V
Report of Audit
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REPORT. OM AUDIT 0? EPA, REGIO* HI
MONITORIHG OF SDPERfUHD REMEDIAL SITES
AUDIT REPORT JIUMBEE E3«H6-03-022»-71903
September 15, 1987
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U.S. Envlrorunental Proteotlva
Library. Raom 2404 PH-21V4
;«0l M- Street, S.W.
•aahingtou, DO 20460
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TABLE OF CONTENTS
Page
SCOPE AND OBJECTIVES 1
SUMMARY OF FINDINGS-. 2
ACTION REQUIRED. 3
BACKGROUND 3
FINDINGS AND RECOMMENDATIONS
1 - SITE CLEANUP DELAYS 5
2 - TRANSFER OF ENFORCEMENT SITE.S 14
APPENDIX A - DISTRIBUTION; 18
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
OMICt OP TMI INtflCTOH OfNIHAL
MID.ATLANTtC OIVIIION ,
§41 CHIITNUT • UllDINO
PHIUADf LPHIA. PENNSYLVANIA ItIS?
September 15, 1987
MEMORANDUM
SUBJECT: Audit Report Number E5eH6-03-0228-71903
Report of Audit on Region Ill's
Monitoring of Supe^fund Remedial Sites
FROM:
TO:
ft
P. Ronald CandoJ
Divisional Inspector Gene]
James M. Seif
Regional Administrator
for Audit
SCOPE AKD OBJECTIVES
This is the first in a series of reports we plan to issue on the
audit we conducted of Region Ill's oversight of remedial Superfund sites
administered by the Commonwealth- of Pennsylvania Department of Environ-
mental Resources (DER). The purpose of this audit was to evaluate actions
taken by DER to clean up the sites, as well as the adequacy of EPA's steward-
ship over DER's remedial program^ We performed the audit in accordance with
the Standards for Audit of Governmental Organizations, Programs, Activities.
and Functions issued by the Comptroller General of the United States. At
the time of our review DER was responsible for 16 National Priorities List
(NPL) sites, while 8 other NPL sites had been recently transferred back to
EPA control. We reviewed 19' of these sites plus 1 additional site that was
proposed to the NPL. Our fieldwork began on July 1, 1986 and was completed
on March 31, 1987. During this audit we also:
1, Examined EPA and DER site files which contained various
reports relating to past site activities.
2. Conducted interviews with EPA and DER project officers,
U.S. Geological Survey staff, site inspection contractor
personnel, and EPA Contract Laboratory Program officials.
3. Made visits to several of the sites.
4. Discussed the preliminary results of our review with
senior staff of the Region III Superfund program.
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SUMMARY OF FINDINGS -
!• SITE CLEANUP DELAYS " ».
DEE's failure to procure Remedial Investigation/Feasibility Studies
(RI/FS) delayed site cleanups, and unnecessarily tied up over $6 Billion
that EPA needed for other Superfund projects. The studies, which can
take over two years to complete, are prerequisites to site cleanups.
EPA obligated $513,000 for an RI/FS at the first DER site in June 1984.
Over the next two years this funding was increased to more than $6 Billion
for studies of eight DER sites. As of September 1986, more than two
years after the initial obligation, DER had yet to formally execute™ a
single 1I/FS contract, and the funds remained unused. This failure,,
resulted from procurement inexperience on the part of DER staff, and
from indecisiveness on the part of DER top management in dealing with
recalcitrant contractors. . We recommend that EPA -aggressively monitor
DER procurement procedures and deobligate excess .funds.
2. TRANSFE1 OF ENFORCEMENT SITES
DEI enforcement efforts have been ineffective. EPA "policy" requires
state agencies to enter into -formal Consent. Order and Agreements (COAs)
with potentially responsible parties (PRPs) to guarantee that remedial
studies and cleanups are performed in accordance with the National-
Contingency Plan (NCP). At the time of our audit, DER had enforce-
ment responsibility for eight National Priorities List (MPL) siteSfT We
reviewed'six of the sites and found that DER had failed to enter into
enforceable agreements with any of the PRPs for remedial work. Evidently,
DER was reluctant to press the PRPs to sign agreements in the belief
that it was more beneficial to get PRPs to perform remedial work on an
informal basis. We did note that COAs were executed by DER for removal
efforts at various sites. However, DER's attitude regarding COAs for
remedial work not only conflicted with EPA policy, but left DER with
little leverage to force recalcitrant PRPs to actually perform the work.
The overall result is that final cleanups and NPL delistings have been
delayed by years. We recommend that EPA transfer all PER enforcement
NPL sites back t«> EPA control. , -
j ' S
Preliminary draft findings were provided to the Hazardous Haste Mangement
Division (HHMD*) by Hay 22, 1987. The Region's' comments received on June 29,
1987 indicated disagreement with the first finding and concurrence with the
second finding. Our evaluation of the Region's comments did not alter the
content of the findings. On July 13, 1987 a draft audit report was issued to
the Regional Administrator. We held an exit conference with HWMD officials on
September 14t 1987. During this conference we were informed that the Region
would not be providing written comments to .the draft report. We were also
informed that the Region basically agreed with most of the facts contained
in the report, but not necessarily with the report's conclusions and
recommendations* ^ . ' .
