£P/4x
                                              _
&EPA         Report  of  Audit
               REPORT ON UNANNOUNCED ON-SITE AUDIT OF REGION II
              REMOVAL ACTIVITIES AT THE DELANCY STREET TRAILER,
                          NEWARK, NEW JERSEY

                   AUDIT REPORT N0- E5eH6-02-0167-70807

 Nh                      FEBRUARY 27, 1987
                                       U.S. Environmental Protect loo
                                       T.IVT-^rv, Room 2404 FM-211-1
                                       •01 M Street, S.W.
                                       Washington. DO  20460

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                              TABLE OF CONTENTS
SCOPE AND OBJECTIVES

SUMMARY OF FINDINGS

ACTION REQUIRED

BACKGROUND

FINDINGS AND RECOMMENDATIONS

1. IMPROVED SECURITY NEEDED

2. IMPROVEMENTS NEEDED IN MONITORING
   CONTRACTOR COSTS

APPENDIX 1 - REGIONAL RESPONSE TO DRAFT AUDIT REPORT

APPENDIX 2 - DISTRIBUTION
Page

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    i
    *   UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
              OFFICE OF THE INSPECTOR GENERAL
                    EASTERN DIVISION

                     150 Causeway Street
                        Room 715
                  Bo.ton. Ma.sachusaM 021 1 4
                       (617)223-0940
                                                                NEW YORK OFFICE:

                                                                90 Church Street
                                                                Suite 802
                                                                New Yort( NY ,0007

                                                                0>t2» 264-5730
MEMORANDUM

DATE:
 FEB27  1987
SUBJECT:  Report on Unannounced On-Site  Audit  of  Region  II
          Removal Activities at the  Delancy  Street  frailer,
          Newark, New Jersey
          Audit Report .Ntu E5eH6-C2-0167-70807
FROM:
TO:
Divisional Inspector General for Audit
Eastern Division

Christopher J. Daggett
Regional Administrator, Region II
SCOPE AND OBJECTIVES

We have performed an unannounced on-site  audit  of Region  II  removal  actions
at the Delancy Street Trailer site, Newark, New Jersey.   The removal  action
was initiated April 11, 1986.  The objectives of the  review  were to  determine
the:

" adequacy of the On-Scene Coordinator's  (OSC)  compliance with  prescribed
  directives and guidance governing removal actions;

* adequacy of the OSC's controls in monitoring  the  cleanup work and  on-s1te
  spending; and

* adequacy of the technical  assistance  provided by  the Technical Assistance
  Team (TAT) contractor.

We performed the review in accordance with  the  Standards  for Audit of Govern-
mental Organizations, Programs, Activities, and Functions issued by  the
Comptroller General of the United States, and included tests of accounting
records and other auditing procedures we  considered necessary.   We evaluated
action memoranda, delivery orders, pollution reports  (POLREPS), daily work
orders, contractor cost reports (EPA Form 1900-55), site  entry/exit  logs,

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OSC logs, Incident obligation logs, and contractor invoices to insure confor-
mance with prescribed directives and guidance.  In addition, we conducted
interviews with the OSC, and personnel from the Response and Prevention
Branch (RPB), the TAT contractor and the Procurement and Contract Management
Division to confirm the accuracy of our findings.               ;..

The review was conducted at the Delancey Street Trailer, Newark, New Jersey,
and RPB offices in Edison, New Jersey.  Audit fieldwork was performed from
July 10, 1986 through September 16, 1986.  The unannounced site visit was made
on July 10, 1986.
Directives and guidance used for the review were:

* National Oil and Hazardous Substances Pollution Contingency Plan (NCP);

0 Superfund Removal Procedures Revision Number Two,  dated August 20, 1984;

  Removal Cost Management Manual, dated January 1985; and

* ERCS contract.


