UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                                 WASHINGTON, D.C. 20460
                                                                               OFFICE OF
                                                                          THE INSPECTOR GENERAL
                                    August 20, 1997
SUBJECT:
FROM:
TO:
             Audit Report No. E1PMF6-05-01 15-7100277
             Audit of Regional Laboratories

             Michael Simmons
             Deputy Assistant Inspector General
               for Internal Audits

             Mary Louise Uhlig
             Acting Associate Administrator for
               Regional Operations and State/Local Relations
Attached is the report on our audit of regional laboratories.  The purpose of the audit was to
evaluate the planning and management of regional laboratories. We concluded that, along with
other EPA offices, the regional laboratories needed to improve the systems for planning,
measuring, and reporting on activities they performed in order to meet the requirements of the
Government Performance and Results Act. We also concluded that the  laboratories needed a
stronger shared identity and national leadership.

ACTION REQUIRED

In responding to the draft report, your office provided corrective actions, with milestone dates,
for each recommendation.  Therefore, no further response is required, and we are closing this
report in  our tracking system.  Please track all corrective actions in the Management Audit
Tracking System.

We have no objections to the further release of this report to the public.

We appreciate the cooperation you, your staff, and the regional laboratories provided during this
review. Should you or your staff have any questions, please contact Charles Allbeny, Audit
Manager, Northern Audit Division, at 312-353-4222 or Richard Hall, Headquarters Liaison at
202-260-5563.
              Recycled/Recyclable  Printed with Vegetable OH Based Inks on 100% Recycled Paper (40% Postconsumer)

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                                                             EPA's Regional Laboratories
                          EXECUTIVE SUMMARY
INTRODUCTION
OBJECTIVES
RESULTS-IN-BRIEF
                           The Office of Inspector General (OIG) performed an audit of the
                           Environmental Protection Agency's (EPA) regional laboratories.
                           Although prior OIG reports have addressed the Agency's Office of
                           Research and Development laboratories, there have been no recent
                           reports concerning the management of regional laboratories.
                           The objectives of this audit were to:

                                determine whether improvements were needed in how
                                 regional laboratories' activities were planned and managed,
                                 and

                                identify areas where administrative processes among
                                 regional laboratories could be streamlined.
                           To meet the Government Performance and Results Act of 1993
                           (the Results Act), EPA is taking steps to improve the processes for
                           planning, program evaluation, budgeting, and fiscal accountability.
                           The regional laboratories' current processes will not be adequate to
                           assist the Agency in meeting the Results Act. Areas for
                           improvement include: (1) preparing performance plans, (2)
                           measuring performance, (3) increasing accountability, and (4)
                           linking planning and performance to funding levels.  See chapter 2
                           on page 5 for details.

                           EPA's regional laboratories need a stronger shared identity and
                           more active national leadership. Each regional laboratory has
                           historically operated independently of the others; however, there
                           are many similarities in their missions, goals, and contributions to
                           the Agency. A 1994 EPA report1 (1994 Laboratory Study)
                           recommended enhancing the role of the "central advocate" for the
       'Research. Development, and Technical Services at EPA: A New Beginning. Report No.
EPA/600/R-94/122, July 1994.
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                                                             EPA's Regional Laboratories
                           regional laboratories and re-evaluating which organizational
                           component should fill that role.  Although the Office of Regional
                           Operations and State/Local Relations (OROS/LR) was designated
                           to perform this role, its ability to fulfill the responsibilities had
                           been limited. The absence of a shared identity among regional
                           laboratories and the limited scope of national leadership have
                           resulted in inefficient efforts to meet common needs. See chapter 3
                           on page 13 for details.
AGENCY ACTIONS
OIG EVALUATION
                           The Acting Associate Administrator for OROS/LR stated that
                           OROS/LR and the regional laboratory managers have joined the
                           Agency in its efforts to understand and implement specific
                           requirements and goals of the Results Act.  The managers
                           recognize the importance of both planning and accountability and
                           will continue to bring their processes in line with the requirements
                           of the Results Act.  Concerning the concept of shared identity for
                           the regional laboratories, OROS/LR will work with the laboratories
                           to achieve greater consistency and effectiveness through more
                           coordinated efforts.  As the current reorganization of the Office of
                           Administrator is completed, its regional operations staff will work
                           to acquire the resources necessary to provide strong national
                           leadership for the broad scope of issues vital to the regional
                           laboratories. See pages 11 and 19 for specific actions the Agency
                           will take to address the findings and recommendations.
                           The Agency's actions, when completed, will address the findings
                           and recommendations in the report.
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                                                  EPA's Regional Laboratories
                          Table of Contents

EXECUTIVE SUMMARY	i

ABBREVIATIONS  	iv

CHAPTERS

1    INTRODUCTION	1
           Purpose	1
           Background 	1
           Scope and Methodology 	3
           Prior Audit Coverage	4

2    IMPROVEMENTS NEEDED TO MEET THE GOVERNMENT PERFORMANCE
     AND RESULTS ACT	5
           Government Performance and Results Act 	5
           Current Practices Need Improvement 	6
           Conclusion	11
           Recommendations 	11
           Agency Actions	11
           OIG Evaluation 	12

3    REGIONAL LABORATORIES NEED A STRONGER SHARED IDENTITY AND
     NATIONAL LEADER 	13
           Shared Identity	13
           National Leadership	14
           Illustrations of Need for National Leadership	16
           Conclusion	18
           Recommendations 	19
           Agency Actions	19
           OIG Evaluation 	19