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ACTION REQUIRED
In accordance vith EPA Order 2750, the Administrator of Region III is
required to provide this off ice, with a written response to the audit report
within 90 days of the audit report. If you have'any questions, please contact
toe or Carl Jannetti at 597-0497.
The courtesies and cooperation extended by your staff during this audit
are appreciated.
BACKGROUND
The "Superfund" program was established by the Comprehensive Environ-
mental Response, Compensation and Liability Act (CERCLA), Public Law 96-510,
enacted on December 11, 1980. The'Superfund program was created to protect
public health and the environment from the release, or threat of release, of
hazardous substances from abandoned hazardous waste sites and other sources
where response was not required by other Federal laws. A Trust Fund was
established by CERCLA to provide funding for responses ranging from control
of emergency situations to provision of permanent remedies at uncontrolled
sites. CERCLA authorized a $1.6 billion program financed by a five year
environmental tax on Industry and from general revenues. CERCLA requires
that response, or payment for response, be sought from those responsible for
the problem. . '
Superfund1s taxing authority expired on September 30, 1985. The avail-
able funds from fiscal year 1985 appropriations along with estimated future
cost recoveries fell $657 million short of planned fiscal year 1986 program
requirements. This resulted in a slowdown of activities from August 1985.
EPA received interim funding of $150 million on April 1, 1986 which allowed
resumption of some cleanup activities.
CERCLA was revised and expanded by the Superfund Amendments and Reauthor-
ization Act (SARA), Public Law 99-499, enacted on October 17, 1986. SARA
reinstituted the environmental tax and expanded the taxing mechanisms avail-
able for. a five year period. It authorized an $8.5 billion program for the
1987-1991 period. The Trust Fund was renamed the Hazardous Substance Super-
fund. '0.
The basic regulatory ^blueprint for the Superfund Program is the National
Oil and Hazardous. Substances Contingency Plan (NCP), 40 CFR Part 300. The
NCP was first published in 1968 as part of the Federal Water Pollution Control
Plan, and has been substantially, revised to meet CERCLA requirements. A
1982 revision authorized the following types of responses for incidents
involving hazardous substances:
o Immediate Removal - a prompt response at any site to
prevent or mitigate Immediate and significant risk
of harm to human life, health or the environment.
' Generally a removal is to be completed within 6 months
or after expenditure of $1 million.
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o Planned Removal - an expedited, but not necessarily •, "'
immediate response, at any site (1) where ther.e will ,
be substantial cost savings by continuing an immediate *
removal when only a small amount of work .is necessary • , '
to complete the cleanup, or (2) when the public and/or
~" the environment vill be at risk from exposure to haz-
ardous substances if response is delayed. The 6
•onth/Sl million limitation also applies, and States ' ,
are required to contribute 10 percent of the costs. •
o Remedial Action - a long term usually more expensive
attempt to achieve a permanent and cost-effective
solution. These actions usually require a series, of
extensive investigations and studies to determine
remedial alternatives which will range from no further
action to total site-cleanups.- If EPA decides to take.
further action, the method selected Is then designed
and eventually implemented. The NCP limits these
long-term cleanup actions to sites included on the ' - •
National Priorities List (NFL). This list design-
ates the nation's worst sites known to be con-
taminated with hazardous substances. NPL sites
are generally determined by EPA's Hazard Ranking
System (HRS) under which individual scores are
developed based on the release or potential for
release, of hazardous substances into grouhdwater,
surface water, and the air. These scores are
weighed and combined to calculate an overall site
score ranging from zero to 100. Sites scoring
28.5 or higher are eligible for NPL listing.
o Initial Remedial Measure - a cost-effective expedited
remedial response at an NPL site to limit exposure to
a significant health or environmental hazard. Such
actions can include the removal of hazardous substances
fouad in drums, barrels, tanks and other bulk storage
containers above the surface, or the removal of highly
• ' contaminated soils largely at or near the surface.
In November 1985, a second revision to the NCP-eliminated planned
removals and initial remedial measures as distinct response categories.
As of February 18, 1986 these responses were included under an expanded
removal authority. By quicker response EPA hoped to help reduce health
and environmental risks, as well as reduce long-term cleanup costs.
At most remedial sites, the States oust pay 10 percent of the costs
of the remedial cleanup. CERCLA section 104(c)(3) provides that no reme-
dial actions shall be taken unless the State in which the release occurs
enters into a contract or cooperative agreement with EPA to provide certain
assurances, including cost-sharing. Pre-remedial activities (preliminary
assessments, site inspections) remedial planning (remedial investigations,
feasibility studies, remedial designs) aad removals may be funded 100
percent by EPA. For facilities operated by a State or political subdivision
at the time of disposal of hazardous substances,.the State must pay at least
50 percent of all response costs,' including removals and remedial planning
previously conducted. .
