs prior to beginning field
work.
• Explore legislative and regulatory alternatives to help cities address
the restrictions and requirements placed on the Revolving Loan Fund by
CERCLA and the National Contingency Plan.
What Action Was Taken
The final report (8100091) was issued to the Acting Assistant
Administrator for Solid Waste and Emergency Response on March 27,
1998. In responding to the draft report, the Acting Assistant
Administrator agreed to implement our recommendations and provided
milestone dates for doing so. Therefore, we closed the report upon
issuance.
Lead and Asbestos
Training Costs were
Understated and •
Inadequately
In 1994, Congress authorized about $5.2 million for lead and asbestos
training. The funds were earmarked for: Regional Lead Training
Centers; nonprofit organizations; low income community residents; and,
small, minority, and women-owned businesses. EPA awarded these
funds in grants under Section 10 of the 1976 Toxic Substances Control
Act (TSCA).
We Found That
EPA miscoded 21 of 34 training grants worth $6.6 million, as "Special
Investigations, Surveys, or Studies." As a result, EPA did not know how
much it had spent on training. Moreover, it was not clear whether EPA
even had the authority to award these grants under TSCA. EPA
asserted that the grants were properly coded because they supported
"development" under Section 10 of TSCA. We found that the only
training authorized under Section 10 of TSCA was the training of federal
personnel. Furthermore, EPA's notice which solicited the lead training
proposals specifically prohibited using these funds for the "development
of new training course curricula for workers."
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EPA did not monitor how many students were being trained, or how
much it cost to train each student. Without this information EPA could
not assess how efficiently the money was being spent. For instance, in
September 1994, EPA provided a grant recipient $160,000 to train an
estimated 600 students in lead paint abatement. Because the recipient
only trained 57 students for the entire year, the actual cost was an
average of $2,807 rather than the estimated $267 per student.
In September 1995, EPA provided the same recipient with $130,000 to
train an estimated 120 to 240 students. According to quarterly progress
reports, the recipient only trained 44 students for the year. Thus, the
cost per student during fiscal 1995 was $2,955 rather than $722.
Moreover, as of 1997, the recipient had not submitted an acceptable
final progress report in response to several EPA requests.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management seek clarification should inconsistencies arise in the future
regarding statutory authority, and ensure that grants are properly coded.
The Director, Grants Administration Division, require evaluation of past
grantee performance before awarding future grants.
What Action Was Taken
The final report (8100070) was issued to the Acting Assistant
Administrator for Administration and Resources Management on March
4, 1998. In responding to the draft report, the Director, Grants
Administration Division, agreed to seek clarifications should future
inconsistencies arise over statutory authority, but asserted that the
grants had been properly coded as "development." A response to the
final report is due by June 2, 1998.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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Closeout of
Constjuction Grants
Program
Construction Grants
In December 1997, EPA reported Construction Grants Closeout as
a material management control weakness in its Integrity Act Report
to the President and Congress. To assist EPA in its effort to close
out the construction grants program, the OIG, in consultation with
EPA, implemented a revised audit strategy in October 1994 that
focuses effort on the most vulnerable grants, based on a risk
analysis of each remaining grant subject to audit. When the OIG
implemented its revised audit strategy, there were 1,453 grants
totaling $12.4 billion subject to audit. As of March 31,1998, there
were only 67 grants totaling $1.8 billion which are expected to
receive OIG review during the next two years.
In August 1992, EPA emphasized closing out projects and promptly
deobligating unliquidated obligations. In November 1993, EPA reported
the completion and closeout of the construction grant program as an
Agency-level weakness. In 1996, the Agency elevated the
completion/closeout of the construction grant program to a material
weakness citing "the closeout schedule continues to slip and millions of
dollars of ineligible costs are not being reimbursed for reuse on other
higher priority state clean water projects."
We Found That
Region 2 did not effectively review construction grants to determine the
viability of unexpended grant obligations or promptly deobligate
unneeded funds. The Region's inadequate control system, lack of
priority, poor coordination, and noncompliance with Agency guidelines
contributed to this condition. As a result, EPA accumulated idle funds of
more than $70 million for the projects reviewed which could have been
used to fund other priority projects, or could have been deposited into
the State Revolving Fund.
In November 1996, senior Agency officials advised Region 2 that one-
quarter of all projects missing estimated closeout target dates were
located in Region 2. Regional officials did not give the construction grant
closeout program the highest priority and did not assure there was
adequate communication and coordination between the various program
offices. Other contributing factors included the turnover of experienced
personnel and the lengthy resolution process when project costs were
disallowed.
The Region's issuance of proposed and final determination letters (FDL)
to resolve audit issues was untimely. Agency guidance requires FDL's
to be issued within 90 or 150 days of the final report date. For the 16
reports we sampled, on average 358 days had elapsed, and the number
of subsequent days will only increase until Region 2 staff issue the FDL
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to the grant recipient. While the resolution process lingered, millions of
dollars of Federal funds remained unnecessarily obligated and projects
could not be closed.
The Region's resolution of grantee disputes has been untimely. Some
cases have remained unresolved for close to 10 years. Our review of
the Region's current disputes inventory showed 17 projects with
approximately half of them remaining unresolved for more than four
years. The Region's written procedures established a goal of 120 days
to resolve each appeal. The delays occurred because the project and
targeted dates for actions leading to the Regional Administrator's
decision were continuously revised. Resolution was delayed because
initial conferences were not always scheduled and personnel did not
prepare timely program memoranda. Therefore, cases were reassigned
to new attorneys and program personnel, and they continued to remain
open without taking action to deobligate excess funds.
We Recommend That
The Regional Administrator, Region 2:
• Require the Grants and Water Programs Branches to conduct a
management review to evaluate the controls for reviewing unexpended
obligations and promptly deobligating unneeded funds.
• Require the Grants and Water Programs Branches to give a higher
priority to the expeditious closeout of construction grants.
• Require the program offices to place a higher priority on the audit
resolution process and eliminate the bottlenecks for preparation of final
determination letters.
• Instruct the Office of Regional Counsel and Water Programs Branch
to implement an action plan to accelerate the dispute resolution process
and eliminate the backlog.
What Action Was Taken
The final report (8100037) was issued to the Regional Administrator on
January 20, 1998. In response to the draft report, Region 2's Assistant
Administrator for Policy and Management (ARA) indicated that the
region has a closeout strategy in place that has been approved by EPA's
Office of Water, and that it has consistently met or exceeded its annual
closeout commitment for the past four years. With regard to
deobligations, the region identified a number of areas where it disagreed
with statements made in the report. However, it plans to review all
construction grants with unliquidated balances to determine if any can
be deobligated. The ARA stated that the region has made
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
31
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progress in the audit resolution process and in reducing the inventory of
audits under appeal and will determine if further progress can be made
in these areas. A response to the final report was due by April 20, 1998.
Aknost $3 Million
Questioned on
Township of
Parsippany-Troy Hills,
New Jersey Projects
We Found That
EPA awarded two construction grants totaling $55,247,491 for the
expansion of the secondary wastewater treatment facility and
construction of an interceptor sewer. The grantee claimed $2,433,266 of
total ineligible costs under the grants, including:
• $1,404,544 of engineering and inspection costs that were primarily for
services related to repair of leaking pipe joints and ineligible ordinary
operating expenses;
• $695,790 of construction costs associated with an ineligible
realignment of the interceptor sewer; and
• $332,932 of administrative and other costs for legal fees outside the
scope of the project, unallowable and duplicative operating costs, and
project-related income not credited to the grant.
We also questioned $512,082 of unsupported construction, engineering
and administrative costs for which supporting documentation was not
provided.
We Recommended That
The Regional Administrator, Region, not participate in the federal share
of the ineligible costs ($1,824,949), and obtain and evaluate any
additional documentation from the grantee for the federal share of
unsupported costs ($384,062).
What Action Was Taken
We issued the final report (8100045) to the Regional Administrator on
January 22, 1998. A response to the report was due by April 23, 1998.
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We Found That
EPA awarded two construction grants totaling $47,922,875 to the
grantee for its share of a joint project with Fairfax County, Virginia, and
the Washington Suburban Sanitary Commission for construction of
wastewater treatment facilities. The grantee claimed $925,023 of
ineligible costs under the grants, including:
• $803,087 of construction costs consisting primarily of ineligible change
orders, quantity adjustments and abandoned facilities;
• $409,530 of inspection fees outside the scope of the grant projects;
and
• $287,594 for credit adjustments to account for engineering costs
which had been inadvertently omitted in the grantee's final claim.
We also questioned $283,028 of unsupported engineering and other
construction costs for which information was not provided.
We Recommended That
The Regional Administrator, Region 3, not participate in the federal
share of the ineligible costs ($664,558), and obtain and evaluate any
additional documentation to determine the eligibility of the federal share
of the unsupported costs ($205,017).
What Action Was Taken
The final reports (8300008 and 8300009) were issued to the Regional
Administrator on January 22, 1998. Responses to the final reports were
due by April 23, 1998.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
33
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Contracts
EPA Needs to Address
Procurement Issues
Related to OSV Peter
Anderson Contract
During an audit of contract personal services issues, we identified a
situation that required EPA management's immediate attention-the
award of a new contract for the operation and maintenance of the Ocean
Survey Vessel (OSV) Peter Anderson by September 30, 1998.
We Found That
The recompete contract for the operation and maintenance of EPA's
OSV Peter Anderson should be awarded as a fixed-priced, performance-
based service contract (PBSC), not a level-of-effort cost-reimbursable
contract, as currently planned by the Office of Water. A fixed-price
PBSC is appropriate for services that can be objectively determined and
for which risk of performance is manageable. EPA has 18 years of
experience, with the same contractor, on which to base a fixed-price
PBSC. As such, EPA has the information available showing the
maintenance to the ship, the destinations where the ship has traveled,
the missions it has supported, the number of days it has been at sea and
on standby, and detailed records of what parts and supplies have been
necessary to support operations. This data is more than adequate for
EPA to develop a PBSC Statement of Work to use for objectively
defining requirements and developing performance standards to
minimize performance risk.
