Office of Inspector General
Semiannual Report
to the Congress
April 1, 1998 through '
September 30, 1998
••BHB
" •»-•*
-------
United States Office of EPA-350-R-98-004
Environmental Protection Inspector General (2441) November 1998
Agency Washington DC 20460
Office of Inspector General
Semiannual Report
to the Congress
April 1, 1998 through
September 30, 1998
-------
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 improving the performance and integrity of EPA
programs and operations, by safeguarding and protecting the Agency's resources, and by dearly
reporting the results of our work
© Foster strong working relationships.
© Operate at the highest performance level.
Cover photo by EPA Documerica, National Archives
-------
Foreword
I am honored to have been selected as EPA's Inspector General. The Office of
Inspector General has an impressive track record, which I hope to build upon
by serving as a force for positive change.
This semiannual report identifies improvements that EPA needs to make to
ensure that it uses defendable data when making environmental decisions. One EPA
region could not show that Superfund removal decisions were supported by sound
environmental data for the five sites we reviewed. We have identified similar problems
in other regions over the past few years. Senior managers have been slow to improve
their quality assurance processes, but have pledged to address the problems.
We recently issued a consolidated report on EPA oversight of state air
enforcement programs. This report focuses on EPA Headquarters role in working with
EPA regions and states to help ensure that inspections are adequate to detect
significant violators of the Clean Air Act, and that such violators are reported. The
importance of this issue was further highlighted in our report on Idaho's air enforcement
program which we found was not sufficient to deter violators, or return them to
compliance in a timely manner. In fiscal year 1999, we will begin a series of multimedia
enforcement audits.
While EPA has taken many positive steps to address contract management
problems, the appearance of using contracts for personal services is a vulnerability that
EPA needs to focus more attention on. Personal services contracts are characterized
by an employer-employee relationship between the government and contractor
personnel. Such personal services relationships can result in work performed outside
the scope of the contract and giving the incumbent contractor an advantage during
future contract awards.
Our investigations are consistently achieving significant results. In April 1998,
an environmental laboratory in Pennsylvania was sentenced to pay nearly $5.6 million
as a result of pleading guilty to nine criminal counts including conspiracy, false
statements, false claims, mail fraud, and violations of the Clean Water Act. The
laboratory acknowledged that it repeatedly provided false water, sewage, and soil test
results for an estimated 415 customers from January 1988 to February 1997. The
former laboratory director was convicted of federal charges and is serving a prison
sentence. A former technical director of the laboratory was sentenced to three years
probation, fined, and ordered to pay restitution. The conspiracy affected schools,
hospitals, local governments, and businesses, including Tobyhanna Army Depot, which
paid the laboratory to test samples for hazardous wastes, contamination of ground
water, and for pollutants discharged into rivers and streams.
-------
EPA's continuing commitment to improvement has been demonstrated by
resolving $100 million in outstanding questioned costs, which represents a 51 percent
decrease in the last year. We encourage Agency management to continue making
audit followup a priority and to be even more timely in audit resolution. Audit followup
is a shared responsibility and the OIG is willing to assist Agency managers in quickly
and effectively resolving open audit reports.
As Inspector General, I look forward to working with the Administrator, Agency
managers, Congress, and EPA's various stakeholders to help ensure that EPA delivers
the maximum in environmental and health benefits to the public.
Nikki L. Tinsley
Inspector General
-------
Profile of Activities and Results
April 1,1998 to September 30,1998
Audit Operations ($ 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
Fiscal
1998
Questioned Costs *
-Total
22.3
- Federal
Recommended Efficiencies*
- Federal
2.0
Costs Disallowed to be Recovered
- Federal
Costs Disallowed as Cost Efficiency
- Federal
April 1, 1998 to
September 30, 1998
$15.4
10.2
0
$62.5
$ 0
Reports Issued - OIG Managed Reviews:
- EPA Reviews Performed By OIG: 60
- EPA Reviews Performed by
- Independent Public Accountants: 5
- EPA Reviews Performed by
State Auditors: 0
Total 65
15.0
$ 76.9
$ 2.0
107
10
0
117
Reports Resolved (Agreement by Agency officials to take
satisfactory corrective action.) *** 92 214
April 1, 1998 to Fiscal
September 30, 1998 1998
Questioned Costs *
- Total $ 0.9 $ 1.2
- Federal 0.9 1.2
Recommended Efficiencies*
- Federal $ 3.2 $ 3.2
Costs Disallowed to be Recovered
- Federal $ 0.3 $ 0.3
Costs Disallowed as Cost Efficiency
- Federal $ 3.2
Reports Issued - Other Reviews:
- EPA Reviews Performed by
Another Federal Agency: 139
- Single Audit Act Reviews:
43
Total
182
$3.2
204
76
280
Agency Recoveries - Recoveries from Audit $34.6M
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) $10.1
$15.0
Savings/Repudiated Claims 0
9.6
Investigations Opened 37
127
Investigations Closed 42
84
Indictments of Persons or Firms 11
17
Convictions of Persons or Firms 4
9
Administrative Actions Against
EPA Employees/ Firms 13
38
Civil Judgments 4
7
Hotline Cases Opened
46 65
Hotline Cases Processed and Closed 41 58
Personnel Security Investigations 362 795
Adjudicated
Legislative and Regulatory
Items Reviewed 24 51
* Questioned Costs and Recommended Efficiencies subject to change pending further review in the audit resolution process.
** 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.
-------
Contents
Executive Summary 1
The OIG in EPA-lts Role and Authority 5
Purpose and Reporting Requirements of the Office of Inspector General
Semiannual Report 5
Who's Who in the Office of Inspector General 6
Section 1-Office of Audit-Significant Findings
Programs 8
Financial Statements 25
Assistance Agreements 30
Contracts 37
Section 2-Office of Investigations-Significant Results
Summary of Investigative Results 43
Selected Prosecutive Actions 44
Civil and Administrative Actions to Recover EPA Funds 47
Selected Suspension and Debarment Actions 49
Section 3-Fraud Prevention and Management Improvements
Advisory and Assistance Services 50
Review of Legislation and Regulations 52
OIG Management Initiatives 53
Committee on Integrity and Management Improvement 53
Hotline Activities 54
Section 4-Report Resolution
Status Report on Perpetual Inventory of Reports in Resolution Process
for the Semiannual Period Ending September 30, 1998 57
Status of Management Decisions on IG Reports 58
Inspector General Issued Reports With Questioned Costs 58
Inspector General Issued Reports With Recommendations that Funds Be
Put to Better Use 59
Appendices
Appendix 1-Reports Issued 60
Appendix 2-Summary of Reports Issued Without Management Decision 67
Appendix 3-Major Laws Administered by EPA 68
The complete text of selected audits is available through the EPA OIG internet home
page, http://www.epa.gov/oigearth
-------
Executive Summary
Section 1--Office of Audit--
Significant Findings
1. EPA's Oversight of Regional and State
Air Enforcement Programs Is Inadequate
Numerous significant air pollution violators went
undetected, and many of those identified were not
reported to EPA. Without information about
significant violators, EPA could neither evaluate
states' enforcement programs, nor act when a
state did not enforce the Clean Air Act. The
effectiveness of air enforcement programs
suffered, in large part, because EPA and the states
did not adhere to EPA requirements (page 8).
2. Idaho's Air Enforcement Program Did
Not Prevent Threats to Human Health and
the Environment
Idaho either did not take enforcement actions
against significant air polluters or did not escalate
the level of actions when polluters were non-
responsive. In many instances, the polluters had
histories of repeated and continuous air quality
violations that lasted for years. Region 10's lack of
oversight contributed to Idaho's ineffective
enforcement program (page 10).
3. EPA Had Not Effectively Implemented
Its Superfund Quality Assurance Program
Although EPA had developed many critical
elements necessary for an effective quality
assurance program, it had not fully developed,
implemented, and reported on the program's
effectiveness. Project managers responsible for
data collection lacked the training and guidance
needed to effectively perform quality assurance
activities (page 11).
4. Region 9's Environmental Data Quality
System for Superfund Removal Actions Is
Insufficient
Region 9's data quality assurance system was
insufficient because decision makers did not
perceive data quality as a risk to decision making,
and thus did not require adequate implementation.
Consequently, data was not of known and
acceptable quality for decision making (page 13).
5. Region 2 Had Not Billed $31.5 Million of
Superfund Oversight Costs
Region 2 did not recover cleanup oversight costs
from responsible parties for as long as 11 years.
When delayed bills were sent, the responsible
parties disputed the amounts and requested
extensive supporting documentation. Collections
were further delayed. Untimely billings and
collections resulted in unnecessary delays in
replenishing the Superfund Trust Fund and in
limiting EPA's ability to clean up other priority sites
(page 15).
6. Additional Effort Needed by Region 9 to
Make Superfund Oversight Cost Billings
Current
Region 9 generally did not bill Superfund oversight
costs timely-with delays up to 36 months. For
overdue bills, the Region did not send dunning
letters or follow-up bills. Continued attention is
needed to ensure that oversight billings are issued
in 120 days and timely regional follow-up occurs
(page 17).
7. EPA's Office of Water Data Integration
Efforts Need to be More Focused and
Significant
The Office of Water has not developed sufficient
Information Technology plans, data standards or
standard guidance that will facilitate data sharing or
integration of data across Office of Water systems.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
-------
Without standardization and integration, EPA will
continue operating stovepipe systems and may not
have the environmental data needed to monitor
state water programs (page 18).
8. Region 5 Was Effectively Overseeing
Responsible Parties' Remedial
Construction Projects, But Could Do More
Region 5 project managers ensured that cleanup
remedies were being completed in accordance with
the record of decision and that schedules in the
settlement agreements were met. However, one
way Region 5 could improve its oversight is by
more frequently using independent quality
assurance teams during construction cleanup
(page 19).
9. State Deferrals: Some Progress, But
Concerns for Long-Term Protection
Continue
While 14 of 30 deferred hazardous waste sites
were behind the schedules agreed to in consent
decrees or other enforceable documents, generally
the cleanups were progressing. Although the State
Deferral program is a low priority, EPA should be
aware of the significant concessions that were
being made. Periodic checks on the long-term
protection of the remedies used were not required.
Also, EPA had no mechanism in place to monitor
or evaluate community input on deferrals or their
terminations (page 20).
10. EPA Has Improved Its Environmental,
Safety, and Health Program, But More
Work is Needed
Since our 1995 report, EPA has implemented most
of our recommendations aimed at improving the
protection of employees, facilities, and the
environment. However, EPA needs to address
training and personnel qualifications. Also, EPA
should improve its reporting process for
environmental audits (page 22).
11. Region 1's Administrative Reforms
Improved the Superfund Process
Region 1's use of various Superfund reforms
helped achieve EPA's goals to improve the equity
and effectiveness of the Superfund process.
However, the average processing time increased
by almost three years. Improved equity or
community buy-in may come with the price or
increased time and costs. Region 1 was one of the
few regions to aggressively implement the Updating
Remedy reform, saving $75 million at 11 sites
(page 23).
12. Further Improvements Needed in the
Working Capital Fund Financial Statements
We could not determine if the fiscal 1997 Working
Capital Fund financial statements reporting over
$41 million were fairly presented. EPA did not have
policies and procedures in place to accumulate and
report timely all revenue and expenses, and related
receivables and payables (page 25).
13. EPA Needs to Improve the Accuracy of
Its Reporting of Reregistered Pesticides
The fiscal 1997 Pesticide Reregistration and
Expedited Processing Fund financial statements
were fairly presented. However, for nearly a decade
problems with EPA's tracking system for
reregistered pesticides resulted in inaccurate
reporting of product reregistrations. For fiscal 1997
product reregistrations were understated by 37 or 9
percent of the total (page 26).
14. Not All Intended Residents Connected
to Completed Texas Wastewater Treatment
Projects
Pollution prevention problems will continue to exist,
posing ongoing threats to the health of residents
and the environment, until all intended residents are
connected to wastewater treatment facilities. Five
completed projects had connection rates from 20 to
88 percent. Low rates of connection were
attributed to affordability and improper handling of
mandatory connection requirements (page 30).
15. Federal Funds Used to Support
Lobbying Activities
Three State Rural Water Associations needed to
improve their internal controls to adequately identify
and exclude lobbying costs from charges to EPA
assistance agreements. We could not identify the
total dollar value of federal funds spent for
unallowable lobbying costs because the funds were
not properly identified or segregated in the
accounting system. Inadequate identification and
segregation of unallowable costs increases the
likelihood federal funds will be used to pay for
unallowable costs (page 31).
OFFICE OF INSPECTOR GENERAL
-------
16. Better Information and Oversight
Would Improve Assistance Awards
EPA program offices did not always negotiate
assistance agreements with well-defined
commitments, adequately determine and
document that costs submitted with assistance
applications were reasonable, or prepare decision
memoranda which contained all information
required to support recommendations for award
(page 33).
17. EPA Has Awarded Assistance
Agreements Without Clear Statutory
Authority
Activities funded by EPA through assistance
awards were not always within EPA's assistance
authorities as described by relevant environmental
statutes. We questioned 25 of the 57 assistance
awards reviewed based on a comparison of the
grant-making language in the statutes and the
description of work to be performed (page 34).
18. EPA's Progress in Correcting Contract
Management Deficiencies
Since 1992 EPA has taken positive steps to
address contract management deficiencies
identified by the Agency's Standing Committee on
Contracts Management. However, management's
focus needs to be maintained in personal services
and contractor access to confidential or sensitive
data (page 37).
19. Instances or Appearances of Personal
Services Under Contracts
Agency controls were generally adequate to
prevent personal services. However, EPA
personnel were not always committed to applying
the controls, which resulted in personal services or
the appearance of personal services. This
occurred in 13 of 23 (56 percent) contracts, and
among nearly all of the major program offices
reviewed (page 38).
20. Controls Over Contractor Access to
Confidential Data Need to be Improved
EPA has a system in place to control contractor
access to confidential business information.
However, the system does not adequately address
controls over contractor access to other equally
sensitive data such as enforcement, Privacy Act or
internal-sensitive information (page 39).
Section 2--Office of Investigations--
Significant Results
During this semiannual reporting period, our
investigative efforts resulted in four convictions and
eleven indictments. Also, our investigative work led
to over $10 million in fines and recoveries (page
43).
OIG-generated suspension and debarment cases
during this reporting period resulted in two
suspension and debarments (page 49).
Section 3--Fraud Prevention and
Management Improvements
During this semiannual period, we reviewed one
legislative and 23 regulatory items, (page 52).
The EPA Committee on Integrity and Management
Improvement (CIMI), chaired by the Inspector
General, planned and implemented the annual
Headquarters observance of Public Service
Recognition Week (page 53).
Forty-six new hotline cases were opened and forty-
one were closed during this reporting period. Of
the cases closed, one resulted in prosecutive action
(page 54).
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 123 reports for
which no management decision had been made.
During the second half of fiscal 1998, the Office of
Inspector General issued 247 new reports and
closed 240. At the end of the reporting period, 130
reports remained in the Agency followup system for
which no management decision had been made. Of
the 130 reports, 57 reports remained in the Agency
followup system for which no management decision
had been made within 6 months of issuance
(page 57).
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
-------
For the 92 reports closed that required Agency
action, EPA management disallowed $62.7 million
of questioned costs and agreed with our
recommendations that $3.2 million be put to better
use (page 57). In addition, cost recoveries in
current and prior periods included $1.9 million in
cash collections, and at least $32.7 million in
offsets against billings.
OFFICE OF INSPECTOR GENERAL
-------
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 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.