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FINDINGS AND RECOMMENDATIONS
J. SITE CLEANUP DELAYS
.DER's failure to procure Remedial Investigation/Feasibility Studies
(RI/FS) delayed site cleanups, and unnecessarily tied up over $6 million
that EPA needed for other Superfund projects. The studies, which can take
over two years to complete, are prerequisites to site cleanups. EPA
obligated $513,000 for an RI/FS at the first DER site in June 1984. Over
the next two years this funding was increased to more than $6 million for
studies of eight DER sites. As of September 1986, more than two years after
the Initial obligation, DER had yet to formally execute a single RI/FS con-
tract an.d. the funds remained unused. This failure resulted .from procurement
inexperience on the part of DER staff, and from indecisiveness on the part
of DER top management in dealing with recalcitrant contractors. ,
• ,It took DER staff one year to assemble Requests for Proposal/Qualifi-
cation (RFP/Q) packages for five sites. These packages contained the
specifications to enable prospective contractors to submit proposals to
perform the RI/FS studies. By January. 1986, DER management had selected the
contractors. However, the contractors selected for four of the five sites
refused to abide by the original specifications in the RFP/Qs. Instead
of terminating the.offers, DER management spent the next nine months negoti-
ating with these contractors. During this time, DER continuously told both
the public and Region III that the studies would soon commence.
The overall effect of DER's failure to procure the studies is that site
cleanups have been seriously delayed. In our review of DER's attempt to
obtain the studies we also learned that:
(1) Region III knew from the beginning that DER was ill-
equipped to handle the procurements, yet the Region
continuously accepted DER assurances that the con-
tracts would be awarded "soon."
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-.,'•• /
(2) DER evaluation of proposals and selection of contrac-
tors were not performed in accordance with the Code
of Federal Regulations (CFR). As a result, award of
the contracts could generate protest by unsuccessful
contractors, and would produce $1 million in questioned
costs upon final audit.
.(3) Region III obligated over $4.4 million of the $6 million
far in advance of DER's anticipated need. For example,
$3 Billion was obligated because the Federal fiscal year
was ending and the Region evidently.wanted to reserve the
money for DER's future use. We also found that DER has
no real need for $1.3 million of the $4.4 million . .
advanced because the Potentially Responsible Parties
(PRPs) have agreed to perform the RI/FS studies for
two of the sites. DER is merely holding this money
• as an enforcement tool to guarantee PRP performance*
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Background
DER was bound by 40 CFR, part 33 to. evaluate and certify that Its
procurement system net Federal regulations. The multi-site cooperative
agreement (KSCA) of February 9, -1984 enabled EPA to fund DER procurement of
RI/FS studies. On June 29, 1984 Region III obligated $513,000 for studies
at the Haver town site. DER, lacking a Superfund staff of Its own, hired a
project management consultant" in July 1984. The consultant was to assemble
RFP/Qs to solicit proposals, and to prepare RI/FS Workplans for the use of
contractors selected to perform the actual RI/FS studies. Region III in-
structed DER to accelerate these workplans at an additional cost of $4,250
so that RI/FS funds could be obligated by the end of fiscal year 1984. On
September 27, 1984, Region III obligated an° additional $3,078,000 for RI/FS
studies at the Voortman, East Mt. Zion, Dorney Jtoad, Brodhead Creek, Berks
Sand Pit, and Welsh Road Sites. The consultant prepared an RFP/Q for the
Welsh Road Site, but it did not meet with the approval of DER. After failing
in a second attempt, the .consultant was removed from this task in March
1985, and* DER prepared its -own specifications. In June 1985, Region III
funded $845,592 for an -RI/FS at Whitmoyer, the eighth DER site. .By the end
of the year DER had evaluated contractor RI/FS proposals for five of the
sites, and decided on contractor selections. On April 9, 1986, Region III
authorized DER to "advance match" an additional $1.6 million of State funds
to cover the difference between the original estimates and the contractor
prices for the five sites. This money would be reimbursed by EPA when
Superfund was reauthorized.
Contract or' Se 1 e ct ion :
DER was- bound by the requirements of 40 CFR, part 33 in its selection
of RI/FS contractors. This reference provides two methods of competitive
negotiation. Both methods required PER to inform prospective contractors of
the criteria by which proposals would be evaluated, and the relative impor-
tance attached to each. Basically the first method allowed DER to solicit
contractor qualifications, proposals, and proposed prices in a single package
while the second outlined a series of steps to follow before negotiating a
price. The first method required DER to: ,
o Conduct meaningful negotiations with the best qualified
contractors, who had acceptable proposals within the
competitive price .range.' . ' .
o Permit revision, of proposals to obtain best and final
offers.
The second method required DER to:
o First determine the 'most qualified contractors.
o Then solicit proposals from those contractors.
o Then determine the best technical proposal.
o
Then negotiate a fair and reasonable price with, the contractor
who had the best'technical proposal*
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o If necessary terminate negotiations if a price could not be agreed
on, and open negotiations with the contractor vho had the next best
proposal.