We identified two reasons why the OSV Peter Anderson recornpete has
not progressed as a fixed-price PBSC. First, the complexity and
diversity of EPA's mission has fostered a belief that it needs the most
flexible contract vehicle available. This mindset continues due to a lack
of understanding of other more efficient contract types available.
Second, Office of Water officials were too involved in the procurement
process by insisting on a particular contract type. Federal regulations
provide that the contracting officer, not the requestor, must have the
authority, to the maximum extent practicable and consistent with law, to
determine the application of rules, regulations, and policies, on a specific
contract. It is appropriate for the Office of Water to develop the
Statement of Work and provide input on the technical requirements of
the OSV Peter Anderson to ensure that the contract meets the
program's mission. However, other procurement decisions,
including contract type, should be the responsibility of the contracting
officer.
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Our review also disclosed personal service issues, performance of work
outside the scope of the contract, and improper use of contractor
employees to perform general renovations to the interior of the ship.
The award of a PBSC could help mitigate the contract management
deficiencies we found.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management and the Assistant Administrator for Water direct their staffs
to work together to develop a fixed-price, performance-based solicitation
for the award of the OSV Peter Anderson follow-on contract by the end
of fiscal 1998.
What Action Was Taken
The Flash Report (8100092) was issued to the Assistant Administrator
for Water, and the Acting Assistant Administrator for Administration and
Resources Management, on March 26, 1998. In an April 23, 1998,
response to the report, the Deputy Assistant Administrator for Water
stated that the Office of Water (OW) disagrees with many of the
statements and recommendations in the Flash Report. However, OWis
committed to using performance-based contracting and, in particular,
fixed-price contracting where appropriate. OWdoes not believe that a
fixed-price contract could adequately meet its needs for the Anderson,
particularly with regard to the safety of people and property on board.
Also, OWdoes not agree that any corrective actions are necessary at
this time, but is continuing to work with the Office of Acquisition
Management to issue a new performance-based, cost-reimbursable
contract that meets its needs in a timely manner. The OIG is currently
evaluating OWs response.
I The EPA OIG provides independent contract audits and financial
advisory services to EPA's Office of Acquisition Management (OAM) and
to other government agencies at certain government contractors.
During this reporting period, the OIG maintained contract audit
cognizance for ten contractors where EPA contracts represent the
majority of the contractor's total auditable dollars. We are responsible
for performing all contract audits at these contractors, including incurred
cost audits, proposal reviews, and operations audits. In addition, we
provide assistance to OAM in developing negotiation objectives, input for
OAM's development of contract-related policy, and analysis of contractor
responses to report issues. Presented below are the results of three
financial contract audits.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
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Inadequate Disclosure Statements
A contractor submitted revised disclosure statements for seven of its
separate cost accounting segments. Federal regulations require
contractors to adequately disclose their cost accounting practices for all
contracts covered by the Cost Accounting Standards. We
performed field work on the disclosure statement for the segment with
the most government contracts and discussed our findings with
contractor representatives who agreed all the disclosure statements
were inadequate and needed to be revised. The contractor submitted
revised disclosure statements and we audited all seven for adequacy.
We found the disclosure statements were adequate. However, the
contractor had not submitted the disclosure statements to EPA in the
time frame required and was cited in noncompliance with federal
regulations.
Accounting System Inadequacies Corrected
We issued a draft report on a contractor's accounting system on
September 7, 1997, in which we stated the system and related internal
controls were not adequate. The contractor responded to the draft
report indicating that, although it did not agree the findings represented
deficiencies in the system, it agreed to adopt the suggestions and
implement them. The contractor's response to the draft report included
massive documentation to support the changes the contractor made to
its system. We reviewed the response and then met with contractor
employees on the implementation of the changes. The contractor had
corrected significant deficiencies, including internal control weaknesses
and system inefficiencies. The final report, issued on December 15,
1997, stated that the accounting system and related internal controls
were generally adequate. We also included several recommendations
which, if implemented, would further improve the degree of reliability that
the government can place on the accounting system.
Systems for Generating Cost Estimates Inadequate
We performed an initial review of a contractor's estimating system in
1995 and found significant deficiencies. An estimating system describes
a contractor's policies, procedures and practices for generating cost
estimates which forecast costs based on information available at the
time. Shortcomings in an estimating system are likely to result in
proposal estimates for either total costs or a major cost element which
are unreliable as a basis for negotiating fair and reasonable prices. As a
result of the initial review, we recommended a reduction in fee objectives
in accordance with EPA Acquisition Regulations. The contractor
concurred with most conditions and recommendations, but disagreed
with certain aspects and provided other comments. The contractor also
provided an action plan with completion dates in its response. We
performed a follow-up review of
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the estimating system and issued a draft report that indicated five of the
prior findings were not corrected and noted four additional deficiencies.
The contractor responded to the draft report concurring
with some of the findings. The final report, dated January 20,1998,
indicated the contractor's estimating system and related internal controls
were still inadequate in some respects.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
37
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Section 2 -- Office of Investigations-Significant Results
OFFICE OF INVESTIGATIONS GOALS AND ACTIVITIES
OFFICE OF INVESTIGATIONS GOALS: In fiscal 1998, the Office of Investigations will
increase its effectiveness in detecting and deterring fraud and other improprieties by
increasing the number of assistance and contract cases, improving the percentage of
cases resulting in referrals for action, reducing the average time for case completions,
and conducting more fraud awareness briefings.
ACTIVITIES TO MEET OUR GOALS
Program Integrity Investigations - Investigations of activities that could undermine the
integrity of Agency programs concerning safety and public health and erode public
confidence in the Agency. These cases are initiated in response to allegations or may
be self-initiated in high-risk areas where there is reasonable suspicion of fraud.
Assistance Agreement Investigations - Investigations of criminal activities related to
Agency grants, State Revolving Fund grants, interagency agreements and cooperative
agreements, which provide assistance to state, local and tribal governments,
universities and nonprofit recipients. Collectively, these programs account for about
half of EPA's budget.
Contract and Procurement Investigations - Investigations involving acquisition
management, contracts and procurement practices. We specifically focus on cost
mischarging, defective pricing and collusion on EPA contracts. The decentralized
nature and the complexity of EPA contracting increase the Agency's vulnerability to
fraud.
Employee Integrity Investigations - Investigations involving allegations against EPA
employees that could threaten the credibility of the Agency.
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Investigative Results
Summary Of Investigative
Activities
Pending Investigations as
of September 30, 1997 156
New Investigations
Opened This Period 90
Investigations Closed
This Period 42
Pending Investigations as
of March 31, 1998 204
Prosecutive and
Administrative Actions
In this period, investigative efforts
resulted in 5 convictions and 6
indictments.* Fines and recoveries,
including those associated with civil
actions, amounted to $4.9 million.
Cost savings from repudiated claims
totaled $9.6 million. Twenty-five
administrative actions were taken as
a result of investigations.
Reprimands 11
Resignations/
Removals 1
Restitutions 4
Suspensions &
Debarments 7
Other 2
TOTAL 25
* Does not include indictments
obtained in cases in which
we provided investigative
assistance.
Profiles of Pending Investigations by Type
General EPA Programs
Total Cases =133
Super-fund
Total Cases = 71
32
33
OContract
^Program Integrity
Assistance Agreement ^Employee Integrity
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
39
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Selected Prosecutive Actions
Former Director and
Laboratory Sentenced in
False Test Results Case;
Hess Environmental
Laboratories, Inc., Enters
Guilty Ptea; Former
Laboratory President
Indicted
On October 28, 1997, Michael Louis Klusaritz, former director of
Hess Environmental Laboratories (Hess), East Stroudsburg, PA,
and Phase II Laboratories, Inc., were sentenced in U.S. District
Court, Eastern District of Pennsylvania, following guilty pleas
entered last summer. Klusaritz was sentenced to one year
imprisonment, three years supervised release, and ordered to
pay $40,000 in restitution (joint and several liability with Phase II)
and a $550 special assessment. Phase II was sentenced to one
year probation and ordered to pay $40,000 in restitution (joint and
several liability with Klusaritz) and a $600 special assessment.
Klusaritz had pleaded guilty to seven counts related to falsifying
water and sewage test results for the Tobyhanna Army Depot
and other clients. Similar charges were also filed against and
guilty pleas entered by Phase II Laboratories, which is owned by
Klusaritz. Klusaritz admitted falsifying test results and billing
customers more than $223,000 for testing that, in most cases,
was never done. Previously, another former Hess Technical
Manager, Judith McCoy, pleaded guilty to conspiracy to defraud
the government, making false statements, and mail fraud while
she was acting laboratory director at Hess. McCoy ran the
laboratory after Klusaritz left in June 1995. McCoy allegedly
continued falsifying environmental testing at the direction of
another Hess official, unidentified in court papers. McCoy is
awaiting sentencing.
On November 10, 1997, Hess itself pleaded guilty to nine criminal
counts including conspiracy, false statements, false claims, mail
fraud, and violations of the Clean Water Act, acknowledging that
it repeatedly provided false water, sewage, and soil test results
for numerous customers from January 1988 to February 1997.
As a result of the plea agreement, Hess faces a potential
maximum sentence of 5 years probation, $4.5 million in fines,
$1.5 million in restitution of false billings, and a $3,600 special
assessment. There may be an additional restitution involved in
the retesting of the samples.