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 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
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)
3 52
1 8
1 8
Significant Problems, Abuses, and
Deficiencies
Recommendations with Respect to
Significant Problems, Abuses, and
Deficiencies
Prior Significant Recommendations on
Which Corrective Action Has Not
Been Completed
Matters Referred to Prosecutive
Authorities
Summary of Instances
Where Information Was Refused *
List of Audit Reports Appendix 1 60
Summary of Significant Reports 1 8
Statistical Table 1-Reports With 4 58
Questioned Costs
Appendix 2 67
2 44
Statistical Table 2-Reports With
Recommendations That Funds Be Put
To Better Use
4 59
Summary of Previous Audit
Reports Without Management
Decisions
Appendix 2 67
Description and Explanation of Revised
Management Decisions Appendix 2 67
Management Decisions with Which the
Inspector General Is in Disagreement **
* There were no instances where information or
assistance requested by the Inspector General was refused
during this reporting period.
** There were no instances of management decisions with which the Inspector
General was in disagreement.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
-------
Headquarters
Office of Inspector General-Who's Who
Inspector General
NMgLTnsjey.
Assistant Inspector General for
Management
John C.Jones
Program Support Staff
Edward Gekosky
Director
Ken
Rot
Office of Audit
James O.Rauch
Assistant Inspector General
ElissaRKarpf
Deputy for External Audits
Vfchael D. Srrmons
Deputy for Internal Audits
eth D. Hockman
Plar ling and Resources Mgmt
rt F. Eagen
Enc leering & Scientific Assistance
Pad ;ia H. Hill
udits and Assistance
1
Office of Investigations
AfenP.Falin
Assistant Inspector General
ErrmettD.DashielL Jr.
Deputy Assistant Inspector General
Divisional Inspectors General for Audit
Divisional Inspectors General for Investigations
Regions 1 & 2
Paul D. McKechnie
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
Thomas L. Papineau
Region 3
Patricia Brady
Regions 4,5,6 & 7
Ailverdes Cornelious
Regions 8,9 & 10
Mark Vallerga
OFFICE OF INSPECTOR GENERAL
-------
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 contractors' indirect cost rate submissions, price proposals,
and conduct final audits of contractor claims. 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 11 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.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
-------
Programs
EPA's Oversight of
Regional and State Air
Enforcement
Programs Is
Inadequate
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.
EPA sets national standards for the more serious toxic air pollutants
that threaten human health and the environment. Section 105 of the
Clean Air Act (Act) authorizes federal grants to help state and local
agencies prevent and control air pollution by ensuring that facilities
meet EPA standards. In fiscal year 1996, EPA awarded $160 million in
grants to states to carry out the Agency's priorities for air enforcement.
The OIG performed six audits on EPA's oversight of the states' air
enforcement data. National issues surfaced during these audits which
formed the basis for this consolidated report.
We Found That
The six air enforcement audits disclosed fundamental weaknesses with
state identification and reporting of significant violators of the Act.
Despite performing more than 3,300 inspections during the fiscal year
reviewed, the six states we audited reported a total of only 18
significant violators to EPA. In contrast, we reviewed state
enforcement files for 430, or 13 percent of the major facilities in these
states and identified an additional 103 significant violators that the
states did not report to EPA. In response to these audits, states and
EPA regions agreed to corrective actions to improve enforcement, and
EPA should ensure that they fulfill these commitments. Numerous
significant air pollution violators went undetected, and many of those
identified were not reported to EPA. This occurred because states
either did not want to report violators or the quality of state inspections
of facilities were inadequate to detect the violations. Without
information about significant violators, EPA could neither assess the
adequacy of the states' enforcement programs, nor take action when a
state did not enforce the Act. Moreover, because violators were not
always reported, EPA's information systems were unable to
communicate accurate information to the general public.
OFFICE OF INSPECTOR GENERAL
-------
States and even EPA regions disregarded Agency requirements. The
effectiveness of air enforcement programs suffered, in large part,
because EPA and the states did not adhere to EPA's Timely and
Appropriate Enforcement requirement (TAE) and its Compliance
Monitoring Strategy (CMS).
For EPA's oversight system to work properly, the Office of Enforcement
and Compliance Assurance (OECA) should oversee EPA regions,
which are responsible for working with state agencies to promote an
effective enforcement program. OECA had not assigned internal
responsibility for the oversight and implementation of CMS. EPA
regions did not always know who to contact in OECA for clarification of
enforcement issues. OECA did not routinely analyze enforcement data
to detect trends and problem areas, and its regional reviews did not
always assess the adequacy of regional oversight to identify violators.
Air grants did not include specific amounts for enforcement, which
resulted in EPA's loss of leverage to ensure state compliance.
We Recommended That
The Assistant Administrator for Enforcement and Compliance
Assurance:
• Continually reinforce EPA regional compliance with the TAE and
CMS.
• Assign oversight responsibility for the CMS.
• Work with the Office of Air and Radiation to earmark Section 105
grant funds for enforcement.
• Perform quality assurance of enforcement data.
• Evaluate regional air enforcement programs that assess regional
compliance with the TAE and CMS.
• Improve communications with the EPA regions.
• Establish focal points within OECA so that states and EPA regions
can obtain clarification of Agency enforcement directives.
What Action Was Taken
The final report (8100244) was issued to the Assistant Administrator for
Enforcement and Compliance Assurance on September 25, 1998. In
response to the draft report, the Assistant Administrator agreed with the
findings and recommendations, and stated OECA formed a workgroup
to streamline and clarify guidance. OECA met several times with state
and local air enforcement officials and have tentatively agreed to a new
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
-------
Idaho's Air Enforcement
Program Did Not Prevent
Threats to Human Health
and the Environment
definition of significant violator. Further workgroup discussion on the
timely and appropriate aspects of the TAE guidance will follow. To
improve communications with states and regions, OECA has
designated two focal points, one each for TAE and CMS oversight.
Also, OECA stated it will work with the Office of Air and Radiation to
modify grant guidance to incorporate enforcement priorities. A
response to the final report is due by December 24, 1998.
The Clean Air Act (CAA) authorizes EPA to set and enforce national
standards for emissions that pollute the air to protect human health and
the environment. The CAA assigns primary responsibility to the states
for ensuring adequate air quality. Although Region 10 granted
authority to Idaho to implement and enforce the stationary source air
program, it still has oversight responsibilities to ensure that the
program complies with federal laws and regulations.
We Found That
Idaho's stationary source air enforcement program for significant
violators (SVs) did not ensure compliance with laws and regulations
and did not prevent threats to human health and the environment. A
stationary source is a permanently fixed facility. Enforcement actions
were either not taken or were not escalated against 18 of the 24 SVs
we reviewed. In many instances, the sources had a history of repeated
and continuous air quality violations of permit conditions that lasted for
years.
Of the few penalties that Idaho had assessed, none included amounts
for the economic benefit gained from noncompliance. Penalties were
not large enough to credibly deter major air polluters. This happened
because Idaho focused more on compliance assistance rather than
enforcement. A lack of enforcement, and small or no penalties, gave
SVs a financial incentive to continue polluting rather than returning their
facilities to compliance. Further, the Compliance Assurance
Agreement
between Region 10 and Idaho did not require Idaho to follow EPA's
enforcement guidance.
Region 10's lack of oversight contributed to Idaho's ineffective
enforcement program. Specifically, the Region did not: (1) have a
plan for assessing the State's program; (2) review any of the State's
programs in the past five years; and (3) use its enforcement authority at
all, and did not take enforcement actions when the State failed to do
so. In addition, the Region did not recognize Idaho's air enforcement
program as a weakness in its Federal Managers' Financial Integrity Act
(FMFIA) assurance letter to the Administrator.
10
OFFICE OF INSPECTOR GENERAL
-------
We Recommended That
The Regional Administrator, Region 10:
• Require the State to develop and implement policies and procedures
that are consistent with EPA enforcement and inspection frequency
guidance.
• Report the weaknesses in Idaho's stationary air enforcement
program as a management control deficiency in the next FMFIA
assurance letter to the EPA Administrator.
• Assume responsibility for enforcement of the stationary source
program if the State is unable or unwilling to implement an
enforcement program that is consistent with the Clean Air Act and EPA
guidance.
What Action Was Taken
The final report (8100249) was issued to the Regional Administrator on
September 30, 1998. In responding to the draft report, the Regional
Administrator concurred with the recommendations and described
corrective actions that have been or will be taken. These actions
included discussions at the highest levels of management in both the
Region and the State to work jointly through the steps to improve
Idaho's air enforcement program. A response to the final report is due
by December 29, 1998.
EPA Had Not Effectively
Implemented Its
Superfund Quality
Assurance Program
EPA relies on environmental data to make important decisions on
complex issues that have significant environmental, social, health, and
economic impacts. Each year EPA and the regulated community
spend about $5 billion collecting environmental data. This data must
be accurate and relevant to the decision-making process to be useful.
The Office of Research and Development (ORD) has primary
responsibility for developing the national quality assurance (QA)
program and directing and overseeing its implementation. This report
focused on QA in the Superfund program, but we also made
recommendations concerning broader, Agencywide QA activities.
We Found That
Although EPA had developed many critical elements necessary for an
effective QA program, it had not fully developed, implemented, and
reported on the program's effectiveness. EPA had not demonstrated a
commitment to a cohesive, centrally-managed, mandatory Agencywide
QA program. ORD had not required all EPA organizations to comply
with minimum project planning requirements. Project managers
responsible for Superfund data collection lacked the training and
guidance needed to perform QA activities effectively.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
11
-------
Tucson International Airport PCB Removal Site (Photo by Dan Cox)
Senior EPA managers had not consistently implemented EPA's policy
to develop project specific data quality objectives for Superfund
environmental data collection. Seventy-nine percent of the regional
project plans we reviewed either did not include adequately document
data quality objectives, or did not contain any at all. The policy was
only minimally successful in the Superfund program because managers
had not provided sufficient direction or tools to implement the policy
and had not assessed program implementation. Without the consistent
use of a systematic planning process with clear criteria, EPA cannot be
sure the environmental data it collects is of the type and quality needed
to make sound cleanup decisions. EPA must perform adequate and
effective oversight in this area or risk making inaccurate decisions that
could adversely affect human health and the environment.
The OIG believes both the ORD and national Superfund QA managers
were at too low a level to effect needed change and were not viewed by
regional staff as being in positions of authority. Regional quality
management plans showed that QA managers and staff were not
appropriately located within their respective regions to accomplish QA
objectives. For example, in one region the QA staff reported to a
manager responsible for data collection activities, which was a conflict
of interest. Five regions had QA managers located in the regional
laboratories rather than in regional offices, making oversight difficult.
We Recommended That
The Acting Assistant Administrator for Research and Development:
• Develop a strategy to institutionalize the QA program.
• Establish and implement a method of ensuring adherence to
minimum criteria for an adequate systematic planning process.
• Place QA managers at organizational levels where they can be
effective and independent quality advocates.
12
OFFICE OF INSPECTOR GENERAL
-------
Region 9's
Environmental Data
Quality System for
Superfund Removal
Actions Is Insufficient
The Acting Assistant Administrator for Solid Waste and Emergency
Response:
• Perform management and technical assessments of regional QA
performance.
• Develop adequate oversight procedures to ensure data is of
sufficient quality to support decision-making.
• Provide Superfund staff with sufficient tools to implement EPA's
data quality objectives policy.
What Action Was Taken
The final report (8100240) was issued to the Acting Assistant
Administrators for Research and Development, and Solid Waste and
Emergency Response on September 30, 1998. In response to the draft
report, the Acting Assistant Administrators generally agreed with the
recommendations, except for placing QA managers at a different
organizational level, and proposed corrective actions. A response to
the final report is due by December 29, 1998.
EPA's Emergency Response Program responds to threats posed by the
sudden or unexpected release of hazardous substances. Region 9's
Emergency Response Office manages the majority of these responses,
called removal actions, for California, Nevada, Arizona, Hawaii, and
the Pacific Islands. The Region's Superfund Program has experienced
serious problems with environmental data quality that are likely to
continue. Risks to environmental data are significant because data is
the basis for EPA's decision-making and enforcement actions.
We Found That
Region 9 did not have a quality management plan which adequately
documented and described the quality system for removal actions.
Further, our review of five removal actions showed that most of the
site-specific quality assurance project plans: (1) were not based on the
seven-step data quality objectives process, EPA's systematic planning
method, (2) were not designed to prevent and detect inappropriate
quality data, (3) did not include defensible or optimal plans for
collecting data, (4) were not implemented or monitored, and (5) were
not reviewed or approved by the Region's Quality Assurance Office.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
13
-------
Perimeter Source Control Trench Treatment System (Photo by Phil \Afeihrouch)
"Data cannot be evaluated as good
or not good until the use of that data
has been clearly defined "
-Principles of Environmental Sampling,
Second Edition, 19%
We believe the main reason
the quality system was
insufficient was because
decision-makers did not
perceive data quality as a
risk to decision-making, and
thus did not require
adequate implementation of
the system. Consequently,
data was not of known and
acceptable quality for
decision-making. Specifically, we found that the Region: (1) completed
three of these removal actions without appropriate quality data for
decision-making, and (2) analyzed about 420 samples over four years
at one removal action that were not used for the decision indicated in
the sampling plan.
We Recommended That
The Regional Administrator, Region 9:
• Develop a quality management plan for Superfund removal actions.
• Develop data quality objectives for all removal actions using a team
approach that involves facilitators, on-scene coordinators, quality
assurance experts, statisticians, and technical experts.
• Amend on-scene coordinators' responsibilities for quality assurance
project plans to include the consideration of critical quality assurance
activities along with approval, implementation, and monitoring of
project plans.
• Require the Quality Assurance Office to review and approve all
quality assurance project plans.
14
OFFICE OF INSPECTOR GENERAL
-------
What Action Was Taken
The final report (8100223) was issued to the Regional Administrator,
Region 9, on September 4, 1998. In responding to the draft report, the
Region agreed with all recommendations and said it believed that these
actions, together with other ongoing efforts, should greatly enhance the
management of data quality at Superfund removal actions. The Region
also said that it "firmly believes that the five removal actions considered
in preparation of the report were appropriate and protective of human
health." A response to the final report is due by December 4, 1998.
Region 2 Had Not Billed
$31.5 Million of
Superfund Oversight
Costs
Superfund legislation authorizes EPA to recover its costs for cleaning
up sites from the responsible parties to help replenish the Superfund
Trust Fund. This includes costs EPA incurs to oversee cleanup
activities. Recovery is initiated through negotiation with, or legal action
against, a responsible party (RP). Judicial and non-judicial actions
establish EPA's legal right to be reimbursed by the RP for oversight
costs. Based on these orders, Region 2 prepares bills and establishes
accounts receivables.
We Found That
Region 2 did not bill and collect in a timely manner accumulated
Superfund oversight costs. The Region did not recover cleanup
oversight costs from RPs for as long as 11 years. Also, when delayed
bills were sent, RPs disputed the amounts and requested extensive
supporting documentation. Collections were further delayed. At least
17 of the 68 (25 percent) delayed bills for oversight since 1989
contained errors and were reduced by $5.4 million.
The Region issued enforcement documents with oversight
reimbursement provisions for 115 Superfund sites. However, from
April 1989 to September 1997, the Region issued bills for only 68 sites
(60 percent). As of September 30, 1997, Region 2's fiscal year 1997
Unbilled Oversight Closing Balance Calculation was $31.5 million for
89 Superfund sites. This was an increase of $2.1 million since
September 30, 1996.
Billing delays were generally caused by the Region's inadequate
management control system. Contributing factors were other competing
priorities, inadequate tracking systems, vague or nonexistent billing
requirements in Consent Decrees, inadequate coordination between
program offices and the Office of Regional Counsel, and difficulty in
segregating oversight from other response costs.