The evaluation criteria contained in the RFP/Q packages closely par-
alleled the first »etho;d described in the CFR. The RFP/Qs generally explained
that, although price would play a significant role in proposal evaluation,
selection would not necessarily be based solely on a low cost basis'. Only
those contractors determined Co be qualified and having an adequate technical
approach, and whose proposals were found to be qualified and within a competi-
tive price range, would be selected for complete evaluation. These proposals
would be evaluated in accordance with the following criteria:
o Technical merit of overall approach, including schedule
and phasing.
o Safety and security practices to ensure the health and.
safety of employees and the general public.
o Response of offerer's references regarding quality of
work, performed on prior projects.
o Overall cost.
DER then planned to conduct interviews or contract negotiations with any or
all contractors in the competitive range, and make an award based on price
and the other factors considered.
DER did not adhere to the CFR, or to its own RFP/Qs, when it evaluated
the proposals. Instead DER used a method that combined aspects of both
the methods described in CFR. Evaluation summaries for the five proposed
awards were on file in Region III. These summaries indicated that DER had
ranked contractor proposals as either "superior, acceptable^, marginally
acceptable, or unacceptable," but did not show which proposal was recommended
for award. However, comparison of the amounts obligated by EPA, to the
amounts in the summaries, indicated that DER only considered the "superior"
proposals for award, even though there were far less costly "acceptable"
proposals for four of the five sites. At DER we verified that only the
proposals Judged as "superior" were considered for award. A DER official
defended this procedure by asserting, "Why buy a Chevy when you can buy a
Cadillac." Be advised DER that the difference in price between the "Chevys"
and "Cadillacs" would be questioned upon final audit of .the cooperative
agreement. It was important that DER follow the competitive negotiation
methods prescribed by CFR, because the aggregate total '. of the variances
between the "acceptable" and the "superior" proposals was-$1,049,737.
During our audit we informed Region0III of DER's selection method.
Regional personnel were of the opinion that DER would have additional informa-
tion, beyond the evaluation summaries, that would show, that the proposed
procurements complied with the CFR. .
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Proposal Evaluations
Ironically, the contractors vhose proposals are listed as "superior" in
the above chart, were the contractors to which DER was experiencing so much
difficulty awarding contracts. We concentrated our proposal evaluation
review on these four sites. We were able to find only one complete evaluation
package, and two partially complete packages. The fourth package had been
thrown out. From this information, and from interviews with DER personnel,
we were able to piece together how the proposals had been evaluated. Evident-
ly, various segments of the proposals were individually scored by evaluation
team members. The combination of the Individual scores dictated whether the
proposal was considered "superior, acceptable, etc." Ve believe that the
evaluation teams were conscientious in performing their reviews. However,
as explained below, we also believe that their efforts were compromised by
their inexperience, and more importantly, by the restraints placed upon them
by DER management.
(1) The evaluation team members were engineers, hydro-
geologists, and chemists by profession. As far as we
could determine, none of the people who assembled the
RFP/Qs, and reviewed the contractor proposals, had any
experience in contracting. For example, even though
DER had requested lump sum prices, the teams evaluated
. .proposed profit margins, labor rates, and overhead
within the various phases of the RI/FS. It was erro-
neously believed that if the contractor performed a
phase of the study for less than the original estimate
DER would keep the difference.
(2) Ho one from DER was allowed to contact the contractors
to get clarifications on the proposals. Several
team members told us that clarifications would have
placed "acceptable*1 proposals, into the "superior"
category. *
.* (3) the evaluation methods'were very subjective* For
example, one team ranked contractor qualifications
based on contractpr employee resumes. Another team,
realizing there was no 'guarantee the employees proposed
would actually perform the work, looked at the company's
overall experience. Consequently, a contractor con-
sidered only marginally qualified by one team, was
actually selected by another team.
(4) The evaluations were also arbitrary. For example,
a proposal for one site was Judged "superior," and
selected for award despite the fact that the pro-
posal contained the wrong .site name. By contrast,
a proposal for a second site was judged non-responsive
because although notarized, it lacked signatures.
Interestingly enough, at the same time a different
team selected this contractor for a third site. In
any event, ye believe the decision to declare the
proposal non-responsive because of missing signatures
_
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was harsh. Especially in light of the fact that DER
had initially misplaced this contractor's proposal,
and did not review It until seven weeks after the
""^competitors' proposals. Moreover, this review dis-
closed that the proposal was acceptable from a tech-
nical standpoint, and was in fact $158,000 cheaper
than the proposal finally* selected. Ironically, had
DER obtained the signatures it may have expedited
•at.ters, because one year later DER had yet to sign
an agreement with the contractor that had been selected.
DER Confused the Public
In a September 4, 1986 letter, concurrently released to the press, the
then Secretary of DER advised the Region III Administrator of Pennsylvania's
aggressiveness in cleaning up hazardous waste sites. The Secretary asserted
that Pennsylvania had, more money spent at more sites than any other state.
The Secretary stated that "Congressional inaction for over a year has stalled
reauthoriration of Superfund, with funding still a far-from-settled issue."