On March 5, 1998, William L. Hopkins, former president of Hess
was indicted on charges of conspiracy to defraud the United
States, making false statements to EPA, violating the Clean
Water Act, and mail fraud. The charges resulted from Hopkins'
alleged participation in the conspiracy to systematically and
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continuously provide false and fraudulent environmental testing
results to customers from January 1988 through February 1997.
The indictment charges that Hopkins knew that Hess did not
have the proper equipment to perform certain environmental tests
and was not performing the tests according to the accepted EPA
method, yet he directed that the false results be reported and
fraudulently billed to the customers. Hess customers relied on
the test results in order to comply with federal and state
environmental laws and to determine where and when remedies
were needed to control hazardous, toxic, or contaminated
substances. If Hopkins is convicted on all charges, he faces a
maximum sentence of 18 years imprisonment, a $1 million fine, 3
years supervised release, a $400 special assessment and
restitution of over $2.2 million.
As a result of the investigation, on May 30, 1997, Hess closed
and terminated its environmental laboratory business. This
investigation was conducted jointly by the EPA OIG, the EPA
CID, and the Army Criminal Investigation Command.
EPA Project Officer
Sentenced in Conflict of
Interest Case
On Novembers, 1997, Theodore Rockwell, an EPA Region 10
Environmental Scientist, was sentenced in U.S. District Court,
District of Alaska, to 24 months probation, 80 hours of community
service, and fined $7,612. Included in the fine is $5,212 to cover
the cost of his supervision. Rockwell previously pleaded guilty to
an information charging that, in his official capacity with EPA, he
authorized EPA to make a $33,894 payment to benefit Lyndon
Lee and Associates, Inc. (Lee), on a matter pending under his
authority while he negotiated and accepted future employment
with Lee. This is a misdemeanor violation of the Federal conflict
of interest statutes. Our investigation revealed that Rockwell
used his EPA position to influence the award of EPA wetlands
training grant funds by the Minnesota Board of Water and Soil
Resources (MBWSR) to Lee. Rockwell advised MBWSR
regarding the ability of Lee, an independent consulting firm, to
perform wetland conservation training. Lee was awarded the
MBWSR contract and Rockwell, as the wetland project officer,
acted as liaison between MBWSR and Lee. Rockwell also
authorized the processing and payment of EPA grant funds to the
State of Minnesota for payment of Lee's services. During this
time, Rockwell negotiated and accepted future employment with
Lee. Rockwell not only signed an employment agreement with
Lee but also accepted payment by Lee for a house-hunting trip to
Seattle.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
41
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Company President
Sentenced To 10 To 24
Months Imprisonment
On Februarys, 1998, Christopher Tate, president of Safety
Management Institute, Inc. (SMI), Roaring Spring, PA, pleaded
guilty in Blair County, PA, to felony charges of violating the
Pennsylvania Solid Waste Management Act. He was sentenced
to 10 to 24 months imprisonment and 5 years probation, fined
$5,000, and ordered to pay $4,895 in restitution plus the costs of
prosecution. On February 18, 1998, Tate and SMI each pleaded
guilty in Dauphin County, PA, to felony charges of tampering with
public records and misdemeanor charges of violating the
Pennsylvania Underground Storage Act. Tate was sentenced to
9 to 24 months imprisonment and 5 years probation and fined
$100. SMI was sentenced to 73 days to one year imprisonment.
The Dauphin County sentences are to run concurrently with
those of Blair County; therefore, Tate, for himself and the
company will serve a total of 10 to 24 months in Blair County
Prison. As a condition of parole and probation, Tate is prohibited
from performing any environmentally related work. SMI was a
contractor engaged in the removal of underground storage tanks
in Hanover, PA, during 1994 when Tate committed the violations
and failed to report that he was previously debarred from
government contracting. This investigation was conducted jointly
by the EPA OIG and the Environmental Crimes Section of the
Office of the Attorney General, Commonwealth of Pennsylvania.
Businessman Sentenced
To 27 Months
Imprisonment
On January 16,1998, Richard D. Salvatierra was sentenced to
27 months imprisonment and 1 year probation, and assessed a
special fee of $150 following his July 1997 conviction for filing
false personal and corporate income tax returns. Salvatierra, an
officer and shareholder of Ricards International, Inc. (Rll) and
Potomac Leasing, Inc. (PLI), was indicted in 1996 on charges of
conspiracy to defraud the United States, false claims, aiding and
abetting, and filing a false tax return. Through PLI, Salvatierra
leased warehouse and office space and then subleased the
space to Rll at a higher rate which was billed to EPA and the
Department of Health and Human Services. Further, as part of
the conspiracy, Salvatierra and Edsel Billingy, a former officer at
Rll and shareholder in PLI, divided the extra funds generated by
having PLI pay certain personal expenses and then claiming
them as business expenses on their tax returns. As previously
reported, Billingy pleaded guilty to conspiracy to defraud the
United States and in July 1997 was sentenced to five years
probation and ordered to pay $70,000 restitution. This
investigation was conducted jointly by the EPA OIG, the HHS
OIG, and the IRS Criminal Investigation Division.
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Restitution Of $11,600
Ordered In Theft Case
On March 19, 1998, Stanley Renee Moore pleaded guilty to
felony larceny charges in Durham County Superior Court,
Durham, North Carolina. Moore, a former U.S. Postal Service
supervisor, admitted stealing computers during the summer of
1997 from the EPA facility at Research Triangle Park, North
Carolina, where he worked a second job as a night crew
supervisor for the EPA custodial services contractor. The day he
entered his plea, Moore was sentenced to a suspended 6 to 8
month prison term and 2 years probation and was ordered to pay
$11,600 restitution to EPA for the total fair market value of the
items he admitted stealing.
Fotmer EPA Employee
Sentenced in Credit Card
Theft Case
On Novembers, 1997, in U.S. District Court, District of Columbia,
Yolanda D. Lee, an EPA Budget Assistant, GS-7, was sentenced
to five months imprisonment and one year supervised release,
and ordered to pay $7,008 in restitution and a $25 special
assessment. On August 11, 1997, Lee pleaded guilty to a one
count information charging her with theft of government property.
Lee admitted using her government-issued credit card to make
personal purchases in the amount of $7,008. Most of the
charges were made at department stores and retail shops. On
November 28, 1997, Lee resigned from EPA.
Arrests Made For Theft
Fcx Inflating Relocation
Benefits Claims
In January 1998, two recipients under EPA's methyl parathion
relocation program were arrested in New Orleans, Louisiana, on
state charges of theft of money by fraud. On January 16, Sandra
Lastie was arrested on charges that she was overpaid more than
$2,500 in benefits based on her false certification that nine
occupants lived in her residence. On January 17, Betty Morgan
was arrested on charges that she was overpaid more than
$3,000 in benefits based on her false certification that eight
occupants lived in her residence.
Under the relocation program (funded by the EPA's Superfund
and administered locally by the Army Corps of Engineers), EPA
pays relocation costs and related subsistence for residents
whose homes have been contaminated with methyl parathion, a
toxic pesticide licensed for agricultural use and banned for indoor
use. Benefit levels are based on the number of occupants
residing in the contaminated homes. EPA is also paying for the
contamination cleanup costs.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
43
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Cleanup costs for Lastie's residence were $60,000; clean-up
costs for Morgan's residence were $26,946. This investigation is
being conducted by the EPA OIG with the cooperation of the New
Orleans Police Department.
On March 17, 1998, Gary L. Jones and Nadine E. Starks were
arrested in Fannin County, GA, on charges of false statements,
forgery, attempted theft by deception, and conspiracy to commit
theft by deception. The charges stem from allegations that Jones
represented himself to an Ellijay, GA, homeowner as an
employee of Atlanta Testing, Inc. (ATI), told the resident that ATI
had contracted with EPA to locate and remove canisters
containing toxic waste, and stated that he had been directed by
EPA to perform soil tests under the concrete slab in their garage.
The charges also allege that Jones presented to the homeowner
a business card and letter purportedly from an EPA employee but
which had been forged by Starks, stating that Jones had been
directed to perform the remedial work. This investigation was
conducted jointly by the EPA OIG and the Fannin County,
Georgia, Sheriff's Office.
44
OFFICE OF INSPECTOR GENERAL
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Civil and Administrative Actions to
Recover EPA Funds
Investigations and audits conducted by the Office of Inspector
General provide the basis for civil and administrative actions to
recover funds fraudulently obtained from EPA. Through the
Inspector General Division of the Office of General Counsel, the
OIG uses a variety of tools to obtain restitution. These include
cooperative efforts with the Department of Justice in filing civil
suits under the False Claims Act, the Program Fraud Civil
Remedies Act, and other authorities; working with grantees using
their own civil litigation authorities; invoking the restitution
provisions of the Victim and Witness Protection Act during
criminal sentencing; using the Agency's authority to
administratively offset future payments and to collect debts; and
negotiating voluntary settlements providing for restitution in the
context of suspension and debarment actions. Civil and
administrative actions to recover funds usually extend over
several semiannual reporting periods.
Corporation Enters into
Civil Settlement, Repays
IT-Davy Joint Venture, International Technology Corporation, and
Davy-McKee Corporation (collectively IT-Davy) entered into a
civil settlement in U.S. District Court, Eastern District of
Pennsylvania, to resolve fraud allegations under the False Claims
Act. The fraud allegations arose out of IT-Davy's construction of
an environmental cleanup project at the Helen Kramer Landfill in
Mantua, New Jersey. In 1989, the Army Corps of Engineers
(COE), on behalf of the EPA, contracted with IT-Davy to perform
the site cleanup. As a result of changes to the project
specifications and certain differing site conditions, the project was
delayed and IT-Davy incurred additional costs over the original
contract price. A joint investigation by the EPA OIG, the Defense
Criminal Investigative Service (DCIS), the Defense Contract Audit
Agency (DCAA), and the U.S. Army Criminal Investigation
Command uncovered allegations that IT-Davy had submitted
false claims in connection with the additional costs by double-
charging for certain labor and equipment costs using a complex
accounting scheme. As a result of the investigation, IT-Davy has
agreed to pay $4.3 million to the United States as part of a global
resolution of all claims under the Helen Kramer Landfill cleanup
contract. Of over $24 million in submitted but unpaid claims, the
COE has agreed that only $14.5 million in additional costs were
as legitimately incurred. Therefore, the United States has
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
45
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realized an additional $9.6 million in cost savings from the
repudiated claims. This investigation was conducted jointly by
the EPA OIG, DCIS, DCAA, and the Army Criminal Investigation
Command.