Untimely oversight billings and collections resulted in unnecessary
delays in replenishing the Superfund Trust Fund. The delays limited
EPA's ability to clean up other priority sites and further protect human
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
15
-------
health and the environment. Unbilled costs also caused
understatements in the account receivable and revenue account
balances in EPA's financial statements. Significant amounts of interest
that would have accrued to the Trust Fund were also lost or postponed.
Before fiscal 1998, Region 2 oversight bills were a low priority.
However, since the first quarter of 1998, the Region has been
concentrating on the backlog of bills. As of May 1998, 14 bills had
been issued, 14 were subsumed in larger negotiations, 3 had no further
costs to be billed, and 8 others will be addressed in fiscal year.
We Recommended That
The Regional Administrator, Region 2:
• Emphasize oversight billings as a priority activity and ensure that all
pending bills are issued by the end of fiscal 1998. A quarterly
reconciliation should be prepared, backlogged bills addressed, and
necessary actions taken.
• Ensure that future oversight costs are billed in accordance with the
enforcement agreements signed by the Region or within 120 days of
the anniversary date if the agreement is silent as to billing
requirements.
• Modify existing written oversight billing procedures to include
timeframes for initiating, assembling, reviewing, and issuing oversight
bills by all participating offices.
• Initiate and document periodic meetings between officials involved
in the oversight process to improve coordination and timeliness
between the offices.
What Action Was Taken
The final report (8100206) was issued to the Regional Administrator,
Region 2, on August 13, 1998. In response to the draft report, Region 2
agreed that it should endeavor to issue bills on a timely, regular basis
and has taken steps to improve its record. However, the Region
disagreed with some of the numbers in the report, and explained that
several billings were delayed due to extenuating circumstances.
Further, Region 2 stated it has addressed 94 percent of the billable
sites as of September 30, 1998, and has established the process for
tracking and issuing oversight bills. A response to the final report is due
by November 12, 1998.
16 OFFICE OF INSPECTOR GENERAL
-------
Additional Effort
Needed by Region 9 to
Make Superfund
Oversight Cost Billing
Current
EPA incurs oversight cost while monitoring cleanup work performed
by responsible parties (RPs) at Superfund sites. The Comprehensive
Environmental Response, Compensation, and Liability Act (CERCLA)
authorizes EPA to recover these costs to help replenish the Superfund
Trust Fund. Such recoveries are accomplished by the use of a
Consent Decree or an Administrative Order on Consent.
We Found That
Region 9's procedures and internal controls, if properly implemented,
are generally adequate to ensure that Superfund remedial action
oversight costs are properly classified, recorded, and billed to RPs. By
July 1998, the Region had made significant progress in reducing a
sizeable longstanding backlog. Continued attention is necessary to
assure that the Region is able to meet EPA's standard for preparing
current oversight billings within 120 days of the consent degree or
administrative order anniversary date. We found delays of up to 36
months in billing oversight costs. Also, for overdue bills, Region 9 was
not sending dunning letters or follow-up bills to RPs. Some of the
delays in billing oversight costs can be attributed to the complexity of
the cost package process, the lengthy periods being billed, extended
delays in preparing bills, and the extent to which cost packages were
being documented. We identified some opportunities for the Region to
improve its oversight billing processes.
We Recommended That
The Regional Administrator, Region 9:
• Evaluate current processes to identify streamlining opportunities,
especially considering minimizing documentation being supplied to
RPs.
• Strengthen regional procedures for follow-up on delinquent accounts
receivable.
• Assure that adjustments to accrued unbilled oversight costs are
appropriately documented and approved.
What Action Was Taken
The final report (8100259) was issued to the Regional Administrator,
Region 9 on September 30,1998. In response to the draft report, the
Region generally agreed with the audit findings and recommendations.
A response to the final report is due by December 29, 1998.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
17
-------
EPA's Office of Water
Data Integration Efforts
Need to be More
Focused and
Significant
Data management and cross-integration of media has been a long-
standing problem for the Agency. Although data management has
been an Agency-level Federal Managers' Financial Integrity Act
weakness since 1994, the Office of Information Resources
Management (OIRM) has made limited progress towards establishing a
fully-operational data standards program. Data standardization is key
to the Agency's goal to integrate data across its information systems.
We Found That
The Office of Water (OW) has not developed Information Technology
plans, data standards or standard guidance that will facilitate data
sharing or integration of data across OW systems, except for one 1992
order. Without standardization and integration, EPA will continue
operating stovepipe systems (Vertical, non-integrated systems) and
may not have the environmental data needed to monitor state water
programs. OWs lack of progress can be attributed, in part, to the
absence of a formal Information Resources Management (IRM)
structure. At the time of our review, OW had numerous projects
underway to (1) increase public access to key water data through the
Internet, (2) organize data by watershed, and (3) establish
environmental indicators. However, OW needs to centralize its IRM
structure and work with EPA's Office of Information Resources
Management to adopt an environmental data standardization process
that will be mandatory for national water systems. Also, OW needs to
establish a long-range plan with measurable goals for its major
information systems.
We Recommended That
The Assistant Administrator for Water:
• Establish a formal IRM organization to act as a clearinghouse for
oversight of Information Technology initiatives and capital investments
across the water program.
• Establish a data architecture and coordinate data management with
U.S. Geological Service for developing Federal data water standards
and providing environmental data guidance.
• Aggressively support establishing EPA-level environmental data
standards with OIRM.
The Acting Director for IRM:
• Formally adopt policies and procedures in Agency directives to
support a standards program, using the Environmental Data Registry as
a central repository.
18
OFFICE OF INSPECTOR GENERAL
-------
Region 5 Was Effectively
Overseeing Responsible
Parties' Remedial
Construction Projects,
But Could Do More
What Action Was Taken
The final report (8100177) was issued to the Assistant Administrator for
Water and the Acting Director, Office of Information Resources
Management, on June 22, 1998. In responding to the draft report, the
Acting Director for Information Resources Management and the Acting
Director for Policy and Resources Management, Office of Water,
generally agreed with the recommendations. Further, they
acknowledged that much remains to be done and stated that both
offices are committed to continuing and strengthening their efforts.
They have already begun implementing our recommendations. OW
established an office-wide IRM committee as the focal point for
increasing efforts to share and integrate data across OW programs.
After determining the nature and extent of contamination at a
Superfund site, EPA announces the proposed cleanup method in the
record of decision. Responsible parties perform the majority of
Superfund cleanup activities. EPA's role is to ensure responsible
parties comply with all applicable laws, regulations, requirements, and
performance standards in any settlement agreement. EPA has three
sets of Superfund reform initiatives designed to assist state and local
governments, communities, and industries by making cleanups easier.
One of the administrative reforms is focused on reducing oversight
where responsible parties are cooperative and capable.
We Found That
Region 5 project managers ensured that remedies were being
completed in accordance with the record of decision and that schedules
in settlement agreement were met. The project managers
accomplished effective oversight by establishing good working
relationships with the responsible parties. This included open
communication and working through issues as they occurred, before
they turned into major problems. One way Region 5 could improve its
oversight is by more frequently using independent quality assurance
teams during construction cleanup.
The impact of the reduced oversight administrative reform in Region 5
was difficult to measure due to (a) the inherent nature of the oversight
process where there is not a defined level of oversight, and (b) the cost
savings from reductions in oversight were not computed.
As a result, for fiscal years 1996 and 1997, the Agency could not
determine whether the reform was successful in Region 5. The reform
had only a limited effect on how Region 5 determined the appropriate
level of oversight at responsible parties cleanups. For fiscal year 1998,
the Agency has developed an evaluation form that, when completed,
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
19
-------
State Deferrals: Some
Progress, But Concerns
for Long-Term
Protection Continue
may provide management with the information it needs to evaluate the
impact of the reform.
We Recommended That
The Acting Regional Administrator, Region 5,
• Require the Superfund Division to (1) use independent quality
assurance teams for Potentially Responible Party lead remedial design
and remedial action sites, and (2) verify that independent quality
assurance teams are being used appropriately.
• Ensure that Superfund Division annually completes the evaluation
form for sites in the reduced oversight administrative reform in order to
compute cost savings.
What Action Was Taken
The final report (8100208) was issued to the Acting Regional
Administrator, Region 5, on August 17, 1998. In response to the draft
report, the Acting Regional Administrator agreed with the report's
recommendations. Based on this response, we closed the report in our
tracking system.
In June 1993, EPA initiated the State Deferral program to reduce the
number of hazardous waste sites awaiting listing to the National
Priorities List (NPL). The program allows the cleanup of deferred sites
with minimal oversight from EPA. After cleanup and certification from
the states, EPA can remove the deferred sites from its Superfund
tracking system.
We Found That
While 14 of 30 deferred sites were behind the schedules agreed to in
consent decrees or other enforceable documents, generally the
cleanups were progressing. For the three sites completed, relatively
simple remedies were performed, including soil disposal and
groundwater and deed restrictions.
Although the State Deferral program is a low priority, EPA should be
aware of the significant concessions being made. The National
Contingency Plan (NCP) establishes the preference for permanent
remedies, and requires treatment remedies in some instances and
five-year reviews when hazardous contaminants remain on site.
States are not required to follow the NCP for deferred sites even
though they were expected to be NPL caliber sites. Eleven of the 18
remedies selected to date have not been permanent or treatment
remedies. For 8 of thel 1 cases, five-year reviews or periodic checks
on the protectiveness of the remedies were not required. Thus,
remedies may not protect human health and the environment for the
long term.
20
OFFICE OF INSPECTOR GENERAL
-------
State Deferral guidance provides for community input on deferrals and
the termination of deferrals based on valid community objections. EPA
has no mechanism to monitor or evaluate community support. In
addition, state officials did not always inform EPA when communities
raise significant concerns. EPA could terminate a deferral if the
community's objections are not addressed by the state. However, EPA
may not be aware of any concerns because it does not closely monitor
the activities at the site or in the community. EPA did not have an
effective monitoring system and evaluation program to track the status
of deferral agreements, sites, and cleanups.
We Recommended That
The Acting Assistant Administrator for Solid Waste and Emergency
Response:
• Establish a mechanism to ensure that five-year reviews or an
equivalent process will be performed where hazardous contaminants
will remain on site.
• Establish a mechanism to ensure that community concerns about
deferrals are brought to EPA's attention.
• Require regional officials to track deferrals more closely.
• Implement performance measures that will reflect the desired
outcomes of the State Deferral program.
What Action Was Taken
The final report (8100234) was issued to the Acting Assistant
Administrator for Solid Waste and Emergency Response on September
10, 1998. In response to the draft report the Acting Assistant
Administrator did not disagree with our recommendations, but
suggested making them less specific. During the audit, Agency officials
made changes to track deferral starts and completions. They also
added state deferrals to a draft Government Performance and Results
Act sub-objective so that they can track the percentage of sites that
have final assessment decisions. A response to the final report is due
by December 9, 1998.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
21
-------
EPA Has Improved Its
Environmental, Safety,
and Health Program,
But More Work Is
Needed
EPA's environmental, safety, and health (ESH) program is responsible
for determining whether EPA complies with its environmental
regulations, as well as safety and health requirements. We followed up
on our 1995 report which recommended actions to better protect
employees, facilities, and the environment.
We Found That
The Agency implemented most of the recommendations in our 1995
report. For example, immediate action was taken to address risk at the
laboratory in Gulf Breeze, Florida and increase the visibility of ESH
audit reports by additional distribution to top management. However,
EPA needs to modify its audit protocol to strengthen its assessment of
the training and qualifications of ESH personnel. The Agency should
also enhance the ESH audit reporting process by clearly discussing risk
in
executive summaries, presenting and analyzing auditee comments in
final reports, and by promoting more timely reporting.
In October 1996 the Agency issued the Code of Environmental
Management Principles for Federal Agencies (CEMP). Full
implementation of this code would satisfy our 1995 recommendation
that EPA establish a model environmental program which also
addressed safety and health issues. The Agency has taken steps to
meet CEMP principles, but needs to do more to be a leader in setting a
standard for excellence in responsible environmental management at
its own laboratories and facilities. Specifically, EPA can demonstrate
strong commitment through a written environmental policy statement
from senior management and by better assessing the Agency's overall
environmental risk so that program priorities can be more effectively
established.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management:
• Strengthen the ESH audit protocol to address training and
qualifications of ESH personnel to best complement the individual
laboratories' ESH needs.
• Further enhance the ESH audit process through improved reporting
and greater access to ESH audit corrective action tracking systems.
• Fully implement CEMP, challenging the Agency to move forward to
a higher level of environmental management and provide leadership
not only for federal, but national, ESH programs.
22
OFFICE OF INSPECTOR GENERAL
-------
Region Ts
Administrative
Reforms Improved the
Superfund Process
What Action Was Taken
The final report (8100185) was issued to the Acting Assistant
Administrator for Administration and Resources Management on July
23,1998. In his July 10, 1998, comments to the draft report, the Acting
Assistant Administrator agreed with our recommendations and provided
planned corrective actions and milestone dates for completion. Based
on this response, we closed the report in our tracking system.
The Superfund program has been criticized because of the pace and
cost of cleaning up hazardous waste sites, the fairness of EPA's
approach for holding waste contributors liable, and the role of States
and communities in the cleanup process. In response to the criticism,
EPA initiated three rounds of Superfund administrative reforms, which
consisted of various initiatives and pilots that were implemented by the
regions.
We Found That
Region 1's use of various Superfund reforms helped achieve the
Agency's goals to improve the equity and effectiveness of the
Superfund process. However, we were unable to document an overall
improvement in expediting the Superfund process from listing on the
National Priorities List to construction completion (pipeline). Before the
initiation of Superfund reforms, Region 1 sites took an average of
seven years and two months to reach construction completion.
Afterwards, the average time increased to nine years and 11 months.
There were tradeoffs in implementing the reforms. Improved equity or
community buy-in may come with the price of additional time spent in
the pipeline which may or may not equate to increased costs. The
Region was not required to evaluate the impact reforms had on the
cleanup process.
Region 1 was one of the few regions to aggressively implement the
Updating Remedy reform, saving $75 million at 11 sites. Use of
enforcement reforms such as de minimis, mixed funding, orphan share,
and Alternative Dispute Resolution provided greater equity to the
Superfund process. One reform, the use of a Community Advisory
Group, resulted in community consensus and cost savings of
approximately $45 million by adopting a new remedy. However, these
successes also came at a price. It took five years for the Advisory
Group to reach consensus. Enforcement reforms, in particular,
required greater detailed information and documentation, thus
increasing the amount of time a site spent in the pipeline.
Presumptive remedies were developed to streamline the Remedial
Investigation/Feasibility Study (RI/FS) process, thus saving time and
costs. We found that this reform did not always expedite the Superfund
process as envisioned. Regional Project Managers (RPMs) believed
the use of presumptive remedies provided a more focused RI/FS and
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
23
-------
promoted consistency. However, the RI/FS phase for most sites took
longer than the 18 month completion goal set by Headquarters. The
Agency had not developed a plan to evaluate the use of this reform.
As a result, there was no assurance that the use of presumptive
remedies actually saved time or money. Additionally, the RPMs said
they were unable to quantify time or cost savings which they believed
resulted from the use of the reform.
We Recommended That
The Regional Administrator, Region 1:
• Instruct the regional enforcement staff to work with Headquarters
Office of Enforcement and Compliance Assurance staff to determine
the
feasibility of implementing regional recommendations which could help
to expedite the Superfund enforcement process.
• Instruct the Office of Site Remediation & Restoration staff to develop
an evaluation plan to determine if the use of presumptive remedies is
achieving its desired results.
What Action Was Taken
The final report (8100254) was issued to the Regional Administrator,
Region 1, on September 29, 1998. In response to the draft report, the
Region generally concurred with the report findings and
recommendations. A response to the final report is due by December
29, 1998.