To ameliorate the situation the Secretary of fered to quickly provide, i.e.
lend, state funds to allow for site studies"...that might falter during
Congressional debate on Superfund."
We found no response to the Secretary in our review of the file. How-
ever, in view of DER's protracted negotiations with the *RI/FS contractors,
the Regional Administrator could have responded that DER had control of over
$6 million of EPA funds for over two years and had yet to award a contract.
In fact, DER officials were overly optimistic in their comments to the press
about when the RI/FS studies .would begin. One such example is the Ha vet town
PCP site. •
In 1953 a township health inspector found pentachlorophenol (PCP) .in
underground pools at the site. Litigation by the township against the PRPs
progressed through, the Commonwealth Court, the Pennsylvania Supreme Court,
and, finally in October 1980,° the U.S. Supreme Court. At that time the
township Manager concluded "We really won all along* I believe it's the end
of the road." In the meantime, EPA had taken initial cleanup steps; filters
were installed to prevent contaminants from leaving the site and entering, a
nearby stream. The site was placed on the NPL in 1982. DER inspections in
1984 and 1985 disclosed that;, the PRPs were not maintaining the filters, and
contaminants were entering the stream. On January 9, 1986 DER selected a
contractor to perform an RI/FS study to determine final cleanup options. At
the time of our review,, nine months later, no contract had. been signed, and
subsequent inquiries over a three month period indicated no change in contract
status. * . • '
* *
Since early 1984, DER repeatedly told both the press and the township
residents that the RI/FS studies would soon occur. DER placed the blame for
the delays on the United States Congress. A September" 15, 1986* newspaper
article reported that the then Secretary of DER announced he was launching a
$782,000 RI/FS study to get the .cleanup project out of "limbo." The Secretary
explained that delays in congressional funding had led to a "general hiatus
in action", but the state had budgeted $8 million, and "I'm going around the
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state to start spending it." When asked why the study was needed, the Secre-
tary replied, "In order to get the Federal money you have to go through
their process." It was estimated that the study would begin in October
1986.
DER has not liv.ed up to its promises to the public since 1984 about
when the studies would start. Likewise, DEE sought to transfer the blame for
the delays to the Federal government. The Secretary's inference that the
U.S. Congress was somehow responsible for the delay in cleanup of the Haver-
town site it without merit. As explained in the background paragraph above,
Region III had obligated RI/FS money for the site as far back as June 1984.
Therefore DER had the money all along to,award a contract. We believe that
Region III should have been more aggressive in monitoring what DER was or
was not doing, but the responsibility for the delay rests with DER. Ue now
understand that an RI/FS study of. the site was scheduled to begin on June 1,
1987. It is entirely possible that the studies could have been already well
on their way, or even completed, had DER not engaged in protracted contract
negotiations.
Contract Negotiations
DER had difficulty awarding contracts. The contractors selected in
January. 1986 for four of the five sites balked at the terms of the proposed
contracts, even though these terms were contained as specifications -in
the. RFP/Qs. Nine months later DER was still negotiating with the contrac-
tors. During this period, DER repeatedly told Region III that the contracts
would be awarded "soon." In September 1986 we were told the awards would be
executed "any day now." Subsequent contacts with DER through December 1986
Indicated that the contracts had yet to be formally executed. We later
learned that, after almost a year .of discussions, DER had terminated negotia-
tions with one contractdr for attempting to increase the proposal price. In
our opinion, DER should have terminated negotiations with any contractor,
who refused to perform in accordance with the specifications.
*• '
DER experienced various problems in negotiating contracts for the four
sites. The Issues Involved matters such as site security, insurance, indem-
nification, method of payment, penalties, and completion dates. We use
the Havertovn -site as an example, because it was the only instance where we
found that DER had issued an ultimatum to the contractor, and because we
believe the contractor's proposal should have been originally rejected as
non-responsive to the RFP/Q.
By September 1985, DER had received 12 proposals to perform the RI/FS
'of the Ravertown site. On January 9, 1986, DER selected a $781,980 proposal,
that it considered as "superior." By comparison, a $502,998 proposal sub-
mitted by a contractor with previous site experience was rejected because
DEE considered it only "acceptable." DER negotiations .with the selected
contractor stalled over several issues. Finally, on April 4, 1986, D£R.
provided the contractor with the Department's "best and final offer" and
as such, not subject to negotiations. The contractor rejected DER's offer
as unacceptable. The contractor maintained that his proposal never offered
or agreed tip guarantee the completion date of the project or to pay a
penalty if the work was late. The contractor also had problems relating
to site security, hours of operation, insurance, and method of payment.
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We reviewed the proposal and found that the contractor was correct. The
proposal never agreed to guarantee the project's completion date as required
in the RFP/Q. Moreover, the contractor's proposal price did not include
security, which was also an RFP/Q requirement. Security in fact would cost
an additional $2,,075 per week.