SUMMARY OF FINDINGS

Our review of the internal and management controls exercised by Region II in
initiating and monitoring the removal  activities at the Delancey Street Trailer
Site disclosed that the OSC generally complied with the directives and guidance
governing removal  actions.  Vie also found that technical assistance provided
by the TAT contractor was adequate.  However, we found several areas that
need improvement:

1. IMPROVED SECURITY NEEDED

   Adequate security was not being provided at the site.  We found at the
   time of our unannounced visit that  paid security guards were not present.
   A subsequent visit found the security guard unaware of his duties.  Similar
   problems had been noted by the OSC  and TAT personnel.  As a result, EPA
   was being billed for security services that were either not provided or
   inadequate.  We recommend that future delivery orders require contractors
   to closely monitor security serv'ices to assure that agreed upon security
   measures are provided.  We also recommend that an overall analysis of
   security problems be conducted to determine if any firms have demonstrated
   a pattern of inadequate performances.

2. IMPROVEMENTS NEEDED IN MONITORING CONTRACTOR COSTS

   The OSC needs to improve the documentation maintained to monitor contractor
   costs.  We found that entry/exit logs did not reconcile with times claimed
   for contractor  personnel.  The OSC  stated that site related tasks were
   performed away from the site and therefore were not reflected on the

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   entry/exit logs.  As a result, the OSC could not accurately verify the
   ERCS contractor's costs as presented on Daily Contractor Cost Reports
   (1900-55s).  We recommend that the OSC maintain more detailed information
   1n the OSC log.  We also recommend that, in the future, the payment of ERCS
   contractor travel time from the firm's office to the site be reevaluated.

An exit conference was held with Regional officials on October 31, 1986.
Based on the discussion and presentation of additional documentation, the
finding on POLREPS was deleted from the final report.  A written response to
the draft report was submitted on January 16, 1987.  We have evaluated the
Region's comments and revised the report where appropriate.  Where differences
still exist, we have summarized the Region's comments and our response in the
ensuing paragraphs.


ACTION REQUIRED

In accordance with EPA Directive 2750, the action official is required to
provide this office a written response to the audit report within 90 days of
the audit report date.


BACKGROUND

The site is an abandoned truck trailer located off Delancy Street on a dirt
roadway by Wilson Avenue and Ball Street in Newark, New Jersey.  On March 27,
1986 RPB had received a telephone call giving notice of an illegal abandonment
of hazardous substances.  The trailer was found on April 6, 1986 by the New
Jersey Board of Public Utilities, Bureau of Investigation and Enforcement.

The trailer, which contained approximately 60 55-gallon drums and hundreds of
small bottles of chemicals, is located in a heavily industrialized area of
Newark.  It is bounded on the west side of the roadway by an unnamed creek, a
tributary of the Hackensack River, and on the east side of the roadway by a
junkyard.  The roadway is occasionally used by trucks and other vehicles for
access to the main paved streets located off Delancy Street and people walk
through the area.

Containers found in the drums were labeled ammonium hydroxide, aluminum
chlorohydroxide, glycerin and formaldehyde.  Formaldehyde and ammonium hydro-
xide are listed as EPA hazardous substances, and formaldehyde is also a
carcinogen.  Some of the drums appeared to be full and potentially contained
solid or sludge-like hazardous wastes.  Other drums contained unknown liquids.

An action memorandum was approved by Director, Emergency and Remedial Response
Division (ERRD) on March 9, 1986.  OH Materials, the Zone 1 ERCS contractor,
initiated work at the site on April 24, 1986.  A total of $138,000 was
authorized for preliminary assessment and removal of which $115,970 was for
mitigation contracting.
                                    - 3 -

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On August 1, 1986 an Administrative Order of Consent was issued to Daniel
Rubenfield and Tri-Corp. Industries, Inc. to take immediate corrective
actions.

Definitions of key terms used in this report are as follows:

ERCS;  Emergency Response Cleanup Services contract(s).   ERCS contract(s) were
developed to assist/support EPA emergency cleanup operations at oil and
hazardous substances releases.  The ERCS contracting network consists of two
groups of contractors, which include four ERCS zone contracts and 20-30
separate ERCS regional contracts.  Region II utilizes the services of the
ERCS Zone 1 contractor, OH Materials Company, Findlay, Ohio.