24 OFFICE OF INSPECTOR GENERAL
-------
Financial Statements
Further Improvements
Needed in the
Working Capital Fund
Financial
During fiscal 1997, EPA established a Working Capital Fund (WCF) to
finance the cost of postage, telecommunications, computer, data
storage and technical services. A WCF is a revolving fund designed to
finance the cost of services provided to customers. As customers
consume services, they are billed, and payment is made through the
WCF.
We Found That
We could not determine if the fiscal 1997 WCF financial statements
reporting over $41 million were fairly presented. EPA did not have
policies and procedures in place to accumulate and report in a timely
manner all WCF revenue and expenses, and related receivables and
payables. We were also unable to determine whether WCF financial
information was properly presented because EPA had not adequately
identified or computed the value of its WCF property. These internal
control weaknesses affected not only the fair presentation of the
financial statements, but also the overall management of the WCF
operations. We considered them to be material weaknesses in our
audit of these financial statements.
EPA did not have policies and procedures in place to identify and
return overbillings in a timely manner. This resulted in any one-year
appropriations expiring before the overbillings could be returned to
EPA's program offices.
EPA's development of WCF billing rates was inconsistent with its fiscal
1997 Appropriations Act which required WCF rates to be established
that would return in full all expenses of operations. EPA's rates did not
include rent, electricity, WCF staff salaries and benefits, and finance
and security costs associated with the operation of the WCF.
Finally, the value of WCF property in the general ledger and the WCF
financial statements was $41.2 million. However, the Enterprise
Technology Services Division Capital Asset Listing showed the value
as $43.5 million. We do not know all the reasons for the $2.3 million
difference, but we identified 21 property items valued at $2.4 million on
the Capital Asset Listing which were not recorded in the general ledger.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
25
-------
EPA Needs to
Improve the Accuracy
of Its Reporting of
Reregistered
Pesticides
We Recommended That
The Acting Chief Financial Officer (CFO):
• Direct the Working Capital Fund staff to record revenue at the time
services are performed.
• Allocate rent, utilities, WCF staff salaries and benefits, and finance
and security costs to the WCF and include these costs in WCF financial
statements. Revise the Agency's policy on the WCF rates to state that
they must return in full all expenses of operation.
• Direct the WCF Staff to reconcile the differences between the value
of EPA's WCF property recorded in the accounting system and on the
Enterprise Technology Services Division's detailed property listing.
What Action Was Taken
The final report (8100166) was issued to the Acting CFO on June 16,
1998. In responding to our draft report, the Acting CFO agreed with our
recommendations and scheduled corrective actions for later completion.
EPA's response to our final report was due September 14, 1998. As of
September 30, 1998, we had not received the response.
EPA is responsible for reassessing the safety of older pesticide
registrations against modern health and environmental testing
standards. To expedite this reregistration process, Congress
authorized EPA to collect fees from pesticide manufacturers. The fees
are deposited into the Pesticide Reregistration and Expedited
Processing Fund (FIFRA Fund). Each year the Agency prepares
financial statements for the FIFRA Fund along with information about
EPA's progress in reregistering pesticides.
We Found That
The fiscal 1997 FIFRA Fund financial statements were fairly presented.
However, problems with its tracking system affected the Office of
Pesticide Program's (OPP) ability to assess and report accurately on
the progress of reregistering pesticides. For nearly a decade similar
tracking system problems have resulted in inaccurate reporting of
product reregistrations. Although OPP implemented procedures to
verify and validate its program accomplishment data based on a
recommendation in our fiscal 1996 audit report, the data review was not
conducted in a timely manner. As a result, OPP understated its fiscal
1997 program accomplishments by not reporting 37 completed
reregistrations which were 9 percent of the total. As the Agency moves
forward in implementing the Government Performance and Results
Act, performance data will be used to make decisions about the
planning,
26
OFFICE OF INSPECTOR GENERAL
-------
Update On Actions
Taken Concerning
Substantial
Noncompliance With
The Federal Financial
Management
Improvement Act
budgeting and execution of the pesticide program. Therefore, it is
important for the Agency to have a system and controls in place to
gather and report this information accurately .
We Recommended That
The Assistant Administrator for Prevention, Pesticides, and Toxic
Substances continue to verify and validate a sample of its reregistration
accomplishments. However, the reviews should be completed before
reporting the annual accomplishment data to Congress, environmental
groups and the public.
What Action Was Taken
The final report (8100204) was issued to the Chief Financial Officer and
the Assistant Administrator for Prevention, Pesticides, and Toxic
Substances on August 20, 1998. In responding to the draft report, the
Assistant Administrator for Prevention, Pesticides, and Toxic
Substances agreed with our findings and recommendation. A response
to the final report is due by November 18, 1998.
As part of our financial statement audits, the Federal Financial
Management Improvement Act (FFMIA) requires us to assess whether
EPA's financial management systems substantially comply with: (1)
Federal financial management system requirements, (2) applicable
accounting standards, and (3) the Standard General Ledger at the
transaction level. If the financial systems are not in substantial
compliance, FFMIA also requires us to report, in our Semiannual
Report to the Congress, on the remediation plan to bring the systems
into compliance.
In our audit report, EPA's FISCAL 1997 AND 1996 FINANCIAL
STATEMENTS (E1AML7-20-7008-8100058, dated March 2, 1998), we
reported that, as of September 30, 1997, EPA's financial management
systems did not substantially comply with certain financial management
system requirements and accounting standards.
Federal Financial Management System Requirements
• The Agency's Core Financial Systems1 and EPAYS did not have
required management controls, including approved implementation
plans, to provide reasonable assurance that
The Core Financial System is composed of the Integrated Financial Management System (IFMS), the
Combined Payroll Redistribution and Reporting System (CPARS), and the Management Accounting and Reporting
System (MARS) The other principal financial systems in the financial systems inventory are the EPA Payroll &
Personnel System (EPAYS) and the Contracts Payment System (CPS)
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
27
-------
Year 2000 activities will be completed before the systems are subject
to failure.
• Financial Management Division (FMD) management had not
established appropriate levels of management review for approval or
disapproval of system development or enhancement/replacement
projects associated with the Year 2000, as required by EPA policy
Directive 2100, Chapter 17, System Life Cycle Management.
• The Agency's Core Financial Systems and EPAYS did not have an
application security plan, as required by OMB Circular A-130,
Management of Federal Information Resources, Appendix III (February
1996).
Our report acknowledged that EPA, through its fiscal 1997 Federal
Managers' Financial Integrity Act process, reported Agency security
plans as a material weakness and Year 2000 Date Conversions as an
Agency-level weakness.
Accounting Standards
• We reported, as a material weakness , EPA's accounting for unbilled
Superfund oversight costs. The Agency implemented a new
methodology during FY97 to estimate and accrue unbilled oversight
costs, which resulted in the Agency's Statement of Financial Position
being fairly presented. However, not withstanding the fair presentation
of the financial statements, an issue remained that as of September 30,
1997, approximately $162 million of oversight costs that were due to
the Agency had not been billed, collected, or returned to Treasury.
Because EPA was not billing and collecting oversight costs timely, the
assets and revenue related to this activity were not recorded in the
Agency's financial system. For this reason EPA was not in compliance
with Statements of Federal Financial Accounting Standards No.1 -
Accounting for Selected Assets and No. 7 - Accounting for Revenue
and Other Financing Sources.
To address the problem, the Agency developed and implemented a
plan to bring oversight billings up-to-date by the end of fiscal 1998.
The Agency has taken a number of steps toward reducing the material
amount of unbilled oversight costs estimated in the fiscal 1997 financial
statements and is prospectively committed to billing on a timely basis.
We will continue to monitor the Agency's progress toward this goal.
Status of Agency's Remediation Plan
On September 30, 1998, the CFO, in response to the final report,
stated that a number of the substantial noncompliance issues had
already been corrected. Additional work still necessary will be included
in a remediation plan, which will be part of the FY 1998 CFO's Strategic
Plan for Resources Management. The target date for completing and
delivering the remedial plan to OMB is October 31,1998. We will
evaluate the Agency's efforts in implementing its remediation plan
during our ongoing audit of the fiscal 1998 financial statement audit and
report on EPA's progress in the next Semiannual Report to the
Congress.
28 OFFICE OF INSPECTOR GENERAL
-------
Not All Intended
Residents Connected to
Completed Texas
Wastewater Treatment
Projects
Assistance Agreements
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.
Water pollution is one of the principal environmental and public health
problems facing small communities located along the U.S.- Mexico
border. These small communities, referred to as colonias, are often
highly impoverished areas, characterized by substandard housing and
poor living conditions. Because they often lack basic services, many
residents suffer from ongoing health conditions. Almost 400,000
people in Texas live in these communities. The federal government
and the State of Texas have undertaken steps through various grant
and loan programs to address the basic water and wastewater problems
in the colonias.
We Found That
Although the Texas Water Development Board (the Board) had been
successful in planning, designing, and constructing wastewater
treatment projects under the Colonias Wastewater Treatment
Assistance Program (CWTAP), residents had not connected to the
completed projects. Pollution prevention problems will continue to
exist, posing ongoing threats to the health of residents and the
environment, until all intended residents are connected to the
completed services. Five projects, completed between 1994 and
1996, had rates of connection that ranged from 20 to 88 percent. The
low rates of connection were attributed to affordability and improper
handling of mandatory connection requirements.
Although wastewater treatment projects had been placed into
operation, many colonia residents did not have access to the services
because they could not afford to connect to the system and install
indoor plumbing fixtures. Traditionally, the Board had relied on other
state and federal programs to provide grant and loan funds to the
residents. However, conflicting state or federal requirements under
other programs may prevent some residents from being eligible for
these funds. As a result, residents are unable to connect to the
completed projects.
Before July 1995, the Board had not exercised its authority to require
grant recipients to establish mandatory connection requirements. As a
result, two of the five projects reviewed were awarded with no
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
29
-------
assurances that the residents
would be made to connect to the
completed wastewater treatment system. Even grants with mandatory
connection requirements were not enforced. Although CWTAP existed
since 1992, the Board had not established monitoring and enforcement
procedures to ensure that connections were made to completed
projects. As a result, the Board had not detected the low rates of
connections experienced on five completed projects. It was not until
our survey that the Board became aware of the low rates of connection.
We Recommended That
The Regional Administrator, Region 6, work with the Board to:
• Ensure that all intended residents of the five completed projects are
connected to the available services.
• Develop affordable financial strategies for delivery of services to the
residents through increased coordination efforts with other State and
federal agencies.
• Ensure that local agencies have enforceable mandatory connection
requirements in place before receipt of grant funding.
• Develop procedures to monitor and enforce mandatory connection
requirements by grant recipients.
What Action Was Taken
Federal Funds Used
to Support Lobbying
Activities
The final report (8400043) was issued to the Regional Administrator,
Region 6, on September 21, 1998. In response to the draft report, the
Region and the Board generally concurred with the report's findings and
recommendations. Region 6 stated it will work with the Board to allow
EPA grant funds to be used to pay for the cost of connections. Based
on the comments provided, we closed the report in our tracking system.
In 1996, EPA and the Department of Agriculture provided $16 million of
congressionally earmarked funding to the National Rural Water
Association (NRWA). NRWA used the EPA funds to award
noncompetitive contracts to its 45 State Rural Water Associations
(SRWAs) for training and technical assistance. To receive annual
funding from NRWA, the SRWAs agreed to support all NRWA
sponsored programs. A March 31, 1998, OIG report concluded that
NRWA had included unallowable lobbying costs in its indirect cost rate.
EPA program officials requested that we review the SRWAs to
determine whether they had also used federal funds to support lobbying
activities.
30
OFFICE OF INSPECTOR GENERAL
-------
We Found That
The six SRWAs reviewed participated in various lobbying activities at
the state and national level from fiscal 1992 to 1996. SRWAs in
Arkansas, Missouri and Wisconsin had developed adequate internal
controls to account for lobbying activities in accordance with OMB
Circular A-122. Cost Principles for Non-Profit Organizations. The costs
associated with their lobbying activities were properly identified as
unallowable and charged to internal accounts. However, the SRWAs in
Alabama, California and Maine needed to further improve their internal
controls to identify and exclude lobbying costs from charges to EPA
assistance agreements. We could not identify the total dollar value of
federal funds spent for lobbying because the three SRWAs improperly
commingled unallowable lobbying costs into their indirect cost pools.
The SRWAs indirect costs were partially reimbursed with federal funds.
Inadequate identification and segregation of unallowable cost increases
the likelihood that federal funds were used to pay for unallowable costs.
The base period for the allocation used by two of the SRWAs (Alabama
and Wisconsin) to calculate indirect costs claimed under their contracts
with NRWA did not comply with OMB Circular A-122. Alabama
calculated 12 monthly indirect cost rates, but did not adjust the 12
monthly rates to one annual rate at year end. Wisconsin calculated a
separate indirect cost rate for each project based on the project period.
This practice resulted in multiple rates with project time periods that did
not coincide with the actual fiscal year. The SRWAs did not believe
they had the flexibility to change their methods of calculating indirect
cost rates because their rate calculations had to be submitted to NRWA
for approval. When organizations use various methods, different base
periods and budgeted data to calculate their indirect cost rates, there
are no assurances that the indirect costs charged to federal assistance
agreements and contracts are equitable or supported by the accounting
records.
We Recommended That
The Director, Grants Administration Division:
• Obtain written assurance from NRWA that the SRWAs have
developed and implemented adequate internal controls to identify and
exclude their lobbying costs from charges to EPA assistance
agreements.
• Require that NRWA and all SRWAs calculate indirect costs
chargeable to federal assistance agreements and contracts in
accordance with OMB Circular A-122.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
31
-------
Better Information and
Oversight Would
Improve Assistance
Awards
What Action Was Taken
The final report (8400049) was issued to the Director, Grants
Administration Division, on September 29, 1998. In responding to the
findings in draft, SRWAs believed their internal controls were adequate
to account for lobbying costs in accordance with OMB Circular A-122.
However, the SRWA agreed that certain actions would be taken or
considered to strengthen their internal controls. A response to the final
report is due by December 29, 1998.
EPA program offices are responsible for programmatic and technical
review of assistance proposals (grants and cooperative agreements),
and for preparing assistance funding packages. The Grants
Administration Division (GAD) performs an administrative review of the
assistance application to ensure that applications are complete.
We Found That
Program offices did not always negotiate assistance agreements with
well-defined commitments, adequately determine and document that
costs submitted with assistance applications were reasonable, or
prepare decision memoranda which contained all information required
to support recommendations for award. Without milestones and
outputs, the Agency limits its ability to hold recipients accountable.
Without justifications for noncompetitive awards, the Agency could give
the appearance of giving preferential treatment to a single assistance
applicant or of not encouraging competition to the maximum extent
practicable. Furthermore, without determinations of cost
reasonableness, the Agency cannot demonstrate that the level of
funding is appropriate for the work to be performed. Without post-
award monitoring plans, the Agency cannot be assured that the time
and money will be available to execute oversight responsibilities
adequately. Without all of these things, the Agency is not providing
effective management of extramural resources.
Also, 28 of 55 fiscal 1997 Environmental Justice assistance
agreements awarded by the Office of Prevention, Pesticides, and Toxic
Substances (OPPTS) were improperly funded using resources intended
for other purposes. Improper use of funds happened because: (1) of
weak funds control within OPPTS, (2) OPPTS division directors acted
to avoid carrying over excess funds, and (3) GAD's "check and
balance" process did not identify the improper funding. This resulted in
the reprogramming of $1.9 million without required congressional
approval. In response to our review, OPPTS took corrective actions
which should prevent future misapplication of funds.