As seen elsewhere, a proposal could be rejected because it simply lacked
signatures. Based on the above, we believe that instead of considering this
proposal "superior" it should. have been rejected, as it was clearly non-
responsive to the RFP/Q. In any event, once the contractor refused the
Department's "best and final offer," DER should have terminated negotiations.
The Ravertown'situation was by no means unique. DER had similar problems
in negotiating the other three contracts as well. Yet the only negotiations
terminated case as a result of a contractor raising the price. We believe
that instead of spending almost a year in protracted negotiations, DER should
have terminated discussion once it became clear that the contractors would
not follow the RFP/Q specifications. :
"Dormant" Funds
Because of the delay in the reauthorlzatlon of Superfund, EPA was forced
to seek Bother sources of funding. As a result, in February 1986 Region III
was requested to review the cooperative agreement and deobligate monies that
would not be spent before June 30,, 1986. The Region considered deobligating
$513,000 from the Brodhead Creek site, and $845,592 from the Hhitmoyer Lab
site, because it was thought that the work would be performed by the site
owners. However, the Region waited until July to request DER's approval to
deobligate, and only asked for the return of -the Brodhead Creek funds. DER
ignored the request. We found that, although the Department did not actually
plan to use the $1.3 million, DER wanted to keep the funds as an enforcement
threat against the sife owners. Consequently, money that vas sorely needed
for other Superfund projects has been needlessly tied up by DER for over two
years.
EPA Monitoring of DER
Region III knew from the start that DER vas Ill-equipped to handle the
sites. In DER's application for the cooperative agreement, it was made clear
that the Department planned to hire a project management consultant to pre-
pare the RFP/Qs and the RI/FS Workplans. Likewise, EPA Headquarters was
not alarmed that DER had little in the way of a Superfund staff, and in fact
processed DER's application for the agreement in just three days. EPA may
have first become concerned in March 1985 when it was learned that DER was
preparing tbe RFP/Qs instead of the consultant.
In May 1985, EPA Headquarters and Region III personnel made a "Manage-
ment Assistance Visit" to DER. The ensuing report on the visit warned that
DER's procurement procedures were not in accordance with the CFR, and that
DER's evaluation process could result in. unnecessary delays in awarding
contracts. Another repo.rt, issued by • the 'Office of the Inspector General,
Audit Report Number P5bH5-l1-0056-70538, covering the cooperative agreement
up to June 30, 1985 likewise reported that DER's procurement system did not
meet Federal requirements. Specifically, 40 CFR 33.110 required DER to
11
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evaluate its own procurement system, and to determine whether its system net
the applicable requirements of 40 CFR, part 33. This previous report said
that the procurement system certified by DER appeared more applicable to
snail purchases such as typewriters, rather than for the avard of large
contracts. This report also criticized EPA because Regional employees were
actually on the DER panel that selected the project management consultant.
By late 1985, Regional personnel were concerned over DER's lack of
progress. Status reports prepared by the Regional project officer pointed
out that:
o Mot one Rl/FS had started.
o $3 million in unspent RI/FS dollars were tied up.
o Sites were now even two years further from cleanup.
o The DER procurement process was a stumbling block.
o DER management was unable to quickly decide.on RI/FS
contractors.
o DER had not responded to the report on.the Hay
"Management Assistance Visit."
Suspecting that DER might not have enough personnel to handle the pro-
jects, the Region conducted a workload analysis of the DER Superfund program.
A draft report of this analysis, dated January 27, .1986, highlighted the fact
that DER fared unfavorably when compared to national averages for other
state programs and EPA.- The report pointed out that it took EPA an average
of 188 days, and other states an average of 233 days to Initiate a remedial
investigation. By contrast, after 730 days DER had yet to award a contract
to initiate a remedial investigation.
From the time of the January workload analysis until our September
visit, DER informed the Region that it was negotiating with the selected con-
tractors. On October 28, 1986 DER notified the Region that it had executed
five contracts. During December we were told by DER that the contracts were
executed, but not in writing. . On January 30, 1987 DER informed the Region
that four of the contracts were executed, but that negotiations with one
contractor had been terminated.
Conclusion • .
DER held EPA money for over two and a half years without actually start-
ing a single RI/FS study. DER ignored the Region's request to return part
of the money, even though it was obvious that DER would not need it and
despite the fact that EPA was hard-pressed. for funds. The procurements
attempted by DER were not in accordance with the CFR. Site cleanups have
been delayed because of prolonged negotiations that should have been termi-
nated. Although responsible for the delays, DER publicly inferred that the
Federal government was somehow at fault. This Inference is only valid to
the extent that EPA allowed what happened, to happen. Any furt'her delay
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will in .CM In.c.nces e«cend Che ti.e th.t Che public could be exposed to
th>t
Recommendation .
. We recommend that the Regional Administrator:
1. Aggressively monitor DER procurement procedures
and notify DER that deviation from the CFR
will jeopardize its procurement certification.
2. Deobligate any EPA funds that are excess to
DER' s needs..