POLREPS:  pollution reports prepared through the life of the removal  project
which provide operational data concerning the project and a current accounting
of the status of funds.

Daily Work Order;  a directive prepared by the OSC defining the next day's
activity and the required personnel, equipment, and materials to be provided
by the ERCS contractor.

Contractor Cost Report (EPA Form 1900-55):  a form prepared by the ERCS
contractor at the end of each day to identify all personnel, equipment and
materials used to complete assigned tasks.

TAT;  Technical Assistance Team.  EPA contractor used to provide support
services to the OSC.  TAT services on the Oelancy Street Trailer removal
action were provided by Roy F. Weston, Inc.

Incident Obligation Log:  a log kept during a removal action to provide the
OSC with an accurate record of daily costs that are counted toward the total
project ceiling.  The log also tracks the limits for individual cost categories,

Exit/Entry Log^  a log maintained by the OSC or his authorized representative
to verify personnel, vehicles, equipment, supplies, and subcontractors brought
on site.  Also serves as a basis for comparison to the contractor's daily
cost reports (EPA Form 1900-55).
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FINDINGS AND RECOMMENDATIONS

1. IMPROVED SECURITY NEEDED

   Adequate security was not being provided at the site.   We found at the
   time of our unannounced visit that paid security guards were not present.
   A subsequent visit found the security guard unaware of his duties.  Similar
   problems had been noted by the OSC and TAT personnel.   As a result,  EPA
   was being billed for security services that were either not provided or
   inadequate.

   Delivery Order Number 6893-02-052, dated April  10,  1986, called for  OH
   Materials to provide for 24-hour security at the trailer.  The revised
   delivery order, dated April 25, 1986 stated "O.H. Materials shall arrange
   for site security of the trailer and its contents as required by the OSC.
   O.H. Materials shall make recommendations to the OSC for appropriate
   site security measures, as appropriate."

   During our July 10, 1986 unannounced site visit, we found that from our
   entry at 9:00 A.M. to our departure at 11:00 A.M.,  no security guard was
   present.  We made a subsequent visit to the site on July 17, 1986 at
   1:35 P.M. and found that though a guard was present, (1) it was his  first
   day on the job and he unaware of what he was guarding, (2) he was unaware
   what his duties were, and (3) he was positioned very far away from the
   trailer.

   The OSC stated that inadequate security services had been a problem since
   the initiation of the removal activity.  Initially, OH Materials had
   contracted with Wells Fargo Guard Services.  These services were provided
   from April 11, 1986 until their termination on May 6, 1986 at request of
   the OSC.  Burns International Security Co. (Burns) was then hired to
   assume security responsibilities.

   Security services did not improve with the hiring of Burns.  Besides the
   incidents described during our on-site visits, TAT personnel also noted
   problems.  In a July 2, 1986 memorandum to the OSC, the TAT representative
   stated that no security guards were observed at the site on nine different
   occasions during  the period June' 10, 1986 to July 1, 1986.  The OSC also
   advised us that no security guards were found on July 11, 1986 and July
   22, 1986.

   OH Materials billed EPA on June 27, 1986 and August 26,  1986 for security
   services.  OH Materials claimed costs for complete 24-hour periods.  On
   June 17, 1986 the OSC requested from OH Materials "detailed documentation
   of hours on-scene for the guard service from Wells Fargo Security."  On
   July 18, 1986, the OSC wrote  to OH Materials about the TAT and 016 obser-
   vations of lack of security and the need for similar detailed documenta-
   tion from Burns.  Documentation in the form of  time sheets was provided,
   but their format made verification of actual hours worked difficult.  On
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   September 9,  1986,  the OSC recommended  to  the  Contracts  Section, Office of
   Financial  Management,  that $3,943  of  $4,244  for  security services be
   withheld.   On September 15,  1986,  the OSC  also disputed  additional charges
   of $804 for security services.  We concur  with these actions taken by the
   OSC.