APPENDICES

1    OFFICE OF REGIONAL OPERATIONS AND STATE/LOCAL
       RELATIONS RESPONSE TO THE DRAFT REPORT	20
2    DISTRIBUTION	23
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                                       EPA's Regional Laboratories
             Abbreviations

Government Performance and Results Act

Environmental Protection Agency


Research. Development, and Technical Services at EPA: A New
Beginning. July 1994, Report No. EPA/600/R-94/122

Office of Inspector General

Office of Regional Operations and State/Local Relations

Research Triangle Park
the Results Act

EPA

1994 Laboratory
Study
OIG

OROS/LR

RTF
                      IV
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                                                              EPA's Regional Laboratories
                                   CHAPTER 1
                                   Introduction
PURPOSE
BACKGROUND
Regional Laboratories
The OIG performed an audit of EPA's regional laboratories.
Although prior OIG reports have addressed the Agency's Office of
Research and Development laboratories, there have been no recent
reports concerning the management of regional laboratories. Our
objectives were to:

     determine whether improvements were needed in how
       regional laboratories' activities were planned and managed,
       and

     identify areas where administrative processes among
       regional laboratories could be streamlined.
A regional laboratory is located in each of the ten EPA regions.
The laboratories provide a range of scientific and technical services
for a wide variety of customers both internal and external to the
Agency.  Customers include regional program offices and state and
local agencies.  The laboratories' mission is to:  (1) provide quality
scientific data, (2) integrate laboratory activities with field and
quality assurance partners, (3) maintain a fully equipped
laboratory, (4) maintain and enhance a technically and
scientifically skilled staff, and (5) advance the Agency's science
agenda.

The focus of the regional laboratories is on the application of
science policies and methods in support of regulatory programs,
monitoring programs, and special projects.  The laboratories' main
role is to perform sample testing in support of various regional
programs. The regional laboratories perform many special
analytical services, which include fast turnaround and verification
analyses, nonstandard tests, and analyses requiring low detection
limits.  Regional laboratories provide services other than analytical
support, including laboratory audits and certifications, methods
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                                                              EPA's Regional Laboratories
                           development, field sampling, consulting and technical assistance,
                           data validation, expert witness testimony, and training.
Sources of
Analytical Services
Government
Performance
and Results Act
EPA regions have three potential sources of laboratory services.
The two main sources are the regional laboratories and the
Contract Laboratory Program. As already mentioned, the regional
laboratories perform many special analytical services.  The
Contract Laboratory Program consists of a group of contractors
that provides routine analytical services in support of EPA's
Superfund effort.  Non-Superfund programs may buy into these
contracts if funds are available.

If a regional laboratory or the Contract Laboratory Program does
not have a certain capability, a region can obtain analytical services
from private laboratories through blanket purchase agreements,
regional contracts, or small purchase requests.  For example,
because Region 4 and the Contract Laboratory Program cannot
perform dioxin analyses, Region 4 contracts out for these services.

The Government Performance and Results Act (the Results Act)
was enacted on August 3, 1993,  to provide for the establishment of
strategic planning and performance measurement in the Federal
Government.  Other purposes of the Results Act include:

      initiating program performance reform by setting program
       goals, measuring program performance against those goals,
       and reporting publicly on their progress; and

      improving Federal program effectiveness and public
       accountability by promoting a new focus on results.

The intent of the Results Act is to change the culture of Federal
agencies, from focusing on what agencies are doing to what they
are accomplishing. Implementing the Results Act would improve
agencies' planning, budgeting, and accountability processes,
linking them together so that planning drives budgeting. Actual
program results could also be monitored and used to influence
future planning.
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                                                             EPA's Regional Laboratories
                           To achieve a strong link among planning, budgeting, and
                           accountability, the Results Act requires all agencies to produce
                           strategic plans, annual performance plans, and annual performance
                           reports.  An agency's strategic plan will include a comprehensive
                           mission statement and general objectives covering the major
                           functions and operations of the agency.  Annual performance plans
                           will include objective goals and describe the operational processes
                           and resources required to meet the goals. Annual performance
                           reports will assess the agency's performance versus the  established
                           goals. The results will be used as a basis for future decisions on
                           programs and budgets.
SCOPE AND
METHODOLOGY         Our audit focused on the regional laboratories' management and
                           administrative processes and the Office of Regional Operations and
                           State/Local Relations (OROS/LR) role as the central advocate for
                           the regional laboratories.  We performed fieldwork in Regions 4, 5,
                           8, and 9; and at OROS/LR. We also obtained data from the other
                           six laboratories. We conducted fieldwork between July 8, 1996,
                           and June 13, 1997.

                           To accomplish our objectives, we reviewed applicable policies and
                           guidance and interviewed EPA officials in the regions visited and
                           OROS/LR. As criteria, we used the Results Act, relevant EPA
                           reports, Office of Administration and Resources Management
                           streamlining guidance, and Office  of Management and Budget
                           information management policies.

                           Our first objective was to determine whether improvements were
                           needed in how regional laboratories' activities were planned and
                           managed.  Through reviews of documentation and discussions with
                           laboratory, regional, and OROS/LR officials, we evaluated the
                           processes and management controls used to plan, schedule, track,
                           and report laboratory activities. Laboratory activities include
                           analytical tests, field sampling, and laboratory inspections and
                           certifications. We asked all ten regional laboratories about their
                           processes for scheduling, tracking, and reporting activities,
                           however we only requested data from the four regions visited. We
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                                                            EPA's Regional Laboratories
                          also reviewed all ten laboratories' processes for determining their
                          annual funding levels.