32
OFFICE OF INSPECTOR GENERAL
-------
EPA Has Awarded
Assistance
Agreements Without
Clear Statutory
Authority
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management:
• Direct GAD to take the lead in the development of project officer
refresher training courses.
• Direct GAD to develop guidance explaining the types of omissions
which will result in GAD returning incomplete assistance funding
packages to the program offices.
• Direct GAD to work with the program offices to develop a
coordinated post-award management strategy.
• Raise the need for additional assistance training to the Resource
Management Committee, including an estimate of the minimum
resources required to deliver training Agencywide, and options for
delivering the training.
What Action Was Taken
The final report (8100256) was issued to all Assistant Administrators
and the Chief Financial Officer on September 30, 1998. In responding
to the draft report, GAD and program offices agreed that those involved
in awarding assistance should be trained. However, they stated the
need for additional training will strain existing resources, and more
resources have not been made available. Program offices agreed that
assistance fundingpackages with significant omissions should be
returned for correction, and GAD agreed to develop guidance on which
types of errors or omissions will cause packages to be returned to the
program offices. A response to the final report is due by December 31,
1998.
While every federal agency has inherent authority to enter into
contracts to procure goods or services for its own use, there is no
comparable inherent authority to provide the government's money or
property under assistance agreements (grants and cooperative
agreements). However, Congress has given this authority to EPA in
many of the Agency's environmental statutes.
We Found That
Activities funded by EPA through assistance awards were not always
within the Agency's assistance authorities as described by the
Comprehensive Environmental Response, Compensation, and Liability
Act (CERCLA); the Federal Insecticide, Fungicide, and Rodenticide
Act; and the Toxic Substances Control Act. We questioned 25 of the
57
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
33
-------
assistance awards reviewed based on a comparison of the grant-
making language in the statutes and the description of work to be
performed.
EPA has broadly interpreted its grant-making statutes in order to
provide assistance for a wide range of environmental projects. For
example, Section 311(c) of CERCLA authorizes research grants to
evaluate the effects of hazardous substances on human health, and
detection of hazardous substances in the environment. The Agency
has broadly interpreted the term "research" to encompass activities
such as outreach and communication, environmental justice issues,
and studying the effects of laws and regulations on the economic
redevelopment of brownfield sites. Furthermore, EPA has determined
that publicizing the results of research is an integral component of the
research itself; therefore, workshops and conferences would also be
authorized. In fact, all nine of the CERCLA 311(c) grants we reviewed
included meetings, workshops, and conferences, and for five of the
nine, these appear to be the primary activities. Yet the proposals do
not indicate that publicizing the research results is the reason for the
meetings and conferences. In fact, the meetings and research appear
to be unrelated to each other.
Since there is no evidence in legislative histories as to how Congress
intended the restrictive assistance authorities to be interpreted,
program offices and the OIG now differ about the extent of the
Agency's assistance authority. While some may see this as a black or
white issue, numerous discussions among all parties have made it clear
that reasonable people have differing opinions. By presenting these
differences we hope that Congress will assist EPA to clarify
congressional intent.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management:
• Coordinate with other Assistant Administrators and seek clear
statutory authority for the types of awards that we identified as
questionable.
• Strengthen controls to prevent unauthorized awards.
• Develop guidance to clarify the types of activities EPA will fund.
• Provide additional training for personnel involved in such decisions.
What Action Was Taken
The final report (8100209) was issued to the Acting Assistant
Administrator for Administration and Resources Management on
34 OFFICE OF INSPECTOR GENERAL
-------
September 18, 1998. In responding to the draft report, the Acting
Assistant Administrator stated that" the Agency believes that the
activities questioned in the Draft Report are authorized by EPA's grant
statutes. Although we disagree with many of the audit findings, we
concur with the audit recommendations." The Agency has requested
legislative clarification, drafted revisions to Agency policy, revised
training materials, and added a special condition to some assistance
awards to ensure compliance with statutory requirements. A response
to the final report is due by December 17, 1998.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
35
-------
EPA Made Progress
Correcting Contract
Deficiencies
Contracts
In 1997, we reviewed EPA's progress since 1992 in addressing
contracts management deficiencies identified by the Agency's Standing
Committee on Contracts Management. We found that EPA had taken
many positive steps to address these deficiencies. However, areas of
potential vulnerabilities remained in (1) contractor conflicts of interest;
(2) personal services; and (3) contractor access to confidential or
sensitive data. We recommended, and the Agency agreed, that
contract management remains a Federal Managers' Financial Integrity
Act Agency-level weakness for fiscal 1997.
We Found That
During fiscal 1998, we conducted additional work in each of the three
areas of potential vulnerability. One area, contractor conflicts of
interest, was sufficiently addressed and further improvements were not
required. However, management focus needs to be maintained in
personal services and contractor access to confidential or sensitive
data. Both of these areas are vulnerabilities that the Agency still
needs to address. EPA program offices and contracting divisions must
share the responsibility of ensuring that personal services do not occur
and that contractor access to confidential or sensitive data is properly
controlled. Based on our findings, and the actions previously taken by
the Agency to improve contracts management, Contracts Management,
as an overall Agency-level weakness, can be removed.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management:
• Declare the Agency's Relationship with Contractors as an Agency-
level weakness in his fiscal 1998 assurance letter to the Administrator
to address the personal services vulnerability.
• Coordinate the effort to have all Assistant Administrators and
Regional Administrators perform a management effectiveness review
on their offices' implementation of policies and procedures for personal
services and report the results in their fiscal 1999 assurance letter.
Based on the reported results, the Agency can then decide if this issue
has been substantially corrected.
36
OFFICE OF INSPECTOR GENERAL
-------
• Incorporate the vulnerability of contractor access to confidential or
sensititive data into the Agency's material weakness of Information
Systems Security Plans in his fiscal 1998 assurance letter to the
Administrator. A corrective action plan should be prepared describing
the Agency's strategy to correct the problem and the methodology to be
used to verify that the corrective actions actually resolved the problem.
Instances or
Appearance of
Personal Services
Under Contracts
What Action Was Taken
We issued the report (8400050) to the Acting Assistant Administrator
for Administration and Resources Management on September 30,
1998. We held an exit conference with the Director, Office of
Acquisition Management, on September 24, 1998. At the exit
conference we were informed that the Acting Assistant Administrator
agreed to implement our recommendations. Therefore, we closed the
report upon issuance.
Personal service relationships can result in undesired effects including
potential legal problems, limiting competition for future contract awards,
and the appearance of circumventing civil service laws and Office of
Management and Budget (OMB) personnel ceilings.
We Found That
Agency controls were generally adequate to prevent personal services.
However, EPA personnel were not always committed to applying the
controls, which resulted in personal services or the appearance of
personal services. Instances of personal services, or the appearance
of such, occurred in 13 of 23 (56 percent) of the contracts, and among
nearly all of the major program offices reviewed. Because of the
number and distribution of such instances across the Agency, the
potential exists that personal service is a continuing systemic problem.
Personal services, or the appearance of such, occurred primarily
because: (1) EPA program office employees exercised excessive
supervision of contractor and subcontractor staff, (2) close working
arrangements existed, or (3) contract language and oversight needed
improvement. Thus, EPA improperly treated contractor staff as
Government employees. Normally, the Government directly hires its
employees under competitive appointment or other procedures
mandated by civil service laws. Obtaining personal services by contact
rather than by direct hire, circumvents those laws and OMB personnel
ceilings. Program offices and contracting divisions each must share
the role of ensuring that personal services do not occur. Program
offices, with the help of contracting offices, should attempt to eliminate
unnecessary interactions with contractors, including shifting work off-
site if possible.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
37
-------
Controls Over
Contractor Access to
Confidential or
Sensitive Data Need to
be Improved
We Recommended That
The Acting Administrator for Administration and Resources
Management and the Agency Senior Resource Officials:
• Identify all contracts where EPA and contractors are co-located, and
evaluate and document whether any on-site contracts can be moved
off-site.
The Acting Assistant Administrator for Administration and Resources
Management:
• Direct Agency contracting officers to conduct a site visit at least
annually for all on-site contracts and document whether they identified
personal service deficiencies. If they identify deficiencies, the
contracting officer should provide needed guidance or
recommendations to the project officer.
What Action Was Taken
The final report (8100251) was issued to the Acting Assistant
Administrator for Administration and Resources Management on
September 29, 1998. The Acting Assistant Administrator agreed to all
of our recommendations, and has provided milestone dates for
completion. Therefore, we closed the report upon issuance.
EPA maintains many types of confidential or sensitive data. Because
the Agency uses contractors extensively, certain contractors can
access much of this data in the normal course of performing their
duties. Inadequately safeguarding or improperly disclosing confidential
or sensitive data could adversely affect Agency personnel and property
or result in a contractor gaining a competitive advantage in the
procurement process.
We Found That
The Agency has a system in place to control contractor access to
confidential business information. However, the system does not
adequately address controls over contractor access to other equally
sensitive data such as enforcement or Privacy Act information.
Contracting officers routinely included various contract clauses that
mention control of confidential or sensitive data when awarding
contracts. However, program personnel were not always aware of the
contract clauses and did not always consider access to confidential or
sensitive data when assigning work. For example, at an EPA
contractor's office, we found two of five files reviewed contained
sensitive documents. According to both EPA's contracting officer and
the contractor, the Agency provided these documents as part of the
38
OFFICE OF INSPECTOR GENERAL
-------
Financial Contract
Audits
work assignment. However, EPA's work assignment managers were
not aware that the documents contained sensitive data. Management
must ensure that confidential and sensitive data are controlled and
safeguarded to prevent improper access by contractors.
We Recommended That
The Acting Assistant Administrator for Administration and Resources
Management, in coordination with other appropriate senior Agency
managers:
• Issue a directive that contracting officers and program office
personnel work together to review their contracts to determine if they
involve contractor access to confidential or sensitive data and ensure
necessary safeguards are in place to control contractor access to such
data.
• Emphasize the evaluation of security over all types of confidential or
sensitive data during quality assurance reviews.
• Revise the Contracts Management Manual to include clear
definitions of confidential business, enforcement sensitive, and Privacy
Act information and address contractor access to each type.
What Action Was Taken
The final report (8100250) was issued to the Acting Assistant
Administrator for Administration and Resources Management on
September 28. 1998. In response to the draft report, the Agency
agreed to implement the recommendations and provided milestone
dates for doing so. Therefore, we closed the report upon issuance.
The OIG provides independent contract audits and financial advisory
services to EPA's Office of Acquisition Management (OAM) and to
other government agencies at certain contractors. During this reporting
period, the OIG maintained contract audit cognizance for 10
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 two financial contract audits.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
39
-------
Contractor Internal Control
Weaknesses Results in Questioned Costs of $2,251,492
Our audit of a contractor's indirect cost rate proposal disclosed
unallowable costs totaling $2,251,492. The majority of the questioned
costs ($2,091,425) are attributed to unsupported incentive
compensation costs. The contractor was unable to provide evidence of
an evaluation of an employee's performance, measured against goals
or objectives listed in the employee's compensation agreement. The
Federal Acquisition Regulation requires the contractor to provide
support for the basis for the incentive award. We also found the
contractor did not: (1) exclude expressly unallowable costs from
claimed amounts; (2) differentiate between claimed costs and incurred
costs in its indirect cost rate proposal; (3) have records storage and
retention procedures that permitted it to provide supporting
documentation in a timely manner; and, (4) properly allocate costs to
the appropriate final cost objectives.
Expressly Unallowable Costs Claimed by a Contractor
We performed an incurred cost audit to determine the allowability of a
contractor's claimed direct costs and indirect costs rates, and to
recommend procurement determined indirect cost rates for the year.
We questioned $135,304 of the $3,928,577 proposed indirect costs.
The majority of the questioned amounts relate to costs incurred to
settle a proposed debarment, which were unallowable in accordance
with the Federal Acquisition Regulation. In addition, we reclassified
some labor related costs because the contractor did not accumulate
and allocate the costs to the correct indirect pool. We also noted
weaknesses in the contractor's internal control system including: (1)
inadequate accounting policies and procedures related to labor
transfers and adjustments; (2) not fully documented indirect cost
internal controls; and (3) contractor
employees not following and enforcing corporate timekeeping practices
for leave requests. These weaknesses lower the reliance that can be
placed on the contractor's labor recording system.
40 OFFICE OF INSPECTOR GENERAL
-------
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.
42
OFFICE OF INSPECTOR GENERAL
-------
Investigative Results
Summary Of Investigative
Activities
Pending Investigations as
of March 31, 1998 204
New Investigations
Opened This Period 37
Investigations Closed
This Period 42
Pending Investigations as
of September 30, 1998 199
Prosecutive and
Administrative Actions
In this period, investigative efforts
resulted in four convictions and 11
indictments.* Fines and recoveries,
including those associated with civil
actions, amounted to $10 million.
Thirteen administrative actions were
taken as a result of investigations.
Reprimands 1
Restitutions 2
Suspensions &
Debarments 2
Other 8
TOTAL 13
* Does not include indictments
obtained in cases in which
we provided investigative
assistance.
Profiles of Pending Investigations by Type
General EPA Programs
Total Cases =129
Superrund
Total Cases = 70
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
43
-------
Selected Prosecutive Actions
Environmental Laboratory
Sentenced to Pay More
Than $5 million for Criminal
Fraud; Former Lab
Technical Director to Pay
$10,000 fine and $27,000 in
Restitution; Former Lab
President Convicted for
Falsifying Test Results
On April 9, 1998, Hess Environmental Laboratories, Inc. (Hess), of
East Stroudsburg, Pennsylvania, was sentenced in U.S. District
Court, Eastern District of Pennsylvania, to pay $5,553,634 in
restitution and a $3,600 assessment and was placed on 5 years
probation. The sentencing follows a November 1997 guilty plea by
Hess 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 an estimated 415 customers from
January 1988 to February 1997. Hess did not have the proper
equipment to perform certain environmental tests and was not
performing the tests according to accepted EPA methods. Hess
customers relied on the test results to comply with federal and state
environmental laws and to determine where and when remedies
were needed to control hazardous, toxic, or contaminated
substances.
On July 1, 1998, William L. Hopkins, Jr., the former president of
Hess, pleaded guilty to the charges of conspiracy to defraud the
United States, making false statements to the EPA, violating the
Clean Water Act, and mail fraud. The indictment charged that
Hopkins knew that Hess did not have the proper equipment to
perform certain environmental tests, yet directed Hess personnel to
continue the fraudulent scheme to prepare, bill for, and mail false
reports to customers for tests that were never performed and which
contained fabricated results. He is awaiting sentencing.
On September 21, 1998, Judith McCoy, a former technical director
at Hess was sentenced to 3 years probation, fined $10,000, and
ordered to pay $27,000 in restitution and a $300 special
assessment. McCoy had pleaded guilty to conspiracy to defraud
the government, making false statements, and mail fraud relating
to her role in the falsification of environmental testing data while
she was acting laboratory director at Hess.
As a result of this investigation, Hess closed in May 1997. Michael
Klusaritz, the former laboratory director, previously was convicted
of federal charges relating to his participation in the criminal
violations. Klusaritz is serving a one year prison sentence. The
conspiracy affected schools, hospitals, local governments, and
businesses, including the Tobyhanna Army Depot in Tobyhanna,
Pennsylvania, which paid Hess to test samples for hazardous
wastes, contamination of ground water, and for pollutants
discharged into rivers and streams. These customers, as well as
the EPA and the
44
OFFICE OF INSPECTOR GENERAL
-------
Former Contract Laboratory
Supervisor Indicted for
False Claims and Falsifying
Test Results. Two
Laboratory Operators Plead
Guilty to Misdemeanor
Fraud
Refrigerant Company
President Indicted for
Fraudulent Certification and
Reclamation Services
Pennsylvania Department of Environmental Protection, relied on
the tests to assess threats to the environment and to determine
where and when remedies were needed to control hazardous, toxic,
or contaminated substances. This investigation was conducted
jointly by the EPA OIG, the EPA Criminal Investigation Division, and
the U.S. Army Criminal Investigation Command.