   Regional Response

   The Region stated that  it  had already taken  the action recommended in the
   draft report not to pay for security services.   It also stated that the
   OSC noted that security was lacking at least one month before the DIG
   visited the site.  During  that time,  the OSC directed OH  Materials  on at
   least three occasions to provide better site security,  which proved to be
  unsuccessful.   The Region suggested that the first recommendation be
  deleted because the Region had initiated such action prior  to the OIG's
  review.   The Region  agreed with  our next recommendation requiring closer
  monitoring of  security  services  by  contractors.

  Finally,  the Region  agreed with  the need  to analyze  problems  and determine
  if  there  is  a  pattern of inadequate performance.   However,  the Region  felt
  that rejecting a  firm may  not  be the most effective  way of  dealing with
  poor performance  in  all  cases, because the  firm could claim that it had
  improved operations since  the  last performance.  The Region stated, "Where
  a pattern of inadequate  performance is noted, EPA will  provide an opportuni-
  ty to the contractor or subcontractor to improve Its practices and to
  demonstrate such  improvement through performance.  If improvement occurs,
  then it would be inappropriate for the OSC not to give consent for utiliza-
  tion of such firms on other projects.   However,  1f such an opportunity
 does not prove to be successful,  then  we agree that OSCs should not  give
 future consent for utilization of such firms and EPA should  look into
 other security options where feasible."
 PIG Response
 We agree that the Region has acted responsibly in dealing with  the  in-
 adequate security services  provided  at  the  site.   Our writeup has reflected
 these actions.   Since  the Region  has already  taken action on our first
 recommendation,  we have  deleted i-t from  the final  report.

 We  are  also  pleased  that the Region  agrees  in  principle with our other
 recommendations.  We believe that tighter control  by the  contractor will
 be  an effective  approach  to  improving security services.  We also believe
 that the Region  should not utilize firms that have a history of substandard
 performance.
Recommendations

We recommend that you:
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                 1. Direct  that  future  delivery orders require contractors to more closely
                   monitor security services to assure that agreed upon security measures
                   are  provided.

                 2. Direct  the Response and Prevention Branch to analyze security problems
                   that have occurred  during removal actions to determine If there are any
                   firms for which a pattern of inadequate performance has been noted.  If
                   it is determined that such a firm is noted, then OSCs should be directed
                   not  to  give  consent for utilization of such firms, in accordance with
                   Article XXXIV, "Subcontract Consent", of the ERCS contract.

             2.  IMPROVEMENTS NEEDED IN MONITORING CONTRACTOR COSTS

                 The OSC needs to improve the documentation maintained to monitor contractor
                 costs.  We found that  entry/exit logs did not reconcile with times claimed
                 for contractor  personnel.  The OSC stated that site related tasks were
                 performed  away  from the site and therefore were not reflected on the
                 entry/exit logs.  As a result, the OSC could not accurately verify the
                 ERCS contractor's costs as presented on Daily Contractor Cost Reports
                 (1900-55s).

                 EPA's Removal Cost Management Manual (Manual), published in January 1985,
                 details the comprehensive cost management procedures to be used during
                 emergency  response actions.  Section 3.3 of the Manual states that the OSC
                 should  verify that the hours of work charged for personnel, equipment, and
                 any other  services, as listed on the daily Contractor Cost Reports, are
                 correct.   Subsection 3.3.1 states "The OSC or other designated on-s1te
                 personnel  can verify personnel charges by routinely recording what personnel
                 are on-site, the duties that they perform, and the length of time that
                 they remain on  site."

                 Personnel  costs are the largest cost experienced at the site.  Subsection
                 5.1.2 of the Manual states that "the names of all personnel and equipment
                 entering and exiting the removal site and the date and time of entry and
                 exit must  be recorded.  This information is instrumental in verifying ERCS
                 personnel  and equipment charges."

                 Our review found that  information maintained by the OSC was not complete
                 or detailed enough to  adequately verify ERCS contractor daily cost claims.
                 The entry/exit  logs only indicated time specifically spent on the site.

