800R76105 - C- August 1976 Managing The Money How EPA Assures Financial Integrity in the Federal Wastewater Treatment Works Construction Grants Program ------- I I nder the Federal Water Pollution Control Act Amendments of 1972, the U S Environmen- tal Protection Agency's wastewater treatment plant construction grants program has become the largest public works effort in the Nation Congress authorized $18 billion in grants to States and municipalities to enable them to build or expand wastewater treatment facilities needed to meet water quality goals The Federal funding share is 75 percent of the costs of individual projects, and State or local governments contribute 25 percent Based on a recent Bureau of Labor Statistics study, each billion dollars spent for wastewater treatment facilities generates approximately 20,000 on-site, year-long jobs In addition, off- site jobs are created in production and transpor- tation of materials and equipment and in engi- neering and technical fields EPA estimates that wastewater treatment con- struction activities will support at least 200,000 jobs by mid-1977, when the entire $18 billion is expected to be obligated for specific projects Although no significant improprieties or irregu- larities have occurred in this mammoth under- taking, the magnitude of the program creates a climate of potential problems As a result, EPA has taken several strong measures to preserve the financial integrity of the construction grants program and to strengthen the Agency's stew- ardship of public funds allocated for this pur- pose. Procurement Regulations EPA has issued regulations governing suba- greements, or contracts, awarded under the construction grants program This includes new procedures for procurement of architectural/ engineering services The regulations are designed to encourage an open selection process for engineers Cost reviews are required for engineering proposals (cost analysis may also be used in selected cases), and for negotiated change orders under construction contracts The regulations prohibit cost-plus-percentage-of-cost contracts since this type of contract provides no incentive to reduce costs They also prohibit fees based on a percentage of construction costs since the fees can bear no relationship to the engineer's effort if construction costs are rising fast Mandatory ------- Federal requirements have been included in standard contract clauses for both consulting engineering and construction contracts In developing these measures, EPA sought suggestions and comments from the public, State and local governments, and professional engineering groups Joint workshops were held throughout the Nation to explain the procedures to the architectural/engineering community, grantees, States and other parties Auditing Practices Guidelines A guide has been developed by EPA's Office of Audit for use by its auditors as well as by certified public accounting firms under contract to the Agency The guide applies to the audit of grant funds spent in the planning, design, and construction of wastewater treatment plants throughout the United States The guide, which updates and formalizes existing audit practices, includes comments and suggestions from five vitally interested groups • American Institute of Certified Public Accoun- tants • General Accounting Office • National Intergovernmental Audit Forum • The American Consulting Engineers Council • Professional Engineers in Private Practice These groups, along with water program and legal specialists within EPA, were instrumental in making the guide an effective working tool Expansion of Monitoring EPA has concluded an agreement with the Corps of Engineers and the General Services Administration to assist in expansion of Federal monitoring of projects under construction Efforts will focus on the quality of supervision provided by the grantee and the resident in- spector EPA will continue to rely heavily on the grantee to insure proper, speedy completion of construction Added Staffing More attention is being given individual con- struction grant projects by allotment of addi- tional personnel and other resources to the program The construction grants effort was strengthened when the President authorized 300 new EPA positions, including 250 entirely new positions and 50 transfers of personnel from other EPA programs Increased Program Management Emphasis on the management of the con- struction grants program has been increased by appointment of a National Program Manager to better coordinate the program, accelerate the grants process and give added focus to individ- ual projects Public Participation EPA will continue to encourage citizen in- volvement in the construction grants process, particularly on a community level Ample oppor- tunity is provided for public participation, partic- ularly in the early stages of planning for waste- water treatment facilities Vital to Public Trust These measures are viewed by EPA as being much more than financial management controls They also are vital steps in building and main- taining the public trust needed to sustain prog- ress, not only in the field of water pollution abatement, but in the entire environmental movement as well For More Information For more information and assistance, write to EPA Water Program Operations, Municipal Con- struction Division (WH-547), Washington, DC 20460 More Help on Auditing Personnel assigned to construction grant audits by EPA has been increased from about 25 man- years in Fiscal Year 1975 to approximately 160 man-years in Fiscal 1977 This will help the Agency perform pre-award, interim, and final au- dits it U S GOVERNMENT PRINTING OFFICE: 1976—626.61O 3.1 ------- |