                          Our second objective was to identify areas where administrative
                          processes among regional laboratories could be streamlined
                          including equipment purchases, development of data management
                          systems, and standard operating procedures. To accomplish this,
                          we asked laboratory officials from all ten regions about their
                          process for planning equipment maintenance and purchases. We
                          interviewed laboratory officials from the four regions visited
                          regarding their purchase and development of data management
                          systems.

                          We issued position papers to the regional laboratories and
                          OROS/LR on May 20, 1997. We met with both groups to discuss
                          the position papers, and incorporated their comments into the draft
                          report. The draft report was issued to the Acting Associate
                          Administrator for OROS/LR on June 25, 1997. Comments to the
                          draft report were received on July 29, 1997. The comments were
                          incorporated into the final report and included as Appendix  1.

                          We performed our audit in accordance with the Government
                          Auditing Standards. 1994 Revision, issued by the Comptroller
                          General of the United States, and included such tests as we saw
                          necessary to complete our objectives.

PRIOR AUDIT
COVERAGE             There were no prior audits of EPA's regional laboratories related to
                          the objectives of our audit.
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                                                           EPA's Regional Laboratories
                                  CHAPTER 2
                    Improvements Needed to Meet The
                Government Performance and Results Act
GOVERNMENT
PERFORMANCE
AND RESULTS ACT
                          To meet the Government Performance and Results Act of 1993
                          (the Results Act), EPA is taking steps to improve the processes for
                          planning, program evaluation, budgeting, and fiscal accountability.
                          The regional laboratories' current processes will not be adequate to
                          assist the Agency in meeting the Results Act. Areas for
                          improvement include: (1) preparing performance plans, (2)
                          measuring performance, (3) increasing accountability, and (4)
                          linking planning and performance to funding levels.
Section 4 of the Results Act requires Federal agencies to prepare
performance plans and reports. By September 1997 and annually
thereafter, each agency is required to prepare a performance plan
covering the program activities set forth in its budget. These plans
will:

      express objective, quantifiable, and measurable goals;

      establish performance indicators to be used in measuring or
       assessing the relevant outputs, service levels, and outcomes
       of each program activity; and

      provide a basis for comparing actual program results with
       the established goals.

The Results Act also requires that starting March 31, 2000, each
agency will submit an annual report on program performance for
the previous fiscal year. The report will include the performance
indicators established in the plan along with the actual program
performance achieved as compared to the established goals. Also,
where a performance goal has not been met, the report will explain
why the goal was not met, the plans and schedules for achieving
the goal, and whether the goal is impractical or infeasible.
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                                                              EPA's Regional Laboratories
                           To help ensure compliance with the Results Act, EPA established a
                           Planning, Budgeting, Analysis, and Accountability process.
                           Among other items, it included requirements for annual
                           performance plans and reports. While the regional laboratories are
                           not required to prepare their own plans and reports, they provide
                           important services to the program offices and need to improve their
                           planning process as EPA implements the Results Act. Consistent
                           planning methods throughout EPA, including the regional
                           laboratories, will simplify preparation of the Agency-wide annual
                           performance plans and reports.
CURRENT PRACTICES
NEED IMPROVEMENT
Preparing Annual
Performance Plans
The Results Act requires strong links among planning, reporting,
and budgeting; and increased accountability.  To assist EPA in
meeting these requirements, regional laboratories, in conjunction
with program offices, will need to prepare annual plans with
objective goals and performance indicators and maintain consistent
data on results.  Regional laboratories will then need to report to
regional and program management on actual achievements and
costs versus projected levels. Lastly, the laboratories will need to
base the funding they receive on planned activities and
performance results.  Performing these activities will help the
regional laboratories and the Agency determine whether goals are
being met and resources are being used for priority activities.

Annual performance plans under the Results Act will include
objective goals and performance indicators. According to a 1994
EPA Subcommittee report2, regional laboratories generally lacked
the information required for effective planning. Only four often
regional laboratories prepared work plans that included goals  and
indicators. Identifying these elements in annual plans will provide
the laboratories with a basis to compare to results and determine if
objectives are being achieved.
       2Research. Development, and Technical Services at EPA: A New Beginning. Appendix F, "EPA
Laboratory Study: BSD Evaluation - Cross-Agency Subcommittee Final Report", Report No.
EPA/600/R-94/122, July 1994.
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                                   EPA's Regional Laboratories
In 1994, the Subcommittee identified a weakness related to
planning among the regional laboratories. There was a general
lack of readily available information, particularly in the areas of
resource management and future program needs. This information
was required to effectively plan for the future. The Subcommittee
recommended that EPA develop an integrated process to plan its
future, and evaluate its current, science and technical service
requirements.  The ability to estimate current and future needs
would help the Agency develop performance plans. As of June
1997, EPA had not taken action to address the recommendation.

Regional laboratories prepared annual plans with varying levels of
detail.

     Half of the laboratories did not prepare written work plans.
       Officials said planning specific activities was difficult
       because the laboratories provided services in response to
       changing regional needs.

     One laboratory prepared plans, but did not identify goals
       and indicators.  The work plans included narrative
       descriptions of planned activities, based on regional
       priorities.