                 There was  no other document prepared that detailed those ERCS contractor
                 employees  who performed tasks away from the site and the time those tasks
                 were performed.  Since overtime claims were regularly submitted for all
                 contract employees, complete and accurate documentation maintained by the
                 OSC was a  necessity to assure that EPA was properly billed.

                 Daily Contractor Cost  Reports claimed 70 more hours that the entry/exit
                 logs showed for the five days that work was performed on the site.  The
                 difference in hours fell into four categories:
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* Time claimed on 4/24/86 (first day of
  onsite work) prior to entry at site.

0 Time claimed on 4/28/86 (first day of
  new week) prior to entry at site.

* Time claimed 4/24 - 4/29/86 after
  completion of work at site.

" Time claimed on 4/30/86 (last day of
  onsite work) after exiting from site.
16   hours


11.5 hours


32.5 hours


10	hours

70   hours
The hours charged prior to entry on the site on April 24, 1986 and April
28, 1986 and the time charged after exiting the site on April 30,  1986
represent travel time from OH Materials1 field office to the site.  Article
XII 8 of the ERCS contract states: "Routine daily commuting time to and
from the work site will not be an allowable charge under the contract."
Also, the revised delivery order issued on April 25, 1986 stated:  "Contractor
is requested to be on-site Thursday, April 24, 1986 at 8:00 A.M.,  E.S.T.
with the aforementioned personnel and equipment."  The OSC stated  that he
had spoken to the Contracting Officer and was advised that these hours
could be claimed if they were reasonable and consistent with Federal travel
regulations.  The OSC also noted that a total of five of the 16 hours not
reconciled on April 24, 1986 occurred because the TAT team, which  prepared
the entry/exit logs, arrived that day 45 minutes late.

The 32.5 hours charged in excess of those recorded on entry/exit logs were
claimed for all OH Materials employees performing work at the site.
Differences between the times stated on the 1900-55's and the entry/exit
logs amounted to as much as four hours a day.  The OSC stated that  OH
Materials personnel were engaged in necessary activities away from the
site, such as assisting, labelling and transporting materials at the
Regional facility in Edison.  He also stated that he would not approve on
the 1900-55s any activity charges that were not allowable or reasonable.
The time listed on the entry/exit logs only indicated the hours spent at
the trailer.  All other activities, though monitored by the OSC, were not
recorded in sufficient detail ir other documents (i.e., OSC log, chain of
custody forms) to indicate hours worked off site by specific personnel.

We believe that tighter controls were needed to assure the accuracy of
contractor cost claims.

Regional Response

The Region believed that the OSC's documentation was adequate to monitor
contractor costs performed away from the site and consistent with  the
contract and the OSC's role.  The Region stated that the 1900-55 forms
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were the OSC's documentation of hours worked, whereas exit/entry logs were
not.  Further, in accordance with the EPA Removal Cost Management Manual,
the EPA Form 1900-55 was the only form currently required to be completed
under the CERCLA removal program.  The Region acknowledged that there may
be discrepancies between the EPA Form 1900-55 and the entry/exit log as
they were used for different purposes.  However, the entry/exit log was
optional and the OSC was not required to reconcile it to the EPA Form 1900-
55.

The Region also stated that it was not the OSC's role to "accurately verify
the ERCS Contractor Cost Reports (1900-55)."  The Region indicated that
the OSC was required to be accurate, but was only required to certify that
services/equipment charged were received.  The OSC signed for travel time
costs as reasonable, and therefore, had no need to "re-evaluate" the travel
costs.

The Region further pointed out that the OSC utilized a variety of different
forms of documentation and that these documents indicated that additional
hours were required to be worked by numerous contractor personnel after
leaving the site.  Therefore, the maintenance of more detailed information
in OSC logs would not address the concerns raised in the draft report.