On December 17, 1997, the United States entered into a civil
settlement agreement with National Environmental Testing, Inc.
(NET), and NET Midwest, Inc. (Midwest), a wholly-owned
subsidiary of NET. Under the terms of the agreement, NET will
pay $242,499 to the United States and $7,500 to the relator of a
qui tarn suit. The criminal investigation resulting in this settlement
was conducted jointly by the EPA OIG, the Naval Criminal
Investigative Service, the Air Force Office of Special
Investigation, and the Army Criminal Investigation Command. On
July 30,1996, the relator filed a complaint in U.S. District Court
for the Northern District of California, alleging that NET and
Midwest violated the False Claims Act concerning payment by
the government for certain scientific testing and analytical
services provided under their government contracts and
subcontracts. Between 1989 and May 1995, NET, Midwest, or
both, entered into contracts with the Army Corps of Engineers,
the EPA, and one subcontract with Planning Research
Corporation, Environmental Management, Inc. (PRC), in
connection with a contract between PRC and the U.S. Navy.
Under the terms of the contracts, Midwest was to test for the
presence of volatile or semi-volatile organic compounds, or
inorganic substances, in samples provided to them by the
government in connection with environmental investigation and
remediation. The complaint alleged that Midwest failed to comply
with mandatory testing procedures in the performance of these
tests, and that NET, Midwest, or both submitted false payment
invoices to the government predicated on full compliance with the
contracts.
Partial Consent Decree
Ottieis Fotiner -
On December 22,1997, a Partial Consent Decree was issued in
U.S. District Court, Southern District of New York, ordering
Harvey S. Wasserman and his wife, Linda, to pay $120,000 for
reimbursement of cleanup costs incurred by EPA at the site of
Barrier Industries, Inc. (Barrier), in Port Jervis, New York. As a
result of an OIG investigation focusing on property transfers, a
civil complaint was filed in October 1995 against Barrier; its Chief
Executive Officer, Kurt J. Wasserman; his wife, Mildred; and
others under the Comprehensive Environmental Response,
Compensation, and Liability Act for recovery of $3.4 million
incurred by EPA as a result of the Barrier cleanup. Kurt
46
OFFICE OF INSPECTOR GENERAL
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Wasserman and Harvey Wasserman, his son who served as
president, were responsible for Barrier's business operations.
Barrier, a manufacturer of janitorial chemicals, car care products,
and paints, maintained and stored hazardous substances at the
Port Jervis site. Proceedings against Barrier and Kurt
Wasserman are continuing in Federal court.
On October 29,1997, Montana State University (MSU) repaid
$40,431 to the EPA Grants Administration Division. The funds
were repaid to EPA after an audit determined that unallowable
costs were billed to an EPA grant to the MSU Chemistry
Department. The audit was performed in support of a criminal
investigation concerning an EPA employee who obtained a
doctorate degree from MSU while on an Intergovernmental
Personnel Act (IPA) assignment at MSU.
EPA awarded a grant to MSU to cover the costs of the IPA. Our
investigation revealed that during the IPA assignment, the
employee primarily attended classes and performed research in
pursuit of a doctorate degree in chemistry. Previously, a civil
settlement was reached with the EPA employee concerning the
costs associated with the degree program.
On November 24,1997, EPA recovered a $10,425 overpayment
from Juanita Aquart, a recipient under the Agency's methyl
parathion relocation program. This action stemmed from
Aquart's receiving an overpayment of relocation benefits after
she failed to notify either EPA or the Army Corps of Engineers
(COE) of the reduction in the size of her household from nine to
three members. Aquart received benefits due to the
contamination of her Mississippi home with methyl parathion.
Under the relocation program (funded by the EPA's Superfund
and administered locally by the COE), EPA pays relocation costs
and related subsistence for residents whose homes have been
contaminated with methyl parathion, a toxic pesticide licensed for
agricultural use and banned for indoor use. Eighty million dollars
of Superfund money have been earmarked for relocation benefits
and cleanup costs associated with the misapplication of the
pesticide in Mississippi.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998 47
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Selected Suspension and Debarment
Actions
Nevada Laboratory and
Former Analyst
Suspended
EPA's policy is to do business only with contractors and
assistance recipients who are honest and responsible. EPA
enforces this policy by suspending or debarring contractors,
assistance recipients, or individuals within those organizations,
from further EPA contracts or assistance if there has been a
conviction of, or civil judgment for, specific offenses, including the
commission of any offense indicating a lack of business integnty
or business honesty that seriously and directly affects the present
responsibility of an entity or individual. An entity or individual
may also be debarred for any other cause of so serious or
compelling a nature that it affects its present responsibility.
Debarments are to be for a period commensurate with the cause,
but generally do not exceed 3 years.
The EPA Suspension and Debarment (S&D) Division in the
Office of Grants and Debarment operates the S&D program at
EPA. The OIG assists the EPA S&D program by providing
information from audits, investigations, and engineering studies;
and obtaining documents and evidence used in determining
whether there is a cause for suspension or debarment
The action summarized below resulted from an OIG investigation:
On November 7, 1997, EPA suspended LAS Laboratory in Las
Vegas, Nevada, and Earl Mills, a former analyst. LAS was
formerly owned by Lockheed Martin Corporation and was known
as Lockheed Analytical Services. In December 1996, LAS was
purchased by Southern Petroleum Laboratories. LAS is a
contractor used by EPA's Superfund Technical Assessment and
Response Team to do analysis for remedial and removal actions
and emergency cleanup. While employed by LAS, Mills allegedly
engaged in questionable practices and fraudulent manipulation of
laboratory data, termed "peak shaving." Peak shaving is a
method of changing quality control and calibration sample results
to bring data within the criteria by manually manipulating the data.
The analytical work involved was performed for the U.S. Air
Force. An audit performed by the U.S. Air Force Center for
Environmental Excellence after the termination of Mills by LAS
found that samples analyzed for the Air Force were electronically
manipulated without justification. The audit further indicated that
48
OFFICE OF INSPECTOR GENERAL
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other manipulations may have occurred which are still undetected
due to lack of a paper or electronic trail. The audit also found
that LAS was not following quality assurance and data review
procedures.
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
49
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Section 3- Fraud Prevention and Management Improvements
This section describes activities of the Office of
Inspector General to promote economy and
efficiency and to prevent and detect fraud,
waste, and abuse in the administration of EPA
programs and operations. This section includes
information required by statute, recommended
by Senate report, or deemed appropriate by the
Inspector General.
Advisory and Assistance
Services
ion
J
Prior OIG case studies of three Superfund sites
indicated that lengthy remedial design/remedial
action (RD/RA) negotiations had delayed site
cleanup and recommended this area for further
review. In cooperation with the Office of Site
Remediation Enforcement (OSRE), Policy and
Program Evaluation Division, we reviewed
trends in the duration of RD/RA negotiations.
The primary focus of the Superfund program is
to maximize the protection of human health and
the environment through fast, efficient cleanup of
hazardous waste sites. At the same time, the
Superfund enforcement program is faced with
the challenge of maximizing potentially
responsible party (PRP) participation and
ensuring fair treatment of these parties. As a
result, EPA's regional offices and the Office of
Enforcement and Compliance Assurance
(OECA) must integrate these competing
priorities at the RD/RA negotiation stage.
Optimally, EPA wants to negotiate a settlement
with the PRPs to conduct and/or finance the
remedial design and remedial action. However,
EPA must also ensure that these negotiations do
not impede the sites' progress toward cleanup.
Based on various analyses, we concluded that
average time frames for RD/RA negotiations
were lengthened in 1995 and 1996. When
evaluating the trends, we noted that changes in
the time frames appeared to coincide with the
advent of two major policy changes:
Enforcement First and the Superfund reforms.
To better gauge the effect of these changes on
negotiation time frames, we excluded the
negotiations for the years in which the policy
changes occurred (1989 and 1993) arid
analyzed average time frames before and after
these policy changes. The results showed that
nationally RD/RA negotiation time frames
decreased 17 percent (from an average of 272
days to 227 days) after "enforcement first" and
increased 11 percent (from an average of 241
days to 268 days) after the Superfund reforms
were introduced. This is shown in the charts
below.
Time Frames Before & After "Enforcement First"
300
FY 86-FY 88
FY 90 - FY 92
50
OFFICE OF INSPECTOR GENERAL
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Time Frames Before & After Start of Superfund Reforms
300-i
268
250
FY90-FY92
FY 94 - FY 96
Although there appears to be a relationship
between the policy changes and RD/RA
negotiation time frames at the national level,
there are regional and case-specific factors that
come into play as well. Different regional
management approaches also appear to have
influenced RD/RA negotiation time frames.
Moreover, case-specific factors, which we did
not include in our analysis, and many of which
are not within EPA's control, can also affect
RD/RA negotiation time frames.
A report (8400015) was issued to the Directors,
Office of Site Remediation Enforcement, and
Policy and Program Evaluation Division, OECA,
on March 27, 1998. We suggested that OSRE
consider: (1) exception reporting and tracking of
RD/RA negotiations that exceed 240 days; (2)
assuring there is a written policy that establishes
a formal process for extending the negotiations
beyond 180 days and requires Headquarters
approval when appropriate; and (3) continuing to
emphasize early RD starts to assure that
negotiation time frames do not impact the pace
of cleanup. OSRE agreed with the report's
conclusions and suggestions.