     Four laboratories' work plans included goals and
       indicators. For example, one region included the estimated
       number of inspections and investigations. Another region
       projected the work days required to complete certain
       numbers of activities, such as training and technical
       assistance. The plans did not include estimated levels of
       analytical  support the laboratories would provide, although
       this was one of the laboratories' major activities.

Regional and laboratory officials said that it was difficult to
develop detailed work plans because the regional laboratories
provide a support function and must react to changing program
needs. However, the laboratories perform many of the same types
of functions every year. As a result, laboratory officials can
establish performance indicators and goals for some activities, with
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                                                               EPA's Regional Laboratories
                            the recognition that the laboratories also fulfill special program
                            needs that are not easily quantified.

                            Performance indicators are particular values or characteristics used
                            to measure or assess relevant outputs, service levels, and outcomes
                            of program activities.  Based on the audit, we identified two
                            potential indicators for the regional laboratories.

                                  One indicator could be the number of analytical tests
                                   performed.  Often regions, nine counted analytical
                                   activities based on analyses, which represented one sample
                                   through one instrument.3  A corresponding goal would be
                                   that the regional laboratory would perform a certain number
                                   of analyses in a fiscal year.

                                  Another indicator could be the number of laboratory audits.
                                   Regional staff audit contract laboratories to ensure they are
                                   properly analyzing samples.  A related goal would indicate
                                   the number of audits the region planned to conduct during
                                   the year.

Measuring Performance    To compare actual results to established goals on a national basis,
Results Consistently        the regional laboratories need consistent data on achieved
                            performance levels.  Comparing results to goals for analytical
                            support will be difficult because some regions include  different
                            items in the counts of analytical activity. As a result, EPA will not
                            be able to determine the national performance level and whether
                            the laboratories are meeting established goals.

                            Laboratory officials included the standard analyses performed by
                            regional laboratory analysts in the analytical activity data.  Also,
                            two of the ten regions included certain types of quality control
                            work in their data; the other eight did not. Including quality
                            control analyses adds significantly to the total analyses.  For
                            example, Region 8 included quality control work in its data.  In
                            fiscal year 1996, Region 8's total was over twice as high as Region
       3Even if an instrument simultaneously tests for a number of elements, the activity is counted as one
analysis. However, there could be more than one analysis for each sample.

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                                                             EPA's Regional Laboratories
Increasing Accountability
Through Reporting
                           4's (see table 1). This occurred although Region 8 had one of the
                           smallest regional laboratories while Region 4 had one of the
                           largest, based on the number of regional full-time equivalents.

                                      Table 1: Regions Included Different
                                               Activities in Data
Region
4
8
Includes Quality
Control Work
No
Yes
Total
Analyses
11,230
22,849
One method of measuring analytical activity is not recommended
over the other. However, because of the differences in measuring,
it would not be possible for the Agency to compare data across the
regions and to calculate total analytical activities versus the
projected level. The regional laboratories need to determine a
system for consistently measuring analytical activities. This will
allow determination of an EPA-wide total and comparison of
actual results to goals.

Accountability is a process for analyzing actual performance and
cost against goals and should focus on the Agency's
accomplishments relative to the commitments made in the annual
performance plan.  Regional laboratories would increase their
accountability by preparing annual performance reports that relate
actual results and resources expended  to objectives.

Seven of the ten regional laboratories  prepared activity reports and
submitted them to regional or program management.  These reports
varied in terms of the information included.  Some of the reporting
regions compared actual accomplishments to planned activities,
while others only described completed activities. Five of the seven
regions included numerical data on the levels of actual or planned
performance.

The three remaining regional laboratories did not report laboratory
activities to regional or program management.  Laboratory officials
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                                                              EPA's Regional Laboratories
                           said that some regional and program management did not request
                           data on actual levels of performance or resources used because
                           they were satisfied with the services provided. Also, the programs
                           were not concerned about the cost of services as long as analyses
                           were performed on time.  Staff members from one region said they
                           had not submitted reports since 1995 because management was
                           more interested in environmental results. In another region, the
                           laboratory previously submitted detailed quarterly reports to
                           program managers.  Since the managers provided little feedback,
                           this practice was suspended.

                           The regional laboratories need to prepare performance reports to
                           show actual accomplishments and costs versus planned activities.
                           Preparing these reports will show whether the laboratories have
                           met their goals and where resources have been spent. Submitting
                           these reports to program and regional management will also
                           increase the regional laboratories' accountability.
Linking Funding to
Performance Plans
and Results
The Results Act emphasizes a strong link among planning,
reporting, and budgeting. EPA intends that performance plans and
prior years' results, including resources used, will be the basis for
future decisions on programs and budgets. However, only three of
ten regional laboratories used planned activities and prior years'
results as the basis for their budgets, while seven based their
budgets on historical amounts. Laboratory officials said that they
do not believe they have significant input into how much funding
they receive.  This occurs because regional laboratories do not
have a specific appropriation.  Instead, they are funded by other
program offices or through the Regional Administrators' offices.

In terms of basing budgets on historical amounts, an EPA report4
stated that: "The budget process should avoid focusing decisions
solely on the margin of the prior year's budget because this
discourages consideration of significant change or major
redirection."  As the laboratories and EPA continue to implement
the Results Act and prepare performance plans and reports,  the
       4Managing For Results. The Planning, Budgeting, and Accountability Task Force, February 23, 1996.