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2. TRANSFE1 OF ENFORCEMENT SITES
DEE enforcement efforts have been ineffective. EPA "policy" requires
state agencies to enter into a formal legal Consent Order and Agreement (00A)
vith PRPs to guarantee that remedial studies and cleanups, are' performed in
accordance with the National Contingency .Plan. At the time of our audit,
DER had enforcement-««ponBibility for eight NPL sites. We reviewed six of
the sites and found that, although in the past several removal actions had
been performed under signed"agreements, DER had failed to execute COAs with
any of the PRPs for remedial tasks. Evidently, DER was reluctant to press
the PRPs to sign agreements in the belief that it was more beneficial to gee
PRPs to perform remedial work on an informal basis. This philosophy not
only conflicted with EPA policy, but left DER with little leverage to force
recalcitrant FRPs to actually perform the work. As a result, final cleanups
and NPL delistings have been delayed by years. We therefore recommend that
Region III transfer the DER enforcement sites back to EPA control.
PRPs will sometimes accept responsibility to conduct specific remedial
tasks for KPL sites. These tasks can include actions such as removals,
RI/FS studies, and final cleanups. EPA requires PRPs to sign a formal COA,
which then becomes an enforcement tool to ensure that the agreed upon work'
is performed in accordance with the National Contingency Plan.. It is there-
fore important that the COA be in place before the work is done. In similar
fashion, although Superfund does not provide authority to delegate EPA's
enforcement responsibility, the Agency does expect States who assume the
enforcement lead to also negotiate COAs with the PRPs. The agreements are
important because all Federal enforcement action is postponed pending the
results obtained under state COAs. Therefore, if state enforcement efforts
fail, or are delayed, permanent site cleanups are Jeopardized.
i,
By 1986 DER had accumulated 16 enforcement NPL sites, none of which
were covered by a COA. Region III attributed this lack of success to a
shortage of DER lawyers and, recognizing that site cleanups wejre being
delayed, recommended that DER consider transferring some. of the sites back
to EPA. Specific issues used'to support this recommendation were:
o The absence of remedial action at one site over.a
five year period.
o DER procurement delays that more than doubled estimated
project costs at another site.
o Protracted negotiations with PRFs over remedial work in
process at several sites not covered by any agreement.
o PRP legal challenges to DER authority to enforce Superfund.
As a result of the Region's recommendation, DER agreed to transfer 8 of the
16 sites. ,
w *
We reviewed" the files available for five of the transferred sites, and
for six of the sites still under DER control. .Our overall Impression is that
DER's problem was not necessarily a shortage of lawyers, but rather the
philosophy that it was more beneficial to deal with PRPs on an informal
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basis, than to press them to commit to specific tasks under binding agree-
ments. This philosophy may have evolved from past experience. -In 1983,.
after conducting a removal action, the PRF for one site announced chat it
would negotiate an agreement with DER to perform an RI/FS and conduct a
cleanup. The PRP threatened legal action against EPA i'f the Agency tried to
interfere. Notes of a telephone conversation between the PRP and DER indi-
cate that the State was prepared to sign the agreement even if EPA objected.
The COA, signed in September of 1983, was praised both by DER and Region III
officials as a model for voluntary cleanups of Superfund sites nationally.
However in 1984, when the RI phase was complete, both DER and EPA recognized
that soil sampling had' not been part of the COA. The PRP later obtained
soil samples, but DER rejected the sample results as.unreliable, and requested
new samples. The PRP refused and in 1985 filed legal challenges with the
State Environmental Hearing Board against DER's authority to act on behalf
of EPA. Subsequently, an EPA contractor took new soil samples, and in
1986 Region III decided to transfer the site from DER's control. The decision
was later reversed because DER "was close to an agreement with the PRP."
We offer the following comments to support our contention that all the
sites should be transferred back to. EPA control, but have omitted site names
since the enforcement issues have yet to be resolved.
, * *'
Site "A"
DER consciously operated contrary to EPA enforcement policy. DER first
became involved with site "A" in 1981. Sampling results in 1982 indicated
contamination of residents' wells. The PRPs conducted a removal action in
1983 and began supplying the residents with interim water supplies. Over
the next two years DER and the PRPs discussed what additional remedial
measures should be taken, but never entered into a COA: Region III tried to
expedite matters In 1985 by drafting a COA, but DER complained that it- was a
State lead site and that the Region's COA gave little, if any, enforcement
power to DER. The Region acquiesced* DER 1986 status reports that are
available to the public described the PRPs as cooperative, and explained
that negotiations were in process. The extent of the PRPs cooperation is
debatable. After four years the residents' wells remain contaminated, and
without a COA in place DER has nothing to enforce* We found that although
the PRPs agreed to voluntarily provide the interim water supplies, they did
not want to be legally obligated to do so under a COA. DER's reluctance to
press for a COA is evidenced in a. September 1984 memorandum from DER's Office
of Chief Counsel which advised:
A
"As I have previously mentioned, as long as the compa-
nies make some progress toward pollution abatement, there
is some advantage to getting that work done without a formal
document, for one thing we are not limited in what we can
request; for another, the companies have received no releases
whatsoever from the Department, which is thus free to insti-
tute suit on any appropriate cause of action* Although , .
there are advantages to having firm commitments, they nay .£ ...
possibly be out-weighed regarding this site by the fact
that the threat of CERCLA action hovers over all, and what ' .
we have received so far is, in technical legal parlance, a
'freebie.' I strongly recommend you reconsider Inclusion
of the reference at this time to a formal document."