Review of Legislation and
Regulations
Section 4(a)(2) of the Inspector General Act of
1978, as amended, directs the Office of
Inspector General to review existing and
proposed legislation and regulations relating to
Agency programs and operations to determine
their effect on economy and efficiency and the
prevention and detection of fraud and abuse.
During this semiannual period, we reviewed five
legislative and 22 regulatory items. The most
significant items reviewed are summarized
below.
H.R. 2883 - The Government
Performance and Results Act
Technical Amendments of 1Sf7
While we endorsed the bill's goal of improving
agency strategic plans and performance reports,
we expressed concerns with two of the
measure's provisions.
First, we were concerned that the provision
requiring Inspectors General to audit program
performance reports and report to Congress on
the results of each audit was premature and
would detract from our ongoing efforts in working
with EPA to develop meaningful goals and obtain
accurate data to measure accomplishments.
Accordingly, we urged Congress to delay
implementation of this requirement for several
years.
Second, while we were pleased that the
measure would afford Inspectors General an
opportunity to comment on the reliability of data
sources and information systems supporting
strategic plans, we recommended a revision to
allow for comment on the agency's assessment
rather than conducting a separate assessment.
If the Inspectors General and the agencies agree
on the scope and methodology of agency-
OCTOBER1,1997 THROUGH MARCH 31,1998
51
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conducted assessments, performing a separate
assessment would be duplicative.
An amended version of H.R. 2883 passed the
House of Representatives on March 12. The
provisions we commented on were substantially
modified. The measure now requires that,
consistent with available resources, the scope
of work of the Inspectors General should be
focused on performance measures for programs
with a high risk of waste, fraud, or
mismanagement.
Proposed Legislation Entitled The
Government Waste, Fraud, and
Section 403 of the proposed measure required
the Inspectors General to review agency
collection practices for debts over $1 million and
recommend needed changes. We maintained
that the provision was unnecessary because the
financial statement audits conducted under the
Chief Financial Officers Act already provide the
information sought. We also commented that an
additional audit requirement would further erode
our ability to devote audit resources to areas of
greatest need.
At the end of the reporting period, no action had
been taken on this proposal.
General Accounting Office
Exposure Draft -Standardsfor
Internal Control in the Federal
While we believed the document captured the
essence, purpose, and application of internal
controls, we suggested that it be revised to:
Refer to specific Federal management
improvement laws passed since the
original standards and discuss their
common dependence on internal
controls. Federal managers will then be
better able to implement these laws as a
mutually supportive system rather than
as individual requirements.
Strongly encourage managers, in
assessing the effectiveness of controls,
to use audit reports, inspections and
other evaluations, including information
on control systems maintained by
contractors and assistance recipients.
Emphasize that alternate control
measures may be necessary to ensure
proper accountability as traditional
controls such as multiple supervisory
layers are reduced or eliminated in more
dynamic, flatter, and/or team-based
organizations.
Indicate the importance of sound internal
controls to mission accomplishment and
the efficiency of operations by including
control responsibilities in employee
performance agreements.
Emphasize the independent statutory
authority of the Inspectors General and
delete the reference to the Inspectors
General having the authority to order
appropriate action.
At the end of the reporting period, revised
standards had not been issued.
Revised EPA Order 5360.1 - r
and Program
Mandatory
Systemar
We noted that the draft document required a
systematic planning approach to develop
acceptance and performance criteria for all work
covered by the Order, but did not define the
"systematic planning approach." We
recommended that the Agency mandate its
preferred data quality objectives process and
52
OFFICE OF INSPECTOR GENERAL
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expand the Order to fully describe process
requirements.
We also recommended that the draft Order
indicate that the performance agreements of all
personnel responsible for environmental data
collection, and not just senior managers, include
critical job elements and performance measures,
as appropriate, regarding data quality.
Finally, we suggested that the Agency
(1) implement a mandatory quality management
information network for information sharing and
(2) make the draft document and the EPA
Quality Manual consistent concerning the review
and approval of quality assurance project plans,
including designations of responsibilities.
At the end of the reporting period, the Agency
had not issued a revised document.
Chapter 21IRM Policy Manual
Directive 2100 - Policy on Public
Access to EPA Information
While we support providing public access to EPA
information to the maximum extent possible, we
recommended that:
Given the nature of information in OIG
audit and investigative reports, the OIG
continue to provide such information
rather than be required to provide an
electronic copy with the Office of
Administration and Resources
Management in Cincinnati for
dissemination;
The Directive discuss the penalties for
the improper release of Confidential
Business Information; and
The document include a disclaimer on
using data for other than its intended
purpose.
The Agency distributed a revised version of the
document which addressed all OIG concerns.
OIG Management Initiatives
As part of our on-going reinvention efforts, the
OIG Leadership Team assessed progress to-
date against the vision of the Office and
identified changes needed to advance and
accelerate our reinvention efforts. First, the
culture of the Office needed to change from
command and control to a more participative and
team based environment. Second, the focus of
the Office needed to expand from compliance
monitoring to environmental assessment- a
results focus. Finally, to truly be partners for
positive change, the Office needed to move
more toward a preventative/consultant role. To
address the above findings, the Office has
undertaken the following steps:
First, the Office has adopted the Malcolm
Baldrige Quality Award Criteria as a new
management framework for organizational
excellence. This systems approach to
integrating leadership, strategic planning, human
resources, information analysis, process
management, customer service and results
provides the Leadership Team with a
comprehensive approach- a blue print for
institutionalized change. The Leadership Team
has already received Baldrige training and is
deploying the training down through the
professional ranks. Second, the Leadership
Team has adopted a comprehensive leadership
development approach to team building based
on collaborative work and shared learning.
Additional training will follow along the lines of
the Baldrige framework.
OCTOBER 1,1997THROUGH MARCH 31,1998
53
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Management Decisions with Which
the Inspector General is in
Disagreement
When the DIG, Region 5 and the Office of Water
could not reach agreement on one of the issues
raised in the audit of the Village of Sauget,
Illinois, it was decided to elevate resolution to
EPA's Audit Resolution Board (ARB). The OIG
concluded that the transfer sewer built (federal
share about $1 million) was an interceptor line
that transported primarily industrial waste from
the Sauget physical/chemical treatment facility to
the Sauget American Bottoms regional treatment
facility for additional treatment. We questioned
whether this interceptor was allowable for federal
funding under Title II of the Clean Water Act
when 99.8 percent of the flow is from industrial
sources and only .2 percent is from domestic
sources. The Office of Water contended that the
transfer sewer was not an interceptor as defined
in the regulations and it was not constructed
exclusively, or almost exclusively, to serve
industrial sources. The ARB concluded (ARB
Decision #21, dated November 13, 1997) that
Region 5's decision that the transfer sewer was
not an interceptor was within the limits of
managerial discretion. The ARB also concluded
that, since this was not an interceptor, it was
unnecessary to address the cost-allowability of
the transfer sewer. We disagree with the ARB's
decision. However, since the issue was unique
and probably would not come up again in
another report, we decided to close out the
report.
54 OFFICE OF INSPECTOR GENERAL
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Section 4 -- Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process for Semiannual
Period Ending March 31,1998 (Dollar Values in Thousands)
Report Category
A. For which no
management decision was
made by October 1, 1997
B. Which were issued
during the reporting period
C. Which were issued
during the reporting period
that required no resolution
Subtotals (A + B - C)
D. For which a
management decision was
made during the reporting
period
E. For which no
management decision
decision was made by the
end of the reporting period
Reports for which no
management decision was
made within six months of
issuance
No.
of
Rpts
177
150
78
249
124
125
82
Report Issuance
Questioned
Costs
S 264,107
4,958
0
269,065
78,239
190,826
185,872
Recommended
Efficiencies
S 5,392
0
0
5,392
5,392
0
0
Report Resolution
Costs Sustained
To Be Recovered
14,485
As Efficiencies
10
(Any difference in number of reports and amounts of questioned costs or recommended efficiencies between this
report and our previous semiannual report results from corrections made to data in our audit tracking system.)
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
55
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Status of Management
Decisions on IG
Reports
This section presents statistical
information as required by the
Inspector General Act
Amendments of 1988 on the
status of EPA management
decisions on reports issued by
the OIG involving monetary
recommendations.
As presented, information
contained in Tables 1 and 2
cannot be used to assess results
of reviews performed or
controlled by this office. Many of
the reports were prepared by
other Federal auditors or
independent public accountants.
EPA OIG staff do not manage or
control such assignments.
Auditees frequently provide
additional documentation to
support the allowability of such
costs subsequent to report
issuance. We expect that a high
proportion of unsupported costs
may not be sustained.
Table 1 — Inspector General Issued Reports With Questioned Costs for Semiannual Period
Ending March 31,1998 (Dollar Value in Thousands)
Report Category
A. For which no management decision was made
by October 1, 1997**
B. New reports issued during period
Subtotals (A + B)
C. For which a management decision was made
during the reporting period
(i)Dollar value of disallowed costs
(ii)Dollar value of costs not disallowed
D. For which no management decision was made
by the end of the reporting period
Reports for which no management decision
was made within six months of issuance
Number of
Reports
97
13
110
42
17
36***
68
56
Questioned Costs*
$264,107
4,958
269,065
78,239
14,485
63,754
190,826
185,872
Unsupported Costs
$1.14,826
1,083
115,909
42,747
2,600
40,147
73,162
72,079
* Questioned costs include the unsupported costs.
** Any difference in number of reports and amounts of questioned costs between this report and previous semiannual report
results from corrections made to data in our audit tracking system.
""""Twenty-five audit reports totaling $10,942 were not agreed to by management.