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                                                             EPA's Regional Laboratories
                           funding they receive should be based more on activities and less on
                           historical amounts.
CONCLUSION
RECOMMENDATIONS
AGENCY ACTIONS
                           The Government Performance and Results Act places new
                           requirements on Federal agencies for improving their planning,
                           budgeting, and accountability systems. Current regional laboratory
                           practices will not be adequate to assist the Agency in meeting the
                           Results Act. The regional laboratories can improve their planning
                           processes by working with program offices to prepare annual
                           performance plans that include goals and indicators and measuring
                           performance results consistently. The laboratories can: (1)
                           increase accountability by preparing annual performance reports
                           and (2) develop a stronger link between funding levels and
                           performance plans and results. Performing these activities will not
                           only help EPA meet the Results Act, it will improve the overall
                           management of activities and resources at the laboratories.
                           We recommend that the Acting Associate Administrator for
                           Regional Operations and State/Local Relations work with regional
                           laboratory management to:

                           2-1.   Prepare, in conjunction with program offices, annual
                                 performance plans that include goals and performance
                                 indicators.

                           2-2.   Develop a system that all regions will use to consistently
                                 measure laboratory activities.

                           2-3.   Prepare annual performance reports that compare goals
                                 with actual accomplishments.

                           2-4.   Base funding levels on performance plans and prior years'
                                 results.
                           In responding to the draft report, the Acting Associate
                           Administrator for Regional Operations and State/Local Relations
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                                                             EPA's Regional Laboratories
                          agreed with all the recommendations and stated that the regional
                          laboratories have taken, and will continue to take, action to address
                          the recommendations.

                          2-1.   The regional laboratories are working with the program
                                 offices, the Office of Planning, Analysis and
                                 Accountability, and the Office of Regional Operations and
                                 State/Local Relations to meet the requirements of the
                                 Results Act.  The regional laboratories have developed an
                                 overall objective and sub-objectives, and are working on
                                 specific performance measures and a performance plan.
                                 The performance plan will be completed by the end of
                                 fiscal year 1998.

                          2-2.   The regional laboratories agree that a consistent
                                 measurement system should be developed, and the issue
                                 will be discussed at a meeting in September 1997.
                                 However, they believe that it is important to develop a
                                 system that is not only consistent and accurate, but also
                                 reflects other factors and assumptions that need to be
                                 considered when measuring the performance of regional
                                 laboratories. A pilot evaluation system will be completed
                                 by September 1998.

                          2-3.   In accordance with the Results Act, the regional
                                 laboratories will prepare annual performance reports that
                                 will compare actual accomplishments with established
                                 goals. The first report is due March 31, 2000, which will
                                 address the accomplishments for fiscal year 1999.

                          2-4.   The regional laboratories anticipate that funding decisions
                                 will be based on accomplishment of goals as identified in
                                 performance plans. The full system for linking planning,
                                 budgeting, and accomplishments should be in place for the
                                 development of the fiscal year 2002 budget. Interim efforts
                                 will be made to assure maximum accountability.
OIG EVALUATION
                           The Agency's planned actions will address the recommendations.


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                                                             EPA's Regional Laboratories
                                   CHAPTER 3
                  Regional Laboratories Need a Stronger
                 Shared Identity and National Leadership
                          EPA's regional laboratories need a stronger shared identity and
                          more active national leadership. Each regional laboratory has
                          historically operated independently of the others, however, there
                          are many similarities in their missions, goals, and contributions to
                          the Agency. A 1994 EPA report5 (1994 Laboratory Study)
                          recommended enhancing the role of the "central advocate"for the
                          regional laboratories and re-evaluating which organizational
                          component should fill that role. Although the Office of Regional
                          Operations and State/Local Relations (OROS/LR) was designated
                          to perform this role, its ability to fulfill the responsibilities had
                          been limited due to resource constraints.

                          The absence of a shared identity among regional laboratories and
                          the limited scope of national leadership have resulted in inefficient
                          efforts to meet common needs.  Development of a data
                          management system and procurement of capital equipment are two
                          examples of where uncoordinated efforts caused duplication of
                          effort.  A stronger shared identity and more active leadership
                          would help the laboratories achieve efficiencies from their
                          collective efforts.
SHARED IDENTITY
                          Each of EPA's ten regional laboratories has historically seen itself
                          as a unique entity. Laboratory officials have no responsibility to
                          each other or to a national level office within EPA. Instead, each
                          regional laboratory reports to its respective Regional
                          Administrator.  At the same time, regional laboratories share
                          similarities in their missions, goals, and contributions to EPA.
                          Each provides a wide range of technical support and assistance
       5Research. Development, and Technical Services at EPA: A New Beginning. Report No.
EPA/600/R-94/122, July 1994.

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                            services to regional program offices, state and local environmental
                            agencies, and tribal units for use in environmental and enforcement
                            decision-making.  Specific activities include sample analysis,
                            method development, and laboratory inspection and certification.