On July 30, 1998, Gene Kong Lee, a former supervisor at Anlab
Analytical Laboratories (Anlab), a Sacramento company that
specialized in water and wastewater testing, was indicted in U.S.
District Court, Eastern District of California, on charges that he
falsified test results and filed a false claim of $10,500 to EPA for
payment for the work. The testing was performed during the
cleanup of a Superfund site in Davis, California. Lee, a gas
chromatography/mass spectrometry supervisor at Anlab, is charged
with having manipulated the computer-generated testing data in
order to make the results appear to meet quality assurance criteria
and to avoid performing quality control measures. Lee is also
charged with falsely reporting the sampling analyses as having
been done within specified holding times, when he knew that this
was untrue. On June 3, 1998, two operators at Anlab, Xiaomang
Pan and Brett Huffman Williams, pleaded guilty to misdemeanor
charges of fraudulent demands against the government and aiding
and abetting for falsifying the laboratory results by manipulating the
data. This investigation was conducted jointly by the EPA OIG and
the EPA Criminal Investigation Division.
On September 14, 1998, Bruce Doane, president of American
Industrial Refrigerants, lnc.(AIR), was indicted on charges of mail
fraud and violations of the Clean Air Act. The indictment charges
that Doane fraudulently represented to potential customers that his
company was fully certified to perform refrigerant recovery and
reclamation services. Doane allegedly had obtained a partial letter
of certification (without the signature page) by photocopying the
first page of a certification issued to one of AIR's competitors,
deleting the competitor"s name, and inserting his own company's
name. This letter was then included with the solicitations he sent
by facsimile to potential customers. The indictment also charges
that Doane performed refrigerant reclamation services on several
occasions at AIR's Mount Holly, North Carolina, location without the
required certification from the EPA. This investigation was
conducted jointly by the EPA OIG and the EPA Criminal
Investigation Division.
APRIL 1, 1998 THROUGH SEPTEMBER 30,1998
45
-------
Two Indicted on Charges
Stemming from Alleged
Impersonation
On May 11,1998, Gary L. Jones and Nadine E. Starks were
indicted in Fannin County, Georgia, on charges of false statements,
forgery, and attempted theft by deception. The charges stem from
allegations that Jones represented himself to an Ellijay, Georgia,
homeowner as an employee of Atlanta Testing, Inc. (ATI), told the
resident that ATI had contracted with the EPA to locate and remove
canisters containing toxic waste, and stated that he had been
directed by the 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.
Continuing Results from the
Methyl Parathion
Investigation
Under the relocation program (funded by EPA's Superfund and
administered locally by the U.S. 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.
On May 19, 1998, Donald Nolan, a resident of Pascagoula,
Mississippi, was indicted for fraudulently claiming benefits under
the Agency's methyl parathion relocation program. The indictment
charges that Nolan, who previously occupied a one-bedroom
apartment, misrepresented the number of family members living in
his household in order to qualify for two two-bedroom apartments
and additional benefits he was not entitled to receive. Our
investigation revealed that Nolan falsely claimed that ten
dependents lived with him in the contaminated apartment, thereby
fraudulently receiving more than $5,000 and causing the Agency to
incur additional costs because of the apartment rentals.
On July 18, 1998, Sandra Lastie and Betty Morgan, two Louisiana
recipients under the relocation program, were indicted in Criminal
District Court, Parish of Orleans, Louisiana, on state charges of
theft of money by fraud. Previously in January, Lastie had been
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. Morgan had also been 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. Cleanup
costs for Lastie's residence were $60,000; those for Morgan's
residence were $26,946.
46
OFFICE OF INSPECTOR GENERAL
-------
Civil and Administrative Actions to Recover
EPA Funds
CEO Ordered to Pay
$4,131,576 in Cleanup
Costs
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. OIG legal counsel
use 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.
On June 26, 1998, a civil judgment was issued in U.S. District
Court, Southern District of New York, ordering Kurt J. Wasserman,
CEO of Barrier Industries, Inc. (Barrier), to pay $4,131,576 plus
post-judgment interest for reimbursement of cleanup costs incurred
by EPA at the Barrier site in Port Jervis, New York. The order also
voided a property transfer from Kurt Wasserman to Mildred
Wasserman, his wife, rendering the property available to satisfy the
judgment against him and enjoined him and his wife from
transferring, encumbering, or disposing of any of his personal or
real property.
As a result of an OIG investigation focusing on property transfers, a
civil complaint had been filed in October 1995 against Barrier, Kurt
Wasserman, Mildred Wasserman, and others under the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980 for recovery of $3.4 million in expenses
incurred by EPA as a result of the Barrier site cleanup. Kurt
Wasserman and Harvey Scott Wasserman, his son who served as
president, were responsible for Barrier's business operations.
Barrier, a manufacturer of janitorial chemicals such as detergents,
polymer-based floor finishes, phenolic disinfectants, acid-based
cleaners, ammonia and solvent-based strippers and cleaners, car
care products, and insect repellent paints, maintained and stored
hazardous substances at the Port Jervis site. Earlier, in December
1997, a partial consent decree was issued ordering Harvey Scott
Wasserman and his wife, Linda Wasserman, to pay the
government $120,000 as part of the cleanup costs.
APRIL 1, 1998 THROUGH SEPTEMBER 30,1998
47
-------
Georgia Corporation to
Pay $50,000 in Civil
Settlement Agreement
On September 30, 1998, the United States Attorney's Office for the
Northern District of Georgia entered into a civil settlement with
Williams-Russell and Johnson, Inc. (WRJ), an EPA contractor
based in Atlanta, Georgia. Under the terms of the settlement
agreement, WRJ agreed to pay EPA $50,000 to resolve allegations
of cost mischarging under the False Claims Act. The case arose
out of an OIG investigation of allegations the WRJ submitted
claims for payment to its subcontractors when, in fact, WRJ had not
yet paid those subcontractors.
Consulting and Support
Services Firm to Pay
$15,000 and Establish
Training Program
On September 4, 1998, Enterprise Advisory Services, Inc. (EASI),
of Houston, Texas, entered into a civil settlement to resolve fraud
allegations under the False Claims Act. EASI agreed to pay
$15,000 to resolve allegations that it submitted invoices to the EPA
for work under an architectural services contract on which EASI
employees allegedly engaged in fraudulent timekeeping practices.
EASI and the EPA also contemporaneously entered into a
Compliance Agreement. EASI agreed to enforce and maintain new
company-wide timekeeping and labor compliance training
procedures and to conduct semiannual audits of EASI's employee
timesheets. EASI also agreed to issue a notice detailing how to
report suspected violations and to establish an employee hotline to
report violations of law or express concerns about EASI's
timekeeping or billing practices.
Previously, on June 15, 1998, John S. Chase, President and
Chairman of the Board, F.A.I.A., Architect, Inc., Houston, Texas,
agreed to a $2,495.13 settlement for the alleged improper billing by
employees for work not actually performed under the EPA
architectural contract during the time that F.A.I.A. was the prime
contractor.
48
OFFICE OF INSPECTOR GENERAL
-------
Selected Suspension and Debarment Actions
Former Laboratory
Operator and Supervisor
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 integrity 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 April 13, 1998, Noel Shrum, former operator, and Jim Hoch,
former supervisor, National Environmental Testing, Inc. (NET),
Santa Rosa, California, were suspended pending proceedings on
proposed debarment. NET performed gas chromatograph (GC)
analyses on EPA samples working as a subcontractor to Ecology &
Environment, a Technical Assistance Team contractor, and to GET
Environmental Services, an Emergency Response Cleanup
Services contractor. Allegedly, Shrum and Hoch submitted and/or
caused to be submitted false GC analytical reports on fuel samples
to the United States Government. This investigation 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.
APRIL 1, 1998 THROUGH SEPTEMBER 30,1998
49
-------
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
Joint Performance Partnership
Grant Management Assistance
Reviews Identified Lessons
Learned
The Office of Audit made a commitment to work
jointly with the Agency to assess performance
partnership grants (PPG). The goal is to identify
success stories and problems early so the
Agency can take corrective action to minimize
any negative effect on overall performances.
One way to achieve this goal is for divisional
audit offices and EPA regional staff to conduct
joint reviews to assess state and regional PPG
implementation and identify any lessons
learned.
A PPG is a multi-program grant made to a state
or tribal agency from funds previously provided
only through grants for specific environmental
programs. A primary purpose of PPGs is to
give recipients increased flexibility to address
their highest environmental priorities, while
continuing to address core program
commitments. EPA designed PPGs to
encourage improved environmental
performance by linking program goals with
program outcomes
and by increasing the use of environmental
indicators and program performance measures.
As of September 30, 1998, two joint reviews
were completed and three others were in
progress. The two completed reviews found
several areas where states successfully
accomplished some PPG goals. The review
teams found that PPGs provided the states the
mechanism to fund high-priority initiatives, such
as pollution prevention, that states would
otherwise be unable to fund adequately under
categorical grants. In addition, the PPG work
plan provided a mechanism for states to
address their own environmental priorities as
part of their PPG commitments. States also
achieved some streamlining with only one grant
to administer.
The review teams found similar difficulties in the
state and regional efforts to achieve PPG goals
and demonstrate improved environmental
performance. Specifically, EPA and the states
need to develop more outcome-based
performance measures, gather sufficient and
appropriate data to measure performance, and
tie what the states will measure to the desired
effect on the environment and public health. In
addition, policy and procedures are required for
handling PPG carryover funds.
Based on the completed reviews, we suggested
that the Agency and the states develop
additional measures that are outcome-based.
The performance partnership agreements with
the states should identify their desired
environmental conditions and correlate them to
their performance measures. Additionally, the
Agency should work with the states to clarify
procedures for carryover funds. When the
additional reviews are completed, we plan to
summarize any national issues that EPA
Headquarters program offices should address.
50
OFFICE OF INSPECTOR GENERAL
-------
Status of the Clean Water State
Revolving Fund (CWSRF) Financial
and Compliance Audit Program
Improving the Administration of
Potentially Responsible Party
(PRP) Oversight
The end of fiscal 1998 marked the first full year of
the OIG's implementation of its CWSRF financial
and compliance audit program. Title VI of the
Clean Water Act of 1987 established the program
to replace the wastewater treatment facilities
construction grants program. EPA awards
capitalization grants to states to establish the
CWSRF program. The main purpose of the
program is to create permanent revolving funds in
each state to make loans to local governments to
construct needed wastewater treatment facilities.
EPA implements the program so that states have a
high degree of flexibility to meet their unique needs
and circumstances.
As of June 1998, state-administered CWSRFs had
assets of more than $25 billion. We developed the
audit program in close coordination with the Office
of Water (OW) to meet its needs to assure that
reliable and credible CWSRF financial statements
are available. The audit program also includes
objectives to meet both the OW and OIG needs to
assure that the states operate the CWSRF's with
adequate internal controls and in compliance with
capitalization grant requirements.
During fiscal 1998, the OIG issued financial
statement audit reports on the CWSRFs in the
states of California and Washington and initiated
audits in Nebraska, Nevada, Texas and Utah. In
addition, the OIG began assessing state and
Independent Public Accountant (IPA) conducted
audits in some of the other states.
In June 1998, the OIG published a CWSRF Audit
Guide for use by its staff and as a reference
document for state auditors and IPAs. OW
awarded the EPA Bronze Medal to key staff in the
OW and OIG for their successful collaborative
efforts to develop and implement the CWSRF audit
program.
In 1995 EPA initiated a reform to improve the
administration of PRP oversight-referred to as
the reduced oversight reform. While auditing
this reform, we identified some concerns as a
result of 1998 changes in the reform. EPA
changed the emphasis from reducing costs to
maximizing the effectiveness and efficiency of
EPA's efforts to oversee PRPs. The intended
result was improved working relationships and
controlled costs.
Since EPA changed this reform while we were
conducting our audit, we did not evaluate how
Region 5 implemented the revised reform.
However, we shared two observations on the
revisions with the Agency. First, the original
guidance still in use focuses on how to identify
PRPs that are cooperative and capable, and
provides examples of how oversight can be
reduced. However, it does not include other
areas that are now being emphasized in the
reform. The guidance should be expanded to
include how project managers can improve their
working relationships with PRPs and improve
billing practices. This guidance will make it
easier for project managers to understand and
implement this reform. Second, the reform
should also be directed toward PRPs where
working relationships need improvement.
A report (8400032) was issued to the Directors,
Office of Emergency and Remedial Response
and Office of Site Remediation Enforcement, on
July 8, 1998. We provided the above
information
for their consideration. No written response was
requested.
APRIL 1,1998 THROUGH SEPTEMBER 30,1998
51
-------
Joint Investigation Furthers Agency
Enforcement Effort
I
As a result of a joint OIG and EPA Criminal
Investigation Division criminal investigation that
concluded in September 1997, the Agency filed
separate complaints against 65 individuals,
assessing civil penalties under the Toxic
Substances Control Act totaling $103,000. These
actions stem from the investigation of Robert G.
Cooley, who owned and operated I.P.C. Chicago,
Inc. (IPC), a company approved by the Illinois
Department of Public Health (IDPH) to provide
asbestos abatement training and issue
accreditation certificates. Cooley was convicted on
September 26, 1997, of mail fraud in connection
with IPC issuing accreditation certificates to
asbestos abatement workers and supervisors
without providing them with the required asbestos
abatement training. Workers possessing the
fraudulent IPC certificates (the respondents in the
Agency's administrative complaints) were
subsequently discovered working on EPA-funded
Asbestos School Hazard Abatement Act projects.
As a result of the criminal case, Cooley was
sentenced to 52 months imprisonment and 3 years
probation, ordered to pay restitution of $234,763,
and assessed $100.
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 September 30,
1998, there were only 40 grants totaling $1.5 billion
which are expected to receive OIG review . The
majority of these grants are in Regions 1, 2 and 3.
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 one
legislative and 23 regulatory items. The most
significant items reviewed are summarized
below.
New Chapter for Resources
Management Directives System
25500-Financial Management of
Cashout Special Accounts
We reviewed the subject document and
expressed the following concerns:
• A reference to required "supporting
documentation" in the handling of cashout
settlement funds did not specify what
documentation would be required or from whom.
We recommended that this issue be clarified.
• Allowing potentially responsible parties
(PRPs) to submit their cashout payments to
several different entities would be unwieldy and
inefficient. Since the Financial Management
Office in the region overseeing the cleanup is
ultimately responsible for recording all
applicable cashout payments and transmitting
them to the Cincinnati Financial Management
Center, we suggested requiring PRPs to remit
the cashout directly to a regional lockbox, if
feasible, or to the Washington Financial
Management Center.
52
OFFICE OF INSPECTOR GENERAL
-------
• The document did not mention a program
element to track the cashout principal in the special
accounts.
• The proposed use of a separate stand-alone
Special Accounts Data Base to record cashout
receipts and calculate interest could make the
process inherently riskier and less efficient.
As of the end of the reporting period, the Agency
had not issued a revised document.
Revised EPA Order 5220.1
Legislative Development, "Policies
and Procedures for the
Development, Coordination, and
Presentation of Legislative
Proposals, Legislative Reports, and
Congressional Testimony"
We were concerned that the revised Order did not
adequately reflect the independent status of the
OIG. Accordingly, we recommended the addition
of language clarifying that its provisions do not
apply to the OIG.
At the end of the reporting period, the Agency had
not issued a revised document.