Finally, the Region believed that the issue of allowable employee travel
time should not be addressed to the Region.  In this case, the trailer was
not a "fixed" removal site.  Daily remobilization was determined to be
more cost-effective and safer than on-site location of ERCS personnel.
The Region stated that EPA Contracts Administration personnel had advised
the OSC that the determination of what was normal commuting time was to be
decided on a case-by-case basis by OSCs and should be consistent with
Federal and EPA travel regulations.  The OSC for the Delancy Street Trailer
Removal Action believed that the contractor's charges for time were
generally consistent with these regulations.

PIG Response

We believe that the documentation maintained at this site was not adequate
to assure the accuracy of the contractor's cost claims.  The Region stated
in its response that the documentation maintained by the OSC indicated
that "additional hours were required to be worked by numerous contractor
personnel after leaving the site."  We are not questioning that work was
required or even performed.  What we are highlighting is that none of the
documentation maintained for this site identified the individuals who
performed the additional work nor the specific hours attendant to those
tasks.

As we have already stated in the narrative portion of this finding, the
EPA Removal Cost Management Manual Section 3.3 states that the OSC should
confirm "that the hours of work charged for personnel, equipment, and any
other services are correct".  More detailed information was needed to
accomplish this verification.
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Finally, we agree that in this instance the Region followed Headquarters
guidance on the allowability of contractor employees travel time.  We have
modified our recommendation to suggest prospective review for approval of
such costs during other removal actions.

Recommendations

We recommend that you:

1. Direct the OSC to maintain more detailed information in the OSC log.

2. Reevaluate in future actions the necessity of paying the ERCS contractor
   for employee travel time from the firm's office to the site.
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                                                           APPENDIX 1
                                                           Page  1 of 5

                        Region II Garments to PIG Draft Report

                        Unannounced On-Site Audit of Region II
                   Removal Activities at the Delancy Street Trailer
                           I.  "Improved Security Needed"

                                   Results of Audit

A. Draft Report page 6, recommendation No. 1; "Recommend to the Contracts Section
   ...that no payment for security services be made to O.H. Materials for those
   periods (a) when such services were found...  to be lacking and (b) when adequate
   detailed documentation is not provided to verify actual hours worked."

                                   Region II Comments

   The Region has already taken the action recommended by the auditor.  The OSC
   noted that security was lacking at least one month before the OIG investigated
   the site.  During that time, the OSC directed O.H. Materials on at least three
   occasions to provide better site security, which proved to be unsuccessful.  As
   a result, the OSC disputed almost $4,000 in site security costs.

                                Region II Recommendations

   This recommendation should be deleted because the Region already initiated
   such action prior to the OIG's review.  The OIG's report, however, should note
   the action taken by the Region to address the need for improved security.

                                   Results of Audit

B. Draft report page 6, recommendation No. 2: "Direct that future delivery orders
   require contractors to more closely monitor security services to assure that
   agreed upon security measures are provided."

                                  Region II Comments
                                     f
   We concur and have already implemented this recommendation.
                                                  *
                                  Results of Audit

C. Draft report page 6, recommendation No. 3; "Direct the Response and Prevention
   Branch to analyze security problems that have occurred during removal actions to
   determine if there are any firms for which a pattern of inadequate performance
   has been noted.  If it is determined that such a firm is noted, then OSCs should
   be directed not to give consent for utilization of such firms, in accordance
   with Article XXXIV, 'Subcontract Consent*, of the ERGS contract."
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                                                               APPENDIX  1
                                                               Page  2 of 5

                                      - 2 -

                                  Region II Comments

   We agree with the need to analyze security problems and determine if there is
   a pattern of inadequate performance.  However, rejecting a firm may not be
   the most effective way of dealing with poor performance in all cases.  The firm
   can claim that it has improved operations since the last performance.  Where
   such a pattern of poor performance has been noted, the Region has taken appro-
   priate action to correct these deficiencies.  For example, EPA has requested
   that O. H.  Materials hire local off-duty police to patrol the site in lieu of
   hiring firms that performed poorly in the past.  This option is being utilized
   more frequently and has been found to be more successful than hiring a security
   subcontractor in some cases.