                            Regional laboratories are not, and should not be, identical in their
                            size, structure, or method of delivering services. Geographic and
                            program variations mandate that each laboratory has the flexibility
                            to meet unique requirements. However, the laboratories need to
                            accept and embrace that there are significant similarities in the
                            functions they perform. The regional laboratories prepared a draft
                            vision statement that indicated that, more and more, solutions to
                            environmental problems can be achieved only through the
                            collective efforts of all stakeholders. A stronger shared identity
                            and national leadership will assist the laboratories in considering
                            not only their regional needs, but national needs that can be met
                            through coordinated efforts.
NATIONAL
LEADERSHIP             The laboratories continue to need stronger national leadership.6 In
                            the 1994 Laboratory Study, EPA concluded that it needed to
                            strengthen the Headquarters advocacy for the regional laboratories.
                            This would, in essence, place regional laboratories on a par with
                            national program offices. This organization would serve a two-
                            fold role. First, it would represent the regional laboratories within
                            Agency-level issues.  These would include discussions concerning
                            allocation of resources. Second, the organization would serve as a
                            focal point for regional laboratory functions. This would include
                            identifying efficiencies related to coordination of laboratory
                            functions and encouraging cooperation among the laboratories.
                            However, according to EPA officials, the expanded role EPA
                            envisioned has not been fulfilled due to resource constraints.

                            The 1994 Laboratory Study listed the following activities among
                            the central advocate's proposed roles:
       6The regional laboratories have referred to this role as the "central advocate". However, in the context of
this report, we will refer to it as "leadership" to better include all aspects of the envisioned role.

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                                   EPA's Regional Laboratories
      provide consensus building for the effective and efficient
       use of resources to meet support requirements;

      facilitate communications among the laboratories, the
       Administrator, and program offices;

      ensure that senior management understood how the
       laboratories' mission integrates into EPA's overall
       scientific mission;

      represent the laboratories during budget and strategic
       planning efforts; and

      provide leadership for the laboratories promoting national
       consistency.

The study recommended that OROS/LR continue as the central
advocate with enhanced management and budget support.
However, according to an OROS/LR official, it was not able to
fulfill this enhanced role due to limited resources. The
OROS/LR's activities for regional laboratories had been limited to
budget justification and distribution of resources for capital
equipment.

The regional laboratory managers believe that stronger national
leadership is needed. The managers provided the following areas
of deficiencies which highlight the need for stronger leadership:

      liaison between the laboratories and Headquarters program
       offices, resulting in less than full integration of the regional
       laboratories into the Agency's science program,

      communication between Headquarters and the laboratories
       concerning emerging issues that may affect its operation
       and results in under-utilization of resources,

      advocacy or leadership when budget and staffing levels are
       addressed,
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                                                             EPA's Regional Laboratories
                                promotion, at the national level, of the regional
                                 laboratories' functions and contribution to the Agency, and

                                recognition of the role that regional laboratories play in
                                 enforcement, monitoring, and agency initiatives.

                           OROS/LR is currently undergoing a reorganization and
                           redefinition of duties.  As part of the reorganization, Agency
                           management has decided that regional laboratory leadership will
                           remain with the regional operations staff in the Office of the
                           Administrator. As EPA implements the reorganization, it needs to
                           determine what role the regional operations staff will perform. In
                           doing so, it is essential that the regional operations staff provide
                           stronger national leadership.
ILLUSTRATIONS OF
NEED FOR NATIONAL
LEADERSHIP
The absence of: (1) a shared identity and (2) an effective national
leadership have resulted in inefficient use of resources.  Attempts
to develop data management systems within regional laboratories
and the procurement of capital equipment are two examples of
where national leadership may have resulted in a more efficient use
of resources. A stronger shared identity and national leadership
will assist the laboratories in considering not only their individual
needs, but how their needs impact and overlap the needs of other
laboratories.
Data Management
Systems
Each regional laboratory has independently purchased, or
developed, its own data management system. While actual use
varied, each laboratory's data management system had the
capability to perform some similar functions. In 1992, EPA's
Research Triangle Park (RTF) and regional laboratories attempted
to develop a common system that would address the core needs of
all of the laboratories.  However, in spite of its efforts and
investments, EPA does not have a data management system which
meets the laboratories' needs.

The RTF system was designed to  contain a core set  of functions
that all of the laboratories needed such as project management,
sample tracking, and analysis scheduling. The data  management
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                                                              EPA's Regional Laboratories
                           system was provided to interested regions.  However, only a few
                           regions adopted it as the others felt the system was not adequate.
                           Some of the regional laboratories felt that this system did not meet
                           the needs already met by current systems, was not user friendly,
                           and that it had flaws. For example, the system did not:  (l)meet
                           biologists' needs, (2) electronically transfer data, or (3) generate
                           reports.  As a result, regional data management needs have been
                           met through several different efforts.

                           A comparison of Region 5's and 9's systems shows the variations
                           in how the systems are used and the related costs.

                                  Region 5 uses its system to track workload, track samples,
                                  generate reports, and upload information from instruments.
                                  Region 9 currently only uses its system to log in samples.

                                  Region 5 obtained its system at no cost from RTF. Region
                                  9 purchased a commercial system for about $10,000.

                                  Region 5 had recently modified its system to expand its
                                  capabilities. Region 9 was hiring computer support to learn
                                  the capabilities of its system.

                           The comparison  of the systems shows the differences that exist
                           throughout regional laboratories.  Both regions spent time and
                           resources trying to get a reliable system in operation. A stronger
                           national leadership would prevent further duplication of effort in
                           the purchase, development, or modifications of systems needed to
                           meet the regional laboratories' core needs.  This leadership could
                           facilitate communication among the laboratories to determine the
                           universal needs for a system, capabilities that had already been
                           developed, and on-going regional developments. Coordination of
                           data management system development would result in a more
                           consistent national process for tracking laboratory activities.