Proposed Delegation of Authority to
Implement Responsibilities Under
the Migratory Bird Conservation Act
and the North American Wetlands
Conservation Act
While we agreed that the proposed permanent
delegation of authority could be an effective and
appropriate means of implementing Migratory Bird
Conservation Commission (MBCC) responsibilities,
it was unclear to us whether delegation to the
directorship level would be permissible since the
MBCC is a Cabinet/Congressional level
commission.
The Agency obtained clarification from the
Secretary of the Commission that adequately
addressed our concerns.
OIG Management Initiatives
Continuing the reinvention initiative undertaken
last year to refocus from a command and
control culture to a more participative and team
based environment, the OIG formed a
Leadership Steering Committee. The
Committee is comprised of senior managers
from throughout the OIG. The purpose of the
Steering Committee is to set future direction,
facilitate the achievement of the Strategic Plan,
identify core processes, set improvement goals,
provide clarification on key policy issues, and
commission teams for improvement.
The Steering Committee formed workgroups
from a broad section of the OIG staff to develop
projects such as (1) developing an OIG
communication strategy for key information,
(2) refining the OIG's planning process to clearly
indicate linkage between EPA's Strategic Plan
and OIG Strategic and Annual Plans and
budgets, (3) establishing the OIG employee
reward system under PERFORMS, and
(4) identifying key OIG processes for
standardization. The New Directions
workgroups are evaluating the feasibility of
establishing a Program Evaluation Unit and an
Office of Planning, Budgeting, and
Accountability. These and other projects will
help the OIG further define and achieve its
vision and goals.
Committee on Integrity and
Management Improvement
The Committee on Integrity and Management
Improvement (CIMI) was established by EPA
Order 1130.1, dated August 9, 1984, to
coordinate the Agency's effort to minimize the
APRIL 1,1998 THROUGH SEPTEMBER 30,1998
53
-------
opportunities for fraud, waste and mismanagement
in EPA programs and activities, and to advise the
Administrator on policies to improve the efficiency
and effectiveness of the Agency. CIMI strives to
continually enhance employee awareness and
understanding of various Agency policies and
procedures and to improve the economy,
efficiency, and effectiveness of Agency operations.
Chaired by the Inspector General, the Committee
is composed of senior managers from EPA
program and regional offices.
Honorable C. Anthony Muse, keynote speaker and Jonathan Z.
Cannon, former General Counsel (Photo by Steve Delaney)
PUBLIC SERVICE RECOGNITION WEEK
To recognize the outstanding achievements of EPA
employees and express appreciation for their
commitment to the Agency's mission and
excellence in Government, CIMI developed and
coordinated a series of special events and exhibits
during Public Service Recognition Week in May.
The highlight of the week's events was a ceremony
honoring the EPA workforce and culminating in the
presentation of the EPA Employee Recognition
Award for community service. Inspector General
Nikki L. Tinsley served as Master of Ceremonies.
Former General Counsel Jonathan Z. Cannon
presented awards to 23 employees whose
exceptional community service has helped to foster
a positive image of Federal employees. He also
acknowledged and thanked another 77 employees
who participate in volunteer programs at nearby
schools. The Honorable C. Anthony Muse of
the Maryland House of Delegates gave the
keynote address, and several EPA employees
provided musical entertainment. Following the
ceremony, the Administrator and the Acting
Inspector General hosted a reception for the
1998 awardees.
MARKETING CIMI DOCUMENTS
The CIMI Committee initiated a project to
increase employee awareness of and interest in
its awareness bulletins and information leaflets,
which are designed to improve employee
knowledge and understanding of various
Agency policies and procedures. Working with
the Office of Human Resources and
Organizational Services, the Committee
arranged to have a formal CIMI presentation at
each weekly orientation program for new
employees. A script about CIMI was developed
for presentation at the orientation sessions and
a fact sheet on CIMI and its publications was
prepared for inclusion in the new employee
orientation package, to be accompanied by a list
of CIMI documents and instructions on how to
access them on the EPA Intranet. CIMI will also
broadcast information about CIMI on the EPA
TV monitors and send messages via e-mail
periodically to remind employees about our
documents and how to access them.
Hotline
In August 1998, responsibility for hotline
operations within OIG transferred from the
Program Support Staff to the Headquarters
Audit Division (HAD). Each complaint is
reviewed by a team of auditors, evaluators, and
criminal investigators as conditions warrant. All
matters significant enough to require a response
are monitored by the team until each aspect of a
complaint has been adequately addressed. As
a result, our overall ability to address matters
involving fraud, waste, and abuse has
improved.
54
OFFICE OF INSPECTOR GENERAL
-------
Also, by the end of the next semiannual period,
HAD will have developed a strategy to better
market the hotline, particularly to EPA contractors
and assistance recipients. This marketing strategy
is to promote the identification of significant
matters warranting investigative, audit, or
management attention.
The OIG Hotline opened 46 new cases and closed
41 during the reporting period. Of the cases
closed, one resulted in prosecutive action. Cases
that did not have immediate validity due to
insufficient information may be used to identify
trends or patterns of potentially vulnerable areas
for future review. At the end of this semiannual
reporting period, 17 Hotline cases were open.
The following is an example of action taken as a
result of information provided by the OIG Hotline.
A complainant alleged that for several years a
company had been dumping solvents, paint
thinners, and other toxic substances at a plant in
Perryville, Missouri. The allegations were
substantiated, and the company was indicted for
illegal disposal of hazardous wastes in September
1998 and scheduled for trial in October 1998.
APRIL 1,1998 THROUGH SEPTEMBER 30,1998 55
-------
Section 4 - Report Resolution
As required by the Inspector General Act, as amended, this section contains information on reports in the
resolution process for the semiannual period. This section also summarizes OIG reviews of the Agency's follow-
up actions on selected reports completed in prior periods. In addition, information is presented on the
resolution of significant reports issued by the OIG involving monetary recommendations.
Current Period
We commend the Agency on the priority it has given to resolving audits, and the results that it has achieved during the
past year. The following shows the status and examples of improvements in EPA's audit resolution.
• As of September 30, 1998, EPA had 130 OIG audit reports requiring resolution; which was 50 less than the ending
balance on September 30, 1997. The Agency has also reduced by 38% the number of past due audit reports (those with
no management decision within six months of issuance) from 92 to 57.
The following table shows the status of the 57
unresolved audit reports as of September 30, 1998.
RESOLUTION STATUS
NO RESPONSE
INCOMPLETE
RESPONSE
UNDER OIG REVIEW
RESOLUTION UNDER
OIG HO REVIEW
APPEAL TO Audit
Resolution Board -
Awaiting Final
Determination Letter
RESOLUTION ON
HOLD
TOTAL
# OF REPORTS
38 reports
5 reports
1 report
4 reports
1 report
8 reports
57 reports
$ QUESTIONED
$82,475,273
$2,121,480
$952,260
$-0-
$7,208,275
$7,298,780
$100,056,068
Agency Action Officials have put resolution on hold on 8
of the 57 past due audit reports, pending additional
information from court decisions, ongoing investigations
and audits. These 8 past due audit reports have
questioned costs totaling $7.3 million.
During this reporting period, the Office of Acquisition
Management has worked diligently to reduce the
number of "no responses" from 43 to 15.
• During the last 12-month period, the costs questioned on the OIG reports for which management decisions were past
due has decreased 51 percent, from $204.3 million as of September 30, 1997, to $100 million as of September 30,
1998.
Trends
There is an overall favorable trend in the number of the Agency's outstanding unresolved reports from September 30,
1995, through September 30, 1998, further demonstrating EPA's commitment to improvement. During this three-year
period, the number of audit reports needing resolution dropped from 110 to 57 and the dollars of questioned costs of
past due reports needing resolution has decreased 22 percent, while the number of audit reports needing resolution
averaged 290.
We encourage EPA management to continue making audit followup a top priority and be even more timely in resolving
audit reports. Audit followup is an integral part of good management. Corrective action taken by management on
resolved audit findings and recommendations is essential to improving the effectiveness and efficiency of Agency
operations. In an era of rising demand for quality public services, tight budgets and limited resources, it is essential that
EPA follow up promptly and collect debts arising from audits. Audit followup is a shared responsibility for which the OIG
is willing to assist Agency managers to resolve open audit reports quickly and effectively.
56
OFFICE OF INSPECTOR GENERAL
-------
Status Report on Perpetual Inventory of Reports in Resolution Process for Semiannual Period Ending
September 30,1998 (Dollar Values in Thousands)
Report Category
A. For which no
management decision was
made by April 1, 1998
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 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
123
247
148
222
92
130
57
Report Issuance
Questioned
Costs
$210,216
11,065
66
221,215
110,313
110,902
110,056
Recommended
Efficiencies
0
3,212
0
3,212
3,212
0
Report Resolution
Costs Sustained
To Be Recovered
62,741
As Efficiencies
3,212
(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.)
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
57
-------
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
September 30, 1998 (Dollar Value in Thousands)
Report Category
A. For which no management decision was made
by April 1,1998**
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
69
22
91
34
25
28**
57
40
Questioned Costs*
$210,216
10,999
221,215
110,313
62,741
47,572
110,902
110,056
Unsupported Costs
$73,105
3,515
76,620
46,075
13,955
32,120
30,545
27,086
* 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.
*** Five audit reports totaling $797 were not agreed to by management.
58
OFFICE OF INSPECTOR GENERAL
-------
Table 2 — Inspector General Issued Reports With Recommendations That Funds Be Put To Better Use
for Semiannual Period Ending September 30,1998 (Dollar Values in Thousands)
Report Category
A. For which no management decision was made by April 1, 1998*
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
(ill) 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
0
1
1
1
1
0
0
0
0
Dollar Value
0
3,212
3,212
3,212
3,212
0
0
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.
Audits With No Final Action As Of 9/30/98-Which are over 365 Days Past OIG Report Issuance
Date
Audits
Programs
Allegations
Assistance Agreements
Construction Grants
Contract Audits
TOTAL
Non-Superfund
41
3
11
119
13
187
Superfund
11
0
14
0
43
68
Total
52
3
25
119
56
255
Percentage
20
1
10
47
22
100
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
59
-------
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
ASSIGNMENT #
1. INTERNAL AND MANAGEMENT ASSIGNMENTS
Office of the Administrator
E1XMG7-11-0028-8400018 EPA'S DISCRIMINATION AND
GRIEVANCE PROCESS
QUESTIONED COSTS
RECOMMENDED
FINAL REPORT
ISSUED
INELIGIBLE
COSTS
UNSUPPORTED
COSTS
UNNECESSARY/ EFFICIENCIES
UNREASONABLE (FUNDS BE PUT
COSTS TO BETTER USE)
Grants Administration Division
E1HWG8-04-0021-8400049 REVIEW OF LOBBYING ACTIVITIES