56
OFFICE OF INSPECTOR GENERAL
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Table 2 — Inspector General Issued Reports With Recommendations That Funds Be Put
To Better Use for Semiannual Period Ending March 31,1998 (Dollar Values in Thousands)
Report Category
A. For which no management decision was made by October 1, 1997*
B. Which were issued during the reporting period
Subtotals (A + B)
C. For which a management decision was made during the
reporting period
(i) Dollar value of recommendations from reports that were
agreed to by management
(ii) Dollar value of recommendations from reports that were
not agreed to by management
(iii) Dollar value of non-awards or unsuccessful bidders
D. For which no management decision was made by the
end of the reporting period
Reports for which no management decision was made within six
months of issuance
Number of
Reports
4
0
4
4
1
2**
1
0
0
Dollar Value
$5,392
0
5,392
5,392
10
5,316
66***
0
0
* Any difference in number of reports and amounts of recommended efficiencies between this report and our previous semiannual report
results from corrections made to data in our audit tracking system.
** Two reports were included in C(i) and C(ii) Only the related dollars disallowed were included in C(i), whereas the dollars which were not
disallowed were included in C(ii).
*** This amount represents the dollar value of recommendations that funds be put to better use, no dollars shown for management decision
on these audits.
Audits With No Final Action As Of 3/31/98-Which are over 365 Days Past OIG Report Issuance Date
Audits
Programs
Allegations
Assistance Agreements
Construction Grants
Contract Audits
TOTAL
Non Superfund
10
4
131
8
20
173
Superfund
42
14
42
98
Total
52
4
131
22
62
271
Percentage
19%
2%
48%
8%
23%
100%
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
57
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Appendix 1 -- Reports Issued
THE INSPECTOR GENERAL ACT REQUIRES A LISTING, SUBDIVIDED ACCORDING TO SUBJECT MATTER, OF EACH REPORT ISSUED
BY THE OFFICE DURING THE REPORTING PERIOD AND FOR EACH REPORT, WHERE APPLICABLE, THE DOLLAR VALUE OF
QUESTIONED COSTS AND THE DOLLAR VALUE OF RECOMMENDATIONS THAT FUNDS BE PUT TO BETTER USE.
Questioned Costs
Assignment Control Number
Title
Efficiencies
Final Report Ineligible Unsupported Unreasonable (Funds Be Put
Issued Costs Costs Costs To Better Use)
1. INTERNAL AND MANAGEMENT ASSIGNMENTS
CHIEF FINANCIAL OFFICER
E1AML7-20-7008-8100058 ERA'S FISCAL 1997 FINANCIAL
STATEMENTS AUDIT
3/ 2/98
Assistant Administrator for Air and Radiation
E1KAE4-05-0246-8100057 AIR THEME REPORT
2/27/98
Assistant Administrator for Administration and Resources
Management
E1XMF6-03-0224-8100070 EPA's TRAINING ASSISTANCE 3/ 4/98
AGREEMENTS
E6DWG6-04-0048-8400017 LOBBYING AND NONCOMPETITIVE 3/31/98
CONTRACTING UNDER FEDERAL
ASSISTANCE AGREEMENTS AND CONTRACTS
Office of Administration and Resources Management
Cincinnati Ohio
E1AMN7-15-7001-8300001 PHYSICAL, ENVIRONMENTAL AND 11/28/97
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
Assistant Administrator for Solid Waste & Emergency Response
E1SFF7-03-0117-8100090 AUSTIN AVENUE RADIATION SITE 3/30/98
REPLACEMENT HOUSING
E1SGF7-05-0102-8100030 SF CONSTRUCTION COMPLETION 12/30/97
E1SHF8-11-0005-8100091 BROWNFIELDS: POTENTIAL FOR 3/27/98
URBAN REVITALIZATION
Assistant Administrator for Water
E1BMF7-23-0012-8100092 PROCUREMENT OF SERVICES FOR
OPERATION OF OCEAN SURVEY VESSEL
PETER ANDERSON
3/26/98
Assistant Administrator for Office of Enforcement and
Compliance Assurance
E1SFG7-11-0024-8400015 SF RD/RA NEGOTIATION TIME FRAMES 3/27/98
58
OFFICE OF INSPECTOR GENERAL
-------
Regional Administrator - Region 1
E1AMN7-15-7001-8300007 PHYSICAL, ENVIRONMENTAL AND
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
12/31/97
Regional Administrator - Region 2
E1FUF7-02-0011-8100037 REGION 2's DEOBLIGATION AND
CLOSEOUT OF CONSTRUCTION GRANTS
E1AMN7-15-7001-8300005 PHYSICAL, ENVIRONMENTAL AND
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
1/20/98
12/19/97
Regional Administrator - Region 3
E1AMN7-15-7001-8300006 PHYSICAL, ENVIRONMENTAL AND
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
12/31/97
Regional Administrator - Region 5
E1AMN7-15-7001-8300003 PHYSICAL, ENVIRONMENTAL AND 12/16/97
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
E6FFF8-05-0041-8100046 FISCAL 1997 SF ENFORCEMENT YEAR- 1/23/98
END SPENDING
Regional Administrator - Region 6
E1GAF7-06-0032-8100078 STATE AIR ENFORCEMENT DATA
NEW MEXICO
E1SGG7-14-0006-8400014 OKLAHOMA REFINING CO RI/FS
3/13/98
3/23/98
Regional Administrator - Region 7
E1HWF7-07-0023-8100080 MISSOURI WATER QUALITY
MONITORING
E1HWF7-07-OOa2-8100089 KANSAS NPDES PROGRAM
3/31/98
3/31/98
Regional Administrator - Region 8
E1SKG7-08-5001-8100082 REGION 8 FIELD SAMPLING
QUALITY ASSURANCE
3/25/98
ASSISTANT REGIONAL ADMINISTRATOR - REGION 9
E1AMN7-15-7001-8300004 PHYSICAL, ENVIRONMENTAL AND
DISASTER RECOVERY CONTROLS
SPECIFIC TO REGIONAL LOCAL
AREA NETWORKS (LANs)
12/19/97
Regional Administrator - Region 10
E1HWF7-10-0012-8100076 REGION 10 NPDES PERMIT PROGRAM
3/13/98
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
-------
E1KAF7-10-0015-8100094 REGION 10 WASHINGTON STATE AIR 3/30/98
ENFORCEMENT PROGRAM
E1GSF7-11-0019-8100093 WASHINGTON STATE RCRA 3/27/98
SIGNIFICANT NON-COMPUER
TOTAL
25
2. CONSTRUCTION GRANT ASSIGNMENTS
P2CWL7-01-0024-8100069 CRANSTON
TOTAL OF REGION 01 = 1
E2CWL7-02-0027-8100056 BRIDGEWATER
P2CWL5-02-0023-8100045 PARSIPPANY - TROY HILLS
TOTAL OF REGION 02 = 2
E2CWM7-03-0151-8200005 CITY OF YORK
P2CUN5-03-0171-8300008 DISTRICT OF COLUMBIA
P2CWN7-03-0005-8300009 COLUMBIA DISTRICT OF
TOTAL OF REGION 03 = 3
E2HTL7-09-0065-8100033 CALIFORNIA SRF
TOTAL OF REGION 09 = 1
RI
NJ
NJ
3/ 4/98
2/18/98
1/22/98
232,715
232,715
86,120
1,824,949
0
0
0
384,061
PA
DC
DC
3/31/98
1/22/9B
1/22/98
CA 12/31/97
1,911,069
252,440
865,917
543,089
1,661,446
0
0
384,061
37,692
347,491
40,284
425,467
0
0
0
0
0
0
0
0
0
0
0
0
0
TOTAL CONSTRUCTION GRANT ASSIGNMENTS
3,805,230
809,528
3. OTHER GRANT ASSIGNMENTS
C3HVK8-33-0004-8500008 SHREVEPORT CITY OF
C3HVK8-33-0026-8500017 KALAMAZOO CITY OF
C3HVK8-33-0027-8500023 AKRON CITY OF
G3HVJ7-33-0029-8500013 WHITLEY CO.CONSOL.SCHLS
G3HVH7-33-0010-8500033 OSFM FY 95/96
N3HVJ7-33-0022-7500058 DELAWARE STATE OF
N3HVK8-33-0001-8500001 DETROIT
N3HVK8-33-0002-8500002 KANSAS STATE
N3HVK8-33-0006-8500003 EASTERN BAND OF CHER. IND
N3HUK8-33-0003-8500004 NEBHE
N3HVK8-33-0009-8500005 NEVADA STATE OF
N3HVK8-33-0010-8500006 SANDIA PUEBLO OF
N3HVK8-33-0011-8500007 SANDIA PUEBLO OF
N3HUK7-33-0027-8500009 CINCINNATI UNIVERSITY OF
N3HVJ8-33-0016-8500010 WISCONSIN STATE OF
N3HVK8-33-0012-8500011 SENECA NATION OF INDIANS
N3HVK8-33-0007-8500012 RHODE ISLAND STATE OF
N3HVJ8-33-0020-8500014 INDIANA STATE OF
N3HVK8-33-0015-8500015 NEW JERSEY STATE OF
N3HVK8-33-0021-8500016 PENNSYLVANIA COMMONWEALTH OFPA
N3HVJ8-33-0030-8500018 ARIZONA STATE OF
N3HVJ8-33-0024-8500019 INDIANA STATE OF
N3HVJ8-33-0032-8500020 OKLAHOMA STATE OF
N3HVK8-33-0036-8500021 YAVAPAI-PRESCOTT INDIAN TRIBAZ
N3HVJ8-33-0038-8500024 WASHINGTON STATE OF
N3HVJ8-33-0029-8500025 WINCHESTER CITY OF
N3HUK8-33-0039-8500026 WAYNE STATE UNIVERSITY
N3HVJ8-33-0034-8500027 ALABAMA STATE OF
N3HVK8-33-0040-8500028 WEST VIRGINIA STATE OF
N3HVK8-33-0042-8500029 WAYNE COUNTY
N3HVJ8-33-0035-8500030 ALASKA STATE OF
N3HVK8-33-0005-8500031 IOWA STATE OF
N3HVK8-33-0005-8500032 IOWA STATE OF
LA
MI
OH
IN
IL
DE
MI
KS
NC
MA
NV
NM
NM
OH
WI
NY
R!