Equipment Purchases      Regional laboratories' capital equipment purchases were made
                           based on regional rather than national needs.  As a result, regional
                           laboratories have the potential for inefficient use of equipment
                           resources. If equipment purchases were better coordinated,
                           regional laboratories could reduce the potential for purchasing

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                                                             EPA's Regional Laboratories
                           equipment that would not be fully used.  EPA and the regional
                           laboratories have also recognized the need for better coordination,
                           but have not taken action to improve it.

                           While OROS/LR was responsible for ensuring proper use of the
                           capital equipment funds, it did not centrally manage the equipment
                           purchases, nor did it require the regional laboratories to submit
                           information on planned purchases and the rationale for those
                           purchases. In December 1996, the OROS/LR began developing a
                           tracking system to show equipment purchased since 1992. An
                           OROS/LR official stated that requiring laboratories to submit the
                           information increased their accountability for the funds. However,
                           OROS/LR's tracking system only identifies past equipment
                           purchases and does not account for planned purchases. As a result,
                           the current method of tracking will still not prevent regional
                           laboratories from purchasing duplicate equipment that will be
                           underutilized.

                           Regional laboratories have recognized that there may be a more
                           efficient way of using equipment. A draft vision statement for the
                           regional laboratories indicated that the regions would coordinate
                           workload, equipment, and expertise  among themselves to assure
                           the most efficient and highest quality service. Under this vision,
                           regional laboratories might use equipment resources more
                           efficiently through coordination of equipment purchases. National
                           leadership for the regional laboratories could help the regional
                           laboratories identify a better way to  use resources to meet support
                           requirements. This leadership could bring the laboratories together
                           to recognize there are commonalities in their work and that they
                           can provide support not only to their regions but also to each other.
CONCLUSION
                           EPA's regional laboratories need a stronger organizational identity
                           and national leadership. Each regional laboratory has historically
                           operated independently of the others, however, there are many
                           similarities in terms of their missions, goals and contributions to
                           the organization. The enhanced national leadership role EPA
                           envisioned is currently not being fulfilled. A stronger shared
                           identity and national leadership could help regional laboratories


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                                                              EPA's Regional Laboratories
                           improve coordination of their activities to reduce duplication of
                           effort and achieve efficiencies in the use of resources.
RECOMMENDATIONS
                           We recommend that the Acting Associate Administrator for
                           Regional Operations and State/Local Relations:

                           3-1.   Work along with the regional laboratories to complete their
                                  efforts to develop a common vision and mission statement.

                           3-2.   Work with regional laboratory management to identify the
                                  appropriate responsibilities for the national leader.
AGENCY ACTIONS
                           In responding to the draft report, the Acting Associate
                           Administrator for OROS/LR agreed with the recommendations and
                           described actions to address the recommendations.

                           3-1.    The regional laboratory vision and mission statements
                                  should be completed by January 1998.

                           3-2.    During the current reorganization, OROS/LR discussed
                                  with the Regional and Deputy Regional Administrators and
                                  regional laboratory directors the specific responsibilities for
                                  the national leader. Within one month of finalizing the
                                  reorganization plan, a work plan will be developed to
                                  reflect regional operations staff activities in support of
                                  regional laboratory operations.
OIG EVALUATION
                           The Agency's planned actions will address the recommendations.
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                                                              EPA's Regional Laboratories
                                                                               Appendix 1
                                                                                Page 1 of3
           UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
                             WASHINGTON, D.C. 20460
                                                         Office of Regional Operations
                                                           and State/Local Relations
MEMORANDUM

DATE:         July 29, 1997

SUBJECT:     Response to the Draft Audit Report No. E1PMF6-05-0115, Audit of
               Regional Laboratories

FROM:        Marylouise M. Uhlig
               Acting Associate Administrator

TO:           Michael Simmons
               Deputy Assistant Inspector General for Internal Audits

        On behalf of the Regions and OROS/LR, I want to thank you for the opportunity to
review the Draft Audit Report No. E1PMF6-05-0115, Audit of Regional Laboratories. Charles
Allberry, Audit Manager, Northern Audit Division and his staff conducted a highly professional
review of the planning and management processes of the Regional laboratories. Evaluations of
this kind are very useful to management serving as important tools in our efforts to improve and
streamline operations.

        The Office of Regional Operations and State/Local Relations (OROS/LR) and the
Regional Science and Technology (RS&T) Managers have joined with the Agency in its efforts to
understand and implement the specific requirements and goals behind the Government
Performance and Results Act (GPRA). We recognize the importance of both planning and
accountability and will continue recent ongoing efforts to bring our processes in line with GPRA
requirements. Supporting the concept of a shared identity for the Regional laboratories, the
Regional Operations Staff will work with the Regions to achieve greater consistency and
effectiveness through more coordinated efforts across the Regional laboratories.  As the
reorganization of portions of the Office of the Administrator, including the Regional Operations
Staff (ROS), is implemented, the ROS will work to acquire the resources (FTE) necessary to
provide strong national leadership for the broad scope of issues vital to the Regional Science and
Technology organizations.
     Note: The original response was signed by Bettina B. Fletcher for Marylouise M. Uhlig.

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                                                               EPA's Regional Laboratories
                                                                                Appendix 1
                                                                                 Page 2 of3
        In response to your specific recommendations, we offer the following comments, planned
 corrective actions and time frames for accomplishing these remedies.