BY STATE RURAL WATER ASSOCIATIONS
E1TME8-23-0012-8400050 EPA CONTRACT MANAGEMENT
INITIATIVES FOLLOW-UP
E1DMD8-11-0002-8100185 EPA'S ENVIRONMENTAL SAFETY AND
HEALTH PROGRAM FOLLOW-UP
E3AMF8-11-0008-8100209 STATUTORY AUTHORITY FOR EPA
ASSISTANCE AGREEMENTS
E1BMF7-11-0026-8100250 CONTRACTOR ACCESS TO CONFIDENTIAL
INFORMATION 9/28/98
E1FMB8-11-0001-8100256 PRE-AWARD MANAGEMENT OF EPA
ASSISTANCE AGREEMENTS
Assistant Administrator for Prevention, Pesticides, £ Toxic Substances
E1AML7-20-7008-8100204 FY97 FIFRA FINANCIAL STATEMENT AUDIT 8/20/98
Assistant Administrator for Research S Development
E1SKF7-08-0011-8100240 SUPERFUND FIELD SAMPLING QUALITY
ASSURANCE CAPPING REPORT
Assistant Administrator for Solid Waste & Emergency Response
E1SFF8-11-0020-8100234 EPA'S SUPERFUND STATE DEFERRAL
PROGRAM
Assistant Administrator for Water
E1NWG6-15-0001-8100177 OFFICE OF WATER DATA INTEGRATION
60
OFFICE OF INSPECTOR GENERAL
-------
E1GAE7-03-0045-8100244 CONSOLIDATED REPORT ON OCEA'S
OVERSIGHT OF REGIONAL AND STATE AIR
ENFORCEMENT PROGRAMS 9/25/98
Regional Administrator - Region 1
E1SFF7-01-0036-8100254 SUPERFUND ADMINISTRATIVE REFORMS
INITIATIVE
E1SFF8-02-0007-8100206 REGION 2'S BILLING OF SUPERFUND
OVERSIGHT COSTS
E6ARF6-04-0058-8100189 RADIATION RISK ANALYSIS AT
CHARLESTON NAVAL SHIPYARD
E1SGF8-05-0035-8100208 POTENTIAL RESPONSIBLE PARTIES LEAD
REMEDIAL DESIGN/REMEDIAL ACTIONS
Regional Administrator - Region 6
E1HWB7-06-0035-8400043 TEXAS BORDER WATER PROJECTS
E1SFF7-09-0058-8100223 ENVIRONMENTAL DATA QUALITY AT
SUPERFUND REMOVAL ACTIONS IN
REGION 9
E1SFF8-09-0022-8100259 REGION 9 SUPERFUND SITE ACCOUNTING
Regional Administrator - Region 10
E1GAF8-10-0018-8100249 IDAHO'S AIR ENFORCEMENT PROGRAM
2. CONSTRUCTION GRANT ASSIGNMENTS
TOTAL OF REGION 02 =
TOTAL OF REGION 03 = 3
-04-0021-8300011 HICKORY
TOTAL OF REGION 04 = 1
-06-0011-8300017 ST. BERNARD PARISH
TOTAL OF REGION 06 = 1
-09-0021-8300019 GUALALA COMM SVCS DIST
TOTAL OF REGION 09 = 1
NJ
PR
372,672
283,972
283,972
0
0
0
0
98,497
TOTAL CONSTRUCTION GRANT ASSIGNMENTS
3. OTHER GRANT ASSIGNMENTS
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
61
-------
LABORERS-AGC ED S, TRAINING CT
CONNECTICUT STATE OF CT
RHODE ISLAND STATE OF RI
VERMONT STATE OF VT
TOTAL OF REGION 01 =
ONONDAGA CO SOIL 5 WATER NY
AMERICAN NATIONAL STANDARDS NY
TOTAL OF REGION 02 =
G3HUK8-33-0046-8500038 ENGINEERS RESEARCH S EDUCAT DC
G3HUK8-33-0047-8500046 CTR FOR WATERSHED PROTECTIONMD
FL
FL
MS
MS
NC
LAKE MICHIGAN AIR DIRECTORS IL
ROCKFORD PUBLIC SCHOOLS IL
FORT BRANCH TOWN OF IN
RED LAKE BANK OF CHIPPEWA MN
OHIO STATE OF FY 95 OH
WISCONSIN SYSTEM UNIVERSITY WI
GREAT LAKES INDIAN FISHWILD WI
ONEIDA INDIAN TRIBE WI
N3HVJ8-33-0041-8500055
N3HVK8-33-0063-8500049
N3HVK8-33-0087-8500070
N3HVJ8-33-0070-8500051
N3HVJ8-33-0071-8500056
N3HVJ8-33-0069-8500076
ALABAMA STATE OF
DEPARTMENT OF HEALTH
PINELLAS COUNTY
GULF COAST RESEARCH LAB
MISSISSIPPI STATE OF
NORTH CAROLINA STATE OF
G3HUK8-33-0060-8500045
N3HVK8-33-0088-8500069
G3HVJ8-33-0064-8500054
N3HVK8-33-0082-8500060
N3HVJ8-33-0072-8500064
N3HUJ8-33-0045-8500034
N3HVK8-33-0074-8500050
N3HVK8-33-0079-8500075
TOTAL OF REGION 05 =
EMMETSBURG CITY OF
WATERLOO CITY OF
DUNCAN CITY OF
LA
LA
OK
CHEYENNE RIVER SIOUX TRIBE
UTAH ASSN OF CONSERVATION
UTAH STATE OF
WYOMING STATE OF
N3HVK8-33-0075-8500053
N3HVK8-33-0076-8500059
G3HVK8-33-0052-8500036
UNION SANITARY DISTRICT
G3HVK8-33-0059-8500041
G3HVK8-33-0058-8500043
G3HVK8-33-0065-8500052
N3HVK8-33-0057-8500042
N3HVK8-33-0081-8500063
N3HVJ8-33-0086-8500071
N3HVK8-33-0089-8500072
COLORADO RIVER INDIAN TRIBESAZ
COLORADO RIVER INDIAN TRIBESAZ
MANILA COMMUNITY SERVICES CA
CA 4/ 9/98
SOUTH COAST AIR QUALITY MGT CA
YOLO CO RESOURCE CONSER CA
GUALALA COMMUNITY SERVICES CA
MONTEREY REGIONAL WATER CA
SAN PASQVAL BAND OF MISSION CA
CALIFORNIA STATE OF CA
AGRICULTURE DEPARTMENT OF HI
TOTAL OF REGION 09 =
11
PORTLAND CITY OF OR
TACOMA CITY OF WA
KING COUNTY WA
TULALIP TRIBES - WASHINGTON WA
0
0
5,574
5,574
0
0
TOTAL OF REGION 10 =
TOTAL OTHER GRANT ASSIGNMENTS
5. SUPERFUND GRANT ASSIGNMENTS
TOTAL OF REGION 05 = 2
E5BFL8-10-0022-8100248 SHOSHONE-BANNOCK TRIBES
TOTAL OF REGION 10 = 1
M5BFL8-20-0008-8100258 97 SUPERFUND DOD IAG
TOTAL OF REGION 20 = 1
MI
MI
TOTAL SUPERFUND GRANT ASSIGNMENTS
8. OTHER CONTRACT ASSIGNMENTS
E8CMP2-01-0109-8400040 ALLIANCE TECH CORP
E8CMP6-01-0614-8400041 ALLIANCE TECH CAC
D8AML8-44-2063-8100130 CADMUS GROUP
D8BML4-44-0159-8100142 ABT ASSOCIATES INC
D8BML7-44-1139-8100149 XENERGY INC
MA
MA
MA
MA
MA
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
62
OFFICE OF INSPECTOR GENERAL
-------
D8GML8-44-2186-8100174 XENERGY INC
D8CML5-44-0148-8100215 EASTERN RESEARCH
D8BML8-44-2078-8100233 SCICOMM INC
will
MA
MA
MA
within
TOTAL OF REGION 01 =
D8BML7-44-1103-8100105
D8EML8-44-2183-8100169
TOTAL OF
E8EML8-22-0117-8100202
E8BML7-22-0058-8100236
E8BML4-22-0090-8100237
E8BML4-22-0090-8100238
E8BML4-22-0090-8100239
E8BML8-22-0118-8100257
E8EMP6-22-0031-8400024
E8BML6-22-0026-8100229
E8BMP5-22-0128-8400037
D8BML5-44-0368-8100164
D8BML8-44-2158-8100213
D8CML5-44-0325-8100104
D8BML8-44-2003-8100200
D8BML8-44-2093-8100218
D8BML4-44-0386-8100231
D8BML6-44-0213-8100232
D8GML8-44-2235-8100242
D8AWP8-44-2164-8400033
D8BML6-44-0159-8100112
D8BML7-44-1123-8100113
D8BML6-44-0156-8100116
D8BML5-44-0226-8100117
D8CML3-44-0151-8100125
D8CML8-44-2071-8100129
D8EML7-44-1004-8100132
D8GML8-44-2056-8100136
D8BML7-44-1115-8100140
D8CML7-44-0053-8100146
D8BML7-44-0108-8100160
D8BML4-44-0052-8100165
D8EML8-44-2171-8100167
D8GML8-44-2105-8100168
D8BML6-44-0172-8100172
D8BML7-44-1119-8100175
D8BML7-44-0024-8100198
D8BML5-44-0378-8100207
D8BML5-44-0389-8100211
D8BML7-44-0023-8100212
D8CML8-44-2062-8100230
D8BML6-44-0155-8100247
D8BMM7-44-0100-8200007
D8BMM6-44-0088-8200008
D8BMM8-44-2163-8200009
D8AWP8-44-2100-8400027
D8AMP8-44-2131-8400028
TOTAL OF
D8EML8-44-2184-8100182
D8BMM8-44-2242-8200010
D8BML7-44-1102-8100108
D8BML5-44-0086-8100110
D8BML7-44-1150-8100115
D8BML7-44-0034-8100141
D8BML5-44-0083-8100151
D8BML6-44-0068-8100152
D8EML8-44-204 1-8100156
D8BML5-44-0027-8100203
D8EML8-44-2190-8100214
TOTAL OF
E8BSP7-05-0053-8400046
E8BSP7-05-0042-8400048
E8DMP7-23-0006-8400021
D8BML7-44-0065-8100114
D8EML8-44-2202-8100192
D8BML8-44-2033-8100195
D8AML8-44-2053-8100100
D8AAP8-44-2167-8400038
D8BML6-44-0125-8100145
D8BML6-44-0126-8100176
D8AMP8-44-2054-8400020
D8AWP8-44-2099-8400029
D8AMP8-44-2195-8400039
D8AMP8-44-2196-8400042
GRUZEN SAMTON
GRUZEN SAMTON
REGION 02 = 2
ICF FY98 OAKLAND FLOORCHECK
ASCI 1990 S 1991 I/C DIR
ASCI 1992 INCURRED COST
ASCI 1992 INCURRED COST
ASCI 1992 INCURRED COST
EH PECHAN INCURRED 92-93
ICF FY96 OAKLAND FLR CHECK
EH PECHAN INCURRED 90-91
SAI
INFORMATION DYNAMICS INC
SOCIOTECHNICAL RESEARCH
DYNAMAC CORPORATION
ROW SCIENCES
OAO CORPORATION
MAR INCORPORATED
MAR INCORPORATED
ASPEN SYSTEMS CORP
ISSI INC
PERRIN QUARLES ASSOCIATES
PERRIN QUARLES ASSOCIATES
ULTRA TECHNOLOGIES
PERRIN QUARLES ASSOCIATES
UNISYS CORPORATION
UNISYS CORPORATION
COMPUTER SYSTEMS DEV CORP
MARASCO NEWTON GROUP INC
ALM JOINT VENTURE
S. COHEN S ASSOCIATES INC
COMPUTER RESOURCE MGT INC
LABAT-ANDERSON INC
PERRIN QUARLES ASSOCIATES
TECHLAW INC
UNIVERSAL SYSTEM 5 TECH
DIVERSIFIED TECH 5 SERVICES
DAVID C. COX f, ASSOCIATES
NMI SYSTEMS INC
LABAT-ANDERSON INC
NMI SYSTEMS INC
SCIENTEX CORP
SRA TECHNOLOGIES INC
DAVID C. COX 5 ASSOCIATES
DAVID C. COX 5 ASSOCIATES
PERRIN QUARLES ASSOCIATES
DYNCORP I S E T
MANTECH
REGION 03 = 45
COLDER ASSOCIATES
SEAWARD SERVICES INC
KBN ENG. f, APPLIED SCIENCES
TECHNOLOGY PLANNING S MGMT .
ENTROPY ENVIRONMENTALISTS
INTEGRATED LABORATORIES SYS
ENTROPY ENVIRONMENTALISTS
ENTROPY ENVIRONMENTALISTS
TRANSCONTINENTAL ENTERPRISE
TRANSCONTINENTAL ENTERPRISE
TRANSCONTINENTAL ENTERPRISE
REGION 04 = 11
AT KEARNEY 95
AT KEARNEY 94
PEI ASSOC 91
ENVIRON SCIENCE S ENG 95
GRACE ANALYTICAL LAB
ENVIRON SCIENCE S ENG
LIMNO-TECH
FEV ENGINEERS TECHNOLOGY
ENVIROSCIENCE 94
CTC TECH INC 95
BATELLE COLUMBUS OPERATION
INTERNATIONAL CONSULTANTS
BATTELLE MEMORIAL INST
AUTOMOTIVE TESTING LAB
NY
NY
VA
VA
VA
VA
DC
DC
MD
MD
MD
MD
MD
MD
MD
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
VA
FL
FL
GA
NC
NC
NC
NC
NC
NC
NC
NC
IL
IL
OH
IL
IL
IL
MI
MI
MN
OH
OH
OH
OH
OH
TOTAL OF REGION 05 =
14
LEE WILSON 5 ASSOCIATES
EGSG AUTOMOTIVE RESEARCH
SOUTHWEST RESEARCH INST
LOCKHEED
8/ 5/98
9/16/98
9/16/98
9/16/98
9/16/98
9/29/98
5/11/98
9/ 9/98
8/ 3/98
6/10/98
8/26/98
4/28/98
8/ 5/98
9/ 1/98
9/ 9/98
9/ 9/98
9/23/98
7/13/98
4/29/98
4/29/98
4/29/98
4/29/98
5/ 5/98
5/ 5/98
5/13/98
5/13/98
6/ 2/98
6/ 4/98
6/10/98
6/10/98
6/16/98
6/16/98
6/16/98
6/18/98
7/29/98
8/13/98
8/20/98
8/26/98
9/ 9/98
9/25/98
7/29/98
7/29/98
8/20/98
6/ 4/98
6/ 4/98
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
be provided to the Congress under separate memorandum
30 days of the transmittal of the semiannual report to the
agency head. The transmitted data will contain appropriate
cautions regarding disclosure.
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998
63
-------
D8GML7-44-1185-8100134 MIDWEST RES INST
TOTAL OF REGION 07 =
WOODWARD-CLYDE INT'L
EDO FIBER SCIENCE CORP
TETRA TECH
SCIENCE APPLICATIONS INT'L
SCIENCE APPLICATIONS INT'L
SCIENCE APPLICATIONS INT'L
GEO/R FC
SIERRA INCORPORATED
ES CI 93
SAIC
SAIC FC
DECISION FOCUS
ENERGY S ENVIRONMENTAL RSCH
CLEAN AIR VEHICLE TECH
ACUREX FL
CADMUS GROUP
CADMUS GROUP
FOSTER WHEELER
AQUA TERA CONSULTANTS
TOTAL OF REGION 03 =
TOTAL OTHER CONTRACT ASSIGNMENTS
9. SUPERFUND CONTRACT ASSIGNMENTS
ALLIANCE TECHNOLOGIES
ECOLOGY S ENVIRONMENT
ECOLOGY S ENVIRONMENT
CDM FEDERAL PROGRAMS
E9BFL3-02-0062-8100260
E9EFG8-02-0401-8400052
D9AFL8-44-2036-8100098
D9BGL6-44-0042-8100109
D9BFL7-44-1178-8100246
D9CFL7-44-1173-8100123
D9EFL8-44-2182-8100170
ECOLOGY S, ENVIR-92 1C S/F
MALCOLM PIRNIE INC
FOSTER WHEELER
FOSTER WHEELER
EBASCO SERVICES INC
SYRACUSE RESEARCH CORP
TAMS CONSULTANTS
TOTAL OF REGION 02 =
E9DFL4-
D9BFL7-
D9BFL5-
D9BFL8-
D9BFL7-
D9BFL7-
D9BFL7-
D9CFL4-
D9CFL4-
D9CFL4-
D9CFL4-
D9BFL7-
D9BFL5-
D9CFL5-
D9BFL8-
D9AFP8-
D9AFP8-
22-0269-
44-0085-
44-0367-
44-2108-
44-1105-
44-1010-
44-0114-
44-0401-
44-0398-
44-0396-
44-0399-
44-1111-
44-0236-
44-0387-
44-2103-
44-2047-
44-2113-
8100245
8100107
8100201
8100210
8100139
8100186
8100111
8100120
8100121
8100122
8100124
8100183
8100184
8100193
8100255
8400022
8400030
E9JHP8-
E9EGL8-
E9BHL7-
E9JHP8-
D9BFL7-
D9EFL8-
D9EFL8-
D9BKL4-
D9BFL8-
05-0044-8400031
23-0003-8100095
23-0009-8100243
23-0011-8400044
44-1206-8100187
44-2028-8100188
44-2239-8100226
ICF-FY 1987 INCURRED COST
ENVIRONMENTAL MANAGEMENT
HUGHES STX CORP
ISSI INC
GANNETT FLEMING ENVIRON ENG
ROY F WESTON INC
COMPUTER SYSTEMS DEV CORP
CDM FEDERAL PROGRAMS
CDM FEDERAL PROGRAMS
CDM FEDERAL PROGRAMS
CDM FEDERAL PROGRAMS
SCIENTEX CORP
ENVIRONMENTAL TECHNOLOGY
BIONETICS CORP
TECHLAW INC
CDM FEDERAL PROGRAMS
WASTE POLICY INSTITUTE
REGION 03 = 17
GRIFFIN SERVICES INC
REGION 04 = 1
CMC INC ASR5 ERCS
EQMI 97 FLOOR CHECK
EQMI 94
SAMSEL SVCS ASR5 ERCS
OHM REMEDIATION SERVICES
OHM CORPORATION
MORRISON KNUDSEN
TOTAL OF REGION 05 =
TOTAL OF
-44-2043-8100154
TOTAL OF
-44-2051-8100137
LOCKHEED ENVIRONMENTAL
SOUTHWEST RESEARCH INST
REGION 06 = 2
DPRA INC
REGION 07 = 1
ENVIRONMENTAL ENGINEERING
9/25/98
4/29/98
8/ 5/98
8/20/98
6/ 2/98
7/17/98
4/29/98
4/30/98
4/30/98
4/30/98
5/ 1/98
7/13/98
7/13/98
7/29/98
9/29/98
4/22/98
6/ 4/98
64
OFFICE OF INSPECTOR GENERAL
-------
D9BFL8-44-2083-8100138 AGEISS ENVIRONMENTAL
D9EFL8-44-2051-8100157 ENVIRONMENTAL ENGINEERING
D9GFL7-44-1165-8100217 CH2M HILL INC
D9GFL7-44-1167-8100220 CH2M HILL INC
D9GFL7-44-1166-8100221 CH2M HILL INC CO
D9EFL7-44-1164-8100225 CH2M HILL INC CO
7
MCLAREN/HART ENVIRONMENTAL CA
BECHTEL CI 92 CA
AEROVIRONMENT, INC. CA
TOTAL OF REGION 09 = 3
ID
WA
WA
D9BFL7-44-0020-8100163 ROY F WESTON INC
D9BFL7-44-1077-8100196 BROWN S ROOT ENVIRONMENTAL
D9BFL7-44-1076-8100197 BROWN S ROOT ENVIRONMENTAL
D9EFL8-44-2101-8100205 CET ENVIRONMENTAL SVCS
D9CFL8-44-2225-8100222 SVERDRUP ENVIRONMENTAL, INC.
TOTAL OF REGION 03 = 5
TOTAL SUPERFUND CONTRACT ASSIGNMENTS
TOTAL REPORTS = 247 7,550,369 3,514,714
APRIL 1, 1998 THROUGH SEPTEMBER 30, 1998 65
-------
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 10
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 ARE
0
0
0
0
0
0
0
0
0
0
0
0
0
0
1
0
0
0
0
0
1
62
OFFICE OF INSPECTOR GENERAL
------- |