IN
NJ
:PA
AZ
IN
OK
3AZ
WA
IN
MI
AL
WV
MI
AK
IA
IA
11/ 5/97
1/21/98
21 4/98
12/19/97
3/10/98
10/ 2/97
10/15/97
10/15/97
10/27/97
10/27/97
10/28/97
10/28/97
10/28/97
11/ 5/97
11/18/97
11/18/97
12/ 2/97
12/19/97
M 5/98
M 5/98
1/22/98
1/23/98
1/23/98
1/28/98
2/ 5/98
2/ 5/98
21 9/98
21 9/98
2/11/98
2/11/98
2/20/98
3/ 5/98
3/ 5/98
0
0
0
0
24,747
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
9,829
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
75,010
0
0
0
0
0
0
0
0
0
0
0
0
57,168
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
0
60
OFFICE OF INSPECTOR GENERAL
-------
TOTAL OF REGION 33 = 33
E3LLL7-06-0031-8100040 LUST COOPERATIVE AGREEMENTS
TOTAL OF REGION 06 = 1
1/22/98
34,576
0
0
132,178
0
0
TOTAL OTHER GRANT ASSIGNMENTS
34
34,576
132,178
5. SUPERFUND GRANT ASSIGNMENTS
E5BFN7-03-0157-8300010 CLEAN SITES INC. VA 2/20/98
TOTAL OF REGION 03 = 1
P5BGN7-06-0036-8300002 NATURAL RESOURCE COMMISSION TX 12/ 9/97
TOTAL OF REGION 06 = 1
H5BFL7-20-0007-8100002 IAG AUDIT REPORT 10/10/97
TOTAL OF REGION 20 = 1
31
31
0
0
,128
,128
0
0
24,676
24,676
116,682
116,682
0
0
TOTAL SUPERFUND GRANT ASSIGNMENTS
31,128
141,358
8. OTHER CONTRACT ASSIGNMENTS
D8BUL4-44-0062-8100001 WOODWARD-CLYDE CONSULTANTS
D8CML7-44-1192-8100003 SRA TECHNOLOGIES
D8BML5-44-0065-8100004 ENERGY & ENVIRONMENTAL ANALYVA
D8BML4-44-0115-8100005 ADVANCED SYSTEMS TECHNOLOGY GA
D8BML7-44-1101-8100007 KBN ENG. & APPLIED SCIENCES GA
D8CML7-44-1087-8100009 HYDROGEOLOGIC INC.
D8BML6-44-0183-8100011 JWK INTERNATIONAL CORP.
D8BML7-44-0010-8100012 SOUTHWEST RESEARCH INSTITUTETX
D8EML7-44-1051-8100013 CADMUS GROUP INC
D8BML7-44-0113-8100014 NCI INFORMATION SYSTEMS,INC VA
D8BML7-44-3026-8100016 MATHTECH FY94 & 95 INCURRED NJ
D8CML5-44-0326-8100017 COM FEDERAL PROGRAMS CORP.
D8BML4-44-0047-8100019 RADIAN
D8BML5-44-0074-8100020 ADVANCD SYSTEMS TECHNOLOGY
D8BML6-44-0154-8100026 DYNAMAC
D8BML7-44-0008-8100027 GRUZEN SAMTON
D8GML7-44-1185-8100028 MIDWEST RES INST
D8AML7-44-1162-8100035 CHOICE CONSTRUCTION COMPANY OH
D8AML7-44-1162-8100038 CHOICE CONSTRUCTION COMPANY OH
D8AMP7-44-1158-8100039 PERFORM TECH
D8AML7-44-1163-8100043 M&R ENTERPRISES
D8AML7-44-1163-8100044 M&R ENTERPRISES
D8EML8-44-2034-8100047 HAGLER BAILLY
D8EML7-44-1110-8100049 ELGIN DDBM NEEDHAM, INC
D8AML7-44-1125-8100050 OMNIPLEX WORLD SERVICES CORPVA
D8AML7-44-1160-8100051 WIND WALKER
D8BML7-44-0067-8100059 TARITAS 96
D8BML6-44-0063-8100060 SEAWARD SERVICES
D8BML7-44-0065-8100062 ENVIRON SCIENCE & ENG 95
D8BML7-44-0095-8100063 OAO CORPORATION
D8BML6-44-0123-8100064 AUTO TESTING LAB 95
D8BML6-44-0059-8100065 ACUREX CI 95
D8BML7-44-1012-8100066 WESTAT, INC.
D8BML5-44-0366-8100067 GARCIA CONSULTING INC
D8BML7-44-0058-8100071 BOOZ ALLEN
D8DML5-44-0190-8100073 ARTHUR D. LITTLE INC.
D8BML7-44-2210-8100075 SYRACUSE RESEARCH CORP.
D8BML4-44-0403-8100083 RCG INTERNATIONAL
D8BML5-44-0142-8100085 EG&G DYNATREND INC.
D8BML7-44-0092-8100086 RADIX II
D8BML7-44-0097-8100087 INFORMATION DYNAMICS, INC.
CO
VA
rvA
GA
GA
VA
VA
ETX
MA
VA
NJ
VA
TX
GA
MD
NY
MO
OH
OH
VA
OH
OH
WA
>VA
VA
MI
FL
IL
MD
OH
CA
MD
VA
VA
MA
NY
VA
MA
MD
DC
10/ 9/97
10/16/97
10/22/97
10/22/97
10/22/97
10/22/97
10/22/97
10/22/97
10/31/97
1V 3/97
11/ 3/97
IV 3/97
1V 3/97
IV 7/97
12/ 4/97
12/ 4/97
12/ 9/97
1/13/98
1/15/98
1/15/98
1/21/98
1/21/98
1/27/98
1/29/98
1/29/98
1/29/98
2/27/98
2/27/98
2/27/98
2/27/98
2/27/98
2/27/98
2/27/98
2/27/98
3/ 6/98
3/ 6/98
3/ 6/98
3/24/98
3/24/98
3/24/98
3/24/98
* The dollar value of contract audits have not been shown.
Public disclosure of the dollar value of financial recom-
mendations could prematurely reveal the Government's
negotiating positions or release of this information is
not routinely available under the Freedom of Information
Act. The number of these reports and dollar value of the
findings have been included in the aggregate data displayed
below. Such data individually excluded in this listing will
be provided to the Congress under separate memorandum within
30 days of the transmittal of the semiannual report to the
agency head. The transmitted data will contain appropriate
cautions regarding disclosure.
OCTOBER1,1997 THROUGH MARCH 31, 1998
61
-------
D8BML7-44-
D8BMM4-44-
D8BMM7-44-
D8BMM7-44-
D8AMP7-44-
D8AMP7-44-
D8AMP8-44-
D8AMP7-44
D8AMP8-44
1132-8100088
0263-8200001
1143-8200002
2029-8200003
1158-8400005
1159-8400007
2016-8400008
1193-8400009
2052-8400011
ELLSWORTH ASSOCIATES INC. VA
INFOPRO INCORPORATED MD
SIERRA RESEARCH, INC. CA
ENVIRONMENTAL HEALTH & ENGR MA
PERFORM TECH
CONSOLIDATED TECH SERVICES
SCIENCES INTERNATIONAL
COMPUTER BASED SYSTEMS INC
GKY ASSOCIATE
TOTAL OF REGION 44 = 50
D8BML7-03-0096-8100023 TRANDES CORPORATION
TOTAL OF REGION 03 = 1
E8EML6-22-0025-8100029 ICF KAISER ACCTG SYSTEM
E8GML8-22-0103-8100031 ICF FPG D/S 96R2
E8GML8-22-0102-8100034 ICF CON GRP SGMT OS 96 R2
E8GML8-22-0111-8100036 ICF 96 INTERNED HO D/S
E8EML6-22-0033-8100042 ICF EST SYSTEM FOLLOW-UP
E8GML8-22-0103-8100048 ICF FPG D/S 96R2
E8GML8-22-0103-8100055 ICF FPG D/S 96R2
E8GML8-22-0111-8100068 ICF 96 INTERNED HO D/S
E8GML8-22-0104-8100079 ICF KAISER INT INC DSR2
E8RMP8-22-0116-8400012 FY86 I/C FOLLOWUP
TOTAL OF REGION 22 = 10
E8SAP8-05-0039-8400004 01 QMS CONTRACT
E8BSP7-05-0041-8400010 AT KEARNEY 93
TOTAL OF REGION 05 = 2
TOTAL OTHER CONTRACT ASSIGNMENTS
VA
MD
VA
VA
VA
MD
VA
IL
3/24/98
10/22/97
12/ 2/97
12/ 4/97
1/21/98
1/29/98
1/29/98
1/29/98
2/17/98
11/20/97
12/15/97
12/30/97
1/12/98
1/15/98
1/20/98
1/29/98
2/11/98
3/ 2/98
3/16/98
3/ 5/98
12/31/97
1/30/98
= 63
9. SUPERFUND CONTRACT ASSIGNMENTS
D9BFL7-44-
D9BGL6-44-
D9BFL6-44
D9BGL7-44-
D9CFL6-44
D9CFL6-44
D9BKL5-44
D9CFL6-44
D9BFL8-44
D9BFL4-44
D9BFL7-44
D9BFL6-44
D9BFM7-44
0086-
0057-
0160-
0023-
0129-
0167-
0038-
•0190-
•2014-
•0424-
•1060-
•0164-
-1047-
8100006
8100008
8100010
8100015
8100018
8100021
8100022
8100053
8100061
8100072
8100074
•8100084
•8200004
MARASCO NEWTON GROUP LTD. VA
TAMS CONSULTANTS FY95 INCURRNY
INFOPRO MD
EG&G DYNATREND FY93 INCURREDMA
ROY F. WESTON INC. PA
ROY F. WESTON INC. PA
B&V WASTE SCIENCE & TECH CORMO
ROY F. WESTON INC.