   Where a pattern of inadequate performance is noted, EPA will first provide an
   opportunity to the contractor or subcontractor to improve its practices and to
   demonstrate such improvement through performance.  If improvement occurs, then
   it would be inappropriate for the OSC not to give consent for utilization of
   such firms on other projects.  However, if such an opportunity does not prove
   to be successful, then we agree that OSCs should not give future  consent for
   utilization of such firms and EPA should look into other security options where
   feasible.

                               Region II Recommendation

   The report should describe the action taken by the Region to correct and improve
   security by having off-duty police hired in some cases to patrol  sites in lieu of
   a security firm.  In addition, the recommendation should be deleted.  The Region
   has taken and will continue to take timely and appropriate action to correct
   inadequate contractor performance.

              II.   "Improvements Needed In Monitoring Contractor Costs."

                                  Results of Audit

A.-Draft report page 6, paragraph 4; "The OSC needs to improve the documentation
   maintained to monitor contractor costs.  We found that entry/exit logs did not
   reconcile with times claimed for contractor personnel.  The OSC stated that site
   related tasks were performed away from the site and therefore were not reflected
   on the entry/exit logs.  As a result, the OSC could not accurately verify the
   ERGS contractor's costs as presented on Daily Contractor Cost Reports (1900-55s).*

                                  Region II Comments

   We believe that the OSC's documentation was adequate to monitor contractor
   costs performed away from the site and consistent with the contract and the
   OSC's role.  The 1900-55 forms are the OSC's documentation of hours worked,
   whereas exit/entry logs are not.  In accordance with the EPA Removal Cost
   Management Manual, the EPA Form 1900-55, which is the daily cost accounting
   sheet, is the only form currently required to be completed under the CERCLA
   removal program.  There may be discrepancies between the EPA Form 1900-55
   and the entry/exit log as they are used for different purposes.  However, the
   entry/exit log is optional and the OSC is not required to reconcile  it to the
   EPA Form 1900-55.  Site exit/entry logs are not timesheets for contractor
   personnel, nor is there a requirement to submit timesheets for the OSC's
   review.

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                                                                APPENDIX 1
                                                                Page 3 of 5
                                       _ 3 _


   It is not the OSC's role, to "accurately verify the ERCS contractor Cost
   Reports (1900-55s)."  The OSC is required to be accurate, but is only
   required to certify that services/equipment charged were received.  The
   OSC signed for travel time costs as reasonable, and therefore, has no need
   to "re-evaluate" the costs.

   Besides the OSC log, OSCs utilize for documentation purposes Daily Work Orders,
   Chain of Custody forms, TAT and OSC log notes, other EPA log notes (Environmental
   Service Division) and site exit/entry logs.  Together, such documents indicate
   that in the instance the I.G. is referring to, additional hours were required to
   be worked by numerous contractor personnel after leaving the site.  Therefore,
   the maintenance of more detailed information in OSC logs, as reccmnended in the
   draft report, would not address the concern raised by the I.G.  about work that
   the contractor performed off site.


                               Results of Audit

B. Draft report page 8, reccmmendationst "We recommend that you:"

   1.  Direct the OSC to maintain more detailed information in the OSC log.

   2.  Disallow payments for ERCS contractor employee travel time from the firm's
       office to the site.

   3.  Tighten language in future Delivery Orders to exclude payment for such
       travel time.

                               Region II Garments

   1.  As discussed under Note IIA above, we do not agree with the necessity for
       this recommendation.  The recommendation should be deleted.

   2..  The issue of allowable employee travel time should not be addressed to the
       Region.  In this case, the trailer was not a "fixed" removal site.- Daily
       immobilization was determined to be more cost-effective and safer than
       on-site location of ERCS personnel.  EPA Contracts Administration personnel
       advised the OSC that the determination of what is normal commuting time
       is decided on a case-by-case basis by OSCs and should be consistent with
       Federal and EPA travel regulations.  The OSC for the Delancy Street Trailer
       Removal Action believed that the contractor's charges for time were gener-
       ally consistent with these regulations.  Therefore, this recommendation
       should be deleted.