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.. The memorandum was narked confidential and the attorney warned against
its release "to anyone outside the Department, in particular, EPA." Five
months previous, the sane attorney assured Region III of DER's wishes to
work cooperatively with EPA.
Site "B"
In addition to DER's reluctamce to execute COAs, policy conflicts between
different DER sections, and between EPA and DER hindered Superfund enforce-
ment. DER inspected site "B" in 1981 in response to complaints of nearby
residents, and determined that their wells were contaminated. The DER inspec-
tor found numerous documented incidences of hazardous wastes disposed at the
site over a 15 year period* However, a DER lawyer advised deletion of the
inspector's conclusions in the report sent to EPA. The lawyer explained that
the State Bureau of Water Quality planned to charge the PRP under the
Pennsylvania Clean Streams Act. Under a DER consent order, the PRP commis-
sioned a hydrogeological assessment In 1983-1984. The PRP then agreed to
enter into a COA with DER for additional remedial work. No COA was signed,
and DER requested the additional work on a informal basis. In 1985, a local
citizens group became concerned that the additional work would cause exhorbi-
tant hookup fees and water rates. DER Informed the group that this problem
would be addressed in a COA. In 1986, Region III assumed enforcement respon-
sibility for the site, because of DER's lack of progress. In a September
meeting, the- PRP agreed to sign a COA with EPA to Implement RI/FS studies.
An internal DER memorandum concerning this meeting described the State's
enforcement problems* The delay In enforcement evidently resulted from a
dispute between the DER Bureau of Water Quality and the DER Superfund program.
The Bureau of Water Quality, unwilling to implement Superfund enforcement
when the site was under DER, now planned to implement water quality enforce-
ment even though the site was transferred back to EPA. Consequently, while
Region III was negotiating the COA for RI/FS studies, the Bureau of Water
Quality planned to issue an order requiring the PRP to conduct immediate
groundwater pumping and treatment action. The author of the memorandum
blamed this confusion on a lack of DEE policy to define the enforcement
roles played by different State Bureaus; as well as the lack of a written
policy concerning the roles played by EPA and DER.
Site "C"
The absence of -enforceable agreements- delayed final cleanup and allowed
PRPs to procrastinatei A PRP conducted a removal action at site "C" under a
1982 COA with DER* However in 1984, Region III became concerned, because the.
COA did not. require the PRP to conduct an RI/FS. In response to a 1985
letter of inquiry, Region III Informed a United States Senator that the work
done to date had not significantly reduced contamination, and that RI/FS
studies were necessary* The Region assured the Senator that if the PRP did
not perform these studies, EPA would. In November 1985, the PRP agreed to
amend the earlier COA to include the studies. However, it took DER almost
one year to draft an amendment, which the PRP refused to sign because it was
felt that "such a level of formality was unnecessary."
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Site "D"
DEE even delayed executing COAs with cooperative PRPs. Site "D" vas
inspected in 1981 and placed on the NPL in 1982. DER informed the PRP in 1983
that a COA "may be required at some future date." The PRP commissioned
a. site environmental assessment, and in 1984 DER began drafting a COA for
RI/FS studies. A 1985 Region III toxicological assessment concluded that
there vas substantial danger to anyone coming in contact with the site.
In November 1985 the PRP agreed to sign a COA. By February 1986, DER was
still drafting the agreement. In March the PRP hired an RI/FS contractor
and requested DER to submit the COA so that on-site work could commence in
June. The PRP offered to start the work before signing an agreement if DER
would approve the task in writing. DER declined and informed the PRP that a
COA was needed before the RI/FS could be started. As of September 1986, no
agreement had been signed.
Conclusion
Contrary to EPA policy, DER has refused or failed to negotiate enforce-
able agreements with the PRPs. DER's informal enforcement policy and lack
of aggressiveness have allowed the PRPs to dictate how, when, or even if the
sites will be cleaned up. In effect the PRPs are running the program, and
as a result final cleanups have been delayed for years. Therefore, we believe
that EPA must take back control of the DER enforcement sites*
Recommendation
We recommend that the Regional Administrator transfer all DER enforce-
ment NPL sites back to EPA control.
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REPORT DISTRIBUTION
Appendix A
Recipient
*^v#i;-j'-- ~ • • ••'<••"
Office of the Inspector General
f.C " »
Inspector General (A-109)
Copies
Regional Office
Administrator of Region III
Director, Hazardous Waste Management Division
Audit Follow-up Coordinator
Headquarters Office
Director, Financial Management Division (PM-226)
Comptroller (PM-225)
Agency Follow-up Official (PM-208)
Attention: Resource Systems Staff
Associate Administrator for Regional Operations (A-101)
2
1
1
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