TAMS CONSULTANTS INC
ENVIRONMENTAL TECHNOLOGY
C&C JOHNSON & MALHOLTRA
CDM FEDERAL PROGRAMS CORP
SVERDRUP ENVIRONMENTAL
TOTAL OF REGION 44 = 13
PA
NY
VA
MD
VA
MO
E9AGP8-02-0405-8400013 MALCOLM PIRNIE INC.
TOTAL OF REGION 02 = 1
E9BGL4-05-0317-8100041 EARTH TECH 93 (WW ENG)
E9BGL5-05-0180-8100054 EARTH TECH 94
E9BGL6-05-0142-8100077 EARTH TECH 95
TOTAL OF REGION 05 = 3
E9BHL4-23-0026-8100081 EQMI 93
TOTAL OF REGION 23 = 1
TOTAL SUPERFUND CONTRACT ASSIGNMENTS
TOTAL REPORTS = 150
NY
WI
MI
MI
MR
10/22/97
10/22/97
10/22/97
11/ 3/97
11/ 3/97
11/17/97
11/20/97
2/ 4/98
2/27/98
3/ 6/98
3/ 6/98
3/24/98
12/ 4/97
3/ 9/98
1/20/98
2/ 6/98
3/10/98
3/19/98
18
3,876
3,874,810
1,083,064
62
OFFICE OF INSPECTOF* GENERAL
-------
Appendix 2 -- Reports Without Management Decision
Reports Issued Without Management Decision -180 Days Past Report Issue Date
Action Official
Grants Administration Division
Office of Acquisition Management (OAM)
Contract Mgmt Division RTF
OAM Cost Advisory - CRNSC
OAM Cost Advisory - FASC
Assistant Administrator for Adm & Resources
Management
Office of Information Resources Management
Assistant Administrator for Water
Assistant Administrator for Office of
Enforcement & Compliance Assurance
Regional Administrator Region 1
Regional Administrator Region 2
Grants Financial Mgmt Region 3
Regional Administrator Region 3
Regional Administrator Region 4
Chief 1MB Region 4
Comptroller Regions 5
Regional Administrator Region 5
Regional Administrator Region 6
Regional Administrator Region 8
Regional Administrator Region 9
Regional Administrator Region 1 0
TOTALS 82
No Response
Received
8
5
8
8
2
1
0
0
1
3
2
11
1
1
3
2
2
0
1
3
62
Response In Review
Process
3
0
4
1
2
0
0
0
1
0
0
0
0
0
0
0
0
0
1
0
12
Inadequate
Response
0
0
2
2
0
0
1
1
0
0
0
0
0
0
0
0
0
1
0
0
7
Appeal to ARB
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
63
-------
Appendix 3--Major Laws Administered by EPA
Statute
Pollution Prevention Act
Toxic Substances Control Act
Federal Insecticide, Fungicide,
and Rodenticide Act
Federal Food, Drug and Cosmetic Act
Resource Conservation and Recovery Act
and Solid Waste Disposal Act
Comprehensive Environmental Response,
Compensation, and Liability Act
Clean Air Act
Clean Water Act
Safe Drinking Water Act
Marine Protection, Research and
Sanctuaries Act
Asbestos School Hazard Abatement Act/
and Asbestos Hazard Emergency Response
Emergency Planning and Community Right-
to-Know Act
Oil Pollution Act of 1990
Environmental Research, Development, and
Demonstration Authorization Ad
National Environmental Education Act
National Environmental Policy Act of 1969
Provisions
Provides that pollution should be prevented or reduced at the source,
recycled safely when not preventable, treated safely when not
preventable or recyclable, or disposed of a safe manner.
Requires EPA notification of any new chemical prior to its manufacture
and authorizes EPA to regulate its production, use, or disposal..
Authorizes EPA to register all pesticides, specify the terms and
conditions of their use, and remove unreasonable hazardous pesticides
from the marketplace.
Authorizes EPA in cooperation with FDA to establish tolerance levels
for pesticide residues on food.
Authorizes EPA to identify hazardous wastes and regulate their
generation, transportation, treatment, storage, and disposal.
Requires EPA to designate hazardous substances that can present
substantial danger and authorizes the cleanup of contaminated sites.
Authorizes EPA to set emission standards to limit the release of criteria
pollutants and hazardous air pollutants.
Requires EPA to establish a list of water pollutants and set standards.
Requires EPA to set drinking water standards to protect public health
from hazardous substances.
Regulates ocean dumping of toxic contaminants.
Authorizes EPA to establish a comprehensive regulatory framework
for controlling asbestos hazards in schools.
Requires States to develop programs for responding to hazardous
chemical releases and requires industries to report on the presence
and release of certain hazardous substances.
Makes EPA responsible for oil spill prevention, preparedness,
response, and enforcement activities associated with non-
transportation-related onshore oil facilities.
Authorizes all EPA research and development programs.
Provides for a program of education on the environment through
activities in schools and related educational activities, and to
encourage students to pursue careers related to the environment.
Provides a national policy requiring environmental impact statements
describing potentially adverse effects of, and alternatives to, any major
Federal action. Established the Council on Environmental Quality.
64
OFFICE OF INSPECTOR GENERAL
-------
OIG MAILING ADDRESSES and TELEPHONE NUMBERS
OIG HOTLINE (2021 260-4977
Headquarters
Environmental Protection Agency
Office of Inspector General
401 M Street, S.W. (2441)
Washington, DC 20460
(202) 260-3137
Atlanta
Environmental Protection Agency
Office of Inspector General
16th-100 Alabama St. SW
Atlanta, GA 30303
Audit: (404) 562-9830
Investigations: (404) 562-9857
Boston
Environmental Protection Agency
Office of Inspector General
JFK Federal Building (OIG)
(office at 1 Congress St)
Boston, MA 02203
Audit: (617) 565-3160
lnvestigations:(617) 565-3928
Chicago
Environmental Protection Agency
Office of Inspector General
77 West Jackson Boulevard
13th Floor (IA-13J)
Chicago, IL 60604
Audit: (312) 353-2486
Investigations: (312) 353-2507
Cincinnati
Environmental Protection Agency
Office of Inspector General
MS : Norwood
Cincinnati, OH 45268-7001
Audit: (513) 366-4360
Investigations: (312) 353-2507 (Chicago)
Dallas
Environmental Protection Agency
Office of Inspector General (6OIG)
1445 Ross Avenue, Suite 1200
Dallas, TXs 75202-2733
Audit: (214) 655-6621
Investigations: (404) 562-9857 (Atlanta)
Denver
Environmental Protection Agency
Office of Inspector General
999 18th Street, Suite 500
Denver, CO 80202-2405
Audit: (303) 312-6872
Investigations: (312) 353-2507 (Chicago)
Kansas City
Environmental Protection Agency
Office of Inspector General
726 Minnesota Avenue
(office at 630 Minnesota Ave)
Kansas City, KS 66101
Audit: (913) 551-7878
Investigations: (312) 353-2507 (Chicago)
New York
Office of Inspector General
290 Boardway, Room 1520
New York, NY 10007
Audit: (212) 637-3080
Investigations: (212) 637-3041
Philadelphia
Environmental Protection Agency
Office of Inspector General
841 Chestnut Street, 13th Floor
Philadelphia, PA 19107
Audit: (215) 566-5800
Investigations: (215) 566-2361
Research Triangle Park, NC
Environmental Protection Agency
Office of Inspector General
Catawba Building
Highway 54, Mail Drop 53
Research Triangle Park, NC 27711
Audit: (919) 541-2204
Investigations: (919) 541-1027
Sacramento
Environmental Protection Agency
Office of Inspector General
650 Capitol Mall, Suite 6309
Sacramento, CA 95814
Audit: (916) 498-6530
Investigations: (415) 744-2465 (SF)
San Francisco
Environmental Protection Agency
Office of Inspector General
75 Hawthorne St (1-1)
19th Floor
San Francisco, CA 94105
Audit: (415) 744-2445
Investigations: (415) 744-2465
Seattle
Environmental Protection Agency
Office of Inspector General
1200 6th Avenue, 19th Floor
Suite 1920, M/SOIG-195
Seattle, WA 98101
Audit: (206) 553-4033
Investigations: (206) 553-1273
OCTOBER 1, 1997 THROUGH MARCH 31, 1998
65
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U S Environmental Protection Agency
Region5r Library (PL-12J) ,_,._..
77 Vi/est Jackson Boulevard, 12th Floor
Chicago, IL 60604-3590
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GET A HOLD
ON SPENDING
REPORT FRAUD, WASTE, OR ABUSE TO THE
INSPECTOR GENERAL
HOTLINE
• INFORMATION IS CONFIDENTIAL
202-260-4977
US. ENVIRONMENTAL PROTECTION AGENCY • OFFICE OF THE INSPECTOR GENERAL • 401M STREET S.W. WASHINGTON, D.C. 20460
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United States
Environmental Protection Agency
(2441)
Washington, DC 20460
Official Business
Penalty for Private Use
$300
SPECIAL FOURTH CLASS MAIL
Postage and Fees Paid
EPA
G-35
U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
11 West Jackson Boulevard. 12tn rtoflf
Chicago, II 60604-3590
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