Recommendation 2-1

        The Regional laboratories are working with Program components, the Office of Planning,
Analysis and Accountability, and OROS/LR to meet the requirements of GPRA. The RS&T
organizations have developed an RS&T Objective under Agency Goal 8, Sound Science, and a
draft Profile Planning Baseline to accompany the Objective. Also, an RS&T GPRA Workgroup
comprised of representatives from each RS&T, have developed Sub-objectives that further define
the RS&T Objective and provide specific Performance Measures. The RS&T GPRA Workgroup
will continue to respond to all Agency GPRA requirements for implementation.  The next step
will be the development of the Performance Plan with Goals and Performance Indicators. The
time frame for complete implementation of this recommendation according to the Agency's GPRA
schedule will be the end of FY 1998 for FY 1999.

Recommendation 2-2

        The RS&Ts have had numerous discussions concerning the issue of measuring laboratory
activities consistently across the Regions. The RS&Ts agree that a consistent measurement
system should be developed and this issue will be on the agenda for the fall RS&T meeting in
September, 1997. However, the RS&Ts believe that it is important to develop a laboratory
activities measurement system that is not only consistent and accurate, but also reflects  numerous
other factors and assumptions which impact any algorithm used to measure laboratory
performance. Sample matrix complexity, programmatic requirements, temporal sample loading
patterns, data quality objectives (e.g. from enforcement-quality requirements to initial site
screening), appropriate quality assurance levels all significantly impact the number of samples
analyzed by a laboratory.  A mechanism to measure Regional laboratory activities, including
consideration of the additional factors, will be prepared for pilot evaluation by September, 1998.

Recommendation 2-3

        In accordance with GPRA, the RS&Ts will join the Agency in preparing annual
Performance Reports that compare actual accomplishments with established goals. Laboratory
performance will be an important element of these reports.  The first steps in this process have
already been taken with the development of the RS&T Objective, Sub-objective and Performance
Measures under GPRA. Implementation of this recommendation will follow the Agency GPRA
requirements with the first Annual Performance Reports due March 31, 2000 addressing
accomplishments for FY 1999.

Recommendation 2-4

        The RS&Ts anticipate that funding decisions will be based on the accomplishment of
Goals as outlined in their respective Performance Plans. Performance Plans with their
Performance Indicators will be incorporated with the Annual Performance Reports and  Program
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                                                                EPA's Regional Laboratories
                                                                                  Appendix 1
                                                                                   Page 3 of3
Office guidance concerning areas of investment and disinvestment to establish outyear funding
requests. Implementation of this recommendation will follow the Agency schedule which calls for
the completion of Annual Performance Reports by  March 31, 2000 addressing the
accomplishments of FY 1999.  Accordingly, the full GPRA system to link planning and budgeting
should be in place for the Regional laboratories for development of the Agency's FY 2002
budget.  Interim efforts will be made to assure maximum accountability of Regional laboratories
as rapidly as possible.

Recommendation 3-1

        OROS/LR is actively engaged with the RS&T managers to complete development of a
common vision and mission statement for the Regional laboratories.  The vision and mission
statements will be discussed with Senior Regional management as well as Headquarters Program
Offices to assure that there  is a shared understanding and support for the functions which the
Regional laboratories can and should provide for the Agency. We anticipate that the vision and
mission statements should be in place by January, 1998.

Recommendation 3-2

        OROS/LR, in the context of recent Office  Reorganization activities, initiated a dialogue
with both the RS&T managers and Regional and Deputy Regional Administrators concerning the
specific responsibilities for the national leader of the RS&Ts. The need for improved coordination
among Regional laboratories for greater efficiency  and effectiveness is recognized and will be
incorporated in the activities of the successor organization, the Regional Operations Staff (ROS)
The scope of the functions  which can be carried out will be dependent upon the staffing levels
which can be established for this activity.

        OROS/LR's has a long history with the Regional laboratories; this experience and
expertise will continue through the Regional Operations Staff.  There is a strong commitment on
the part of the Office of the Administrator,  including the Regional Operations Staff, to provide the
National leadership to the Regional laboratories to maximize their ability to support the Agency's
mission for protection and  improvement of public health and the environment. As soon as the
Office of the Administrator Reorganization is finalized, a work plan will be developed for
Regional Operations Staff activities in support of the RS&T operations.  This work plan will
reflect discussions with RS&T managers, Regional Administrators and Deputy Regional
Administrators and will define the responsibilities of this National leadership role.  The draft
workplan will be developed within one month of the completion of the Reorganization.
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                                                            EPA's Regional Laboratories
                                                                          Appendix 2
                                                                           Page 1 of 1
                                  DISTRIBUTION

Headquarters

Acting Associate Administrator for Regional Operations and
 State/Local Relations (1501)
Assistant Administrator, Office of Research and Development (8101)
Audit Followup Coordinator, Office of the Administrator (1104)
Agency Followup Official (3101)
 Attn: Assistant Administrator, OARM
Agency Followup Coordinator (3304)
 Attn: Director, RMD
Associate Administrator for Congressional and Legislative Affairs (1301)
Associate Administrator for Communications and Public Affairs (1701)
Headquarters Library (3404)

Office of Inspector General

Inspector General (2410)
GAO Issue Area Planner
Divisional Inspectors General

Regional Offices

Regional Administrators
Regional Laboratory Directors
Regional Libraries
                                      ,. -23;>"- >-"-   <-j
                                                   ,i   ..          Report No. 7100277

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U.S. Environmental Protection Agency
Region 5, Library (PL-12J)
77 West Jackson Boulevard. 12th Ftonr
Chicago, IL  60604-3590

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