   3.  We do not agree with this recommendation.  The auditor has not demonstrated
       the necessity for the exclusion of such travel time.  Furthermore, neither
       the Regional Administrator nor the OSC can change a provision to the contract
       through a delivery order.


                                      -  13  -

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                                                                          APPENDIX 1
                                                                          Page 4 of 5
                                                   -  4 -

                            III. "POLREPS Were Not Submitted on a Timely Basis"

                                            Results of Audit

               Draft report page 8, paragraph 4; " The OSC did not submit weekly POLREPS.  Accord-
               ing to the Chief, Incident Response and Prevention Section, personnel who required
               knowledge of the removal action (Emergency and Remedial Response Division, Solid
               Waste Branch and Office of Regional Counsel) were informed verbally on a daily
               basis and also in the weekly Branch status report and therefore the weekly POLREP
               report was not critical.  As a result, required reports were not submitted in
               accordance with Agency guidelines."

               The auditor recommends that OSCs adhere to prescribed procedures for submitting
               POLREPS.

                                             Region II Comments

               The Superfund Removal Procedures Manual states that routine progress reports
               should be submitted to the Emergency Response Division a minimum of once every
               week for sites, and daily where practicable for classic spills.  However, the
               "minimum of once every week" POLREP frequency within the manual is guidance which
               may be implemented on a-case-by-case basis.

               POLREPS were prepared and issued for this site as follows:

                               Date Prepared by OSC;    Date Released from Branch;
               - POLREP II          4/17/86                     4/18/86
               - POLREP 12          4/24/86                     5/2/86
               - POLREP 13          5/12/86                     5/13/86
               - POLREP 14          6/18/86                     7/24/86

               The five day sampling efforts at the site were reflected in POLREPS 12 and 13.
               We believe this to be adequate documentation in accordance with Agency guidance
               for the submission of POLREPS.  As stated, the OSC also prepared weekly status
               reports which covered on-going site activities, and kept necessary Regional and
              'Headquarters personnel informed of site activities through telephone ccmnunica-
               tion.  No special occurrences or changes in site activities warranted additional
               reporting by the OSC.  We believe, that the frequency of reports was appropriate
               given the activities at the site and the other reporting and communication conducted.

                                          Region II Recommendation

               We recomnend that this issue be deleted from the report.

                                     IV.  Clarifications to Draft Report

              0  Regarding the definition of key terms - Page 4, "ERGS," the ERGS contracts
                 were not "developed to assist/support the U.S. Coast Guard's cleanup operation
                 of oil" as stated  (although provisions exist for this).

              0  Regarding the "Incident Obligation Log," page 4, as stated in our cements
                 on the Industrial Latex draft audit, this is a record of "estimated costs"
                 rather than an "accurate record of daily costs."

                                                - 14 -
.

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                                                                         APPENDIX 1
                                                                         Page 5 of 5
                                                   - 5 -
                The revised National Oil and Hazardous Substances Pollution Contingency Plan,
                (NCP), deletes the terminology "immediate removal actions" and has been using
                the term "removals" since February 18, 1986.  The audit report uses the old
                terminology  (i.e. page 2, paragraph 4 - Surrmary of Findings).
:
                                               -  15  -

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                                                               APPENDIX 2

                                 DISTRIBUTION


Recipient                                                      Copies

Inspector General (A-109)                                        1
Deputy Inspector General                                         1
Divisional Inspector General for Audit,
  Internal Audit Division            'v       -                    1
Director, Audit Operations Staff            •- ••  "•                3
  (Audit Control File (2))
  (GAO                (1)}
Regional Administrator                                           2
Director, Emergency and Remedial Response Division               1
Audit Followup Coordinator                                       1
Comptroller (PM-225)                                             1
Agency Followup Official (PM-208)
  Attn:  Resource Systems Staff                                  1
                                -  16 -

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